CREDIT AGREEMENT
DATED AS OF
JUNE 15, 2007
AMONG
TRANS ENERGY INC.,
AS BORROWER,
CIT CAPITAL USA INC.,
AS ADMINISTRATIVE AGENT,
AND
THE LENDERS PARTY HERETO
SOLE LEAD ARRANGER AND SOLE BOOKRUNNER
CIT CAPITAL USA INC.
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above....................................................................1
Section 1.02 Certain Defined Terms..................................................................1
Section 1.03 Types of Loans and Borrowings.........................................................16
Section 1.04 Terms Generally; Rules of Construction................................................17
Section 1.05 Accounting Terms and Determinations; GAAP.............................................17
ARTICLE II
THE CREDITS
Section 2.01 Commitments...........................................................................17
Section 2.02 Loans and Borrowings..................................................................17
Section 2.03 Requests for Borrowings...............................................................18
Section 2.04 Interest Elections....................................................................19
Section 2.05 Funding of Borrowings.................................................................20
Section 2.06 Termination and Reduction of Aggregate Maximum Credit Amounts.........................21
Section 2.07 Borrowing Base........................................................................21
Section 2.08 Letters of Credit.....................................................................23
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
Section 3.01 Repayment of Loans....................................................................27
Section 3.02 Interest..............................................................................27
Section 3.03 Alternate Rate of Interest............................................................27
Section 3.04 Prepayments...........................................................................28
Section 3.05 Fees..................................................................................29
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs...........................30
Section 4.02 Presumption of Payment by the Borrower................................................31
Section 4.03 Certain Deductions by the Administrative Agent........................................32
Section 4.04 Disposition of Proceeds...............................................................32
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
Section 5.01 Increased Costs.......................................................................32
Section 5.02 Break Funding Payments................................................................33
Section 5.03 Taxes.................................................................................33
Section 5.04 Mitigation Obligations/Replacement of Lenders.........................................34
Section 5.05 Illegality............................................................................35
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ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Effective Date........................................................................35
Section 6.02 Each Credit Event.....................................................................38
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01 Organization; Powers..................................................................39
Section 7.02 Authority; Enforceability.............................................................39
Section 7.03 Approvals; No Conflicts...............................................................39
Section 7.04 Financial Condition; No Material Adverse Change.......................................39
Section 7.05 Litigation............................................................................40
Section 7.06 Environmental Matters.................................................................40
Section 7.07 Compliance with the Laws and Agreements; No Defaults..................................41
Section 7.08 Investment Company Act................................................................41
Section 7.09 Taxes.................................................................................41
Section 7.10 ERISA.................................................................................42
Section 7.11 Disclosure; No Material Misstatements.................................................43
Section 7.12 Insurance.............................................................................43
Section 7.13 Restriction on Liens..................................................................43
Section 7.14 Subsidiaries..........................................................................43
Section 7.15 Location of Business and Offices......................................................43
Section 7.16 Properties; Titles, Etc...............................................................44
Section 7.17 Maintenance of Properties.............................................................44
Section 7.18 Gas Imbalances, Prepayments...........................................................45
Section 7.19 Marketing of Production...............................................................45
Section 7.20 Swap Agreements.......................................................................45
Section 7.21 Use of Loans and Letters of Credit....................................................45
Section 7.22 Solvency..............................................................................45
Section 7.23 Development Plan......................................................................46
ARTICLE VIII
AFFIRMATIVE COVENANTS
Section 8.01 Financial Statements; Ratings Change; Other Information...............................46
Section 8.02 Notices of Material Events............................................................49
Section 8.03 Existence; Conduct of Business........................................................49
Section 8.04 Payment of Obligations................................................................49
Section 8.05 Operation and Maintenance of Properties...............................................49
Section 8.06 Insurance.............................................................................50
Section 8.07 Books and Records; Inspection Rights..................................................50
Section 8.08 Compliance with Laws..................................................................51
Section 8.09 Environmental Matters.................................................................51
Section 8.10 Further Assurances....................................................................51
Section 8.11 Reserve Reports.......................................................................52
Section 8.12 Title Information.....................................................................53
Section 8.13 Additional Collateral; Additional Guarantors..........................................53
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Section 8.14 ERISA Compliance......................................................................54
Section 8.15 Swap Agreements.......................................................................54
Section 8.16 Marketing Activities..................................................................55
Section 8.17 Development Plan......................................................................55
ARTICLE IX
NEGATIVE COVENANTS
Section 9.01 Financial Covenants...................................................................55
Section 9.02 Debt..................................................................................56
Section 9.03 Liens.................................................................................56
Section 9.04 Dividends, Distributions and Redemptions..............................................56
Section 9.05 Investments, Loans and Advances.......................................................56
Section 9.06 Nature of Business....................................................................57
Section 9.07 Limitation on Leases..................................................................57
Section 9.08 Proceeds of Notes.....................................................................57
Section 9.09 ERISA Compliance......................................................................58
Section 9.10 Sale or Discount of Receivables.......................................................59
Section 9.11 Mergers, Etc..........................................................................59
Section 9.12 Sale of Properties....................................................................59
Section 9.13 Environmental Matters.................................................................59
Section 9.14 Transactions with Affiliates..........................................................59
Section 9.15 Subsidiaries..........................................................................59
Section 9.16 Negative Pledge Agreements; Dividend Restrictions.....................................59
Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments......................................60
Section 9.18 Swap Agreements.......................................................................60
Section 9.19 Development Plan......................................................................60
Section 9.20 Net Profits Interest..................................................................60
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 Events of Default.....................................................................61
Section 10.02 Remedies..............................................................................63
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.01 Appointment; Powers...................................................................64
Section 11.02 Duties and Obligations of Administrative Agent........................................64
Section 11.03 Action by Administrative Agent........................................................64
Section 11.04 Reliance by Administrative Agent......................................................65
Section 11.05 Subagents.............................................................................65
Section 11.06 Resignation or Removal of Administrative Agent........................................65
Section 11.07 Agents as Lenders.....................................................................66
Section 11.08 No Reliance...........................................................................66
Section 11.09 Administrative Agent May File Proofs of Claim.........................................66
Section 11.10 Authority of Administrative Agent to Release Collateral and Liens.....................67
Section 11.11 The Arranger..........................................................................67
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ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices...............................................................................67
Section 12.02 Waivers; Amendments...................................................................68
Section 12.03 Expenses, Indemnity; Damage Waiver....................................................69
Section 12.04 Successors and Assigns................................................................71
Section 12.05 Survival; Revival; Reinstatement......................................................73
Section 12.06 Counterparts; Integration; Effectiveness..............................................74
Section 12.07 Severability..........................................................................74
Section 12.08 Right of Setoff.......................................................................74
Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS............................74
Section 12.10 Headings..............................................................................76
Section 12.11 Interest Rate Limitation..............................................................76
Section 12.12 EXCULPATION PROVISIONS................................................................76
Section 12.13 Collateral Matters; Swap Agreements...................................................77
Section 12.14 No Third Party Beneficiaries..........................................................77
Section 12.15 USA Patriot Act Notice................................................................77
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ANNEXES, EXHIBITS AND SCHEDULES
Annex I ......... List of Maximum Credit Amounts
Exhibit A......... Form of Note
Exhibit B......... Form of Borrowing Request
Exhibit C......... Form of Interest Election Request
Exhibit D......... Form of Compliance Certificate
Exhibit E......... Not used
Exhibit F-1....... Security Instruments
Exhibit F-2....... Form of Guaranty and Collateral Agreement
Exhibit G......... Form of Assignment and Assumption
Exhibit H......... Form of Conveyance of Net Profits Interest
Exhibit I......... Development Plan
Schedule 1.02..... Permitted Holders
Schedule 7.05..... Litigation
Schedule 7.14..... Subsidiaries and Partnerships
Schedule 7.18..... Gas Imbalances
Schedule 7.19..... Marketing Contracts
Schedule 7.21..... Use of Proceeds
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THIS CREDIT AGREEMENT dated as of June 15, 2007, is among: Trans Energy
Inc., a corporation duly formed and existing under the laws of the State of
Nevada (the "Borrower"); each of the Lenders from time to time party hereto; and
CIT Capital USA Inc. (in its individual capacity, "CIT"), 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 has requested that the Lenders provide certain loans to
and extensions of credit on behalf of the Borrower.
B. The Lenders have agreed to make such loans and extensions of credit
subject to the terms and conditions of this Agreement.
C. 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:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Affected Loans" has the meaning assigned such term in Section 5.05.
"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.
"Aggregate Maximum Credit Amounts" at any time shall equal the sum of
the Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.06.
"Agreement" means this Credit Agreement, as the same may from time to
time be amended, modified, supplemented or restated.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, for any day from the Effective Date until
the next Redetermination Date, with respect to any ABR Loan or Eurodollar Loan,
or with respect to the Commitment Fee Rate, as the case may be, the rate per
annum set forth in the Borrowing Base Utilization Grid below based upon the
Borrowing Base Utilization Percentage then in effect:
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Borrowing Base Utilization Grid
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Borrowing Base Utilization less than 20% greater than or equal to greater than or equal to greater than or equal to
Percentage 20% but less than 30% 30% but less than 40% 40%
---------------------------- ------------------------ -------------------------- ------------------------- -------------------------
Eurodollar Loans 1.75% 2.25% 3.25% 5.25%
---------------------------- ------------------------ -------------------------- ------------------------- -------------------------
ABR Loans 0.75% 1.25% 2.25% 4.25%
---------------------------- ------------------------ -------------------------- ------------------------- -------------------------
Commitment Fee Rate 0.50% 0.50% 0.50% 0.75%
---------------------------- ------------------------ -------------------------- ------------------------- -------------------------
Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change, provided,
however, if at any time the Borrower fails to deliver a Reserve Report pursuant
to Section 8.11(a), then the "Applicable Margin" for all Revolving Credit
Exposure levels means the rate per annum set forth on the grid when the
Borrowing Base Utilization Percentage is at its highest level.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the Aggregate Maximum Credit Amounts represented by such Lender's
Maximum Credit Amount as such percentage is set forth on Annex I.
"Approved Counterparty" means (a) any Lender or any Affiliate of a
Lender and (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.
"Arranger" means CIT Capital USA Inc., in its capacities as the sole
lead arranger and sole bookrunner 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 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit G or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the Effective
Date to but excluding the Termination Date.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America or any successor Governmental Authority.
"Borrowing" means Loans of the same Type, made, converted or continued
on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Base" means at any time an amount equal to the amount
determined in accordance with Section 2.07, as the same may be adjusted from
time to time pursuant to Section 8.12(c).
"Borrowing Base Deficiency" occurs if at any time the total Revolving
Credit Exposures exceeds the Borrowing Base then in effect.
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"Borrowing Base Utilization Percentage" means, as of any day, the
fraction expressed as a percentage, the numerator of which is the sum of the
Revolving Credit Exposures of the Lenders on such day, and the denominator of
which is the Borrowing Base in effect on such day.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City or Houston, Texas are authorized
or required by law to remain closed; and if such day relates to a Borrowing or
continuation of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice
by the Borrower with respect to any such Borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day on which
dealings in dollar deposits are carried out in the London interbank market.
"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.
"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 having a fair market value in excess of $100,000.
"Change in Control" means the occurrence of any one of the following
events: (a) Xxx Xxxxxxxx is no longer actively involved in the management of the
Borrower as Chief Executive Officer and President, (b) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules
of the SEC thereunder as in effect on the date hereof) other than the Permitted
Holders, of Equity Interests representing more than 25% of the aggregate
ordinary voting power represented by the issued and outstanding Equity Interests
of the Borrower, (c) occupation of a majority of the seats (other than vacant
seats) on the board of directors of the Borrower by Persons who were neither (i)
nominated by the board of directors of the Borrower nor (ii) appointed by
directors so nominated or (d) the acquisition of direct or indirect Control of
the Borrower by any Person or group other than the Permitted Holders.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (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(b)), 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.
"Conveyance of Net Profits Interest" means that certain Conveyance of
Net Profits Interest in the form attached hereto as Exhibit H.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
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"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a)
modified from time to time pursuant to Section 2.06 and (b) modified from time
to time pursuant to assignments by or to such Lender pursuant to Section
12.04(b). The amount representing each Lender's Commitment shall at any time be
the lesser of such Lender's Maximum Credit Amount and such Lender's Applicable
Percentage of the then effective Borrowing Base.
"Commitment Fee Rate" has the meaning set forth in the definition of
"Applicable Margin".
"Consolidated Net Income" means with respect to the Borrower and the
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and the 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 the 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, as the case may be; (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 gains or losses during such period and (e)
any gains or losses attributable to writeups or writedowns of assets; and
provided 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.
"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.
"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 20% 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.
"Conveyance of Net Profits Interest" means that certain Conveyance of
Net Profits Interest in the form attached hereto as Exhibit H.
"Debt" means, for any Person, 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) all
accounts payable and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services incurred
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in the ordinary course of business which are not greater than sixty (60) days
past the date of invoice or delinquent; (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 (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
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 even if such goods or
services are not 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; and (m) the undischarged balance of any
production payment 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.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Development Plan" shall mean the Borrower's Plan of Development for
the Oil and Gas Properties and the related Hydrocarbon Interests as of the
Effective Date attached as Exhibit I, as approved by Administrative Agent, as
the same may be amended from time to time pursuant to Section 9.19.
"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, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.
"dollars" or "$" refers to lawful money of the United States of
America.
"EBITDAX" 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, exploration expenses and other similar noncash charges,
minus all noncash income added to Consolidated Net Income.
"Effective Date" means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).
"Engineering Reports" has the meaning assigned such term in Section
2.07(c)(i).
-5-
"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 mean those
waste that are excluded from the definition of "hazardous waste" pursuant to 40
C.F.R. Section 261.4(b)(5) ("Section 261.4(b)(5)"); provided, however, that (a)
in the event either OPA, CERCLA, RCRA or Section 261.4(b)(5) 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 261.4(b)(5),
such broader meaning shall apply.
"Environmental Permit" means any permit, registration, license,
approval, consent, exemption, variance, or other authorization required under or
issued pursuant to applicable Environmental Laws.
"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 the Borrower or a Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" 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", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the LIBO Rate.
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"Event of Default" has the meaning assigned such term in Section 10.01.
"Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (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 are not delinquent or which 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, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which 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) 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, provided that no
such deposit account is a dedicated cash collateral account or is subject to
restrictions against access by the depositor in excess of those set forth by
regulations promulgated by the Board and no such deposit account is intended by
Borrower or any of its Subsidiaries to provide collateral to the depository
institution; (f) 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, that do not secure
any monetary obligations and 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; (g) Liens on cash or securities pledged to secure performance
of tenders, surety and appeal bonds, government contracts, performance and
return of money bonds, bids, trade contracts, leases, statutory obligations,
regulatory obligations and other obligations of a like nature incurred in the
ordinary course of business and (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; provided, further that Liens described in clauses (a) through (e)
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.
"Excess Cash Flow" for any period shall mean EBITDAX for such period
less (a) cash tax payments made during such period, (b) any changes in working
capital from the preceding period (as determined in accordance with GAAP) made
during such period and (c) Capital Expenditures made during such period that are
approved by the Lenders or are otherwise permitted under this Agreement.
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"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 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, (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, (c) in the case of a Foreign Lender, any withholding tax
that is imposed on amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party to this Agreement (or designates a new lending
office) or is attributable to such Foreign Lender's failure to comply with
Section 5.03(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts with respect to such withholding tax
pursuant to Section 5.03(a) or Section 5.03(c) and (d) taxes associated with the
Conveyance of Net Profits Interest.
"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 JPMorgan Chase Bank, N.A. from three Federal funds
brokers of recognized standing selected by it.
"Fee Letter" means that certain Proposal Letter dated as of May 7,
2007, by and between the Borrower and the Administrative Agent.
"Financial Statements" means the financial statement or statements of
the Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is not organized under
the laws of the United States of America or any state thereof or the District of
Columbia.
"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.
"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, any of their Properties or any
Lender.
"Governmental Requirement" means any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
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.
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"Guarantors" means: Tyler Energy, Inc., Tyler Construction Company,
Inc., Xxxxxxx County Gathering Systems, Inc. and Prima Oil Company, Inc. and
each other Subsidiary that guarantees the Indebtedness pursuant to Section
8.13(b).
"Guaranty Agreement" means an agreement executed by the Guarantors in
substantially the form of Exhibit F-2 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.
"Hazardous Material" means any substance regulated or as to which
liability might arise under any applicable Environmental Law and including,
without limitation: (a) any chemical, compound, material, product, byproduct,
substance or waste defined as or included in the definition or meaning of
"hazardous substance," "hazardous material," "hazardous waste," "solid waste,"
"toxic waste," "extremely hazardous substance," "toxic substance,"
"contaminant," "pollutant," or words of similar meaning or import found in any
applicable Environmental Law; (b) petroleum hydrocarbons, petroleum products,
petroleum substances, natural gas, oil, oil and gas waste, crude oil, and any
components, fractions, or derivatives thereof; and (c) radioactive materials,
asbestos containing materials, polychlorinated biphenyls, or radon.
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws 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 (whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising): (a) to the Administrative Agent 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 while such Person (or in the case of its Affiliate, the
Person affiliated therewith) is a Lender hereunder and (c) all renewals,
extensions and/or rearrangements of any of the above.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Initial Reserve Report" means the report of Data & Consulting
Services, dated as of March, 2007, with respect to certain Oil and Gas
Properties of the Borrower and its Subsidiaries as of December 31, 2006.
"Interest Election Request" means a request by the Borrower to convert
or continue a Borrowing in accordance with Section 2.04.
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"Interest Expense" means, for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such period, including to the extent included in
interest expense under GAAP: (a) amortization of debt discount, (b) capitalized
interest and (c) the portion of any payments or accruals under Capital Leases
allocable to interest expense, plus the portion of any payments or accruals
under Synthetic Leases allocable to interest expense whether or not the same
constitutes interest expense under GAAP.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
"Interim Redetermination" has the meaning assigned such term in Section
2.07(b).
"Interim Redetermination Date" means the date on which a Borrowing Base
that has been redetermined pursuant to an Interim Redetermination becomes
effective as provided in Section 2.07(d).
"Investment" means, for any Person: (a) the acquisition (whether for
cash, Property, services or securities or otherwise) of Equity Interests of any
other Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale); (b) the
making of any deposit with, or advance, loan or capital contribution to,
assumption of Debt of, purchase or other acquisition of any other Debt or equity
participation or interest in, 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);
(c) the purchase or acquisition (in one or a series of transactions) of Property
of another Person that constitutes a business unit or (d) 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.
"Issuing Bank" means JPMorgan Chase Bank, N.A., in its capacity as the
issuer of Letters of Credit or any other Person named as an Issuing Bank by the
Administrative Agent.
"LC Commitment" at any time means five hundred thousand dollars
($500,000).
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"LC Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.
"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.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Telerate Screen 3750 (or on any successor
or substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered by the
principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to (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) production payments and the like payable
out of Oil and Gas Properties. The term "Lien" shall include easements,
restrictions, servitudes, permits, conditions, covenants, 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 Fee Letter, the
Conveyance of Net Profits Interest, the Letters of Credit and the Security
Instruments.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Majority Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders holding greater than fifty percent (50%) of the Aggregate
Maximum Credit Amounts; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding greater than fifty percent (50%) of the outstanding
aggregate principal amount of the Loans and participation interests in Letters
of Credit (without regard to any sale by a Lender of a participation in any Loan
under Section 12.04(c)).
"Material Adverse Effect" means a material adverse change in, or
material adverse effect on (a) the business, operations, Property, condition
(financial or otherwise) or prospects 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
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enforceability of any Loan Document or (d) the rights and remedies of or
benefits available to the Administrative Agent or any Lender under any Loan
Document.
"Material Indebtedness" means Debt (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $250,000. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Borrower or any Subsidiary in
respect of any Swap Agreement at any time shall be the Swap Termination Value.
"Maturity Date" means June 15, 2010.
"Maximum Credit Amount" means, as to each Lender, the amount set forth
opposite such Lender's name on Annex I under the caption "Maximum Credit
Amounts", as the same may be (a) reduced or terminated from time to time in
connection with a reduction or termination of the Aggregate Maximum Credit
Amounts pursuant to Section 2.06(b) or (b) modified from time to time pursuant
to any assignment permitted by Section 12.04(b).
"Moody's" means Xxxxx'x Investors Service, Inc. and any successor
thereto that is a nationally recognized rating agency.
"Mortgaged Property" means any Property owned by the Borrower or any
Guarantor which is subject to the Liens existing and to exist under the terms of
the Security Instruments.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in section 3(37) or 4001 (a)(3) of ERISA.
"New Borrowing Base Notice" has the meaning assigned such term in
Section 2.07(d).
"Notes" means the promissory notes of the Borrower described in Section
2.02(d) 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 hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, 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
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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.
"Organizational Documents" means, with respect to any Person, (a) in
the case of any corporation, the certificate of incorporation and by-laws (or
similar documents) of such Person, (b) in the case of any limited liability
company, the certificate of formation and limited liability company agreement
(or similar documents) of such Person, (c) in the case of any limited
partnership, the certificate of formation and limited partnership agreement (or
similar documents) of such Person, (d) in the case of any general partnership,
the partnership agreement (or similar document) of such Person and (e) in any
other case, the functional equivalent of the foregoing.
"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 set forth in Section 12.04(c)(i).
"Permitted Holders" means the individuals set forth on Schedule 1.02.
"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.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at
its principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective. Such rate is set by the JPMorgan Chase Bank, N.A. as a general
reference rate of interest, taking into account such factors as the JPMorgan
Chase Bank, N.A. may deem appropriate; it being understood that many of the
JPMorgan Chase Bank, N.A.'s commercial or other loans are priced in relation to
such rate, that it is not necessarily the lowest or best rate actually charged
to any customer and that the JPMorgan Chase Bank, N.A. may make various
commercial or other loans at rates of interest having no relationship to such
rate.
"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.
"Proposed Borrowing Base" has the meaning assigned to such term in
Section 2.07(c)(i).
"Proposed Borrowing Base Notice" has the meaning assigned to such term
in Section 2.07(c)(ii).
"Proved Reserves" means "Proved Reserves" as defined in the Definitions
for Oil and Gas Reserves (in this paragraph, the "Definitions") promulgated by
the Society of Petroleum Engineers (or any generally recognized successor) as in
effect at the time in question. "Proved Developed Producing Reserves" means
Proved Reserves which are categorized as both "Developed" and "Producing" in the
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Definitions, "Proved Developed Nonproducing Reserves" means Proved Reserves
which are categorized as both "Developed" and "Nonproducing" in the Definitions,
and "Proved Undeveloped Reserves" means Proved Reserves which are categorized as
"Undeveloped" in the Definitions.
"Redemption" means with respect to any Debt, the repurchase,
redemption, prepayment, repayment, defeasance or any other acquisition or
retirement for value (or the segregation of funds with respect to any of the
foregoing) of such Debt. "Redeem" has the correlative meaning thereto.
"Redetermination Date" means, with respect to any Scheduled
Redetermination or any Interim Redetermination, the date that the redetermined
Borrowing Base related thereto becomes effective pursuant to Section 2.07(d).
"Register" has the meaning assigned such term in Section 12.04(b)(iv).
"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.
"Release" means any depositing, spilling, leaking, pumping, pouring,
placing, emitting, discarding, abandoning, emptying, discharging, migrating,
injecting, escaping, leaching, dumping, or disposing.
"Remedial Work" has the meaning assigned such term in Section 8.09(a).
"Required Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least sixty-six and two-thirds percent (66-2/3%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure is outstanding, Lenders holding at least sixty-six and two-thirds
percent (66-2/3%) of the outstanding aggregate principal amount of the Loans or
participation interests in such Letters of Credit (without regard to any sale by
a Lender of a participation in any Loan under Section 12.04(c)).
"Reserve Report" means a report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, as of each January 1st
or July 1st (or such other date in the event of an Interim Redetermination) the
oil and gas reserves attributable to the Oil and Gas Properties of the Borrower
and the Subsidiaries, together with a projection of the rate of production and
future net income, taxes, operating expenses and capital expenditures with
respect thereto as of such date, based upon the economic assumptions consistent
with the Administrative Agent's lending requirements at the time.
"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President 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.
"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 of its Subsidiaries, 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 of its
Subsidiaries or any option, warrant or other right to acquire any such Equity
Interests in the Borrower or any of its Subsidiaries.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Loans and its
LC Exposure at such time.
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"Scheduled Redetermination" has the meaning assigned such term in
Section 2.07(b).
"Scheduled Redetermination Date" means the date on which a Borrowing
Base that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).
"SEC" means the Securities and Exchange Commission or any successor
Governmental Authority.
"Security Instruments" means the Guaranty Agreement, mortgages, deeds
of trust and other agreements, instruments or certificates described or referred
to in Exhibit F-1, and any and all other agreements, instruments, consents 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, this Agreement, or reimbursement obligations under the
Letters of Credit, as such agreements may be amended, modified, supplemented or
restated from time to time.
"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.
"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. 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 interest 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.
"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
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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.
"Termination Date" means the earlier of the Maturity Date and the date
of termination of the Commitments.
"Total Reserve Value" means, with respect to any Proved Reserves
expected to be produced from any Oil and Gas Properties, the net present value,
discounted at 10% per annum, of the future net revenues expected to accrue to
the Borrowers' and their Subsidiaries' collective interests in such reserves
during the remaining expected economic lives of such reserves. Each calculation
of such expected future net revenues shall be made in accordance with the then
existing standards of the Society of Petroleum Engineers, provided that in any
event (a) appropriate deductions shall be made for severance and ad valorem
taxes, and for operating, gathering, transportation and marketing costs required
for the production and sale of such reserves, (b) the pricing assumptions used
in determining Total Reserve Value for any particular reserves shall be based
upon (i) annual quotations on the New York Mercantile Exchange for Xxxxx Hub
(natural gas) or Cushing, Oklahoma (oil) futures on the date of the relevant
Reserve Report for each calendar year to the extent such quotations are
available for future periods, provided that with respect to quotations for
calendar years after the fifth calendar year, the quotation for the fifth
calendar year shall be applied, (ii) with respect to future periods for which
quotations are not available on the New York Mercantile Exchange, constant
pricing for such periods based on the quotation for the last period for which a
quotation is available on the New York Mercantile Exchange for Xxxxx Hub
(natural gas) or Cushing, Oklahoma (oil), (c) operating expenses shall be held
constant, (d) future capital expenditures shall be expressed in current year
dollars (i.e., inflation shall not be assumed), and (e) to the extent basis Swap
Agreements are not in place, the cash-flows derived from the pricing assumptions
set forth in clause (b) above shall be further adjusted to account for the
historical basis differentials for each month during the preceding 12-month
period calculated by comparing realized crude oil and natural gas prices to
Cushing, Oklahoma and Xxxxx Hub NYMEX prices for each month during such period.
"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 issuance of Letters of Credit hereunder, and the grant of Liens
by the Borrower on Mortgaged Properties 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, the
guaranteeing of the Indebtedness and the other obligations under the Guaranty
Agreement by such Guarantor and such Guarantor's grant of the security interests
and provision of collateral under the Security Instruments, and the grant of
Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to
the Security Instruments.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Alternate Base Rate or the LIBO
Rate.
Section 1.03 Types of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings, respectively, may be classified and referred to
by Type (e.g., a "Eurodollar Loan" or a "Eurodollar Borrowing").
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Section 1.04 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 in the
Loan Documents), (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 in the Loan Documents), (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" and
(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. 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.
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, applied on a basis
consistent with the Financial Statements except for changes in which Borrower's
independent certified public accountants concur and which are disclosed to the
Administrative Agent on the next date on which financial statements are required
to be delivered to the Lenders pursuant to Section 8.01(a); provided that,
unless the Borrower and the Majority 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
The Credits
Section 2.01 Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the
total Revolving Credit Exposures exceeding the total Commitments. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, repay and reborrow the Loans.
Section 2.02 Loans and Borrowings.
(a) Borrowings; Several Obligations. Each Loan shall be made
as part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments are several and no Lender
shall be responsible for any other Lender's failure to make Loans as required.
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(b) Types of Loans. Subject to Section 3.03, each Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.
(c) Minimum Amounts; Limitation on Number of Borrowings. At
the commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$500,000 and not less than $500,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $500,000; provided that an ABR Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.08(e). Borrowings of more than one
Type may be outstanding at the same time, provided that there shall not at any
time be more than a total of six Eurodollar Borrowings outstanding.
Notwithstanding any other provision of this Agreement, the Borrower shall not be
entitled to request, or to elect to convert or continue, any Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.
(d) 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 (i) any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement, or (ii) 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 Maximum Credit Amount as in effect on such date,
and otherwise duly completed. In the event that any Lender's Maximum Credit
Amount increases or decreases for any reason (whether pursuant to Section 2.06,
Section 12.04(b) or otherwise), 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 Maximum Credit
Amount after giving effect to such increase or decrease, and otherwise duly
completed. The date, amount, Type, interest rate and, if applicable, Interest
Period of each Loan made by each Lender, and all payments made on account of the
principal thereof, shall be recorded by such Lender on its books for its 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.
Section 2.03 Requests for Borrowings To request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 12:00 noon, New York City time, one
Business Day before the proposed Borrowing; provided that no such notice shall
be required for any deemed request of an ABR Borrowing to finance the
reimbursement of an LC Disbursement as provided in Section 2.08(e). Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in substantially the form of Exhibit B and signed by the
Borrower. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a
Business Day;
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(iii) whether such Borrowing is to be an ABR Borrowing or
a Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period";
(v) the amount of the then effective Borrowing Base, the
current total Revolving Credit Exposures (without regard to the requested
Borrowing) and the pro forma total Revolving Credit Exposures (giving
effect to the requested Borrowing); and
(vi) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the requirements
of Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Each Borrowing
Request shall constitute a representation that the amount of the requested
Borrowing shall not cause the total Revolving Credit Exposures to exceed the
total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and
the then effective Borrowing Base).
Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
Section 2.04 Interest Elections.
(a) Conversion and Continuance. Each Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurodollar Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.04. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) Interest Election Requests. To make an election pursuant
to this Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Interest Election Request in substantially the form of Exhibit C and
signed by the Borrower.
(c) Information in Interest Election Requests. Each telephonic
and written Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to each
resulting Borrowing (in which case the information to be specified pursuant
to Section 2.04(c)(iii) and (iv) shall be specified for each resulting
Borrowing);
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(ii) the effective date of the election made pursuant to
such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar
Borrowing, the Interest Period to be applicable thereto after giving effect
to such election, which shall be a period contemplated by the definition of
the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Notice to Lenders by the Administrative Agent. Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender's portion of
each resulting Borrowing.
(e) Effect of Failure to Deliver Timely Interest Election
Request and Events of Default and Borrowing Base Deficiencies on Interest
Election. If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
or a Borrowing Base Deficiency has occurred and is continuing: (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
(and any Interest Election Request that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
Section 2.05 Funding of Borrowings.
(a) Funding by Lenders. Each Lender shall make each Loan to be
made by it hereunder on the funding date in the Borrowing Request by wire
transfer of immediately available funds by 1:00 p.m., New York City time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Borrower maintained with the Administrative Agent in
Houston, Texas and designated by the Borrower in the applicable Borrowing
Request; provided that ABR Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.08(e) shall be remitted by the
Administrative Agent to the Issuing Bank. Nothing herein shall be deemed to
obligate any Lender to obtain the funds for its Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for its Loan in any particular place or manner.
(b) Presumption of Funding by the Lenders. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.05(a) 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 applicable Borrowing 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
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the Administrative Agent, at (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 interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
Section 2.06 Termination and Reduction of Aggregate Maximum Credit
Amounts.
(a) Scheduled Termination of Commitments. Unless previously
terminated, the Commitments shall terminate on the Maturity Date. If at any time
the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or
reduced to zero, then the Commitments shall terminate on the effective date of
such termination or reduction.
(b) Optional Termination and Reduction of Aggregate Credit
Amounts.
(i) The Borrower may at any time terminate, or from time
to time reduce, the Aggregate Maximum Credit Amounts; provided that (A)
each reduction of the Aggregate Maximum Credit Amounts shall be in an
amount that is an integral multiple of $500,000 and (B) the Borrower shall
not terminate or reduce the Aggregate Maximum Credit Amounts if, after
giving effect to any concurrent prepayment of the Loans in accordance with
Section 3.04(c), the total Revolving Credit Exposures would exceed the
total Commitments.
(ii) The Borrower shall notify the Administrative Agent
of any election to terminate or reduce the Aggregate Maximum Credit Amounts
under Section 2.06(b)(i) at least three Business Days prior to the
effective date of such termination or reduction, specifying such election
and the effective date thereof. Promptly following receipt of any notice,
the Administrative Agent shall advise the Lenders of the contents thereof.
Each notice delivered by the Borrower pursuant to this Section 2.06(b)(ii)
shall be irrevocable. Any termination or reduction of the Aggregate Maximum
Credit Amounts shall be permanent and may not be reinstated. Each reduction
of the Aggregate Maximum Credit Amounts shall be made ratably among the
Lenders in accordance with each Lender's Applicable Percentage.
Section 2.07 Borrowing Base.
(a) Initial Borrowing Base. For the period from and including
the Effective Date to but excluding the first Redetermination Date, the amount
of the Borrowing Base shall be $18,000,000. Notwithstanding the foregoing, the
Borrowing Base may be subject to further adjustments from time to time pursuant
to Section 8.12(c).
(b) Scheduled and Interim Redeterminations. The Borrowing Base
shall be redetermined semi-annually in accordance with this Section 2.07 (a
"Scheduled Redetermination"), and, subject to Section 2.07(d), such redetermined
Borrowing Base shall become effective and applicable to the Borrower and the
Lenders on May 1st and November 1st of each year, commencing November 1, 2007.
In addition, the Borrower may, by notifying the Administrative Agent thereof,
and the Administrative Agent may, at the direction of the Required Lenders, by
notifying the Borrower thereof, one time during any 12-month period, each elect
to cause the Borrowing Base to be redetermined between Scheduled
Redeterminations (an "Interim Redetermination") in accordance with this Section
2.07.
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(c) Scheduled and Interim Redetermination Procedure.
(i) Each Scheduled Redetermination and each Interim
Redetermination shall be effectuated as follows: Upon receipt by the
Administrative Agent of (A) the Reserve Report and the certificate required
to be delivered by the Borrower to the Administrative Agent, in the case of
a Scheduled Redetermination, pursuant to Section 8.11(a) and (c), and, in
the case of an Interim Redetermination, pursuant to Section 8.11(b) and
(c), and (B) such other reports, data and supplemental information,
including, without limitation, the information provided pursuant to Section
8.11(c), as may, from time to time, be reasonably requested by the Majority
Lenders (the Reserve Report, such certificate and such other reports, data
and supplemental information being the "Engineering Reports"), the
Administrative Agent shall evaluate the information contained in the
Engineering Reports and shall, in good faith, propose a new Borrowing Base
(the "Proposed Borrowing Base") based upon such information and such other
information (including, without limitation, the status of title information
with respect to the Oil and Gas Properties as described in the Engineering
Reports and the existence of any other Debt) as the Administrative Agent
deems appropriate in its sole discretion and consistent with its normal oil
and gas lending criteria as it exists at the particular time. In no event
shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit
Amounts.
(ii) The Administrative Agent shall notify the Borrower
and the Lenders of the Proposed Borrowing Base (the "Proposed Borrowing
Base Notice"):
(A) in the case of a Scheduled Redetermination (1)
if the Administrative Agent shall have received the Engineering
Reports required to be delivered by the Borrower pursuant to Section
8.11(a) and (c) in a timely and complete manner, then on or before the
April 15th and October 15th of such year following the date of
delivery or (2) if the Administrative Agent shall not have received
the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.11(a) and (c) in a timely and complete manner,
then promptly after the Administrative Agent has received complete
Engineering Reports from the Borrower and has had a reasonable
opportunity to determine the Proposed Borrowing Base in accordance
with Section 2.07(c)(i); and
(B) in the case of an Interim Redetermination,
promptly, and in any event, within thirty (30) days after the
Administrative Agent has received the required Engineering Reports.
(iii) Any Proposed Borrowing Base that would increase the
Borrowing Base then in effect must be approved or deemed to have been
approved by the Required Lenders as provided in this Section 2.07(c)(iii);
and any Proposed Borrowing Base that would decrease or maintain the
Borrowing Base then in effect must be approved or be deemed to have been
approved by the Majority Lenders as provided in this Section 2.07(c)(iii).
Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have
fifteen (15) days to agree with the Proposed Borrowing Base or disagree
with the Proposed Borrowing Base by proposing an alternate Borrowing Base.
If at the end of such fifteen (15) days, any Lender has not communicated
its approval or disapproval in writing to the Administrative Agent, such
silence shall be deemed to be an approval of the Proposed Borrowing Base.
If, at the end of such 15-day period, the Required Lenders, in the case of
a Proposed Borrowing Base that would increase the Borrowing Base then in
effect, or the Majority Lenders, in the case of a Proposed Borrowing Base
that would decrease or maintain the Borrowing Base then in effect, have
approved or deemed to have approved, as aforesaid, then the Proposed
Borrowing Base shall become the new Borrowing Base, effective on the date
specified in Section 2.07(d), provided, however, that no Lender shall be
required to increase their share of the Borrowing Base without its consent.
If, however, at the end of such 15-day period, the Required Lenders or the
Majority Lenders, as applicable, have not approved or deemed to have
approved, as aforesaid, then the Administrative Agent shall poll the
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Lenders to ascertain the highest Borrowing Base then acceptable to a number
of Lenders sufficient to constitute the Required Lenders or the Majority
Lenders, as applicable, for purposes of this Section 2.07 and such amount
shall become the new Borrowing Base, effective on the date specified in
Section 2.07(d).
(iv) In connection with any Scheduled Redetermination or
Interim Redetermination, the Administrative Agent and the Lenders shall
propose a new definition for "Applicable Margin". If the Borrower agrees to
such new definition, such definition shall be in effect until the next
Redetermination Date. If the Borrower does not agree to any proposed
definition of "Applicable Margin", then the definition of "Applicable
Margin" shall remain the same and the Borrowing Base shall not be increased
at the Redetermination Date.
(d) Effectiveness of a Redetermined Borrowing Base. After a
redetermined Borrowing Base is approved or is deemed to have been approved by
the Required Lenders or Majority Lenders, as applicable, pursuant to Section
2.07(c)(iii), the Administrative Agent shall notify the Borrower and the Lenders
of the amount of the redetermined Borrowing Base (the "New Borrowing Base
Notice"), and such amount shall become the new Borrowing Base, effective and
applicable to the Borrower, the Administrative Agent and the Lenders:
(i) in the case of a Scheduled Redetermination, (A) if
the Administrative Agent shall have received the Engineering Reports
required to be delivered by the Borrower pursuant to Section 8.11(a) and
(b) in a timely and complete manner, then on the May 1st or November 1st,
as applicable, following such notice, or (B) if the Administrative Agent
shall not have received the Engineering Reports required to be delivered by
the Borrower pursuant to Section 8.11(a) and (b) in a timely and complete
manner, then on the Business Day next succeeding delivery of such notice;
and
(ii) in the case of an Interim Redetermination, on the
Business Day next succeeding delivery of such notice.
Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 8.12(c), whichever occurs first.
Notwithstanding the foregoing, no Scheduled Redetermination or Interim
Redetermination shall become effective until the New Borrowing Base Notice
related thereto is received by the Borrower.
(e) Availability of Borrowing Base and Current Ratio. In the event that the
Borrower ratio of (i) consolidated current assets (excluding non-cash assets
under FAS 133) to (ii) consolidated current liabilities (excluding non-cash
obligations under FAS 133 and current maturities under this Agreement) to be
less than 1.0 to 1.0, then the availability for the Borrower to borrow pursuant
to the Borrowing Base shall be reduced by an amount equal to the current assets
the Borrower would need to maintain or increase such ratio to 1.25 to 1.0.
Section 2.08 Letters of Credit.
(a) General. Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of dollar denominated Letters of
Credit for its own account or for the account of any of its Subsidiaries, in a
form reasonably acceptable to the Administrative Agent, at any time and from
time to time during the Availability Period; provided that the Borrower may not
request the issuance, amendment, renewal or extension of Letters of Credit
hereunder if a Borrowing Base Deficiency exists at such time or would exist as a
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result thereof. The Administrative Agent shall have the right to have the
Issuing Bank or another entity issue the Letter of Credit on its behalf.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy to the Administrative Agent (not less than seven (7)
Business Days in advance of the requested date of issuance, amendment, renewal
or extension) a notice:
(i) requesting the issuance of a Letter of Credit or
identifying the Letter of Credit to be amended, renewed or extended;
(ii) specifying the date of issuance, amendment, renewal
or extension (which shall be a Business Day);
(iii) specifying the date on which such Letter of Credit
is to expire (which shall comply with Section 2.08(c));
(iv) specifying the amount of such Letter of Credit;
(v) specifying the name and address of the beneficiary
thereof and such other information as shall be necessary to prepare, amend,
renew or extend such Letter of Credit; and
(vi) specifying the amount of the then effective
Borrowing Base and whether a Borrowing Base Deficiency exists at such time,
the current total Revolving Credit Exposures (without regard to the
requested Letter of Credit or the requested amendment, renewal or extension
of an outstanding Letter of Credit) and the pro forma total Revolving
Credit Exposures (giving effect to the requested Letter of Credit or the
requested amendment, renewal or extension of an outstanding Letter of
Credit).
Each notice shall constitute a representation that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the LC
Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing Base).
The Administrative Agent shall then arrange for the Letter of Credit to be
issued on the Borrower's behalf.
(c) Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or
an amendment to a Letter of Credit increasing the amount thereof) and without
any further action on the part of the Issuing Bank or the Lenders, the
Administrative Agent hereby grants to each Lender, and each Lender hereby
acquires from the Administrative Agent, a participation in the Administrative
Agent's rights and obligations in respect of such Letter of Credit equal to such
Lender's Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent such Lender's Applicable Percentage of each LC
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Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the
date due as provided in Section 2.08(e), or of any reimbursement payment
required to be refunded to the Borrower for any reason. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
Section 2.08(d) in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default, the existence of a Borrowing Base Deficiency or
reduction or termination of the Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse the
Administrative Agent such LC Disbursement by paying to the Administrative Agent
an amount equal to such LC Disbursement not later than 12:00 noon, New York City
time, on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., New York City time,
on such date, or, if such notice has not been received by the Borrower prior to
such time on such date, then not later than 12:00 noon, New York City time, on
(i) the Business Day that the Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii)
the Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of receipt;
provided that any such LC Disbursement shall, subject to the conditions to
Borrowing set forth herein, be deemed to have requested, and the Borrower does
hereby request under such circumstances, that such payment be financed with an
ABR Borrowing in an equivalent amount and, to the extent so financed, the
Borrower's obligation to make such payment shall be discharged and replaced by
the resulting ABR Borrowing. If the Borrower fails to make such payment when
due, the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect thereof and such
Lender's Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this Section
2.08(e), the Administrative Agent shall distribute such payment to any Lenders
that have made payments pursuant to this Section 2.08(e) to reimburse the
Administrative Agent. Any payment made by a Lender pursuant to this Section
2.08(e) to reimburse the Administrative Agent for any LC Disbursement (other
than the funding of ABR Loans as contemplated above) shall not constitute a Loan
and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.
(f) Obligations Absolute. The Borrower's obligation to
reimburse LC Disbursements as provided in Section 2.08(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of this Agreement, or
any term or provision therein, (ii) any draft or other document presented under
a Letter of Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect, (iii) payment
by the Issuing Bank under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit, or
(iv) any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section 2.08(f),
constitute a legal or equitable discharge of, or provide a right of setoff
against, the Borrower's obligations hereunder. Neither the Administrative Agent,
the Lenders nor the Issuing Bank, nor any of their Related Parties shall have
any liability or responsibility by reason of or in connection with the issuance
or transfer of any Letter of Credit or any payment or failure to make any
payment thereunder (irrespective of any of the circumstances referred to in the
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preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of the Administrative Agent.
(g) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section
2.08(e)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(g) shall
be for the account of the Administrative Agent, except that interest accrued on
and after the date of payment by any Lender pursuant to Section 2.08(e) to
reimburse the Administrative Agent shall be for the account of such Lender to
the extent of such payment.
(h) Cash Collateralization. If (i) any Event of Default shall
occur and be continuing and the Borrower receives notice from the Administrative
Agent or the Majority Lenders demanding the deposit of cash collateral pursuant
to this Section 2.08(h), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account designated by the Administrative Agent, in the name of
the Administrative Agent and for the benefit of the Lenders, an amount in cash
equal to, in the case of an Event of Default, the LC Exposure, and in the case
of a payment required by Section 3.04(c), the amount of such excess as provided
in Section 3.04(c), as of such date plus any accrued and unpaid interest
thereon; provided that the obligation to deposit such cash collateral shall
become effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower or any Subsidiary described in
Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to the
Administrative Agent, for the benefit of it and the Lenders, an exclusive first
priority and continuing perfected security interest in and Lien on such account
and all cash, checks, drafts, certificates and instruments, if any, from time to
time deposited or held in such account, all deposits or wire transfers made
thereto, any and all investments purchased with funds deposited in such account,
all interest, dividends, cash, instruments, financial assets and other Property
from time to time received, receivable or otherwise payable in respect of, or in
exchange for, any or all of the foregoing, and all proceeds, products,
accessions, rents, profits, income and benefits therefrom, and any substitutions
and replacements therefor. The Borrower's obligation to deposit amounts pursuant
to this Section 2.08(h) shall be absolute and unconditional, without regard to
whether any beneficiary of any such Letter of Credit has attempted to draw down
all or a portion of such amount under the terms of a Letter of Credit, and, to
the fullest extent permitted by applicable law, shall not be subject to any
defense or be affected by a right of set-off, counterclaim or recoupment which
the Borrower or any of its Subsidiaries may now or hereafter have against any
such beneficiary, the Issuing Bank, the Administrative Agent, the Lenders or any
other Person for any reason whatsoever. Such deposit shall be held as collateral
securing the payment and performance of the Borrower's and the Guarantor's
obligations under this Agreement and the other Loan Documents. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the Borrower's
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated, be applied to satisfy other obligations of
the Borrower and the Guarantors under this Agreement or the other Loan
Documents. If the Borrower is required to provide an amount of cash collateral
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hereunder as a result of the occurrence of an Event of Default, and the Borrower
is not otherwise required to pay to the Administrative Agent the excess
attributable to an LC Exposure in connection with any prepayment pursuant to
Section 3.04(c), then such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.
ARTICLE III
Payments of Principal and Interest; Prepayments; Fees
Section 3.01 Repayment of Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date.
Section 3.02 Interest.
(a) ABR Loans. The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Margin, but in no
event to exceed the Highest Lawful Rate.
(b) Eurodollar Loans. The Loans comprising each Eurodollar
Borrowing shall bear interest at the LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.
(c) Post-Default Rate. Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by the
Borrower or any Guarantor hereunder or under any other Loan Document is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to two percent (2%) plus the rate applicable to ABR Loans as
provided in Section 3.02(a), but in no event to exceed the Highest Lawful Rate.
(d) Interest Payment Dates. Accrued interest on each Loan
shall be payable in arrears on each Interest Payment Date for such Loan and on
the Termination Date; provided that (i) interest accrued pursuant to Section
3.02(c) shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than an optional prepayment of an ABR Loan prior
to the Termination Date), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment, and (iii)
in the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.
(e) Interest Rate Computations. All interest hereunder shall
be computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate 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). The applicable Alternate Base Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error, and be binding upon the parties hereto.
Section 3.03 Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:
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(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Majority
Lenders that the LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their Loans
included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
Section 3.04 Prepayments.
(a) Optional Prepayments. The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part, in
minimum increments of $500,000 or, if less than $500,000, the remaining balance
of the Loans, subject to prior notice in accordance with Section 3.04(b).
(b) Notice and Terms of Optional Prepayment. The Borrower
shall notify the Administrative Agent by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 12:00 noon, New York City time, three Business Days
before the date of prepayment, or (ii) in the case of prepayment of an ABR
Borrowing, not later than 12:00 noon, New York City time, one Business Day
before the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid. Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 3.02.
(c) Mandatory Prepayments.
(i) If, after giving effect to any termination or
reduction of the Aggregate Maximum Credit Amounts pursuant to Section
2.06(b), the total Revolving Credit Exposures exceeds the total
Commitments, then the Borrower shall (A) prepay the Borrowings on the date
of such termination or reduction in an aggregate principal amount equal to
such excess, and (B) if any excess remains after prepaying all of the
Borrowings as a result of an LC Exposure, pay to the Administrative Agent
on behalf of the Lenders an amount equal to such excess to be held as cash
collateral as provided in Section 2.08(h).
(ii) Upon any redetermination of or adjustment to the
amount of the Borrowing Base in accordance with Section 2.07 or Section
8.12(c), if the total Revolving Credit Exposures exceeds the redetermined
or adjusted Borrowing Base, then the Borrower shall
(A) either
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(i) prepay the Borrowings in an
aggregate principal amount equal to such
excess;
(ii) provide engineering reports on
additional Oil and Gas Properties not
currently included in the Borrowing Base
having a value equal to at least the amount
of the deficiency and grant to the
Administrative Agent a Lien on such
properties; or
(iii) use 100% of Excess Cash Flow
to prepay the Borrowings within one Business
Day of each delivery of an Excess Cash Flow
report required by Section 8.01(n)(ii);
and
(B) if any excess remains after the Borrower
exercises one of the options in (A) above, as a
result of an LC Exposure, pay to the Administrative
Agent on behalf of the Lenders an amount equal to
such excess to be held as cash collateral as provided
in Section 2.08(h).
The Borrower shall be obligated to make such
prepayment, pledge of collateral and/or deposit of
cash collateral within sixty (60) days following its
receipt of the New Borrowing Base Notice in
accordance with Section 2.07(d) or the date the
adjustment occurs; provided that all payments
required to be made pursuant to this Section
3.04(c)(ii) must be made on or prior to the
Termination Date.
If the Borrower is unable to cure such
Borrowing Base Deficiency within sixty (60) days
following the determination of the New Borrowing
Base, then the Borrower shall use 100% of Excess Cash
Flow to prepay the Borrowings until the Loans have
been repaid in full. Such payments shall be required
within one Business Day of each Excess Cash Flow
report delivered by the Borrower pursuant to Section
8.01(n)(ii).
(iii) Each prepayment of Borrowings pursuant to this
Section 3.04(c) shall be applied, first, ratably to any ABR Borrowings then
outstanding, and, second, to any Eurodollar Borrowings then outstanding,
and if more than one Eurodollar Borrowing is then outstanding, to each such
Eurodollar Borrowing in order of priority beginning with the Eurodollar
Borrowing with the least number of days remaining in the Interest Period
applicable thereto and ending with the Eurodollar Borrowing with the most
number of days remaining in the Interest Period applicable thereto.
(iv) Each prepayment of Borrowings pursuant to this
Section 3.04(c) shall be applied ratably to the Loans included in the
prepaid Borrowings. Prepayments pursuant to this Section 3.04(c) shall be
accompanied by accrued interest to the extent required by Section 3.02.
(d) No Premium or Penalty. Prepayments permitted or required
under this Section 3.04 shall be without premium or penalty, except as required
under Section 5.02.
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Section 3.05 Fees.
(a) Commitment Fees. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the applicable Commitment Fee Rate on the average daily amount
of the unused amount of the Commitment of such Lender during the period from and
including the date of this Agreement to but excluding the Termination Date.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the Termination Date,
commencing on the first such date to occur after the date hereof. All commitment
fees shall be computed on the basis of a year of 360 days, unless such
computation would exceed the Highest Lawful Rate, in which case interest shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to
the Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender's Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to the Administrative
Agent a fronting fee, which shall accrue at the rate of 0.325% per annum on the
average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the date of this Agreement to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, provided that in no event shall such fee be less than $500 during any
quarter, and (iii) to the Administrative Agent for its own account, the standard
fees charged to it by the Issuing Bank with respect to the issuance, amendment,
renewal or extension of any Letter of Credit or processing of drawings
thereunder. Participation fees and fronting fees accrued through and including
the last day of March, June, September and December of each year shall be
payable on the third Business Day following such last day, commencing on the
first such date to occur after the date of this Agreement; provided that all
such fees shall be payable on the Termination Date and any such fees accruing
after the Termination Date shall be payable on demand. Any other fees payable
pursuant to this Section 3.05(b) shall be payable within 10 days after demand.
All participation fees and fronting fees shall be computed on the basis of a
year of 360 days, unless such computation would exceed the Highest Lawful Rate,
in which case interest shall be computed on the basis of a year of 365 days (or
366 days in a leap year), and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(c) Borrowing Base Increase Fees. The Borrower agrees to pay
to the Administrative Agent, for the account of each Lender then party to this
Agreement, ratably in accordance with its Applicable Percentage, a Borrowing
Base increase fee equal to 1.25% on the amount of any increase of the Borrowing
Base over the highest Borrowing Base previously in effect, payable on the
effective date of any such increase to the Borrowing Base.
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 or reimbursement of LC Disbursements, or of amounts payable under Section
5.01, Section 5.02, Section 5.03 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
be fully earned and shall not be refundable under any circumstances. Any amounts
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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
12.01, except payments to be made directly to the Issuing Bank as expressly
provided herein and except that payments pursuant to Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 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.
(b) Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, unreimbursed LC Disbursements, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.
(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 or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements 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 and participations in LC
Disbursements 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
and participations in LC Disbursements; 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 or
participations in LC Disbursements 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 or the Issuing Bank 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
Lender 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.
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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 2.05(b), Section 2.08(d), Section 2.08(e) or Section 4.02 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.
Section 4.04 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 Mortgaged Property. 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 V
Increased Costs; Break Funding Payments; Taxes; Illegality
Section 5.01 Increased Costs.
(a) Eurodollar Changes in Law. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Lender including any
reserve requirements imposed by the Board; or
(ii) impose on any Lender or the London interbank market
any other condition affecting this Agreement or Eurodollar Loans made
by such Lender;
and the result of any of the foregoing shall be 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 (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender 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, or participations in Letters of Credit held by, such Lender, 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
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
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(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 Section 5.01(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.
(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; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section 5.01 for any increased costs or
reductions incurred more than 365 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 365-day period referred to above shall be
extended to include the period of retroactive effect thereof.
Section 5.02 Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the LIBO Rate that
would have been applicable to such Loan, for the period from the date of such
event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert or continue, for the period that would have
been the Interest Period for such Loan), over (ii) the amount of interest which
would accrue on such principal amount for such period at the interest rate which
such Lender would bid were it to bid, at the commencement of such period, for
dollar deposits of a comparable amount and period from other banks in the
eurodollar market.
A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 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.
Section 5.03 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 5.03(a)), the Administrative Agent, or the
Lender (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.
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(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.
(c) Indemnification by the Borrower. The Borrower shall
indemnify the Administrative Agent and each Lender, within 10 days after written
demand therefor, 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 5.03) 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 5.03 shall be delivered to the Borrower and shall be
conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after 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.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
(f) Tax Refunds. If the Administrative Agent or a Lender
determines, in its sole discretion, that it has received a refund of any Taxes
or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this
Section 5.03, it shall pay over such refund to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 5.03 with respect to the Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This Section 5.03 shall not be construed to require the Administrative Agent or
any Lender to make available its tax returns (or any other information relating
to its taxes which it deems confidential) to the Borrower or any other Person.
Section 5.04 Mitigation Obligations/Replacement of Lenders.
(a) Mitigation Obligations. If any Lender requests
compensation under Section 5.01, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 5.03, then such Lender shall use reasonable
efforts to designate a different lending office
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for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 5.01 or Section 5.03, as the case
may be, in the future and (ii) would not subject such Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender fails to consent to
a proposed amendment, waiver or other modification to this Agreement that would
otherwise be approved by the necessary percentage of Lenders to be effective,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 12.04(b)), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld and (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the Borrower (in the case of all other amounts). A Lender shall not be required
to make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.
Section 5.05 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender's obligation to make such Eurodollar Loans shall be
suspended (the "Affected Loans") until such time as such Lender may again make
and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans on the date specified by such Lender in such notice)
and, to the extent that Affected Loans are so made as (or converted into) ABR
Loans, all payments of principal which would otherwise be applied to such
Lender's Affected Loans shall be applied instead to its ABR Loans.
ARTICLE VI
Conditions Precedent
Section 6.01 Effective Date. The obligations of the Lenders to make
Loans and of the Administrative Agent to procure Letters of Credit hereunder
shall not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 12.02):
(a) The Administrative Agent, the Arranger and the Lenders
shall have received all commitment, facility and agency fees, including those
set forth in the Fee Letter, and all other fees and 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 (including, without limitation, the fees and expenses of
Xxxxxx & Xxxxxx L.L.P., counsel to the Administrative Agent).
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(b) The Administrative Agent shall have received a certificate
of the Secretary or an Assistant Secretary of the Borrower and each Guarantor
setting forth (i) resolutions of its board of directors with respect to the
authorization of the Borrower or such Guarantor to execute and deliver the Loan
Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the officers of the Borrower or such Guarantor (y) who
are authorized to sign the Loan Documents to which the Borrower or such
Guarantor 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 Organizational
Documents of the Borrower and such Guarantor, 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 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 the Borrower and each Guarantor.
(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 a principal amount equal to its
Maximum Credit Amount dated as of the date hereof.
(g) 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 the Security Instruments, including the Guaranty
Agreement and the other Security Instruments described on Exhibit F-1. In
connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall:
(i) be reasonably satisfied that the Security Instruments
create first priority, perfected Liens (subject only to Excepted Liens
identified in clauses (a) to (d) and (f) of the definition thereof, but
subject to the provisos at the end of such definition) on at least 80%
of the net present value, discounted at 10% per annum, of the Oil and
Gas Properties evaluated in the Initial Reserve Report; and
(ii) have received certificates, together with undated,
blank stock powers for each such certificate, representing all of the
issued and outstanding Equity Interests of each of the Guarantors,
which is directly owned by either the Borrower or a Subsidiary.
(h) The Administrative Agent shall have received an opinion of
(i) Xxxxxxx Xxxxxxx, special counsel to the Borrower and (ii) Xxxxxx & Xxxxxx,
LLP, special Texas counsel to the Administrative Agent.
(i) The Administrative Agent shall have received a certificate
of insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.12.
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(j) 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 at least 80% of
the net present value, discounted at 10% per annum, of the Oil and Gas
Properties evaluated in the Initial Reserve Report.
(k) The Administrative Agent shall be reasonably satisfied
with the environmental condition of the Oil and Gas Properties of the Borrower
and its Subsidiaries.
(l) 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 7.03.
(m) The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a) and the Initial Reserve Report
accompanied by a certificate covering the matters described in Section 8.11(c).
(n) The Administrative Agent shall have received appropriate
UCC search certificates reflecting no prior Liens encumbering the Properties of
the Borrower and the Subsidiaries for each of the following jurisdictions: West
Virginia and any other jurisdiction requested by the Administrative Agent; other
than those being assigned or released on or prior to the Effective Date or Liens
permitted by Section 9.03.
(o) The Administrative Agent shall be satisfied with the terms
of the Conveyance of Net Profits Interest, and have received executed
counterparts of the same.
(p) The Borrower and the Lenders shall have agreed upon the
Development Plan which shall be reasonably satisfactory to the Lenders.
(q) The Administrative Agent shall have received evidence that
the Borrower is repaying all existing Debt and the Liens associated with such
Debt, if any, are being released contemporaneously with the funding under this
Agreement.
(r) The Administrative Agent shall have received evidence that
the Borrower is using the proceeds from the Loans to repay all existing Debt,
except Debt permitted by this Agreement.
(s) The Administrative Agent shall have received such other
documents as the Administrative Agent 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 and
of the Administrative Agent to procure Letters of Credit hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 12.02) at or prior to 2:00 p.m., New York City time, on June
30, 2007 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
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Section 6.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding), and of
the Administrative Agent to procure or arrange to amend, renew or extend any
Letter of Credit, is subject to the satisfaction of the following conditions:
(a) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no event, development or circumstance has occurred or
shall then exist that has resulted in, or could reasonably be expected to have,
a Material Adverse Effect.
(c) The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, such representations and warranties shall
continue to be true and correct as of such specified earlier date.
(d) The making of such Loan or the issuance, amendment,
renewal or extension of such Letter of Credit, as applicable, would not conflict
with, or cause any Lender to violate or exceed, any applicable Governmental
Requirement, and no Change in Law shall have occurred, and no litigation shall
be pending or threatened, which does or, with respect to any threatened
litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of
any Loan, the issuance, amendment, renewal, extension or repayment of any Letter
of Credit or any participations therein or the consummation of the transactions
contemplated by this Agreement or any other Loan Document.
(e) The receipt by the Administrative Agent of a Borrowing
Request in accordance with Section 2.03 or a request for a Letter of Credit in
accordance with Section 2.08(b), as applicable.
Each request for a Borrowing and each request for the issuance,
amendment, renewal or extension of any Letter of Credit shall be deemed to
constitute a representation and warranty by the Borrower on the date thereof as
to the matters specified in Section 6.02(a) through (e).
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
Section 7.01 Organization; Powers. Each of the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, 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.
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Section 7.02 Authority; Enforceability. The Transactions are within the
Borrower's and each Guarantor's corporate powers and have been duly authorized
by all necessary corporate and, if required, stockholder action (including,
without limitation, any action required to be taken by any class of directors of
the Borrower or any other Person, whether interested or disinterested, in order
to ensure the due authorization of the Transactions). Each Loan Document to
which the Borrower and each Guarantor is a party has been duly executed and
delivered by the Borrower and such Guarantor and constitutes a legal, valid and
binding obligation of the Borrower and such Guarantor, 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.
Section 7.03 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
shareholders or any class of directors, whether interested or disinterested, of
the Borrower 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 which, 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 any Organizational Document of the
Borrower or any Subsidiary 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 the Borrower or any Subsidiary or its Properties, or
give rise to a right thereunder to require any payment to be made by the
Borrower or such Subsidiary and (d) will not result in the creation or
imposition of any Lien on any Property of the Borrower or any Subsidiary (other
than the Liens created by the Loan Documents).
Section 7.04 Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders its
unaudited consolidated balance sheet and statements of income, stockholders
equity and cash flows (i) as of and for the fiscal quarter ended March 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 dates and for such periods in
accordance with GAAP.
(b) Since December 31, 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 the Borrower and its
Subsidiaries has been conducted only in the ordinary course consistent with past
business practices.
(c) Neither the Borrower nor any Subsidiary has on the date
hereof any material Debt (including Disqualified Capital Stock) or any
contingent liabilities, off-balance sheet liabilities or partnerships,
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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.
Section 7.05 Litigation.
(a) Except as set forth on Schedule 7.05, there are no
actions, suits, investigations or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any Subsidiary (i) as to which
there is a reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect, (ii) that involve any Loan Document or the
Transactions.
(b) Since the date of this Agreement, there has been no change
in the status of the matters disclosed in Schedule 7.05 that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
Section 7.06 Environmental Matters. Except for such matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Borrower:
(a) the Borrower and its Subsidiaries and each of their
respective Properties and operations thereon are, and within all applicable
statute of limitation periods have been, in compliance with all applicable
Environmental Laws;
(b) the Borrower and its Subsidiaries have obtained all
Environmental Permits required for their respective operations and each of their
Properties, with all such Environmental Permits being currently in full force
and effect, and none of Borrower or its Subsidiaries has received any written
notice or otherwise has knowledge that any such existing Environmental Permit
will be revoked or that any application for any new Environmental Permit or
renewal of any existing Environmental Permit will be protested or denied;
(c) to the Borrower's knowledge, there are no claims, demands,
suits, orders, inquiries, or proceedings concerning any violation of, or any
liability (including as a potentially responsible party) under, any applicable
Environmental Laws that is pending or threatened against the Borrower or its
Subsidiaries or any of their respective Properties or as a result of any
operations at the Properties;
(d) to the Borrower's knowledge, none of the Properties
contain or have contained any: (i) underground storage tanks; (ii)
asbestos-containing materials; or (iii) landfills or dumps; (iv) hazardous waste
management units as defined pursuant to RCRA or any comparable state law; or (v)
sites on or nominated for the National Priority List promulgated pursuant to
CERCLA or any state remedial priority list promulgated or published pursuant to
any comparable state law;
(e) to the Borrower's knowledge, there has been no Release or
threatened Release, of Hazardous Materials at, on, under or from any of
Borrower's or its Subsidiaries' Properties, there are no investigations,
remediations, abatements, removals, or monitorings of Hazardous Materials
required under applicable Environmental Laws at such Properties and none of such
Properties are adversely affected by any Release or threatened Release of a
Hazardous Material originating or emanating from any other real property,
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(f) neither the Borrower nor its Subsidiaries has received any
written notice asserting an alleged liability or obligation under any applicable
Environmental Laws with respect to the investigation, remediation, abatement,
removal, or monitoring of any Hazardous Materials at, under, or Released or
threatened to be Released from any real properties offsite the Borrower's or its
Subsidiaries' Properties and there are no conditions or circumstances that would
reasonably be expected to result in the receipt of such written notice.
(g) there has been no exposure of any Person or property to
any Hazardous Materials as a result of or in connection with the operations and
businesses of any of the Borrower's or its Subsidiaries' Properties that would
reasonably be expected to form the basis for a claim for damages or compensation
and there are no conditions or circumstances that would reasonably be expected
to result in the receipt of notice regarding such exposure; and
(h) the Borrower and its Subsidiaries have provided to Lenders
complete and correct copies of all environmental site assessment reports,
investigations, studies, analyses, and correspondence on environmental matters
(including matters relating to any alleged non-compliance with or liability
under Environmental Laws) that are in any of the Borrower's or its Subsidiaries'
possession or control and relating to their respective Properties or operations
thereon.
Section 7.07 Compliance with the Laws and Agreements; No Defaults.
(a) Each of the Borrower and each Subsidiary is in 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, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(b) Neither the Borrower nor any Subsidiary is in default nor
has any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default or would require the Borrower or a Subsidiary 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 the
Borrower or any Subsidiary or any of their Properties is bound.
(c) No Default has occurred and is continuing.
Section 7.08 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of, or subject to regulation under, the
Investment Company Act of 1940, as amended.
Section 7.09 Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves in accordance with GAAP
or (b) to the extent that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of Taxes and other
governmental charges are, in the reasonable opinion of the Borrower, adequate.
No Tax Lien has been filed and, to the knowledge of the Borrower, no claim is
being asserted with respect to any such Tax or other such governmental charge.
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Section 7.10 ERISA.
(a) The Borrower, the Subsidiaries 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 Borrower, any Subsidiary 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.
(d) No Plan (other than a defined contribution plan) or any
trust created under any such Plan has been terminated since September 2, 1974.
No liability to the PBGC (other than for the payment of current premiums which
are not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has
been or is expected by the Borrower, any Subsidiary or any ERISA Affiliate to be
incurred with respect to any Plan. No ERISA Event with respect to any Plan has
occurred.
(e) Full payment when due has been made of all amounts which
the Borrower, the Subsidiaries 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 Borrower, the Subsidiaries 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 Borrower, a Subsidiary or any ERISA Affiliate
in its sole discretion at any time without any material liability.
(h) Neither the Borrower, the Subsidiaries 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 Borrower, the Subsidiaries 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.
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Section 7.11 Disclosure; No Material Misstatements. The Borrower has
disclosed to the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. None of the other reports, financial statements, certificates or
other information furnished by or on behalf of the Borrower or any Subsidiary to
the Administrative Agent or any Lender or any of their Affiliates in connection
with the negotiation of this Agreement or any other Loan Document or delivered
hereunder or under any other Loan Document (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time. There is no fact peculiar to the Borrower or any
Subsidiary which could reasonably be expected to have 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 or the Loan Documents or the
other documents, certificates and statements furnished to the Administrative
Agent or the Lenders by or on behalf of the Borrower or any Subsidiary prior to,
or on, the date hereof in connection with the transactions contemplated hereby.
There are no statements or conclusions in any Reserve Report which are based
upon or include misleading information or fail to take into account material
information regarding the matters reported therein.
Section 7.12 Insurance. The Borrower has, and has caused all of its
Subsidiaries to have, (a) all insurance policies sufficient for the compliance
by each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in at least amounts and against such risk
(including, without limitation, public liability) that are usually insured
against by companies similarly situated and engaged in the same or a similar
business for the assets and operations of the Borrower and its Subsidiaries. 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 7.13 Restriction on Liens. Neither the Borrower nor any of the
Subsidiaries is a party to any material agreement or arrangement (other than
Capital Leases creating Liens permitted by Section 9.03(c), but then only on the
Property subject of such Capital Lease), or subject to any order, judgment, writ
or decree, which either restricts or purports to restrict its ability to grant
Liens to the Administrative Agent and the Lenders on or in respect of their
Properties to secure the Indebtedness and the Loan Documents.
Section 7.14 Subsidiaries. Except as set forth on Schedule 7.14 or as
disclosed in writing to the Administrative Agent (which shall promptly furnish a
copy to the Lenders), which shall be a supplement to Schedule 7.14, the Borrower
has no Subsidiaries and the Borrower has no Foreign Subsidiaries.
Section 7.15 Location of Business and Offices. The Borrower's
jurisdiction of organization is Nevada; the name of the Borrower as listed in
the public records of its jurisdiction of organization is Trans Energy Inc.; and
the organizational identification number of the Borrower in its jurisdiction of
organization is C20070523-0173 (or, in each case, as set forth in a notice
delivered to the Administrative Agent pursuant to Section 8.01(m) in accordance
with Section 12.01). The Borrower's principal place of business and chief
executive offices are located at the address specified in Section 12.01 (or as
set forth in a notice delivered pursuant to Section 8.01(m) and Section
12.01(c)). Each Subsidiary's jurisdiction of organization, name as listed in the
public records of its jurisdiction of organization, organizational
identification number in its jurisdiction of organization, and the location of
its principal place of business and chief executive office is stated on Schedule
7.14 (or as set forth in a notice delivered pursuant to Section 8.01(m)).
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Section 7.16 Properties; Titles, Etc.
(a) Each of the Borrower and the Subsidiaries 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, in each
case, free and clear of all Liens except Liens permitted by Section 9.03. After
giving full effect to the Excepted Liens, the Borrower or the Subsidiary
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 the Borrower or such Subsidiary to bear the costs and expenses relating
to the maintenance, development and operations of each such Property in an
amount in excess of the working interest of each Property set forth in the most
recently delivered Reserve Report that is not offset by a corresponding
proportionate increase in the Borrower's or such Subsidiary's net revenue
interest in such Property.
(b) All material leases and agreements necessary for the
conduct of the business of the Borrower and the Subsidiaries are valid and
subsisting, in full force and effect, and there exists no default or event or
circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or leases, which could
reasonably be expected to have a Material Adverse Effect.
(c) The rights and Properties presently owned, leased or
licensed by the Borrower and the Subsidiaries including, without limitation, all
easements and rights of way, include all rights and Properties necessary to
permit the Borrower and the Subsidiaries to conduct their business in all
material respects in the same manner as its business has been conducted prior to
the date hereof.
(d) All of the Properties of the Borrower and the Subsidiaries
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) The Borrower and its Subsidiaries 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 in their businesses as presently conducted, 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, with such exceptions as could not
reasonably be expected to have a Material Adverse Effect.
Section 7.17 Maintenance of Properties. Except for such acts or
failures to act as could not be reasonably expected to have a Material Adverse
Effect, the Oil and Gas Properties (and Properties unitized therewith) of the
Borrower and its Subsidiaries have been maintained, operated and developed in a
good and workmanlike manner and in conformity with all Governmental Requirements
and in conformity with the provisions of all leases, subleases or other
contracts comprising a part of the Hydrocarbon Interests and other contracts and
agreements forming a part of the Oil and Gas Properties of the Borrower and its
Subsidiaries. Specifically in connection with the foregoing, except for those as
could not be reasonably expected to have a Material Adverse Effect, (i) no Oil
and Gas Property of the Borrower or any Subsidiary 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 (ii) none of the xxxxx comprising a part
of the Oil and Gas Properties (or Properties unitized therewith) of the Borrower
or any Subsidiary is deviated from the vertical more than the maximum permitted
by Governmental Requirements, and such xxxxx are, in fact, bottomed under and
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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) of the Borrower or such Subsidiary. All pipelines,
xxxxx, gas processing plants, platforms and other material improvements,
fixtures and equipment owned in whole or in part by the Borrower or any of its
Subsidiaries 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 which are operated by the Borrower or any of its
Subsidiaries, in a manner consistent with the Borrower's or its Subsidiaries'
past practices (other than those the failure of which to maintain in accordance
with this Section 7.17 could not reasonably be expected to have a Material
Adverse Effect).
Section 7.18 Gas Imbalances, Prepayments. Except as set forth on
Schedule 7.18 or on the most recent certificate delivered pursuant to Section
8.11(c), on a net basis there are no gas imbalances, take or pay or other
prepayments which would require the Borrower or any of its Subsidiaries to
deliver Hydrocarbons produced from the Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor exceeding 20,000
mcf of gas (on an mcf equivalent basis) in the aggregate.
Section 7.19 Marketing of Production. Except for contracts listed and
in effect on the date hereof on Schedule 7.19, and thereafter either disclosed
in writing to the Administrative Agent or included in the most recently
delivered Reserve Report (with respect to all of which contracts the Borrower
represents that it or its 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
which are not cancelable on 60 days notice or less without penalty or detriment
for the sale of production from the Borrower's or its Subsidiaries' Hydrocarbons
(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.
Section 7.20 Swap Agreements. After the date hereof, each report
required to be delivered by the Borrower pursuant to Section 8.01(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 7.21 Use of Loans and Letters of Credit. The proceeds of the
Loans and the Letters of Credit shall be used for the purposes set forth on
Schedule 7.21. 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 Loan or Letter of Credit will be used for any
purpose which violates the provisions of Regulations T, U or X of the Board.
Section 7.22 Solvency. After giving effect to the transactions
contemplated hereby, (a) the aggregate 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 Debt of the Borrower and
the Guarantors on a consolidated basis, as the Debt becomes absolute and
matures, (b) each of the Borrower and the Guarantors will not have incurred or
intended to incur, and will not believe that it will incur, Debt beyond its
ability to pay such Debt (after taking into account the timing and amounts of
cash to be received by each of the Borrower and the Guarantors and the amounts
to be payable on or in respect of its liabilities, and giving effect to amounts
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that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement) as such Debt becomes absolute and matures and (c) each
of the Borrower and the Guarantors will not have (and will have no reason to
believe that it will have thereafter) unreasonably small capital for the conduct
of its business.
Section 7.23 Development Plan.
(a) The Administrative Agent has been provided with a true and
correct copy of the Development Plan, which is attached hereto as Exhibit I.
Except as permitted pursuant to Section 9.19, the Development Plan has not been
terminated, amended, modified or supplemented.
(b) The Borrower has obtained all consents from Governmental
Authorities necessary to implement and complete in all material respects the
Development Plan as in effect on the Effective Date.
(c) The Development Plan complies in all material respects
with all applicable restrictive covenants and Governmental Requirements and with
all applicable Environmental Laws. The Development Plan covers all work
reasonably necessary (i) to drill and complete all xxxxx scheduled to be drilled
thereunder, (ii) to construct, install and commence operations of the production
facilities related thereto and (iii) to complete and operate all xxxxx as
contemplated in connection therewith. The budget (including the budget for
capital costs described therein) for the Development Plan has been prepared by
the Borrower in good faith and represents the total costs and expenses
anticipated by the Borrower. The development schedule in the Development Plan is
realistic and feasible.
ARTICLE VIII
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 and all
Letters of Credit shall have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:
Section 8.01 Financial Statements; Ratings Change; Other Information.
The Borrower will furnish to the Administrative Agent and each Lender:
(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, its audited consolidated
balance sheet and related statements of operations, stockholders' 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 acceptable to the Administrative Agent (without a
"going concern" or like qualification or exception and without any qualification
or exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Borrower and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied.
(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, its consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
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periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Responsible Officers as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes.
(c) Certificate of Responsible Officer -- Compliance.
Concurrently with any delivery of financial statements under Section 8.01(a) or
Section 8.01(b), a certificate of a Responsible 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 8.12(b)
and Section 9.01 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 7.04 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate.
(d) Certificate of Accounting Firm -- Defaults. Concurrently
with any delivery of financial statements under Section 8.01(a), a certificate
of the accounting firm that reported on such financial statements stating
whether they obtained knowledge during the course of their examination of such
financial statements of any Default (which certificate may be limited to the
extent required by accounting rules or guidelines).
(e) Certificate of Responsible Officer - Swap Agreements.
Concurrently with any delivery of financial statements under Section 8.01(a) and
Section 8.01(b), 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 therefor, any new credit support agreements relating
thereto not listed on Schedule 7.19, 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 8.01(a), a certificate
of insurance coverage from each insurer with respect to the insurance required
by Section 8.06, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, copies of the
applicable policies.
(g) Other Accounting Reports. Promptly upon receipt thereof, a
copy of each other report or letter submitted to the Borrower or any of its
Subsidiaries by independent accountants in connection with any annual, interim
or special audit made by them of the books of the Borrower or any such
Subsidiary, and a copy of any response by the Borrower or any such Subsidiary,
or the Board of Directors of the Borrower or any such Subsidiary, to such letter
or report.
(h) Reports to Shareholders. Promptly after the same become
publicly available, copies of all periodic and other reports, proxy statements
and other materials distributed by the Borrower to its shareholders generally.
(i) SEC and Other Filings; Reports to Shareholders. Promptly
after the same become publicly available, notice of all reports, proxy
statements and other materials filed by the Borrower or any Subsidiary with the
SEC, or with any national securities exchange.
(j) Lists of Purchasers. Concurrently with the delivery of any
financial statements to the Administrative Agent pursuant to Section 8.01(a) or
(b), a list of all Persons purchasing Hydrocarbons from the Borrower or any
Subsidiary.
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(k) 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 Oil or Gas Properties or any Equity Interests in any Subsidiary,
prior written notice of such disposition, the price thereof and the anticipated
date of closing and any other details thereof requested by the Administrative
Agent or any Lender.
(l) Notice of Casualty Events. Prompt written notice, and in
any event within three Business Days, of the occurrence of any Casualty Event or
the commencement of any action or proceeding that could reasonably be expected
to result in a Casualty Event.
(m) Information Regarding Borrower and Guarantors. Prompt
written notice (and in any event within thirty (30) days prior thereto) of any
change (i) in the Borrower's or any Guarantor's corporate 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 or any
Guarantor's chief executive office or principal place of business, (iii) in the
Borrower's or any Guarantor's identity or corporate structure or in the
jurisdiction in which such Person is incorporated or formed, (iv) in the
Borrower's or any Guarantor's jurisdiction of organization or such Person's
organizational identification number in such jurisdiction of organization, and
(v) in the Borrower's or any Guarantor's federal taxpayer identification number.
(n) Other Reports. The Borrower shall prepare and provide to
the Lenders and Administrative Agent the following reports:
(i) on a monthly basis by the 30th of each month after
the end of each calendar month, 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 each 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.
(ii) Upon the occurrence of any Borrowing Base
Deficiency, the Borrower shall provide, on a monthly basis on the 15th
of each month after the end of each calendar moth, a report setting
forth, for such calendar month, the Borrower's Excess Cash Flow;
(iii) such other information as the Administrative Agent
may reasonably request, including, but not limited to, an unaudited
income statement, a consolidated balance sheet and a statement of cash
flow (with such statement to show any variations from the budget
previously delivered), copies of the Borrower's bank account
statements, statement of expenses for the preceding month, 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.
(iv) As soon as available, and in any event, within 30
days following the end of each calendar month, the Borrower shall
deliver evidence showing (A) whether actual development is proceeding
in accordance with the schedule set forth in the Development Plan (or
if not, specifying any variations or delays) and (B) whether the amount
theretofore spent, together with the funds remaining to be advanced by
the Lenders under the terms of this Agreement, are adequate to meet all
costs incurred and projected to be incurred to complete all phases of
the Development Plan.
(o) 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 Organizational Documents, any
preferred stock designation or any other organic document of the Borrower or any
Subsidiary.
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(p) Other Requested Information. Promptly following any
request therefor, such other information regarding 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 compliance with the terms of
this Agreement or any other Loan Document, as the Administrative Agent or any
Lender may reasonably request.
Section 8.02 Notices of Material Events. The Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of, or the 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
Affiliate thereof not previously disclosed in writing to the Lenders or any
material adverse development in any action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Lenders) that, in either
case, if adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) 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 $250,000; and
(d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 8.02 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 8.03 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 other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.11.
Section 8.04 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 before the same shall become delinquent or
in default, except where (a) the validity or amount thereof is being contested
in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP and (c) the failure to make payment pending such contest could not
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 8.05 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 careful and efficient manner in accordance with the practices
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of the industry and in compliance with all applicable contracts and agreements
and in compliance with all Governmental Requirements, including, without
limitation, applicable pro ration 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, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
(b) keep and maintain all Property material to the conduct of
its business in good working order and condition, ordinary wear and tear
excepted, and preserve, maintain and keep in good repair, working order and
efficiency (ordinary wear and tear excepted) all of its material Oil and Gas
Properties and other material Properties, including, without limitation, all
equipment, machinery and facilities.
(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) operate its Oil and Gas Properties and other material
Properties or cause or make reasonable and customary efforts to cause such Oil
and Gas Properties and other material Properties to be operated in accordance
with the practices of the industry and in material compliance with all
applicable contracts and agreements and in compliance in all material respects
with all Governmental Requirements.
(f) 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 8.05.
Section 8.06 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. 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.
Section 8.07 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 any Lender, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, 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.
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Section 8.08 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.
Section 8.09 Environmental Matters.
(a) The Borrower shall at its sole expense: (i) comply, and
shall cause its Properties and operations and each Subsidiary 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, about 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 policies of environmental audit and
compliance as may be necessary to continuously determine and assure that the
Borrower's and its Subsidiaries' obligations under this Section 8.09(a) are
timely and fully satisfied, which failure to establish and implement could
reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will promptly, but in no event later than
five days of the occurrence of a triggering event, notify the Administrative
Agent and the Lenders in writing of any threatened action, investigation or
inquiry by any Governmental Authority or any threatened demand or 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 will result in liability
(whether individually or in the aggregate) in excess of $1,000,000, not fully
covered by insurance, subject to normal deductibles.
(c) The Borrower will, and will cause each Subsidiary to
provide environmental audits and tests in accordance with American Society of
Testing Materials standards if and only if (i) the Borrower acquires additional
Oil and Gas Properties, (ii) the Administrative Agent and the Lenders request
such an audit with respect to such additional Oil and Gas Properties, and (iii)
such an audit or request has not been requested in the past calendar year
(unless an Event of Default has occurred and is continuing or as otherwise
required to be obtained by the Administrative Agent or the Lenders by any
Governmental Authority).
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Section 8.10 Further Assurances.
(a) The Borrower at its sole 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 therewith.
(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 Mortgaged Property without the signature of
the Borrower or any other Guarantor where permitted by law. A carbon,
photographic or other reproduction of the Security Instruments or any financing
statement covering the Mortgaged Property or any part thereof shall be
sufficient as a financing statement where permitted by law.
Section 8.11 Reserve Reports.
(a) On or before March 30th and September 30th of each year,
commencing September 30, 2007, the Borrower shall furnish to the Administrative
Agent and the Lenders a Reserve Report evaluating the Oil and Gas Properties of
the Borrower and its Subsidiaries as of the immediately preceding January 1st
and July 1st. The Reserve Report as of January 1 of each year shall be prepared
by one or more petroleum engineers acceptable to the Administrative Agent, and
the July 1 Reserve Report of each year shall be prepared by or under the
supervision of the chief engineer of the Borrower who shall certify such Reserve
Report to be true and accurate and to have been prepared in accordance with the
procedures used in the immediately preceding January 1 Reserve Report.
(b) In the event of an Interim Redetermination, the Borrower
shall furnish to the Administrative Agent and the Lenders a Reserve Report
prepared by or under the supervision of the chief engineer of the Borrower who
shall certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately preceding
January 1 Reserve Report. For any Interim Redetermination requested by the
Administrative Agent or the Borrower pursuant to Section 2.07(b), the Borrower
shall provide such Reserve Report with an "as of" date as required by the
Administrative Agent as soon as possible, but in any event no later than thirty
(30) days following the receipt of such request.
(c) With the delivery of each Reserve Report, the Borrower
shall provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material respects: (i) the
information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct, (ii) the Borrower or 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 9.03, (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 7.18 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 therefor, (iv) none of their
Oil and Gas Properties have been sold since the date of the last Borrowing Base
determination except as set forth on an exhibit to the certificate, which
certificate shall list all of its Oil and Gas Properties sold and in such detail
as reasonably required by the Administrative Agent, (v) attached to the
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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
7.19 had such agreement been in effect on the date hereof and attached thereto
is a schedule of the Oil and Gas Properties evaluated by such Reserve Report
that are Mortgaged Properties and demonstrating the percentage of the Total
Reserve Value of the Oil and Gas Properties that the value of such Mortgaged
Properties represent in compliance with Section 8.13(a).
Section 8.12 Title Information.
(a) On or before the delivery to the Administrative Agent and
the Lenders of each Reserve Report required by Section 8.11(a), the Borrower
will deliver title information in form and substance acceptable to the
Administrative Agent covering enough of the Oil and Gas Properties evaluated by
such Reserve Report that were not included in the immediately preceding Reserve
Report, so that the Administrative Agent shall have received together with title
information previously delivered to the Administrative Agent, satisfactory title
information on at least 80% of the Total Reserve 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 8.12(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) which are
not permitted by Section 9.03 raised by such information, (ii) substitute
acceptable Mortgaged Properties with no title defects or exceptions except for
Excepted Liens (other than Excepted Liens described in clauses (e), (g) and (h)
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 80% of the value of the Oil and Gas Properties evaluated by such
Reserve Report.
(c) If the Borrower is unable to cure any title defect
requested by the Administrative Agent or the Lenders to be cured within the
60-day period or the Borrower does not comply with the requirements to provide
acceptable title information covering 80% of the value of the Oil and Gas
Properties evaluated in the most recent Reserve Report, such default shall not
be a Default, but instead the Administrative Agent and/or the Majority Lenders
shall have the right to exercise the following remedy in their sole discretion
from time to time, and any failure to so exercise this remedy at any time shall
not be a waiver as to future exercise of the remedy by the Administrative Agent
or the Lenders. To the extent that the Administrative Agent or the Majority
Lenders are not satisfied with title to any Mortgaged Property after the 60-day
period has elapsed, such unacceptable Mortgaged Property shall not count towards
the 80% requirement, and the Administrative Agent may send a notice to the
Borrower and the Lenders that the then outstanding Borrowing Base shall be
reduced by an amount as determined by the Majority Lenders to cause the Borrower
to be in compliance with the requirement to provide acceptable title information
on 80% of the value of the Oil and Gas Properties. This new Borrowing Base shall
become effective immediately after receipt of such notice.
Section 8.13 Additional Collateral; Additional Guarantors.
(a) In connection with each redetermination of the Borrowing
Base, the Borrower shall review the Reserve Report and the list of current
Mortgaged Properties (as described in Section 8.11(c)(vi)) to ascertain whether
the Mortgaged Properties represent at least 80% of the Total Reserve Value of
the Oil and Gas Properties evaluated in the most recently completed Reserve
Report after giving effect to exploration and production activities,
acquisitions, dispositions and production. In the event that the Mortgaged
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Properties do not represent at least 80% of such Total Reserve Value, then the
Borrower shall, and shall cause its Subsidiaries to, grant, within thirty (30)
days of delivery of the certificate required under Section 8.11(c), to the
Administrative Agent as security for the Indebtedness a first-priority Lien
interest (provided that Excepted Liens of the type described in clauses (a) to
(d) and (f) of the definition thereof may exist, 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 Mortgaged Properties will represent at least 80% of such Total
Reserve Value. 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 8.13(b).
(b) In the event that the Borrower forms or acquires any
Subsidiary, the Borrower shall promptly cause such Subsidiary to guarantee the
Indebtedness pursuant to the Guaranty Agreement. In connection with any such
guaranty, the Borrower shall, or shall cause such Subsidiary to, (A) execute and
deliver a supplement to the Guaranty Agreement executed by such Subsidiary, (B)
pledge all of the Equity Interests of such new Subsidiary (including, without
limitation, delivery of original stock certificates evidencing the Equity
Interests of such Subsidiary, together with an appropriate undated stock powers
for each certificate duly executed in blank by the registered owner thereof) and
(C) execute and deliver such other additional closing documents, certificates
and legal opinions as shall reasonably be requested by the Administrative Agent.
Section 8.14 ERISA Compliance. The Borrower will promptly furnish and
will cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the
Administrative Agent (i) 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, (ii) 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 (iii) 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.
Section 8.15 Swap Agreements. Within 30 days of the Effective Date, the
Borrower shall enter into hedge positions satisfactory to the Administrative
Agent, and thereafter 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.
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Section 8.16 Marketing Activities. 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) which 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.
Section 8.17 Development Plan. The Borrower shall comply with the
capital expenditure limits set in Section 9.01(e), except for any modification
of the Development Plan which is permitted by the terms of Section 9.19.
Promptly following such modification, the Borrower shall provide the
Administrative Agent a true and correct copy of such modification.
ARTICLE IX
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 and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 9.01 Financial Covenants.
(a) Interest Coverage Ratio. The Borrower will not, as of the
last day of any fiscal quarter, permit its ratio of EBITDAX for the period of
four fiscal quarters then ending to Interest Expense for such period to be less
than (i) 1.25 to 1.00 for all fiscal quarters ending in 2007, (ii) 1.75 to 1.00
for all fiscal quarters ending in 2008 and (iii) 2.25 to 1.00 for all fiscal
quarters ending thereafter.
(b) Ratio of Debt to EBITDAX. The Borrower will not, at any
time, permit its ratio of Debt as of such time to EBITDAX for the four fiscal
quarters ending on the last day of the fiscal quarter immediately preceding the
date of determination for which financial statements are available to be greater
than (i) 6.5 to 1.0 for all fiscal quarters ending in 2007, (ii) 5.5 to 1.0 for
all fiscal quarters ending in 2008 and (iii) 4.5 to 1.0 for all fiscal quarters
ending thereafter.
(c) Current Ratio. The Borrower will not permit, as of the
last day of any fiscal quarter, its ratio of (i) consolidated current assets
(including the unused amount of the total Commitments, but excluding non-cash
assets under FAS 133) to (ii) consolidated current liabilities (excluding
non-cash obligations under FAS 133 and current maturities under this Agreement)
to be less than 1.0 to 1.0.
(d) Asset Coverage Ratio. The Borrower will not, as of any
date of determination, permit its ratio of Total Reserve Value to Debt as of
such date to be less than 2.0 to 1.0.
(e) Capital Expenditures. The Borrower will not and will not
permit its Subsidiaries to either make or commit or agree to make any Capital
Expenditure (by purchase or Capital Lease or incur costs associated with the
exploration and development of Borrower's or its Subsidiaries' Oil and Gas
Properties) outside the Development Plan, after the Effective Date, that would
cause the aggregate amount of all such Capital Expenditures to exceed $500,000
unless otherwise agreed to by the Administrative Agent.
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Section 9.02 Debt. The Borrower will not, and will not permit any
Subsidiary to, incur, create, assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan
Documents or any guaranty of or suretyship arrangement for the Notes or other
Indebtedness arising under the Loan Documents.
(b) 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 which are not
greater than ninety (90) days past the date of invoice or delinquent or which
are being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP.
(c) Debt under Capital Leases not to exceed $250,000.
(d) intercompany Debt between the Borrower and any Subsidiary
or between Subsidiaries to the extent permitted by Section 9.05(e); 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
Agreement.
(e) other Debt not to exceed $250,000 in the aggregate at any
one time outstanding.
Section 9.03 Liens. The Borrower will not, and will not permit any
Subsidiary 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.
(b) Excepted Liens.
(c) Liens securing Capital Leases permitted by Section 9.02(c)
but only on the Property under lease.
Section 9.04 Dividends, Distributions and Redemptions. 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 Subsidiaries may declare and pay dividends to
the Borrower ratably with respect to their Equity Interests.
Section 9.05 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) accounts receivable arising in the ordinary course of
business.
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(b) 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.
(c) 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 Xxxxx'x, respectively or, in the case of any
Foreign Subsidiary, a bank organized in a jurisdiction in which the Foreign
Subsidiary conducts operations having assets in excess of $500,000,000 (or its
equivalent in another currency).
(d) deposits in money market funds investing exclusively in
Investments described in Section 9.05(b) or Section 9.05(c).
(e) Investments (i) made by the Borrower in or to the
Guarantors and (ii) made by any Subsidiary in or to the Borrower or any
Guarantor.
(f) Investments in direct ownership interests in additional
Oil and Gas Properties and gas gathering systems related thereto or related to
farm-out, farm-in, joint operating, joint venture or area of mutual interest
agreements, gathering systems, pipelines or other similar arrangements which are
usual and customary in the oil and gas exploration and production business
located within the geographic boundaries of the United States of America.
(g) Investments in stock, obligations or securities received
in settlement of debts arising from Investments permitted under this Section
9.05 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 9.05(g) exceeds $100,000.
Section 9.06 Nature of Business. The Borrower will not, and will not
permit any Subsidiary to, allow any material change to be made in the character
of its business as an independent oil and gas exploration and production
company.
Section 9.07 Limitation on Leases. The Borrower will not, and will not
permit any Subsidiary to, 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 $250,000 in any period of twelve
consecutive calendar months during the life of such leases.
Section 9.08 Proceeds of Notes. The Borrower will not permit the
proceeds of the Notes to be used for any purpose other than those permitted by
Section 7.21. 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.
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Section 9.09 ERISA Compliance. The Borrower will not, and will not
permit any Subsidiary to, 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.
(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, (1) any Multiemployer Plan, or (2)
any other Plan that is subject to Title IV of ERISA under which the actuarial
present value of the benefit liabilities under such Plan exceeds the current
value of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities.
(h) incur, or permit any 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.
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Section 9.10 Sale or Discount of Receivables. Except for receivables
obtained by the Borrower or any Subsidiary out of 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, the Borrower will not, and will not
permit any Subsidiary to, discount or sell (with or without recourse) any of its
notes receivable or accounts receivable.
Section 9.11 Mergers, Etc. The Borrower will not, and will not permit
any Subsidiary to, merge into or with or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or sell, transfer,
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
(whether now owned or hereafter acquired) (any such transaction, a
"consolidation"), or liquidate or dissolve; 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
provided that if one of such Subsidiaries is a wholly-owned Subsidiary, then the
surviving Person shall be a wholly-owned Subsidiary.
Section 9.12 Sale of Properties. The Borrower will not, and will not
permit any Subsidiary to, sell, assign, farm-out, convey or otherwise transfer
any Property except for (a) the sale of Hydrocarbons in the ordinary course of
business; (b) farmouts of undeveloped acreage and assignments in connection with
such farmouts; and (c) 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.
Section 9.13 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 (a) will subject any such
Property to any Remedial Work under any Environmental Laws or (b) will cause any
representation in Section 7.06 to be untrue or inaccurate at any time, assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such
violations, remedial obligations or inaccurate representations could reasonably
be expected to have a Material Adverse Effect.
Section 9.14 Transactions with Affiliates. 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 Affiliate (other than the Guarantors and
wholly-owned Subsidiaries of the Borrower) unless such transactions are
otherwise permitted under this Agreement and are upon fair and reasonable terms
no less favorable to it than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.
Section 9.15 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 8.13(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 Foreign Subsidiaries.
Section 9.16 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, the Security Instruments or Capital Leases creating Liens permitted
by Section 9.03(c)) which 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.
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Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments. The
Borrower will not, and will not permit any Subsidiary to, 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 therefor to exceed 20,000 mcf of gas (on an
mcf equivalent basis) in the aggregate.
Section 9.18 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) do not exceed, as of
the date such Swap Agreement is executed, (A) 80% of the reasonably anticipated
projected production from proved, developed, producing Oil and Gas Properties
for each month of the calendar year of 2007 for each of crude oil and natural
gas, calculated separately, (B) 75% of the reasonably anticipated projected
production from proved, developed, producing Oil and Gas Properties for each
month of the calendar years of 2008 and 2009 for each of crude oil and natural
gas, calculated separately, and (C) 70% of the reasonably anticipated projected
production from proved, developed, producing Oil and Gas Properties for each
month of the calendar years of 2010 and 2011 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 50% 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. In no event shall any Swap Agreement 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.
Section 9.19 Development Plan.
(a) Without the prior written consent of the Majority Lenders,
the Borrower shall not amend, modify or supplement any term of the Development
Plan if the effect of such amendment, modification, supplement or waiver would
be to materially and adversely affect the commercial terms of the Development
Plan or the schedule of the Development Plan.
(b) Without the prior written consent of the Majority Lenders,
the Borrower shall not cancel, terminate or abandon the Development Plan unless
a successor Development Plan has been agreed to by the Lenders or the conditions
of such new Development Plan are not materially less favorable than those of the
predecessor Development Plan.
Section 9.20 Net Profits Interest.
(a) As additional consideration for the making of the Loans by
the Lenders, the Borrower agrees to convey to the Lenders, in undivided shares
proportionate to their respective Commitments, a net profits interest in and to
all Oil and Gas Properties of the Borrower. The net profits interest shall be
conveyed with respect to each (i) Oil and Gas Property currently owned by the
Borrower and (ii) any additional Oil and Gas Property acquired by the Borrower
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or any Subsidiary or in which the Borrower or any Subsidiary acquires an
additional interest, in each case, after the effective date through the date
this Agreement is terminated.
(b) The Lenders shall receive 2% of the net profits received
by the Borrower from all Oil and Gas Properties of the Borrower after the
Effective Date. The net profits interest shall be subject to the terms and
conditions set forth in the form of the Conveyance of Net Profits Interest, and
any other agreements currently in existence as of the time of the acquisition of
such Properties and validly affecting the underlying leases or the Borrower's
interest therein.
(c) The net profits interest required to be conveyed hereby:
(i) shall be effective as of the first day of the calendar month in which the
Conveyance was made, (ii) shall be substantially in the form of the Conveyance
of Net Profits Interest, (iii) shall be executed and filed for recording by the
Borrower promptly after the receipt, delivery and recording of applicable
assignments into the Borrower establishing its interest of record in any Oil and
Gas Properties, (iv) shall be delivered by the Borrower to the Lenders promptly
after its return from recording, and (v) shall survive any termination of the
Credit Agreement.
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default. One or more of the following events
shall constitute an "Event of Default":
(a) the Borrower shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any LC Disbursement when and as
the same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof, by acceleration 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
10.01(a)) payable under any Loan Document, when and as the same shall become due
and payable, and such failure shall continue unremedied for a period of three
Business Days.
(c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary 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 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) the Borrower or any Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in Section 8.01(m),
Section 8.01(o), Section 8.02, Section 8.03, Section 8.13 or in ARTICLE IX.
(e) the Borrower or any Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement (other
than those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d))
or any other Loan Document, and such failure shall continue unremedied for a
period of 30 days after the earlier to occur of (A) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender) or (B) a Responsible Officer of the Borrower or such Subsidiary
otherwise becoming aware of such default.
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(f) the Borrower or any Subsidiary 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 require 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 Subsidiary 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 Subsidiary or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered.
(i) the Borrower or any Subsidiary 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 10.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any Subsidiary 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 Subsidiary 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 $250,000 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 Subsidiary 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 Subsidiary to
enforce any such judgment.
(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 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 Subsidiary or any of their Affiliates shall so state in writing.
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(m) an ERISA Event shall have occurred that, in the opinion of
the Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect.
(n) a Change in Control shall occur.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one
described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time
thereafter during the continuance of such Event of Default, the Administrative
Agent may, and at the request of the Majority Lenders, shall, by notice to the
Borrower, take either or both of the following actions, at the same or different
times: (i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) 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 (including, without limitation, the payment
of cash collateral to secure the LC Exposure as provided in Section 2.08(h)),
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 10.01(h), Section 10.01(i) or
Section 10.01(j), the Commitments shall automatically terminate and 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
(including, without limitation, the payment of cash collateral to secure the LC
Exposure as provided in Section 2.08(h)), 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.
(b) In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.
(c) 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:
(i) first, to payment or reimbursement of that portion of
the Indebtedness constituting fees, expenses and indemnities payable to
the Administrative Agent in its capacity as such;
(ii) second, to serve as cash collateral to be held by
the Administrative Agent to secure the LC Exposure; and
(iii) third, pro rata to payment or reimbursement of that
portion of the Indebtedness constituting fees, expenses and indemnities
payable to the Lenders;
(iv) fourth, pro rata to payment of accrued interest on
the Loans;
(v) fifth, pro rata to payment of principal outstanding
on the Loans and Indebtedness referred to in Clause (b) of the
definition of Indebtedness owing to a Lender or an Affiliate of a
Lender;
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(vi) sixth, pro rata to any other Indebtedness;
(vii) seventh, any excess, after all of the Indebtedness
shall have been indefeasibly paid in full in cash, shall be paid to the
Borrower or as otherwise required by any Governmental Requirement.
ARTICLE XI
The Administrative Agent
Section 11.01 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 11.02 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 (the use of the term "agent" herein and in the other Loan
Documents with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law; rather, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties), (b) the Administrative
Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, 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 bank 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 VI 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. For
purposes of determining compliance with the conditions specified in ARTICLE VI,
each Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the
Administrative Agent shall have received written notice from such Lender prior
to the proposed closing date specifying its objection thereto.
Section 11.03 Action by Administrative Agent. The Administrative Agent
shall have no duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
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is required to exercise in writing as directed by the Majority Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02) 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 Majority Lenders or the Lenders, as applicable, (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02) 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 requisite Lenders in the written instructions (with
indemnities) described in this Section 11.03, 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 Majority Lenders or the Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02), 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.
Section 11.04 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 11.05 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 XI 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 11.06 Resignation or Removal of Administrative Agent. Subject
to the appointment and acceptance of a successor Administrative Agent as
provided in this Section 11.06, 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 the Majority Lenders. Upon any such
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resignation or removal, the Majority Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Majority 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 which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its appointment as
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 XI and Section 12.03 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 11.07 Agents as Lenders. Each bank serving as an 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 an
Administrative Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrower or
any Subsidiary or other Affiliate thereof as if it were not an Administrative
Agent hereunder.
Section 11.08 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. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent or the Arranger shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
affairs, financial condition or business of the Borrower (or any of its
Affiliates) which may come into the possession of the Administrative Agent or
any of its Affiliates. In this regard, each Lender acknowledges that Xxxxxx &
Xxxxxx L.L.P. is acting in this transaction as special counsel to the
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 11.09 Administrative Agent May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans and all other
Indebtedness that are owing and unpaid and to file such other documents as may
be necessary or advisable in order to have the claims of the Lenders and the
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Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent
and their respective agents and counsel and all other amounts due the Lenders
and the Administrative Agent under Section 12.03) allowed in such judicial
proceeding; and
(b) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.
Section 11.10 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
authorized by the terms of the Loan Documents.
Section 11.11 The Arranger. The Arranger shall have no duties,
responsibilities or liabilities under this Agreement and the other Loan
Documents other than their duties, responsibilities and liabilities in its
capacity as a Lender hereunder.
ARTICLE XII
Miscellaneous
Section 12.01 Notices.
(a) Except in the case of notices and other communications
expressly permitted to be given by telephone (and subject to Section 12.01(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 000 0xx Xxxxxx, Xx.
Xxxxx, XX 00000, Attn: Xxxxx X. Xxxxxxxx, Chairman, (Telecopy No.
304-422-4064);
(ii) if to the Administrative Agent, to it at 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, attention of Xxxxxxxxxx Xxxxxxx
(Telecopy No. (000) 000-0000).
(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
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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 12.02 Waivers; Amendments.
(a) No failure on the part of the Administrative Agent or any
Lender 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 12.02(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 or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender 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 Majority Lenders or by the Borrower and the Administrative
Agent with the consent of the Majority Lenders; provided that no such agreement
shall (i) increase the Commitment or the Maximum Credit Amount of any Lender
without the written consent of such Lender, (ii) increase the Borrowing Base
without the written consent of the Required Lenders, decrease or maintain the
Borrowing Base without the consent of the Majority Lenders, or modify Section
2.07 in any manner without the consent of each Lender, (iii) reduce the
principal amount of any Loan or LC Disbursement or reduce the rate of interest
thereon, or reduce any fees payable hereunder, or reduce any other Indebtedness
hereunder or under any other Loan Document, without the written consent of each
Lender affected thereby, (iv) postpone the scheduled date of payment or
prepayment of the principal amount of any Loan or LC Disbursement, or any
interest thereon, or any fees payable hereunder, or any other Indebtedness
hereunder or under any other Loan Document, or reduce the amount of, waive or
excuse any such payment, or postpone or extend the Termination Date without the
written consent of each Lender affected thereby, (v) change Section 4.01(b) or
Section 4.01(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (vi) waive or
amend Section 3.04(c), Section 6.01, Section 6.02, Section 8.13, Section
10.02(c) or Section 12.13 or change the definition of the terms "Foreign
Subsidiary" or "Subsidiary", without the written consent of each Lender, (vii)
release any Guarantor (except as set forth in the Guaranty Agreement), release
any of the collateral (other than as provided in Section 11.10), or reduce the
percentage set forth in Section 8.13(a) to less than 80%, without the written
consent of each Lender, or (viii) change any of the provisions of this Section
12.02(b) or the definitions of "Required Lenders" or "Majority Lenders" or any
other provision hereof specifying the number or percentage of Lenders required
to waive, amend or modify any rights hereunder or under any other Loan Documents
or make any determination or grant any consent hereunder or any other Loan
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Documents, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent hereunder or under any other Loan Document without the
prior written consent of the Administrative Agent. Notwithstanding the
foregoing, any supplement to Schedule 7.14 (Subsidiaries) shall be effective
simply by delivering to the Administrative Agent a supplemental schedule clearly
marked as such and, upon receipt, the Administrative Agent will promptly deliver
a copy thereof to the Lenders.
Section 12.03 Expenses, Indemnity; Damage Waiver.
(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 syndication of the credit facilities provided for herein, 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 any 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 reasonable out-of-pocket expenses incurred by the
Administrative Agent in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder, (iv) all
out-of-pocket expenses incurred by any Administrative Agent or any Lender,
including the fees, charges and disbursements of any counsel for any Agent, the
Issuing Bank 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 12.03, or in connection with the Loans
made or Letters of Credit issued hereunder, including, without limitation, all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(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 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
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CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE
PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY THE
ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE
DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH
THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT OF A DRAWING UNDER ANY
LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER
IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (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 SUBSIDIARY OR ANY OF 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, 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 WILFUL MISCONDUCT OF SUCH INDEMNITEE.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent or the Arranger under
Section 12.03(a) or (b), each Lender severally agrees to pay to the
Administrative Agent or the Arranger, as the case may be, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
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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 the Administrative Agent or the Arranger in its capacity as such.
(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 Letter
of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section 12.03 shall be payable
promptly after written demand therefor.
Section 12.04 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 12.04. 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 12.04(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
12.04(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) with the prior written
consent (such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the
Borrower shall be required if such assignment is to a Lender, an
Affiliate of a Lender or, if an Event of Default has occurred and
is continuing, is to any other assignee; and
(B) the Administrative Agent, provided that no
consent of the Administrative Agent shall be required for an
assignment to an assignee that is a Lender immediately prior to
giving effect to such assignment.
(ii) Assignments shall be subject to the following
additional 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 or Loans,
the amount of the Commitment or Loans 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
$1,000,000 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
$3,500; and
(D) the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent such contact information
as the Administrative Agent shall request.
(iii) Subject to Section 12.04(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 5.02, Section 5.03 and Section 12.03). Any
assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this Section 12.04 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
12.04(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
Maximum Credit Amount of, and principal amount of the Loans and LC
Disbursements 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
Lenders 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 completed Administrative Questionnaire (unless the assignee
shall already be a Lender hereunder), the processing and recordation
fee referred to in Section 12.04(b) and any written consent to such
assignment required by Section 12.04(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 12.04(b).
(c) (i) Any Lender may, without the consent of the Borrower,
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
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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 described in the proviso to Section 12.02 that affects
such Participant. In addition such agreement must provide that the Participant
be bound by the provisions of Section 12.03. Subject to Section 12.04(c)(ii),
the Borrower agrees that each Participant shall be entitled to the benefits of
Section 5.01, Section 5.02 and Section 5.03 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to Section 12.04(b).
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 12.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 4.01(c) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any
greater payment under Section 5.01 or Section 5.03 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. A Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits of Section 5.03
unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 5.03(e) as though it were a Lender.
(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, without limitation, any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section
12.04(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.
(e) Notwithstanding any other provisions of this Section
12.04, no transfer or assignment of the interests or obligations of any Lender
or any grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower and the Guarantors to file a
registration statement with the SEC or to qualify the Loans under the "Blue Sky"
laws of any state.
Section 12.05 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 and issuance of any Letters of Credit, 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 or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 and
ARTICLE XI shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit 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
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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 Lenders' 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 12.06 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.
(c) Except as provided in Section 6.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter 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 shall be effective
as delivery of a manually executed counterpart of this Agreement.
Section 12.07 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 12.08 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 12.08 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 12.09 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 TEXAS 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. CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH
REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY
ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN
DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, 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 IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS
SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH
SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.
(d) 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, AGENT OR 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 12.09.
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Section 12.10 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 12.11 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 the laws of the United
States of America and the State of Texas or any other jurisdiction whose laws
may be mandatorily applicable to such Lender notwithstanding the other
provisions of this Agreement), then, in that event, notwithstanding anything to
the contrary in any of the Loan Documents or any agreement entered into in
connection with or as security for the Notes, it is agreed as follows: (i) the
aggregate of all consideration which constitutes interest under law applicable
to any Lender that is contracted for, taken, reserved, charged or received by
such Lender under any of the Loan Documents or agreements or otherwise in
connection with the Notes shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be canceled automatically
and if theretofore paid shall be credited by such Lender on the principal amount
of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower); and (ii) in the event that the maturity of the Notes is
accelerated by reason of an election of the holder thereof resulting from any
Event of Default under this Agreement or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under law applicable to any Lender may never include more than the
maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically by
such Lender as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited by such Lender on the principal amount of
the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower). All sums paid or agreed to be paid to any Lender for
the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the 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 allowed by such applicable law. If
at any time and from time to time (i) the amount of interest payable to any
Lender on any date shall be computed at the Highest Lawful Rate applicable to
such Lender pursuant to this Section 12.11 and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable to such
Lender would be less than the amount of interest payable to such Lender computed
at the Highest Lawful Rate applicable to such Lender, then the amount of
interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.11. To the extent that Chapter 303 of the Texas
Finance Code is relevant for the purpose of determining the Highest Lawful Rate
applicable to a Lender, such Lender elects to determine the applicable rate
ceiling under such Chapter by the weekly ceiling from time to time in effect.
Chapter 346 of the Texas Finance Code does not apply to the Borrower's
obligations hereunder.
Section 12.12 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
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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 12.13 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 arise under any
such Swap Agreement while such Person or its Affiliate is a Lender, but only
while such Person or its Affiliate is a Lender, including any Swap Agreements
between such Persons in existence prior to the date hereof. 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.
Section 12.14 No Third Party Beneficiaries. This Agreement, the other
Loan Documents, and the agreement of the Lenders to make Loans and the
Administrative Agent to procure and arrange to issue, amend, renew or extend
Letters of Credit 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.
Section 12.15 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 "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: TRANS ENERGY INC.
By:
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Xxxxx X. Xxxxxxxx, CEO and President
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Administrative Agent and Lender: CIT CAPITAL USA INC.,
as Administrative Agent and Lender
By:
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Name:
Title:
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