Exhibit 10.1
[EXECUTION COPY]
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
PARALLEL PETROLEUM CORPORATION
AND PARALLEL, L.P.,
AS BORROWERS,
AND
PARALLEL, L.L.C.,
AS GUARANTOR,
AND
CITIBANK TEXAS, N.A.
AND THE INSTITUTIONS NAMED HEREIN,
AS LENDERS,
AND
CITIBANK TEXAS, N.A.
AS JOINT LEAD ARRANGER AND
ADMINISTRATIVE AGENT,
AND
BNP PARIBAS,
AS JOINT LEAD ARRANGER AND
SYNDICATION AGENT
DECEMBER 23, 2005
TABLE OF CONTENTS
Page No.
1. Definitions....................................................................................... 1
2. Commitments of the Lenders........................................................................ 13
(a) Revolving Loans.......................................................................... 13
(b) Ratable Loans............................................................................ 13
(c) Procedure for Borrowing.................................................................. 13
(d) Letters of Credit........................................................................ 14
(e) Procedure for Obtaining Letters of Credit................................................ 15
(f) Voluntary Reduction of Commitment........................................................ 16
(g) Several Obligations...................................................................... 16
(h) Type and Number of Advances.............................................................. 16
3. Notes Evidencing Loans............................................................................ 16
(a) Form of Notes............................................................................ 16
(b) Issuance of Additional Notes............................................................. 17
(c) Interest Rates........................................................................... 17
(d) Payment of Interest...................................................................... 17
(e) Payment of Principal..................................................................... 17
(f) Payment to Lenders....................................................................... 17
(g) Sharing of Payments, Etc................................................................. 18
(h) Non-Receipt of Funds by the Agent........................................................ 18
4. Interest Rates.................................................................................... 18
(a) Options.................................................................................. 18
(b) Interest Rate Determination.............................................................. 19
(c) Conversion Option........................................................................ 19
(d) Recoupment............................................................................... 20
(e) Interest Rates Applicable After Default.................................................. 20
5. Special Provisions Relating to Loans.............................................................. 21
(a) Unavailability of Funds or Inadequacy of Pricing......................................... 21
(b) Change in Laws........................................................................... 21
(c) Increased Cost or Reduced Return......................................................... 21
(d) Discretion of Lender as to Manner of Funding............................................. 23
(e) Breakage Fees............................................................................ 24
6. Collateral Security............................................................................... 24
7. Borrowing Base.................................................................................... 25
(a) Initial Borrowing Base................................................................... 25
(b) Subsequent Determinations of Borrowing Base.............................................. 25
(c) Subsequent Unscheduled Redeterminations of Borrowing Base................................ 26
(d) Other Determinations of the Borrowing Base............................................... 26
(e) Evaluation Factors....................................................................... 26
(f) Required Percentage of Lenders........................................................... 27
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(g) Automatic Reductions of Borrowing Base................................................... 27
8. Fees.............................................................................................. 27
(a) Letter of Credit Fee..................................................................... 27
(b) Borrowing Base Determination Fee......................................................... 27
(c) Unused Commitment Fee.................................................................... 27
(d) Facility Fee............................................................................. 28
(e) Agency and Arrangement Fee............................................................... 28
9. Prepayments....................................................................................... 28
(a) Voluntary Prepayments.................................................................... 28
(b) Mandatory Collateral or Prepayment For Borrowing Base Deficiency......................... 28
10. Representations and Warranties.................................................................... 29
(a) Creation and Existence................................................................... 29
(b) Power and Authority...................................................................... 29
(c) Binding Obligations...................................................................... 29
(d) No Legal Bar or Resultant Lien........................................................... 29
(e) No Consent............................................................................... 30
(f) Financial Condition...................................................................... 30
(g) Liabilities.............................................................................. 30
(h) Litigation............................................................................... 30
(i) Taxes; Governmental Charges.............................................................. 30
(j) Titles, Etc.............................................................................. 31
(k) Defaults................................................................................. 31
(l) Casualties; Taking of Properties......................................................... 31
(m) Use of Proceeds; Margin Stock............................................................ 31
(n) Location of Business and Offices......................................................... 32
(o) Compliance with the Law.................................................................. 32
(p) No Material Misstatements................................................................ 32
(q) Not A Utility............................................................................ 32
(r) ERISA.................................................................................... 32
(s) Public Utility Holding Company Act....................................................... 32
(t) Subsidiaries............................................................................. 33
(u) Environmental Matters.................................................................... 33
(v) Liens.................................................................................... 33
(w) Investment Company Act................................................................... 33
(x) Maintenance of Properties................................................................ 33
(y) Gas Imbalances, Prepayments.............................................................. 34
(z) General.................................................................................. 34
11. Conditions of Lending............................................................................. 34
12. Affirmative Covenants............................................................................. 38
(a) Financial Statements and Reports......................................................... 38
(b) Certificates of Compliance............................................................... 39
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(c) Accountants' Certificate................................................................. 40
(d) Taxes and Other Liens.................................................................... 40
(e) Compliance with Laws..................................................................... 40
(f) Further Assurances....................................................................... 41
(g) Performance of Obligations............................................................... 41
(h) Insurance................................................................................ 41
(i) Accounts and Records..................................................................... 42
(j) Right of Inspection...................................................................... 42
(k) Notice of Certain Events................................................................. 42
(l) ERISA Information and Compliance......................................................... 43
(m) Environmental Reports and Notices........................................................ 43
(n) Compliance and Maintenance............................................................... 43
(o) Operation of Properties.................................................................. 43
(p) Compliance with Leases and Other Instruments............................................. 44
(q) Certain Additional Assurances Regarding Maintenance and Operations of Properties......... 44
(r) Sale of Certain Assets/Prepayment of Proceeds............................................ 44
(s) Title Matters............................................................................ 45
(t) Curative Matters......................................................................... 45
(u) Change of Principal Place of Business.................................................... 45
(v) Additional Collateral.................................................................... 45
(w) Crude Oil and Natural Gas Hedging........................................................ 46
(x) Subordinated Loan Agreement.............................................................. 46
(y) Existence; Conduct of Business........................................................... 46
13. Negative Covenants................................................................................ 47
(a) Negative Pledge.......................................................................... 47
(b) Current Ratio............................................................................ 47
(c) Funded Debt Ratio........................................................................ 47
(d) Adjusted Consolidated Net Worth.......................................................... 48
(e) Subsidiaries; Consolidations and Mergers................................................. 48
(f) Debts, Guaranties and Other Obligations.................................................. 48
(g) Dividend and Distributions............................................................... 49
(h) Loans and Advances....................................................................... 49
(i) Receivables and Payables................................................................. 50
(j) Nature of Business....................................................................... 50
(k) Transactions with Affiliates............................................................. 50
(l) Rate Management Transactions............................................................. 50
(m) Investments.............................................................................. 51
(n) Amendment to Organizational Documents.................................................... 52
(o) ERISA Compliance......................................................................... 52
(p) Accounting Method and Fiscal Year........................................................ 52
(q) Issuance of Equity Interests............................................................. 52
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(r) Subordinated Debt........................................................................ 52
(s) Limitation on Leases..................................................................... 52
14. Events of Default................................................................................. 53
15. The Agent and the Lenders......................................................................... 56
(a) Appointment and Authorization............................................................ 56
(b) Note Holders............................................................................. 57
(c) Consultation with Counsel................................................................ 57
(d) Documents................................................................................ 57
(e) Resignation or Removal of Agent.......................................................... 57
(f) Responsibility of Agent.................................................................. 58
(g) Independent Investigation................................................................ 59
(h) Indemnification.......................................................................... 60
(i) Benefit of Section 15.................................................................... 60
(j) Pro Rata Treatment....................................................................... 60
(k) Assumption as to Payments................................................................ 61
(l) Other Financings......................................................................... 61
(m) Interests of Lenders..................................................................... 61
(n) Investments.............................................................................. 62
(o) Delegation to Affiliates................................................................. 62
(p) Execution of Collateral Documents........................................................ 62
(q) Collateral Releases...................................................................... 62
(r) Internal Revenue Service Forms........................................................... 62
(s) Syndication Agent........................................................................ 63
16. Exercise of Rights................................................................................ 63
17. Notices........................................................................................... 63
18. Expenses.......................................................................................... 64
19. Indemnity......................................................................................... 65
20. Non-Liability of Lenders.......................................................................... 66
21. Governing Law..................................................................................... 66
22. Invalid Provisions................................................................................ 66
23. Maximum Interest Rate............................................................................. 66
24. Amendments........................................................................................ 67
25. Multiple Counterparts............................................................................. 67
26. Conflict.......................................................................................... 68
27. Survival.......................................................................................... 68
28. Parties Bound..................................................................................... 68
29. Assignments and Participations.................................................................... 68
30. Choice of Forum: Consent to Service of Process and Jurisdiction................................... 70
31. Waiver of Jury Trial.............................................................................. 70
32. Other Agreements.................................................................................. 71
33. Financial Terms................................................................................... 71
34. Communications Via Internet....................................................................... 71
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35. Amendment and Restatement......................................................................... 71
36. USA Patriot Act Notice............................................................................ 71
Exhibits
Exhibit "A" - Notice of Borrowing
Exhibit "B" - Revolving Note
Exhibit "C" - Guaranty
Exhibit "D" - Certificate of Compliance
Exhibit "E" - Assignment and Acceptance Agreement
Schedules
Schedule "1" - Liens
Schedule "2" - Financial Condition
Schedule "3" - Liabilities
Schedule "4" - Litigation
Schedule "5" - Gas Imbalances; Prepayments
Schedule "6" - Title Matters
Schedule "7" - Curative Matters
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THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (hereinafter referred to
as the "Agreement") executed as of the 23rd day of December, 2005, is by and
among PARALLEL PETROLEUM CORPORATION, a Delaware corporation ("PPC") and
PARALLEL, L.P., a Texas limited partnership ("PLP") (hereinafter PPC and PLP are
collectively referred to as "Borrowers" and individually as a "Borrower"), and
PARALLEL, L.L.C., a Delaware limited liability company ("Guarantor"), and
CITIBANK TEXAS, N.A., a national banking association ("Citibank Texas"), and
each of the financial institutions which is a party hereto (as evidenced by the
signature pages to this Agreement) or which may from time to time become a party
hereto pursuant to the provisions of Section 29 hereof or any successor or
assignee thereof (hereinafter collectively referred to as "Lenders", and
individually, "Lender"), and Citibank Texas, as Joint Lead Arranger and as
Administrative Agent ("Agent") and BNP Paribas, as Joint Lead Arranger and as
Syndication Agent ("Syndication Agent").
W I T N E S S E T H:
WHEREAS, Borrowers have requested that the Lenders provide Borrowers with
a $350,000,000 revolving credit facility and the Lenders are willing to make
such facility available to Borrowers, subject to the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:
1. Definitions. When used herein the terms "Agent", "Agreement",
"Borrower", "Borrowers", "Citibank Texas", "Guarantor", "Lender", "Lenders",
"PLP", "PPC" and "Syndication Agent" shall have the meanings indicated above.
When used herein the following terms shall have the following meanings:
Acquisition means the acquisition by PLP of a portion of the remaining
interest of Lynx Production Company, Inc. and all of the interests of Cascade
Energy Corporation, Cavic Interests, LLC, Chelsea Energy, Inc. and E. L.
Xxxxxxxx in certain oil and gas properties located in the Xxxxxx Field, Xxxxxxx
and Xxxxxx Counties, Texas, as contemplated by (i) that certain Purchase and
Sale Agreement dated as of October 14, 2005, by and among Lynx Production
Company, Inc., et al., as Seller, and PLP, as Buyer, and (ii) that certain
Ancillary Agreement To Purchase and Sale Agreement dated as of October 14, 2005,
between Lynx Production Company, Inc. and PLP.
Adjusted Consolidated Net Worth shall mean PPC's consolidated
stockholders' equity, as determined in accordance with GAAP, excluding the
cumulative effect of any change in accounting principles after September 30,
2005, and the after-tax net effect of any non-recurring non-cash charges after
September 30, 2005, including, without limitation, any charges under
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Financial Accounting Standards Board Statement Nos. 133 and 144, as amended,
supplemented or modified from time to time.
Advance means a borrowing hereunder (i) made to Borrowers by some or all
of the Lenders on the same Borrowing Date, or (ii) converted or continued by the
Lenders on the same date of conversion or continuation, consisting, in either
case, of the aggregate amount of the several Loans of the same type and, in the
case of LIBOR Loans, for the same Interest Period.
Affiliate means any Person which, directly or indirectly, controls, is
controlled by or is under common control with the relevant Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean a member of the board of directors, a partner or an
officer of such Person, or any other Person with possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, through the ownership (of record, as trustee, or by
proxy) of voting shares, partnership interests or voting rights, through a
management contract or otherwise. Any Person owning or controlling directly or
indirectly ten percent or more of the voting shares, partnership interests or
voting rights, or other equity interest of another Person shall be deemed to be
an Affiliate of such Person.
Alternate Base Rate means, as of any date, a rate of interest per annum
equal to the higher of (i) the Base Rate for such date, or (ii) the sum of the
Federal Funds Effective Rate for such date plus one-half of one percent (.50%)
per annum.
Assignment and Acceptance means a document substantially in the form of
Exhibit "E" hereto.
Available Commitment means, at any time, the Commitment then in effect
minus the Total Outstandings.
Base Rate shall mean the fluctuating rate of interest per annum
established and announced from time to time by Citibank, N.A. as its prime rate
(which is not necessarily the lowest rate charged to any customer). Each change
in the Base Rate shall become effective without prior notice to Borrowers
automatically as of the opening of business on the date of any change in said
prime rate.
Base Rate Loans shall mean any loan during any period which bears interest
based upon the Alternate Base Rate or which would bear interest based upon the
Alternate Base Rate if neither the Maximum Rate ceiling nor the minimum 5.00%
floor rate under Section 4(a)(i) hereof was in effect at that particular time.
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Base Rate Margin means zero percent (0%) per annum.
Borrowing Base shall mean the value assigned by the Lenders from time to
time to the Oil and Gas Properties or other Collateral pursuant to Section 7
hereof.
Borrowing Base Deficiency is used herein as defined in Section 9(b)
hereof.
Borrowing Base Usage shall mean, as of any date, the Total Outstandings
divided by the Borrowing Base.
Borrowing Date means the date elected by Borrowers pursuant to Section
2(c) hereof for an Advance on the Loan.
Business Day shall mean (i) with respect to any borrowing, payment or note
selection of LIBOR Loans, a day (other than Saturdays or Sundays) on which banks
are legally open for business in Midland, Texas and New York, New York and on
which dealings in United States dollars are carried on in the London interbank
market, and (ii) for all other purposes a day (other than Saturdays and Sundays)
on which banks are legally open for business in Midland, Texas.
Change of Control shall occur (i) if a majority of the individuals
comprising the Board of Directors of PPC as of the Effective Date shall either
resign, be declared incompetent or otherwise be removed (voluntarily or
involuntarily) or cease to serve as members of the Board of Directors of PPC,
(ii) upon the acquisition of beneficial ownership (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended, the "1934 Act") of
an aggregate of 35% or more of the Voting Power of PPC's outstanding Voting
Securities by any person or group (as such term is used in Rule 13d-5 under the
1934 Act), and/or (iii) upon the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the assets of PPC and
its Subsidiaries taken as a whole to any "person" (as such term is used in
Sections 13(d) and 14(d) of the 1934 Act). For purposes of the definition of
"Change of Control," "Voting Securities" means all securities of a company
entitling the holders thereof to vote in an election of directors (without
consideration of the rights of any class of stock other than the common stock to
elect directors by a separate class vote); and a specified percentage of the
"Voting Power" of a company means such number of the Voting Securities as will
enable the holders thereof to cast such percentage of all the votes which could
be cast in an election of directors (without consideration of the rights of any
class of stock other than the common stock to elect directors by a separate
class vote).
Collateral is used herein as defined in Section 6 hereof.
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Commitment means (A) for all Lenders, the lesser of (i) $350,000,000 or
(ii) the Borrowing Base, as reduced or increased from time to time pursuant to
Sections 2 and 7 hereof, and (B) as to any Lender, its obligation to make
Advances hereunder in amounts not exceeding, in the aggregate, an amount equal
to such Lender's Commitment Percentage times the total Commitment as of any
date. The Commitment of each Lender hereunder shall be adjusted from time to
time to reflect assignments made by such Lender pursuant to Section 29 hereof.
Each reduction in the Commitment shall result in a Pro Rata reduction in each
Lender's Commitment.
Commitment Percentage means for each Lender the percentage set forth
opposite the Lender's name on the signature page hereto. The Commitment
Percentage of each Lender hereunder shall be adjusted from time to time to
reflect assignments made by such Lender pursuant to Section 29 hereof.
Consolidated Current Assets means the total of the consolidated current
assets determined in accordance with GAAP, including as of any date, the
Available Commitment, but excluding the after tax net effect of any
non-recurring non-cash charges after September 30, 2005, under Financial
Accounting Standards Board Statement No. 133, as amended, supplemented or
modified from time to time.
Consolidated Current Liabilities means the total of consolidated current
obligations as determined in accordance with GAAP, excluding therefrom, as of
any date, current maturities due on the Loans and the Subordinated Notes, and
excluding the after tax net effect of any non-recurring non-cash charges after
September 30, 2005, under Financial Accounting Standards Board Statement No.
133, as amended, supplemented or modified from time to time.
Consolidated EBITDA means for any period, PPC's consolidated earnings
during such period from continuing operations, before provision for interest
expenses, income taxes, depreciation, depletion, amortization, gains and losses
on asset sales and other non-cash charges.
Consolidated Funded Debt means as of any date, PPC's total outstanding
liabilities for borrowed money and other interest-bearing liabilities on such
date, determined in each case on a consolidated basis in accordance with GAAP.
Consolidated Net Income shall mean PPC's consolidated net income after
income taxes calculated in accordance with GAAP.
Current Ratio means the ratio of Consolidated Current Assets for the date
or period being measured to the Consolidated Current Liabilities for such date
or period.
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Default means all the events specified in Section 14 hereof, regardless of
whether there shall have occurred any passage of time or giving of notice, or
both, that would be necessary in order to constitute such event as an Event of
Default.
Default Rate shall mean a default rate of interest determined in
accordance with Section 4(e) hereof.
Defaulting Lender is used herein as defined in Section 3(f) hereof.
Effective Date means the date of this Agreement.
Eligible Assignee means any of (i) a Lender or any Affiliate of a Lender;
(ii) a commercial bank organized under the laws of the United States, or any
state thereof, and having a combined capital and surplus of at least
$100,000,000; (iii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000, provided that such bank
is acting through a branch or agency located in the United States; (iv) a Person
that is primarily engaged in the business of commercial lending and that (A) is
a subsidiary of a Lender, (B) a subsidiary of a Person of which a Lender is a
subsidiary, or (C) a Person of which a Lender is a subsidiary; (v) any other
entity (other than a natural person) which is an "accredited investor" (as
defined in Regulation D under the Securities Act) which extends credit or buys
loans as one of its businesses, including, but not limited to, insurance
companies, mutual funds, investments funds and lease financing companies; and
(vi) with respect to any Lender that is a fund that invests in loans, any other
fund that invests in loans and is managed by the same investment advisor of such
Lender or by an Affiliate of such investment advisor (and treating all such
funds so managed as a single Eligible Assignee); provided, however, that no
Affiliate of either Borrower or of Guarantor shall be an Eligible Assignee.
Engineered Value is used herein as defined in Section 6 hereof.
Environmental Laws means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C.A. Section 9601, et seq., the Resource
Conservation and Recovery Act, as amended by the Hazardous Solid Waste Amendment
of 1984, 42 U.S.C.A. Section 6901, et seq., the Clean Water Act, 33 U.S.C.A.
Section 1251, et seq., the Clean Air Act, 42 U.S.C.A. Section 1251, et seq., the
Toxic Substances Control Act, 15 U.S.C.A. Section 2601, et seq., The Oil
Pollution Act of 1990, 33 U.S.G. Section 2701, et seq., and all other laws,
statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions,
rules, regulations, orders, permits and restrictions of any federal, state,
county, municipal and other governments, departments, commissions, boards,
agencies, courts, authorities, officials and officers, domestic or foreign,
relating to oil pollution, air pollution,
-5-
water pollution, noise control and/or the handling, discharge, disposal or
recovery of on-site or off-site asbestos, radioactive materials, spilled or
leaked petroleum products, distillates or fractions and industrial solid waste
or "hazardous substances" as defined by 42 U.S.C. Section 9601, et seq., as
amended, as each of the foregoing may be amended from time to time.
Environmental Liability means any claim, demand, obligation, cause of
action, order, violation, damage, injury, judgment, penalty or fine, cost of
enforcement, cost of remedial action or any other costs or expense whatsoever,
including reasonable attorneys' fees and disbursements, resulting from the
violation or alleged violation of any Environmental Law or the release of any
substance into the environment which is required to be remediated by a
regulatory agency or governmental authority or the imposition of any
Environmental Lien (as hereinafter defined), which could reasonably be expected
to individually or in the aggregate have a Material Adverse Effect.
Environmental Lien means a Lien in favor of any court, governmental agency
or instrumentality or any other Person (i) for any Environmental Liability or
(ii) for damages arising from or cost incurred by such court or governmental
agency or instrumentality or other person in response to a release or threatened
release of asbestos or "hazardous substance" into the environment, the
imposition of which Lien could reasonably be expected to have a Material Adverse
Effect.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
Event of Default is used herein as defined in Section 14 hereof.
Federal Funds Effective Rate shall mean, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of Dallas, Texas, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations at approximately 10:00 a.m.
(Dallas, Texas time) on such day on such transactions received by the Agent from
three (3) Federal funds brokers of recognized standing selected by the Agent in
its sole discretion.
Financial Statements means balance sheets, income statements, statements
of cash flow and appropriate footnotes and schedules, prepared in accordance
with GAAP.
GAAP means generally accepted accounting principles, consistently applied.
Guaranty means the unlimited Guaranty of Guarantor in the form of Exhibit
"C" attached hereto.
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Intercreditor Agreement means that certain Intercreditor and Subordination
Agreement dated as of November 15, 2005, executed by Borrowers, Guarantor,
Agent, and BNP Paribas, as Subordinated Administrative Agent, as the same may be
amended, modified or restated from time to time.
Interest Payment Date shall mean the last day of each calendar month in
the case of Base Rate Loans and, in the case of LIBOR Loans, the last day of the
applicable Interest Period, and if such Interest Period is longer than three (3)
months, at three (3) month intervals following the first day of such Interest
Periods.
Interest Period shall mean with respect to any LIBOR Loan (i) initially,
the period commencing on the date such LIBOR Loan is made and ending one (1),
two (2), three (3), six (6) or twelve (12) months (if, at the date of any such
election, a six (6) or twelve (12) month placement is available to the Agent)
thereafter as selected by the Borrowers pursuant to Section 4(a)(ii), and (ii)
thereafter, each period commencing on the day following the last day of the next
preceding Interest Period applicable to such LIBOR Loan and ending one (1), two
(2), three (3) or six (6) months (if, at the date of any such election, a six
(6) month placement is available to the Agent) thereafter, as selected by the
Borrowers pursuant to Section 4(a)(ii); provided, however, that (i) if any
Interest Period would otherwise expire on a day which is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day unless the
result of such extension would be to extend such Interest Period into the next
calendar month, in which case such Interest Period shall end on the immediately
preceding Business Day, (ii) if any Interest Period begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period) such
Interest Period shall end on the last Business Day of a calendar month, and
(iii) any Interest Period which would otherwise expire after the Maturity Date
shall end on such Maturity Date.
Letters of Credit is used herein as defined in Section 2(d) hereof.
LIBOR Base Rate shall mean the offered rate for the period equal to or
greater than the Interest Period for U.S. dollar deposits of not less than
$1,000,000 as of 11:00 a.m. City of London, England time two (2) Business Days
prior to the first day of the Interest Period as shown on the display designated
as "British Bankers Association Interest Settlement Rates" on Xxxxxx'x for the
purpose of displaying such rate. In the event such rate is not available on
Xxxxxx'x, then such offered rate shall be otherwise independently determined by
the Agent from an alternate, substantially independent source available to Agent
or shall be calculated by Agent by substantially similar methodology as that
theretofore used to determine such offered rate.
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LIBOR Loans means any loans during any period which bear interest at the
LIBOR Rate, or which would bear interest at such rate if the Maximum Rate
ceiling was not in effect at a particular time.
LIBOR Margin means:
(a) two and one-half percent (2.50%) per annum whenever the
Borrowing Base Usage is equal to or greater than 75%; or
(b) two and one-quarter percent (2.25%) per annum whenever the
Borrowing Base Usage is equal to or greater than 50%, but less than 75%;
or
(c) two percent (2.00%) per annum whenever the Borrowing Base
Usage is less than 50%.
LIBOR Rate means, with respect to a LIBOR Loan for the relevant Interest
Period, the higher of (A) five percent (5.00%) per annum, or (B) the sum of (i)
the quotient of the LIBOR Base Rate applicable to such Interest Period, divided
by one minus the Reserve Requirement (expressed as a decimal) applicable to such
Interest Period, plus (ii) the LIBOR Margin. The LIBOR Rate shall be rounded to
the next higher multiple of 1/100th of one percent if the rate is not such a
multiple.
Lien means any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance or lien (statutory or otherwise) of every kind and
character.
Loan Documents means this Agreement, the Notes, the Guaranty in the form
of Exhibit "C" hereto, the Security Instruments and all other documents executed
by Borrowers, Guarantor or any of their Subsidiaries and delivered to the Agent
or the Lenders in connection with the transactions described in this Agreement.
Loans means the Revolving Loans.
Majority Lenders means Lenders holding 66-2/3% or more of the Commitments
or if one or more of the Commitments have been terminated, Lenders holding
66-2/3% of the outstanding Loans.
Material Adverse Effect shall mean a material adverse effect on (i) the
assets or properties, liabilities, financial condition, business, operations,
affairs or circumstances of either Borrower or Guarantor, (ii) the ability of
either Borrower or Guarantor to carry out its businesses as of the date of this
Agreement or as proposed at the date of this Agreement to be conducted,
-8-
(iii) the ability of either Borrower or Guarantor to perform fully and on a
timely basis its obligations under any of the Loan Documents, or (iv) the
validity or enforceability of any of the Loan Documents or the rights and
remedies of the Agent or the Lenders thereunder.
Maturity Date shall mean October 31, 2010.
Maximum Rate means at any particular time in question, the maximum
non-usurious rate of interest which under applicable law may then be charged on
the Notes. If such Maximum Rate changes after the date hereof, the Maximum Rate
shall be automatically increased or deceased, as the case may be, without notice
to Borrowers from time to time as of the effective date of each change in such
Maximum Rate.
Notes means the Revolving Notes, substantially in the form of Exhibit "B"
hereto issued or to be issued hereunder to each Lender, respectively, to
evidence the indebtedness to such Lender arising by reason of the Advances on
the Commitment, together with all modifications, renewals and extensions thereof
or any part thereof.
Notice of Borrowing is used herein as defined in Section 2(c) hereof.
Oil and Gas Properties means all oil, gas and mineral properties and
interests and related personal properties, in which either Borrower or any
Subsidiary now or hereafter owns an interest.
Other Financing is used herein as defined in Section 15(l) hereof.
Payor is used herein as defined in Section 3(h) hereof.
Permitted Liens shall mean (i) royalties, overriding royalties,
reversionary interests, production payments and similar burdens to the extent
the same do not reduce either Borrower's or Guarantor's net revenue interest in
the Oil and Gas Properties to an interest below that represented to Agent and
Lenders; (ii) sales contracts or other arrangements for the sale of production
of oil, gas or associated liquid or gaseous hydrocarbons which would not (when
considered cumulatively with the matters discussed in clause (i) above) deprive
either Borrower or Guarantor of any material right in respect of its assets or
properties (except for rights customarily granted with respect to such contracts
and arrangements); (iii) statutory Liens for taxes or other assessments that are
not yet delinquent (or that, if delinquent, are being contested in good faith by
appropriate proceedings, levy and execution thereon having been stayed and
continue to be stayed and for which either Borrower or Guarantor has set aside
on its books adequate reserves in accordance with GAAP); (iv) easements, rights
of way, servitudes, permits, surface leases and other rights in respect to
surface operations, pipelines, grazing, logging, canals, ditches, reservoirs or
the like, conditions, covenants and other restrictions, and easements
-9-
of streets, alleys, highways, pipelines, telephone lines, power lines, railways
and other easements and rights of way on, over or in respect of either
Borrower's or Guarantor's assets or properties and that do not individually or
in the aggregate cause a Material Adverse Effect; (v) materialmen's, mechanic's,
repairman's, employee's, vendor's, laborer's warehousemen's, landlord's,
carrier's, pipeline's, contractor's, sub-contractor's, operator's,
non-operator's (arising under operating or joint operating agreements), and
other Liens (including any financing statements filed in respect thereof)
incidental to obligations incurred by either Borrower or Guarantor in connection
with the construction, maintenance, development, transportation, processing,
storage or operation of either Borrower's or Guarantor's assets or properties to
the extent not delinquent (or which, if delinquent, are being contested in good
faith by appropriate proceedings and for which either Borrower or Guarantor, as
applicable, has set aside on its books adequate reserves in accordance with
GAAP); (vi) all contracts, agreements and instruments, and all defects and
irregularities and other matters affecting either Borrower's or Guarantor's
assets and properties which were in existence at the time either Borrower's or
Guarantor's assets and properties were originally acquired by it and all routine
operational agreements entered into in the ordinary course of business, which
contracts, agreements, instruments, defects, irregularities and other matters
and routine operational agreements are not such as to, individually or in the
aggregate, interfere materially with the operation, value or use of either
Borrower's or Guarantor's assets and properties, considered in the aggregate;
(vii) liens in connection with workmen's compensation, unemployment insurance or
other social security, old age pension or public liability obligations; (viii)
legal or equitable encumbrances deemed to exist by reason of the existence of
any litigation or other legal proceeding or arising out of a judgment or award
with respect to which an appeal is being prosecuted in good faith and levy and
execution thereon have been stayed and continue to be stayed; (ix) rights
reserved to or vested in any municipality, governmental, statutory or other
public authority to control or regulate either Borrower's or Guarantor's assets
and properties in any manner, and all applicable laws, rules and orders from any
governmental authority; (x) landlord's liens; (xi) Liens incurred pursuant to
the Security Instruments; (xii) Liens securing the Subordinated Debt, and (xiii)
Liens existing at the date of this Agreement which are identified in Schedule 1
hereto. Provided, however, that the definition of the term "Permitted Liens"
does not include Liens of any kind or character which are prior by perfection to
Liens on the Collateral held by Agent, or which may, by operation of law, become
prior to such Liens held by Agent.
Person means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
Plan means any plan subject to Title IV of ERISA and maintained by either
Borrower, Guarantor or any Subsidiary, or any such plan to which either Borrower
is required to contribute on behalf of its employees.
-10-
Prior Credit Agreement means that certain Second Amended and Restated
Credit Agreement dated as of September 27, 2004, by and among Borrowers,
Guarantor, Citibank Texas (formerly known as First American Bank, SSB), as
Agent, and Citibank Texas and the other lender parties thereto, as Lenders, as
amended by First Amendment to Second Amended and Restated Credit Agreement dated
as of December 27, 2004, by Second Amendment to Second Amended and Restated
Credit Agreement dated as of April 1, 2005, by Third Amendment to Second Amended
and Restated Credit Agreement dated as of October 13, 2005, and by Fourth
Amendment to Second Amended and Restated Credit Agreement dated as of November
15, 2005.
Pro Rata or Pro Rata Part means for each Lender, (i) for all purposes
where no Loan is outstanding, such Lender's Commitment Percentage and (ii)
otherwise, the proportion which the portion of the outstanding Loans owed to
such Lender bears to the aggregate outstanding Loans owed to all Lenders at the
time in question.
Rate Management Transaction means any transaction (including an agreement
with respect thereto) now existing or hereafter entered into by either Borrower
or any of their respective Subsidiaries which is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
forward exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions) or any combination
thereof, whether linked to one or more interest rates, foreign currencies,
commodity prices, equity prices or other financial measures.
Regulation D shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
and other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
Reimbursement Obligations shall mean at any time, the obligations of
either or both Borrowers in respect of all Letters of Credit then outstanding to
reimburse amounts paid by any Lender in respect of any drawing or drawings under
a Letter of Credit.
Required Payment is used herein as defined in Section 3(h) hereof.
Reserve Requirement means, with respect to any Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
-11-
Revolving Loan or Loans means an Advance or Advances made pursuant to
Section 2(a) hereof.
Security Instruments is used collectively herein to mean this Agreement,
all Deeds of Trust, Mortgages, Security Agreements, Assignments of Production
and Financing Statements and other collateral documents covering certain of the
Oil and Gas Properties and related personal property, equipment, oil and gas
inventory and proceeds of the foregoing, all guaranties, all pledge agreements,
all security agreements and all collateral assignments of notes and liens
executed as security for the Loans, all such documents to be in form and
substance reasonably satisfactory to Agent.
Subordinated Debt means all obligations owed by either Borrower or
Guarantor pursuant to the Subordinated Loan Agreement, the Subordinated Notes or
any related document or instrument, as the same may be amended, modified or
restated from time to time.
Subordinated Loan Agreement means that certain Second Lien Term Loan
Agreement dated as of November 15, 2005, executed by Borrowers, BNP Paribas, as
Administrative Agent, and the other lenders parties thereto, as the same may be
amended, modified or restated from time to time.
Subordinated Notes means the subordinated promissory notes issued pursuant
to the Subordinated Loan Agreement, as the same may be renewed, extended,
modified or amended from time to time.
Subsidiary means any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by either Borrower or another Subsidiary.
Total Outstandings means, at any time, the sum of (i) the total principal
balance outstanding on the Revolving Loans, plus (ii) the total face amount of
all outstanding Letters of Credit, plus (iii) the amount of all unpaid
Reimbursement Obligations.
Tranche means a set of LIBOR Loans made by the Lenders at the same time
and for the same Interest Period.
Unscheduled Redeterminations means a redetermination of the Borrowing Base
made at any time other than on the dates set for the regular redetermination of
the Borrowing Base which are made (A) at the request of Borrowers (but only once
each six (6) month period), or (B) at the reasonable request of Majority
Lenders, or (C) at any time that Agent or Majority Lenders
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determine, in their sole discretion that either (i) there has been a material
decrease in the value of the Collateral, or (ii) an event has occurred which
could cause a Material Adverse Effect.
2. Commitments of the Lenders.
(a) Revolving Loans. On the terms and conditions hereinafter set
forth, each Lender agrees severally to make Advances to Borrowers from
time to time during the period beginning on the Effective Date and ending
on the Maturity Date in such amounts as Borrowers may request up to an
amount not to exceed, in the aggregate principal amount advanced at any
time, its Pro Rata Part of the Available Commitment. Subject to the terms
of this Agreement, Borrowers may borrow, repay and reborrow at any time
prior to the Maturity Date. The obligation of Borrowers hereunder shall be
evidenced by this Agreement and the Notes issued in connection herewith,
said Notes to be as described in Section 3 hereof. Notwithstanding any
other provision of this Agreement, no Advance shall be required to be made
hereunder if any Default or Event of Default has occurred and is
continuing. Each Advance under the Commitment shall be an aggregate amount
of at least $500,000 or any whole multiples of $100,000 in excess thereof.
Irrespective of the face amount of the Note or Notes, the Lenders shall
never have the obligation to Advance any amount or amounts in excess of
the Commitment or to increase the Commitment.
(b) Ratable Loans. Each Advance hereunder shall consist of Revolving
Loans made from the several Lenders ratably in proportion to the ratio
that their respective Commitments bear to the total of all Commitments.
(c) Procedure for Borrowing. Whenever Borrowers desire an Advance
under the Commitment, they shall give Agent telegraphic, telex, facsimile
or telephonic notice ("Notice of Borrowing") of such requested Advance,
which in the case of telephonic notice, shall be promptly confirmed in
writing. Each Notice of Borrowing shall be in the form of Exhibit "A"
attached hereto and shall be received by Agent not later than 11:00 a.m.
Midland, Texas time, (i) one Business Day prior to the Borrowing Date in
the case of Base Rate Loans, or (ii) three Business Days prior to any
proposed Borrowing Date in the case of LIBOR Loans. Each Notice of
Borrowing shall specify (i) the Borrowing Date (which shall be a Business
Day), (ii) the principal amount to be borrowed, (iii) the portion of the
Advance constituting Base Rate Loans and/or LIBOR Loans and (iv) if any
portion of the proposed Advance is to constitute LIBOR Loans, the initial
Interest Period selected by Borrowers pursuant to Section 4 hereof to be
applicable thereto. Upon receipt of such Notice, Agent shall advise each
Lender thereof; provided, that if the Lenders have received at least one
(1) day's notice of such Advance prior to funding of a Base Rate Loan, or
at least three (3) days' notice of each Advance prior to funding in the
case of a LIBOR Loan, each Lender shall provide Agent at its office at
0000 X. Xxx
-00-
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, not later than 1:00 p.m.,
Midland, Texas time, on the Borrowing Date, in immediately available
funds, its Pro Rata Part of the requested Advance, but the aggregate of
all such fundings by each Lender shall never exceed such Lender's
Commitment. Not later than 2:00 p.m., Midland, Texas time, on the
Borrowing Date, Agent shall make available to the Borrowers at the same
office, in like funds, the aggregate amount of such requested Advance.
Neither Agent nor any Lender shall incur any liability to the Borrowers in
acting upon any Notice of Borrowing referred to above which Agent or such
Lender believes in good faith to have been given by a duly authorized
officer or other person authorized to borrow on behalf of Borrowers or for
otherwise acting in good faith under this Section 2(c). Upon funding of
Advances by Lenders and such funds being made available to Borrowers in
accordance with this Agreement, pursuant to any such Notice, the Borrowers
shall have effected Advances hereunder.
(d) Letters of Credit. On the terms and conditions hereinafter set
forth, the Agent, or an Affiliate of Agent, shall from time to time during
the period beginning on the Effective Date and ending on the Maturity Date
upon request of either Borrower issue standby Letters of Credit for the
account of either Borrower (the "Letters of Credit") in such face amounts
as either Borrower may request, but not to exceed in the aggregate face
amount at any time outstanding the sum of One Million and No/100 Dollars
($1,000,000.00). The face amount of all Letters of Credit issued and
outstanding hereunder shall be considered as Advances on the Commitment
for Borrowing Base purposes and all payments made by the Agent, or any
issuing Affiliate of Agent, on such Letters of Credit shall be considered
as Advances under the Notes. Each Letter of Credit used for the account of
either Borrower hereunder shall (i) be in favor of such beneficiaries as
are specifically requested by such Borrower for purposes of securing such
Borrower's obligations associated with its oil and gas operations and
activities, or securing such Borrower's obligations in connection with
Rate Management Transactions permitted under this Agreement, (ii) have an
expiration date not exceeding the earlier of (a) one year or (b) the
Maturity Date, and (iii) contain such other terms and provisions as may be
required by Agent. Each Lender (other than Agent, except in cases where an
Affiliate of Agent is the issuer) agrees that, upon issuance of any Letter
of Credit hereunder, it shall automatically acquire a participation in the
Agent's, or its issuing Affiliate's, liability under such Letter of Credit
in an amount equal to such Lender's Commitment Percentage of such
liability, and each Lender (other than Agent, except in cases where an
Affiliate of Agent is the issuer) thereby shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as
surety, and shall be unconditionally obligated to Agent, or its issuing
Affiliate, to pay and discharge when due, its Commitment Percentage of
Agent's, or its issuing Affiliate's, liability under such Letter of
Credit. The Borrowers hereby, jointly and severally, unconditionally agree
to pay and reimburse the Agent, or its issuing Affiliate, for the amount
of each demand for
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payment under any Letter of Credit that is in compliance with the
provisions of any such Letter of Credit at or prior to the date on which
payment is to be made by the Agent, or its issuing Affiliate, to the
beneficiary thereunder, without presentment, demand, protest or other
formalities of any kind. Upon receipt from any beneficiary of any Letter
of Credit of any demand for payment under such Letter of Credit, the Agent
shall promptly notify the Borrowers of the demand and the date upon which
such payment is to be made by the Agent, or its issuing Affiliate, to such
beneficiary in respect of such demand. Forthwith upon receipt of such
notice from the Agent, Borrowers shall advise the Agent whether or not
Borrowers intend to borrow hereunder to finance their obligations to
reimburse the Agent, or its issuing Affiliate, and if so, submit a Notice
of Borrowing as provided in Section 2(c) hereof. If Borrowers fail to so
advise Agent and thereafter fail to reimburse Agent, or its issuing
Affiliate, the Agent shall notify each Lender of the demand and the
failure of the Borrowers to reimburse the Agent, or its issuing Affiliate,
and each Lender shall reimburse the Agent, or its issuing Affiliate, for
its Commitment Percentage of each such draw paid by the Agent, or its
issuing Affiliate, and unreimbursed by the Borrowers. All such amounts
paid by Agent, or its issuing Affiliate, and/or reimbursed by the Lenders
shall be treated as an Advance or Advances under the Commitment, which
Advances shall be immediately due and payable and shall bear interest at
the Maximum Rate.
(e) Procedure for Obtaining Letters of Credit. The amount and date
of issuance, renewal, extension or reissuance of a Letter of Credit
pursuant to the Lenders' commitments above in Section 2(d) shall be
designated by either Borrower's written request delivered to Agent at
least three (3) Business Days prior to the date of such issuance, renewal,
extension or reissuance. Concurrently with or promptly following the
delivery of the request for a Letter of Credit, the Borrower making such
request shall execute and deliver to the Agent, or its issuing Affiliate,
an application and agreement with respect to the Letter of Credit, said
application and agreement to be in the form used by the Agent, or its
issuing Affiliate. Neither the Agent nor any Affiliate of Agent shall be
obligated to issue, renew, extend or reissue such Letter of Credit if (A)
the amount thereon when added to the face amount of the outstanding
Letters of Credit plus any Reimbursement Obligations exceeds One Million
and No/100 Dollars ($1,000,000.00) or (B) the amount thereof when added to
the Total Outstandings would exceed the Commitment. Borrowers, jointly and
severally, agree to pay the Agent, or its issuing Affiliate, for the
benefit of the Lenders commissions for issuing the Letters of Credit
(calculated separately for each Letter of Credit) in an amount equal to
the greater of (i) the LIBOR Margin in effect per annum at the time of
issuance times the maximum face amount of the Letter of Credit (calculated
on the basis of actual days elapsed or a year consisting of 360 days) or
(ii) $500.00. In addition, Borrowers, jointly and severally, agree to pay
to the Agent, or its issuing Affiliate, for its own account an additional
commission of one-quarter of one percent (.25%) times the maximum face
amount of
-15-
such Letter of Credit for issuing each such Letter of Credit. Such
commissions shall be payable prior to the issuance of each Letter of
Credit and thereafter on each anniversary date of such issuance while such
Letter of Credit is outstanding.
(f) Voluntary Reduction of Commitment. Subject to the provisions of
Section 5(e) hereof, Borrowers may at any time, or from time to time, upon
not less than three (3) Business Days' prior written notice to Agent,
reduce or terminate the Commitment; provided, however, that (i) each
reduction in the Commitment must be in the amount of $1,000,000 or more,
in increments of $100,000 and (ii) each reduction must be accompanied by a
prepayment of the Notes in the amount by which the outstanding principal
balance of the Notes exceeds the Commitment as reduced pursuant to this
Section 2(f).
(g) Several Obligations. The obligations of the Lenders under the
Commitment are several and not joint. The failure of any Lender to make an
Advance required to be made by it shall not relieve any other Lender of
its obligation to make its Advance, and no Lender shall be responsible for
the failure of any other Lender to make the Advance to be made by such
other Lender. No Lender shall be required to lend hereunder any amount in
excess of its legal lending limit.
(h) Type and Number of Advances. Any Advance on the Commitment may
be a Base Rate Loan or a LIBOR Loan, or a combination thereof, as selected
by the Borrowers pursuant to Section 4 hereof. The total number of
Tranches which may be outstanding at any time shall never exceed three
(3).
3. Notes Evidencing Loans. The loans described above in Section 2 shall be
evidenced by promissory notes of Borrowers as follows:
(a) Form of Notes. The Revolving Loan shall be evidenced by a Note
or Notes in the aggregate face amount of $350,000,000, and the Note or
Notes shall be in the form of Exhibit "B" hereto with appropriate
insertions. Notwithstanding the face amount of the Notes, the actual
principal amount due from the Borrowers to Lenders on account of the
Notes, as of any date of computation, shall be the sum of Advances then
and theretofore made on account thereof, less all principal payments
actually received by Lenders in collected funds with respect thereto.
Although the Notes may be dated as of the Effective Date, interest in
respect thereof shall be payable only for the period during which the
loans evidenced thereby are outstanding and, although the stated amount of
the Notes may be higher, the Notes shall be enforceable, with respect to
Borrowers' obligation to pay the principal amount thereof, only to the
extent of the unpaid principal amount of the Revolving Loans. Irrespective
of the face amount of the Notes, no Lender
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shall ever be obligated to advance on the Commitment any amount in excess
of its Commitment then in effect.
(b) Issuance of Additional Notes. At the Effective Date there shall
be outstanding Note or Notes in the aggregate face amount of $350,000,000
payable to the order of Lenders. From time to time new Notes may be issued
to other Lenders as such Lenders become parties to this Agreement. Upon
request from Agent, Borrowers shall execute and deliver to Agent any such
new or additional Notes. From time to time as new Notes are issued the
Agent shall require that each Lender exchange its Note(s) for newly issued
Note(s) to better reflect the extent of each Lender's Commitments
hereunder.
(c) Interest Rates. The unpaid principal balance of the Notes shall
bear interest from time to time as set forth in Section 4 hereof.
(d) Payment of Interest. Interest on the Notes shall be payable on
each Interest Payment Date.
(e) Payment of Principal. Principal of the Revolving Loans shall be
due and payable to the Agent for the ratable benefit of the Lenders on the
Maturity Date unless earlier due in whole or in part as a result of an
acceleration of the amount due or pursuant to the mandatory prepayment
provisions of Section 9(b) hereof.
(f) Payment to Lenders. Each Lender's Pro Rata Part of payment or
prepayment of the Loans shall be directed by wire transfer to such Lender
by the Agent at the address provided to the Agent for such Lender for
payments no later than 2:00 p.m., Midland, Texas, time on the Business Day
such payments or prepayments are deemed hereunder to have been received by
Agent; provided, however, in the event that any Lender shall have failed
to make an Advance as contemplated under Section 2 hereof (a "Defaulting
Lender") and the Agent or another Lender or Lenders shall have made such
Advance, payment received by Agent for the account of such Defaulting
Lender or Lenders shall not be distributed to such Defaulting Lender or
Lenders until such Advance or Advances shall have been repaid in full to
the Lender or Lenders who funded such Advance or Advances. Any payment or
prepayment received by Agent at any time after 12:00 noon, Midland, Texas,
time on a Business Day shall be deemed to have been received on the next
Business Day. Interest shall cease to accrue on any principal as of the
end of the day preceding the Business Day on which any such payment or
prepayment is deemed hereunder to have been received by Agent. If Agent
fails to transfer any principal amount to any Lender as provided above,
then Agent shall promptly direct such principal amount by wire transfer to
such Lender.
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(g) Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, or otherwise) on account of the Loans,
(including, without limitation, any set-off) which is in excess of its Pro
Rata Part of payments on the Loans, as the case may be, obtained by all
Lenders, such Lender shall purchase from the other Lenders such
participation as shall be necessary to cause such purchasing Lender to
share the excess payment pro rata with each of them; provided that, if all
or any portion of such excess payment is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of the recovery. Borrowers agree that any Lender so
purchasing a participation from another Lender pursuant to this Section
may, to the fullest extent permitted by law, exercise all of its rights of
payment (including the right of offset) with respect to such participation
as fully as if such Lender were the direct creditor of Borrowers in the
amount of such participation.
(h) Non-Receipt of Funds by the Agent. Unless the Agent shall have
been notified by a Lender or the Borrowers (the "Payor") prior to the date
on which such Lender is to make payment to the Agent of the proceeds of a
Loan to be made by it hereunder or Borrowers are to make a payment to the
Agent for the account of one or more of the Lenders, as the case may be
(such payment being herein called the "Required Payment"), which notice
shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall
not be required to), make the amount thereof available to the intended
recipient on such date and, if the Payor has not in fact made the Required
Payment to the Agent, the recipient of such payment shall, on demand, pay
to the Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount was
made available by the Agent until the date the Agent recovers such amount
at the rate applicable to such portion of the applicable Loan.
4. Interest Rates.
(a) Options.
(i) Base Rate Loans. On all Base Rate Loans Borrowers agree to
pay interest on the Notes calculated on the basis of the actual days
elapsed in a year consisting of 365 days, or if appropriate, 366
days with respect to the unpaid principal amount of each Base Rate
Loan from the date the proceeds thereof are made available to
Borrowers until maturity (whether by acceleration or otherwise), at
a varying rate per annum equal to the lesser of (A) the Maximum Rate
(defined herein), or (B) the greater of (i) five percent (5.00%), or
(ii) the sum of the Alternate Base Rate plus
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the Base Rate Margin. Subject to the provisions of this Agreement as
to prepayment, the principal of the Notes representing Base Rate
Loans shall be payable as specified in Section 3(e) hereof and the
interest in respect of each Base Rate Loan shall be payable on each
Interest Payment Date applicable thereto. Past due principal and, to
the extent permitted by law, past due interest in respect to each
Base Rate Loan, shall bear interest, payable on demand, at a rate
per annum equal to the Default Rate.
(ii) LIBOR Loans. On all LIBOR Loans Borrowers agree to pay
interest calculated on the basis of a year consisting of 360 days
with respect to the unpaid principal amount of each LIBOR Loan from
the date the proceeds thereof are made available to Borrowers until
maturity (whether by acceleration or otherwise), at a varying rate
per annum equal to the lesser of (i) the Maximum Rate, or (ii) the
LIBOR Rate. Subject to the provisions of this Agreement with respect
to prepayment, the principal of the Notes shall be payable as
specified in Section 3(e) hereof and the interest with respect to
each LIBOR Loan shall be payable on each Interest Payment Date
applicable thereto. Past due principal and, to the extent permitted
by law, past due interest shall bear interest, payable on demand, at
a rate per annum equal to the Default Rate. Upon three (3) Business
Days' written notice prior to the making by the Lenders of any LIBOR
Loan (in the case of the initial Interest Period therefor) or the
expiration date of each succeeding Interest Period (in the case of
subsequent Interest Periods therefor), Borrowers shall have the
option, subject to compliance by Borrowers with all of the
provisions of this Agreement, as long as no Event of Default exists,
to specify whether the Interest Period commencing on any such date
shall be a one (1), two (2), three (3), six (6) or twelve (12) month
period. If Agent shall not have received timely notice of a
designation of such Interest Period as herein provided, Borrowers
shall be deemed to have elected to convert all maturing LIBOR Loans
to Base Rate Loans.
(b) Interest Rate Determination. The Agent shall determine each
interest rate applicable to the Loans hereunder. The Agent shall give
prompt notice to Borrowers and the Lenders of each rate of interest so
determined and its determination thereof shall be conclusive absent error.
(c) Conversion Option. Borrowers may elect from time to time (i) to
convert all or any part of its LIBOR Loans to Base Rate Loans by giving
Agent irrevocable notice of such election in writing prior to 10:00 a.m.
(Midland, Texas time) on the conversion date and such conversion shall be
made on the requested conversion date, provided that
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any such conversion of a LIBOR Loan shall only be made on the last day of
the Interest Period with respect thereof, (ii) to convert all or any part
of its Base Rate Loans to LIBOR Loans by giving the Agent irrevocable
written notice of such election three (3) Business Days prior to the
proposed conversion and such conversion shall be made on the requested
conversion date or, if such requested conversion date is not a Business
Day, on the next succeeding Business Day. Any such conversion shall not be
deemed to be a prepayment of any of the loans for purposes of this
Agreement or the Notes.
(d) Recoupment. If at any time the applicable rate of interest
selected pursuant to Sections 4(a)(i) or 4(a)(ii) above shall exceed the
Maximum Rate, thereby causing the interest on the Notes to be limited to
the Maximum Rate, then any subsequent reduction in the interest rate so
selected or subsequently selected shall not reduce the rate of interest on
the Notes below the Maximum Rate until the total amount of interest
accrued on the Notes equals the amount of interest which would have
accrued on the Notes if the rate or rates selected pursuant to Sections
4(a)(i) or (ii), as the case may be, had at all times been in effect.
(e) Interest Rates Applicable After Default. Notwithstanding
anything to the contrary contained in this Section 4, during the
continuance of a Default or an Event of Default the Majority Lenders may,
at their option, by notice from Agent to Borrowers (which notice may be
revoked at the option of the Majority Lenders notwithstanding the
provisions of Section 15 hereof, which requires all Lenders to consent to
changes in interest rates) declare that no Advance may be made as,
converted into, or continued as a LIBOR Loan. During the continuance of an
Event of Default, the Majority Lenders, may, at their option, by notice
from Agent to Borrowers (which notice may be revoked at the option of
Majority Lenders notwithstanding the provisions of Section 15 hereof,
which requires all Lenders to consent to changes in interest rates)
declare that (i) each LIBOR Loan shall bear interest for the remainder of
the applicable Interest Period at the rate otherwise applicable to such
Interest Period plus four percent (4%) per annum and (ii) each Base Rate
Loan shall bear interest at the rate otherwise applicable to such Interest
Period plus four percent (4%), provided that, during the continuance of an
Event of Default under Section 14(f) or 14(g), the interest rate set forth
in clauses (i) and (ii) above shall be applicable to all outstanding Loans
without any election or action on the part of the Agent or any Lender.
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5. Special Provisions Relating to Loans.
(a) Unavailability of Funds or Inadequacy of Pricing. In the event
that, in connection with any proposed LIBOR Loan, the Agent reasonably
determines, which determination shall, absent manifest error, be final,
conclusive and binding upon all parties, due to changes in circumstances
since the date hereof, adequate and fair means do not exist for
determining the LIBOR Rate or such rate will not accurately reflect the
costs to the Lenders of funding a LIBOR Loan for such Interest Period, the
Agent shall give notice of such determination to Borrowers and the
Lenders, whereupon, until the Agent notifies Borrowers and the Lenders
that the circumstances giving rise to such suspension no longer exist, the
obligations of the Lenders to make, continue or convert Loans into a LIBOR
Loan shall be suspended, and all Loans to Borrowers shall be Base Rate
Loans during the period of suspension.
(b) Change in Laws. If at any time any new law or any change in
existing laws or in the interpretation of any new or existing laws shall
make it unlawful for any Lender to make or continue to maintain or fund
LIBOR Loans hereunder, then such Lender shall promptly notify Borrowers in
writing and such Lender's obligation to make, continue or convert Loans
into LIBOR Loans under this Agreement shall be suspended until it is no
longer unlawful for such Lender to make or maintain LIBOR Loans. Upon
receipt of such notice, Borrowers shall either repay the outstanding LIBOR
Loans owed to such Lender, without penalty, on the last day of the current
Interest Periods (or, if any Lender may not lawfully continue to maintain
and fund such LIBOR Loans, immediately), or Borrowers may convert such
LIBOR Loans at such appropriate time to Base Rate Loans.
(c) Increased Cost or Reduced Return.
(i) If, after the date hereof, the adoption of any applicable
law, rule, or regulation, or any change in any applicable law, rule,
or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank, or comparable
agency charged with the interpretation or administration thereof, or
compliance by any Lender with any request or directive (whether or
not having the force of law) of any such governmental authority,
central bank, or comparable agency:
(A) shall subject such Lender to any tax, duty, or other
charge with respect to any LIBOR Loans, its Notes, or its
obligation to make LIBOR Loans, or change the basis of
taxation of any amounts payable to such Lender under
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this Agreement or its Notes in respect of any LIBOR Loan
(other than franchise taxes and taxes imposed on or measured
by the overall net income of such Lender);
(B) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than reserve requirements, if any, taken into account
in the determination of the LIBOR Rate) relating to any
extensions of credit or other assets of, or any deposits with
or other liabilities or commitments of, such Lender, including
the Commitment of such Lender hereunder; or
(C) shall impose on such Lender or on the London
interbank market any other condition affecting this Agreement
or its Notes or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to
such Lender of making, converting into, continuing, or maintaining
any LIBOR Loan or to reduce any sum received or receivable by such
Lender under this Agreement or its Notes with respect to any LIBOR
Loan, then Borrowers shall pay to such Lender on demand such amount
or amounts as will reasonably compensate such Lender for such
increased cost or reduction. If any Lender requests compensation by
Borrowers under this Section 5(c), Borrowers may, by notice to such
Lender (with a copy to Agent), suspend the obligation of such Lender
to make or continue LIBOR Loans, or to convert all or part of the
Base Rate Loans owing to such Lender to LIBOR Loans, until the event
or condition giving rise to such request ceases to be in effect (in
which case the provisions of Section 5(c) shall be applicable);
provided that such suspension shall not affect the right of such
Lender to receive the compensation so requested.
(ii) If, after the date hereof, any Lender shall have
reasonably determined that the adoption of any applicable law, rule,
or regulation regarding capital adequacy or any change therein or in
the interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank, or
comparable agency, has or would have the effect of reducing the
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rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or
such corporation could have achieved but for such adoption, change,
request, or directive (taking into consideration its policies with
respect to capital adequacy), then from time to time upon demand
Borrowers shall pay to such Lender such additional amount or amounts
as will reasonably compensate such Lender for such reduction.
(iii) Each Lender shall promptly notify Borrowers and Agent of
any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender to compensation pursuant to
this Section 5(c) and will designate a separate lending office, if
applicable, if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 5(c) shall furnish to Borrowers and
Agent a statement setting forth the additional amount or amounts to
be paid to it hereunder which shall be conclusive in the absence of
manifest error. In determining such amount, such Lender may use any
reasonable averaging and attribution methods.
(iv) Any Lender giving notice to Borrowers through the Agent
pursuant to Section 5(c) shall give to Borrowers a statement signed
by an officer of such Lender setting forth in reasonable detail the
basis for, and the calculation of such additional cost, reduced
payments or capital requirements, as the case may be, and the
additional amounts required to compensate such Lender therefor.
(v) Within five (5) Business Days after receipt by Borrowers
of any notice referred to in Section 5(c), Borrowers shall pay to
the Agent for the account of the Lender issuing such notice such
additional amounts as are required to compensate such Lender for the
increased cost, reduced payments or increased capital requirements
identified therein, as the case may be.
(d) Discretion of Lender as to Manner of Funding. Notwithstanding
any provisions of this Agreement to the contrary, each Lender shall be
entitled to fund and maintain its funding of all or any part of its Loan
in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as
if each Lender had actually funded and maintained each LIBOR Loan through
the purchase of deposits having a maturity corresponding to the last
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day of the Interest Period applicable to such LIBOR Loan and bearing an
interest rate at the applicable interest rate for such Interest Period.
(e) Breakage Fees. Without duplication under any other provision
hereof, if any Lender incurs any loss, cost or expense including, without
limitation, any loss of profit and loss, cost, expense or premium
reasonably incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Lender to fund or maintain any
LIBOR Loan or the relending or reinvesting of such deposits or amounts
paid or prepaid to the Lenders as a result of any of the following events
other than any such occurrence as a result in the change of circumstances
described in Sections 5(a) and (b):
(i) any payment, prepayment or conversion of a LIBOR Loan on a
date other than the last day of its Interest Period (whether by
acceleration, prepayment or otherwise);
(ii) any failure to make a principal payment of a LIBOR Loan
on the due date thereof; or
(iii) any failure by Borrowers to borrow, continue, prepay or
convert to a LIBOR Loan on the dates specified in a notice given
pursuant to Section 2(c) or 4(c) hereof;
then Borrowers shall pay to such Lender such amount as will reimburse such
Lender for such loss, cost or expense. If any Lender makes such a claim
for compensation, it shall furnish to Borrowers and Agent a statement
setting forth the amount of such loss, cost or expense in reasonable
detail (including an explanation of the basis for and the computation of
such loss, cost or expense) and the amounts shown on such statement shall
be conclusive and binding absent manifest error.
6. Collateral Security. To secure the performance by Borrowers of their
obligations hereunder, and under the Notes, Security Instruments and Rate
Management Transactions, whether now or hereafter incurred, matured or
unmatured, direct or contingent, joint or several, or joint and several,
including extensions, modifications, renewals and increases thereof, and
substitutions therefor, Borrowers shall herewith grant and assign to Agent for
the ratable benefit of the Lenders a first and prior Lien on certain of their
Oil and Gas Properties, certain related equipment, oil and gas inventory,
as-extracted collateral and proceeds of the foregoing. The Oil and Gas
Properties herewith mortgaged to the Agent by Borrowers shall represent (i) not
less than 80% of the Engineered Value (as hereinafter defined) of Borrowers'
proved developed producing Oil and Gas Properties as of the Effective Date, and
(ii) not less than 80% of the Engineered Value of Borrowers' other proved Oil
and Gas Properties as of the Effective Date. In addition to the mortgaging of
the Oil and Gas Properties (x) PPC shall grant
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and assign to Agent for the ratable benefit of Lenders a first and prior Lien on
all of its equity interests in Guarantor and in PLP, (y) Guarantor shall grant
and assign to Agent for the ratable benefit of Lenders a first and prior Lien on
all of its equity interests in PLP, and (z) Guarantor shall provide Lenders with
the Guaranty. Obligations arising from Rate Management Transactions between
Borrowers and one or more of the Lenders or an Affiliate of any of the Lenders
shall be secured by the Collateral on a pari passu basis with the indebtedness
and obligations of Borrowers under the Loan Documents. All Oil and Gas
Properties and other collateral in which Borrowers and Guarantor herewith grant
or hereafter grant to Agent for the ratable benefit of the Lenders a first and
prior Lien (to the satisfaction of the Agent) in accordance with this Section 6,
as such properties and interests are from time to time constituted, are
hereinafter collectively called the "Collateral".
The granting and assigning of such security interests and Liens by
Borrowers and Guarantor shall be pursuant to Security Instruments in form and
substance reasonably satisfactory to the Agent. Concurrently with the delivery
of each of the Security Instruments or within a reasonable time thereafter,
Borrowers shall have furnished to the Agent mortgage and title opinions and
other title information reasonably satisfactory to Agent with respect to the
title and Lien status of Borrowers' interests in not less than 80% of the
Engineered Value of Borrowers' mortgaged Oil and Gas Properties. "Engineered
Value" for this purpose shall mean future net revenues discounted at the
discount rate being used by the Agent as of the date of any such determination
utilizing the pricing parameters used in the engineering report furnished to the
Agent pursuant to Sections 7 and 12 hereof. Borrowers will cause to be executed
and delivered to the Agent, in the future, additional Security Instruments if
the Agent reasonably deems such are necessary to insure perfection or
maintenance of Lenders' security interests and Liens in not less than 80% of the
Engineered Value of the Oil and Gas Properties or in any of the other
Collateral.
7. Borrowing Base.
(a) Initial Borrowing Base. At the Effective Date, the Borrowing
Base shall be $125,000,000, provided, however, that $5,600,000 of the
Borrowing Base shall not be available for Advances unless the Acquisition
is consummated on or before January 31, 2006, on terms and pursuant to
instruments satisfactory to Agent. If the Acquisition is not so
consummated on or before January 31, 2006, then the Borrowing Base shall
automatically reduce by $5,600,000 on January 31, 2006.
(b) Subsequent Determinations of Borrowing Base. Subsequent
determinations of the Borrowing Base shall be made by the Lenders
semi-annually on or about April 1 and October 1 of each year beginning
April 1, 2006, or as Unscheduled Redeterminations. No later than March 1
and September 1 of each year, beginning March 1, 2006, Borrowers shall, at
their own expense, furnish to Lenders an engineering
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report covering the Oil and Gas Properties in form and substance
satisfactory to Agent and dated effective not more than sixty (60) days
prior to the delivery of the same to Lenders. Each such report shall be
prepared by an independent petroleum engineering firm acceptable to Agent,
utilizing economic pricing perameters used by Agent as established from
time to time, together with such other information, reports and data
concerning the value of the Oil and Gas Properties as Agent shall deem
reasonably necessary to determine the value of such Oil and Gas
Properties. Agent shall by notice to Borrowers no later than 45 days after
its receipt of the engineering report and all other information requested
by Lenders (herein called a "Determination Date"), notify Borrowers of the
designation by Lenders of the new Borrowing Base for the period beginning
on such Determination Date and continuing until, but not including, the
next Determination Date.
(c) Subsequent Unscheduled Redeterminations of Borrowing Base.
Within thirty (30) days after either (i) receipt of notice from Agent that
Lenders require an Unscheduled Redetermination, or (ii) Borrowers give
notice to Agent of their desire to have an Unscheduled Redetermination
performed, Borrowers shall furnish to Lenders an engineering report in
form and substance satisfactory to Agent prepared by independent petroleum
engineers acceptable to Agent valuing the Oil and Gas Properties utilizing
economic and pricing parameters used by the Agent as established from time
to time, together with such other information, reports and data concerning
the value of the Oil and Gas Properties as Agent shall deem reasonably
necessary to determine the value of such Oil and Gas Properties. If an
Unscheduled Redetermination is made by Lenders, the Agent shall notify
Borrowers within a reasonable time after receipt of all requested
information of the new Borrowing Base, and such new Borrowing Base shall
continue until the next Determination Date.
(d) Other Determinations of the Borrowing Base. If Borrowers do not
furnish all such information, reports and data by any date specified in
Section 7(b) or 7(c), unless such failure is of no fault of Borrowers,
Lenders may nonetheless designate the Borrowing Base at any amounts which
Lenders in their discretion determine and may redesignate the Borrowing
Base from time to time thereafter until Lenders receive all such
information, reports and data, whereupon Lenders shall designate a new
Borrowing Base as described above.
(e) Evaluation Factors. Each Lender shall determine the amount of
the Borrowing Base attributable to the Oil and Gas Properties based upon
the loan collateral value which such Lender in its discretion (using such
methodology, assumptions and discount rates as such Lender customarily
uses in assigning collateral value to oil and gas properties, oil and gas
gathering systems, gas processing and plant operations) assigns to such
Oil and Gas Properties at the time in question and based upon such other
credit
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factors consistently applied (including, without limitation, the assets,
liabilities, cash flow, business, properties, prospects, management and
ownership of Borrowers and their Affiliates) as such Lender customarily
considers in evaluating similar oil and gas credits.
(f) Required Percentage of Lenders. All determinations or
Unscheduled Redeterminations of the Borrowing Base require the approval of
all Lenders. If the Lenders cannot otherwise agree on the Borrowing Base
attributable to the Oil and Gas Properties, each Lender shall submit in
writing to the Agent its proposed Borrowing Base attributable to the Oil
and Gas Properties and the Borrowing Base attributable to the Oil and Gas
Properties shall be set on the basis of the lowest Borrowing Base
attributable to the Oil and Gas Properties proposed by any Lender.
(g) Automatic Reductions of Borrowing Base. If at any time any of
the Oil and Gas Properties are sold, the Borrowing Base then in effect
shall automatically be reduced by an amount equal to the amount of
prepayment required to be made pursuant to Section 12(r) hereof. The
Borrowing Base shall be additionally reduced from time to time pursuant to
the provisions of Section 12(t) hereof and as elsewhere provided herein.
It is expressly understood that Agent and Lenders have no obligation to
designate the Borrowing Base at any particular amounts, except in the
exercise of their discretion, whether in relation to the Commitment of
otherwise.
8. Fees.
(a) Letter of Credit Fee. Borrowers shall pay to Agent the Letter of
Credit fees required above in Section 2(e).
(b) Borrowing Base Determination Fee. Borrowers shall pay to Agent
for the ratable benefit of Lenders at the time Agent provides any notice
required by Section 7, an amount equal to three-eighths of one percent
(.375%) of the amount of any increase in the Borrowing Base upon a
scheduled semi-annual determination of the Borrowing Base or an
Unscheduled Redetermination. The parties acknowledge and agree that such
fee is intended as reasonable compensation to Lenders for their time,
effort and expense in determining the Borrowing Base.
(c) Unused Commitment Fee. Borrowers shall pay to Agent for the
ratable benefit of the Lenders an unused commitment fee (the "Unused
Commitment Fee") in an amount equal to one-quarter of one percent (.25%)
times the daily average of the unadvanced amount of the Commitment (i.e.,
the Commitment minus the Total Outstandings). Such Unused Commitment Fee
shall be calculated on the basis of a year consisting of 360 days. The
Unused Commitment Fee shall be payable quarterly in arrears on the last
day of each calendar quarter beginning December 31, 2005, with the
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first payment being for the period from the Effective Date through
December 31, 2005, and with the final fee payment due on the Maturity Date
for any period then ending for which the Unused Commitment Fee shall not
have been theretofore paid. In the event the Commitment terminates on any
date prior to the end of any such quarterly period, Borrowers shall pay to
the Agent for the ratable benefit of the Lenders, on the date of such
termination, the total Unused Commitment Fee due for the period in which
such termination occurs. If a date for payment of the Unused Commitment
Fee shall be other than a Business Day such payment shall be made on the
next succeeding Business Day.
(d) Facility Fee. On the Effective Date Borrowers shall pay to Agent
for the ratable benefit of Lenders a facility fee in the amount of
$187,500.
(e) Agency and Arrangement Fee. Borrowers shall pay to Agent for its
own account the fees described in the fee letter dated as of the Effective
Date between Borrowers and Agent, at the times provided therein.
9. Prepayments.
(a) Voluntary Prepayments. Subject to the provisions of Section 5(e)
hereof, Borrowers may at any time and from time to time, without penalty
or premium, prepay the Notes, in whole or in part. Each such prepayment
shall be made on at least three (3) Business Days' notice to Agent in the
case of LIBOR Loan Tranches and without notice in the case of Base Rate
Loans and shall be in a minimum amount of (i) $500,000 or any whole
multiple of $100,000 in excess thereof (or the unpaid balance of the
Notes, whichever is less), for Base Rate Loans, plus accrued interest
thereon, to the date of prepayment, and (ii) $1,000,000 or any whole
multiple of $100,000 in excess thereof (or the unpaid balance of the
Notes, whichever is less) for LIBOR Loans, plus accrued interest thereon
to the date of prepayment.
(b) Mandatory Collateral or Prepayment For Borrowing Base
Deficiency. In the event the Total Outstandings ever exceed the Borrowing
Base as determined by Lenders pursuant to Section 7 hereof (a "Borrowing
Base Deficiency"), Borrowers shall, within thirty (30) days after written
notification from the Agent, either (A) by instruments reasonably
satisfactory in form and substance to the Lenders, provide the Agent with
collateral with value and quality in amounts satisfactory to all of the
Lenders in their discretion in order to increase the Borrowing Base by an
amount at least equal to such excess, (B) prepay, without premium or
penalty, the principal amount of the Notes in an amount at least equal to
such excess plus accrued interest thereon to the date of prepayment, or
(C) eliminate the Borrowing Base Deficiency through a combination of (A)
and (B) above. If the Total Outstandings ever exceed the Commitment as a
result of any required reduction in the Commitment pursuant to Section
7(g) hereof, then in such
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event, Borrowers shall immediately prepay the principal amount of the
Notes in an amount at least equal to such excess plus accrued interest to
the date of prepayment.
10. Representations and Warranties. In order to induce the Lenders to
enter into this Agreement, Borrowers and Guarantor, jointly and severally,
represent and warrant to the Lenders (which representations and warranties will
survive the delivery of the Notes) that:
(a) Creation and Existence. PPC is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and is duly qualified and in good standing in the State of Texas
and in all other jurisdictions wherein failure to qualify may result in a
Material Adverse Effect. PLP is a limited partnership duly organized and
validly existing under the laws of the State of Texas and is duly
qualified in the State of Texas and in all other jurisdictions wherein
failure to qualify may result in a Material Adverse Effect. Guarantor is a
limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly qualified and
in good standing in the State of Nevada and in all other jurisdictions
wherein failure to qualify may result in a Material Adverse Effect.
Borrowers and Guarantor have all power and authority (corporate or
otherwise) to own their respective properties and assets and to transact
the business in which they are engaged.
(b) Power and Authority. Each Borrower is duly authorized and
empowered to create and issue the Notes; and each Borrower and Guarantor
is duly authorized and empowered to execute, deliver and perform its
respective Loan Documents, including this Agreement; and all action
(corporate or otherwise) on each Borrower's and Guarantor's part requisite
for the due creation and issuance of the Notes and for the due execution,
delivery and performance of the Loan Documents, including this Agreement,
has been duly and effectively taken.
(c) Binding Obligations. This Agreement does, and the Notes and
other Loan Documents upon their creation, issuance, execution and delivery
will, constitute valid and binding obligations of each Borrower and
Guarantor, respectively, enforceable in accordance with its respective
terms (except that enforcement may be subject to general principles of
equity and any applicable bankruptcy, insolvency, or similar debtor relief
laws now or hereafter in effect and relating to or affecting the
enforcement of creditors' rights generally).
(d) No Legal Bar or Resultant Lien. The Notes and the Loan
Documents, including this Agreement, do not and will not, to the best of
either Borrower's or Guarantor's knowledge, violate any provisions of any
contract, agreement, law, regulation, order, injunction, judgment, decree
or writ to which Borrower or Guarantor is
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subject, or result in the creation or imposition of any Lien or other
encumbrance upon any assets or properties of either Borrower or of
Guarantor, other than those contemplated or permitted by this Agreement.
(e) No Consent. The execution, delivery and performance by Borrowers
of the Notes and the execution, delivery and performance by Borrowers and
Guarantor of the other Loan Documents to which each is a party, including
this Agreement, does not require the consent or approval of any other
person or entity, including without limitation any regulatory authority or
governmental body of the United States or any state or any political
subdivision of the United States or any state thereof, which consent has
not been obtained.
(f) Financial Condition. The consolidated Financial Statements of
PPC dated as of September 30, 2005, which have been delivered to Lenders
by PPC are complete and correct in all material respects and fully and
accurately reflect in all material respects the financial condition and
results of operations of PPC as of such date and for the periods stated
and no change in the condition, financial or otherwise, of PPC which is
reasonably expected to have a Material Adverse Effect has occurred since
September 30, 2005, except as disclosed to Lenders in Schedule "2"
attached hereto.
(g) Liabilities. Neither either Borrower nor Guarantor has any
material liability, direct or contingent on the Effective Date, except as
disclosed to the Lenders in the Financial Statements or on Schedule "3"
attached hereto. No unusual or unduly burdensome restrictions, restraint,
or hazard exists by contract, law or governmental regulation or otherwise
relative to the business, assets or properties of either Borrower or
Guarantor which is reasonably expected to have a Material Adverse Effect.
(h) Litigation. Except as described in the Financial Statements, or
as otherwise disclosed to the Lenders in Schedule "4" attached hereto, on
the Effective Date there is no litigation, legal or administrative
proceeding, investigation or other action of any nature pending or, to the
knowledge of the officers of either Borrower or Guarantor, threatened
against or affecting either Borrower, Guarantor or any Subsidiary which
involves the possibility of any judgment or liability not fully covered by
insurance, and which is reasonably expected to have a Material Adverse
Effect.
(i) Taxes; Governmental Charges. Each Borrower and Guarantor has
filed all tax returns and reports required to be filed and has paid all
taxes, assessments, fees and other governmental charges levied upon it or
its assets, properties or income which are due and payable, including
interest and penalties, the failure of which to pay could reasonably be
expected to have a Material Adverse Effect, except such as are being
contested in good faith by appropriate proceedings and for which adequate
reserves for
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the payment thereof as required by GAAP has been provided and levy and
execution thereon have been stayed and continue to be stayed.
(j) Titles, Etc. Each Borrower and Guarantor has good and defensible
title to all of its respective material assets, including without
limitation, the Oil and Gas Properties and other Collateral, free and
clear of all Liens or other encumbrances except Permitted Liens.
(k) Defaults. Neither either Borrower nor Guarantor is in default
and no event or circumstance has occurred which, but for the passage of
time or the giving of notice, or both, would constitute a default under
any loan or credit agreement, indenture, mortgage, deed of trust, security
agreement or other agreement or instrument to which either Borrower or
Guarantor is a party in any respect that would be reasonably expected to
have a Material Adverse Effect. No Default or Event of Default hereunder
has occurred and is continuing.
(l) Casualties; Taking of Properties. Since the dates of the latest
Financial Statements of Borrowers and Guarantor delivered to Lenders,
neither the business nor the assets or properties of Borrowers or
Guarantor has been affected (to the extent it is reasonably expected to
cause a Material Adverse Effect), as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of property or cancellation of
contracts, permits or concessions by any domestic or foreign government or
any agency thereof, riot, activities of armed forces or acts of God or of
any public enemy.
(m) Use of Proceeds; Margin Stock. The proceeds of the Commitment
may be used by Borrowers for the purposes of (i) refinancing either
Borrower's existing indebtedness with Lenders, (ii) the acquisition,
exploration and development of oil and gas properties, (iii) working
capital in either Borrower's oil and gas business, and (iv) the payment of
fees associated with the transaction contemplated by this Agreement.
Neither either Borrower nor Guarantor is engaged principally or as one of
its important activities in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" as defined in
Regulation U of the Board of Governors of the Federal Reserve System (12
C.F.R. Part 221), or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry a margin
stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of Regulation G or U of the Board of
Governors of the Federal Reserve System.
Neither either Borrower nor Guarantor, nor any person or entity
acting on behalf of either Borrower or Guarantor, has taken or will take
any action which might cause the loans hereunder or any of the Loan
Documents, including this Agreement, to violate
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Regulation G or U or any other regulation of the Board of Governors of the
Federal Reserve System or to violate the Securities Exchange Act of 1934
or any rule or regulation thereunder, in each case as now in effect or as
the same may hereafter be in effect.
(n) Location of Business and Offices. The principal place of
business and chief executive offices of each Borrower and Guarantor are
located at the addresses as stated in Section 17 hereof.
(o) Compliance with the Law. To the best of each Borrower's and
Guarantor's knowledge, neither either Borrower, Guarantor nor any
Subsidiary:
(i) is in violation of any law, judgment, decree, order,
ordinance, or governmental rule or regulation to which either
Borrower, Guarantor, or any Subsidiary, or any of its respective
assets or properties are subject; or
(ii) has failed to obtain any license, permit, franchise or
other governmental authorization necessary to the ownership of any
of its respective assets or properties or the conduct of its
respective business.
(p) No Material Misstatements. No information, exhibit or report
furnished by either Borrower or Guarantor to the Lenders in connection
with the negotiation of this Agreement contained any material misstatement
of fact or omitted to state a material fact or any fact necessary to make
the statements contained therein not materially misleading.
(q) Not A Utility. Neither either Borrower nor Guarantor is a
utility as a result of being engaged in the (i) generation, transmission,
or distribution and sale of electric power; (ii) transportation,
distribution and sale through a local distribution system of natural or
other gas for domestic, commercial, industrial, or other use; (iii)
provision of telephone or telegraph service to others; (iv) production,
transmission, or distribution and sale of steam or water; (v) operation of
a railroad; or (vii) provision of sewer service to others.
(r) ERISA. Each Borrower, Guarantor and each Subsidiary is in
compliance in all material respects with the applicable provisions of
ERISA, and no "reportable event", as such term is defined in Section 403
of ERISA, has occurred with respect to any Plan of either Borrower,
Guarantor or any Subsidiary.
(s) Public Utility Holding Company Act. Neither either Borrower nor
Guarantor is a "holding company", or "subsidiary company" of a "holding
company", or
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an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(t) Subsidiaries. PPC has no Subsidiaries other than Guarantor and
PLP. PLP has no Subsidiaries. PPC and Guarantor collectively own 100% of
the partnership interests of PLP and PPC owns 100% of the membership
interests of Guarantor.
(u) Environmental Matters. As of the Effective Date neither either
Borrower nor Guarantor (i) has received notice or otherwise learned of any
Environmental Liability which would be reasonably expected to individually
or in the aggregate have a Material Adverse Effect arising in connection
with (A) any non-compliance with or violation of the requirements of any
Environmental Law or (B) the release or threatened release of any toxic or
hazardous waste into the environment, (ii) has received notice of any
threatened or actual liability in connection with the release or notice of
any threatened release of any toxic or hazardous waste into the
environment which would be reasonably expected to individually or in the
aggregate have a Material Adverse Effect or (iii) has received notice or
otherwise learned of any federal or state investigation evaluating whether
any remedial action is needed to respond to a release or threatened
release of any toxic or hazardous waste into the environment for which
either Borrower or Guarantor is or may be liable which would reasonably be
expected to result in a Material Adverse Effect.
(v) Liens. Except (i) as disclosed on Schedule "1" hereto and (ii)
for Permitted Liens, the assets and properties of each Borrower and
Guarantor are free and clear of all Liens and encumbrances.
(w) Investment Company Act. Neither either Borrower nor Guarantor is
an "investment company," or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(x) Maintenance of Properties. Except for such acts or failures to
act as could not reasonably be expected to have a Material Adverse Effect,
the Oil and Gas Properties (and properties unitized therewith), to the
Borrowers' knowledge prior to taking over operations and as to all
non-operated properties, have been maintained, operated and developed in a
good and workmanlike manner and in conformity with all requirements of
governmental authorities and in conformity with the provisions of all
leases, subleases or other contracts comprising a part of the Oil and Gas
Properties. Specifically in connection with the foregoing, except as could
not reasonably be expected to have a Material Adverse Effect, (a) no Oil
and Gas Property is subject to having allowable production reduced below
the full and regular allowable (including the maximum
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permissible tolerance) because of any overproduction (whether or not the
same was permissible at the time) and (b) none of the xxxxx comprising a
part of the Oil and Gas Properties (or properties unitized therewith) is
deviated from the vertical more than the maximum permitted by governmental
authorities, and such xxxxx are, in fact, bottomed under and are producing
from, and the well bores are wholly within, the Oil and Gas Properties (or
in the case of xxxxx located on properties unitized therewith, such
unitized properties). All pipelines, xxxxx, gas processing plants,
platforms and other material improvements, fixtures and equipment owned in
whole or in part by the Borrowers or any of their Subsidiaries that are
necessary to conduct normal operations on the Oil and Gas Properties
currently operated by the Borrowers or, to the Borrowers' knowledge prior
to taking over operations and as to all non-operated properties, are being
maintained in a state adequate to conduct normal operations, and with
respect to such of the foregoing which are operated by the Borrowers or
any of their Subsidiaries, in a manner consistent with the Borrowers' or
their Subsidiaries' past practices (other than those the failure of which
to maintain in accordance with this Section 10(x) could not reasonably be
expected to have a Material Adverse Effect).
(y) Gas Imbalances, Prepayments. As of the date hereof, except as
set forth on Schedule 5, on a net basis there are no gas imbalances, take
or pay or other prepayments which would require the Borrowers or any of
their Subsidiaries to deliver hydrocarbons produced from the Oil and Gas
Properties at some future time without then or thereafter receiving full
payment therefor exceeding 100,000 Mcf of gas (on an Mcf equivalent basis)
in the aggregate.
(z) General. As of the Effective Date, there are no significant
material facts or conditions relating to the Loans, the Loan Documents,
any of the Collateral, or the financial condition or business of either
Borrower or Guarantor that could, collectively or individually, have a
Material Adverse Effect and that have not been related, in writing, to
Lenders as an attachment to this Agreement; and all writings heretofore or
hereafter exhibited or delivered to Lenders by or on behalf of either
Borrower or Guarantor are and will be genuine and in all material respects
what they purport and appear to be.
11. Conditions of Lending.
(a) The effectiveness of this Agreement, and the obligation to make
the initial Advance or issue any initial Letter of Credit under the
Commitment shall be subject to satisfaction of the following conditions
precedent:
(i) Borrowers' Execution and Delivery. Borrowers shall have
executed and delivered this Agreement, the Notes and all other
required Loan Documents, all in form and substance satisfactory to
the Agent;
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(ii) Guarantor's Execution and Delivery. Guarantor shall have
executed and delivered this Agreement, its Guaranty in the form of Exhibit
"C" and all other required Loan Documents, all in form and substance
satisfactory to the Agent;
(iii) Legal Opinions. The Agent shall have received from Borrowers'
and Guarantor's legal counsel one or more favorable legal opinions in form
and substance satisfactory to the Agent as to (1) the matters set forth in
subsections 10(a), (b), (c), (d), (e) and (h) hereof, and (2) as to such
other matters as Agent or its counsel may reasonably request;
(iv) Resolutions. The Agent shall have received (1) a copy of the
resolutions, in form and substance satisfactory to Agent, of the Board of
Directors of PPC authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party, the
borrowings contemplated hereunder and, to the extent applicable, the
pledge of Collateral, certified by the secretary or an assistant secretary
of PPC as of the Effective Date, which certificate shall be in form and
substance satisfactory to Agent and Agent's counsel and shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded, (2) a copy of the resolutions, in form and substance
satisfactory to Agent duly adopted by the respective partners of PLP
authorizing the execution, delivery and performance of this Agreement and
the other Loan Documents to which it is a party, the borrowings
contemplated hereunder and, to the extent applicable, the pledge of
Collateral, certified by its general partner, which certificate shall be
in form and substance satisfactory to Agent and Agent's counsel and shall
state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded, and (3) resolutions, in form and substance
satisfactory to Agent, of the managers of Guarantor authorizing the
execution, delivery and performance of this Agreement, its Guaranty and
the other Loan Documents to which it is a party and, to the extent
applicable, the pledge of Collateral, certified by its secretary or
assistant secretary as of the Effective Date, which certificate shall be
in form and substance satisfactory to Agent and Agent's counsel and shall
state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded;
(v) Good Standing. The Agent shall have received evidence of
existence and good standing for PPC and Guarantor and evidence of
existence for PLP;
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(vi) Incumbency. The Agent shall have received a signed certificate
of each Borrower and Guarantor, certifying the names of the officers of
each Borrower and Guarantor authorized to sign loan documents on behalf of
each Borrower and Guarantor, together with the true signatures of each
such officer. The Agent may conclusively rely on such certificate until
the Agent receives a further certificate of either Borrower or Guarantor
canceling or amending the prior certificate and submitting signatures of
the officers named in such further certificate;
(vii) Environmental Review. The Agent shall have received
satisfactory evidence that Borrowers have completed an environmental
review of their respective material Oil and Gas Properties or other
environmental assurances satisfactory to Agent;
(viii) Organizational Documents. The Agent shall have received
copies of Certificates of Incorporation, Organization, Formation or
Limited Partnership, as applicable, for each Borrower and Guarantor
together with all amendments thereto, appropriately certified by
governmental authority in the jurisdiction of organization of each
Borrower and Guarantor, as applicable, and a copy of the Bylaws, Limited
Liability Company Agreement or Agreement of Limited Partnership, as
applicable, of each Borrower and Guarantor, and all amendments thereto,
certified by one or more officers or owners of each Borrower or Guarantor,
as the case may be, as being true, correct and complete;
(ix) Payment of Accrued Interest and Fees. Agent shall have received
(i) payment of all accrued interest and all Unused Commitment Fees and
other fees and expenses accruing prior to the Effective Date pursuant to
the Prior Credit Agreement, and (ii) payment of any fees and expenses
required to be received by it on the Effective Date pursuant to the Loan
Documents and the fee letter dated as of the Effective Date, between
Borrowers and Agent;
(x) Representation and Warranties. The representations and
warranties of Borrowers and Guarantor under this Agreement shall be true
and correct in all material respects as of such date, as if then made
(except to the extent that such representations and warranties related
solely to an earlier date);
(xi) Security Instruments. Agent shall have received Security
Instruments in form and substance satisfactory to Agent covering the
Collateral as required by Section 6 hereof;
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(xii) Title Opinions or Information. Agent shall have received from
Borrowers title opinions or title information covering such part of the
Oil and Gas Properties as may be selected by Agent, such opinions or other
title information to be in content, form and substance satisfactory to
Agent;
(xiii) Engineering Review. Agent shall have received a copy of an
engineering report prepared by an independent engineering firm acceptable
to Agent in its sole discretion covering such part of the Oil and Gas
Properties as may be selected by Agent, said report to be in form and
substance satisfactory to Agent;
(xiv) Absence of Certain Proceedings. No suit, action or other
proceeding by a third party or a governmental authority shall be pending
or threatened which relates to this Agreement or the transactions
contemplated hereby;
(xv) Certificates of Insurance. Borrowers shall have delivered to
Agent certificates of insurance acceptable to Agent evidencing that
Borrowers are carrying insurance in accordance with Section 12(h) hereof,
reflecting that all required insurance policies are endorsed in favor of
and made jointly payable to Agent as its interests may appear, naming
Agent and the Lenders as "additional insureds" and providing that the
insurer will give at least thirty (30) days prior notice of any
cancellation to Agent;
(xvi) Rate Management Transactions. Borrowers shall have delivered
to Agent a current schedule reflecting all of their existing Rate
Management Transactions;
(xvii) No Event of Default. No Default or Event of Default shall
have occurred and be continuing;
(xviii) Other Documents. Agent shall have received such other
instruments and documents incidental and appropriate to the transactions
provided for herein as Agent or its counsel may reasonably request, and
all such documents shall be in form and substance reasonably satisfactory
to the Agent; and
(xix) Legal Matters Satisfactory. All legal matters incident to the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory to special counsel for Agent retained at the expense of
Borrowers and Guarantor.
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(b) The obligation of the Lenders to make any Advance or issue any Letter
of Credit under the Commitment (other than the initial Advance) shall be subject
to the following additional conditions precedent that, at the date of making
each such Advance and after giving effect thereto:
(i) Representation and Warranties. The representations and
warranties of Borrowers and Guarantor under this Agreement are true and
correct in all material respects as of such date, as if then made (except
to the extent that such representations and warranties relate solely to an
earlier date);
(ii) No Event of Default. No Default or Event of Default shall have
occurred and be continuing; and
(iii) Legal Matters Satisfactory. All legal matters incident to the
consummation of the transactions contemplated hereby shall be satisfactory
to special counsel for Agent retained at the expense of Borrowers and
Guarantor.
Each Notice of Borrowing shall constitute a representation and warranty by
Borrowers that the conditions contained in Sections 11(b)(i) and (ii) have been
satisfied.
12. Affirmative Covenants. A deviation from the provisions of this Section
12 shall not constitute a Default or an Event of Default under this Agreement if
such deviation is consented to in writing by Majority Lenders prior to the date
of deviation. Borrowers and Guarantor will at all times comply with the
covenants contained in this Section 12 from the date hereof and for so long as
the Commitments are in existence or any amount is owed to the Agent or the
Lenders under this Agreement or the other Loan Documents.
(a) Financial Statements and Reports. Borrowers and Guarantor shall
promptly furnish to the Agent from time to time upon request such
information regarding the business and affairs and financial condition of
Borrowers and Guarantor, as the Agent may reasonably request, and will
furnish to the Agent:
(i) Annual Financial Statements. As soon as available, and in
any event within ninety (90) days after the end of each fiscal year
of PPC (x) the annual audited consolidated Financial Statements of
PPC, prepared in accordance with GAAP accompanied by an unqualified
opinion on such consolidated statements rendered by BDO Xxxxxxx, LLP
or another independent accounting firm reasonably acceptable to the
Agent, and (y) the annual unaudited consolidating Financial
Statements of PPC prepared in accordance with GAAP;
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(ii) Quarterly Financial Statements. As soon as available, and
in any event within forty-five (45) days after the end of each
fiscal quarter of PPC, the quarterly unaudited consolidated and
consolidating Financial Statements of PPC prepared in accordance
with GAAP;
(iii) Report on Properties. As soon as available and in any
event on or before March 1, 2006, and thereafter on or before March
1 and September 1 of each calendar year, and at such other times as
any Lender, in accordance with Section 7 hereof, may request, the
engineering reports required to be furnished to the Agent under such
Section 7 on the Oil and Gas Properties;
(iv) Quarterly Production Reports. As soon as available and in
any event within forty-five (45) days after the end of each fiscal
quarter of Borrowers, a quarterly production report, in form and
substance satisfactory to the Agent, indicating the sales volumes,
sales revenues, production taxes, operating expenses and net
operating income from the Oil and Gas Properties, with detailed,
calculations and worksheets, all in form and substance reasonably
satisfactory to the Agent;
(v) List of Purchasers. Promptly upon request of the Agent
from time to time and promptly after an Event of Default, a list of
all Persons purchasing hydrocarbons from the Borrowers or any of
their Subsidiaries;
(vi) SEC Reports. As soon as available, and in any event
within five (5) days of filing, copies of all filings by PPC with
the Securities and Exchange Commission; and
(vii) Additional Information. Promptly upon request of the
Agent from time to time any additional financial or other
information that the Agent may reasonably request.
All such reports, information, balance sheets and Financial Statements
referred to in Subsection 12(a) above shall be in such detail as the Agent
may reasonably request and shall be prepared in a manner consistent with
the Financial Statements.
(b) Certificates of Compliance. Concurrently with the furnishing of
the annual audited Financial Statements pursuant to Subsection 12(a)(i)
hereof and the quarterly unaudited Financial Statements pursuant to
Subsection 12(a)(ii) hereof,
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Borrowers will furnish or cause to be furnished to the Agent a certificate
in the form of Exhibit "D" attached hereto, signed by the President, Chief
Financial Officer or other authorized representative of Borrowers, (i)
stating that Borrowers and Guarantor have fulfilled in all material
respects their respective obligations under the Notes and the Loan
Documents, including this Agreement, and that all representations and
warranties made herein and therein continue (except to the extent they
relate solely to an earlier date) to be true and correct in all material
respects (or specifying the nature of any change), or if a Default has
occurred, specifying the Default and the nature and status thereof; (ii)
to the extent requested from time to time by the Agent, specifically
affirming compliance of each Borrower and Guarantor in all material
respects with any of its representations (except to the extent they relate
solely to an earlier date) or obligations under said instruments; (iii)
setting forth the computation, in reasonable detail as of the end of each
period covered by such certificate, of compliance with Sections 13(b), (c)
and (d); and (iv) containing or accompanied by such financial or other
details, information and material as the Agent may reasonably request to
evidence such compliance.
(c) Accountants' Certificate. Concurrently with the furnishing of
the annual audited Financial Statements pursuant to Section 12(a)(i)
hereof, Borrowers will furnish a statement from the firm of independent
public accountants which prepared such Financial Statements to the effect
that nothing has come to their attention to cause them to believe that
there existed on the date of such statements any Event of Default and
specifically calculating PPC's compliance with Sections 13(b), (c) and (d)
of this Agreement.
(d) Taxes and Other Liens. Each Borrower and Guarantor will pay and
discharge promptly all taxes, assessments and governmental charges or
levies imposed upon it, or upon its income or any of its assets or
property, as well as all claims of any kind (including claims for labor,
materials, supplies and rent) which, if unpaid, might become a Lien or
other encumbrance upon any or all of its assets or property and which
could reasonably be expected to result in a Material Adverse Effect;
provided, however, that neither either Borrower nor Guarantor shall be
required to pay any such tax, assessment, charge, levy or claim if the
amount, applicability or validity thereof shall currently be contested in
good faith by appropriate proceedings diligently conducted, levy and
execution thereon have been stayed and continue to be stayed and if it
shall have set up adequate reserves therefor, if required, under GAAP.
(e) Compliance with Laws. Each Borrower and Guarantor will observe
and comply, in all material respects, with all applicable laws, statutes,
codes, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, orders and restrictions relating to environmental standards
or controls or to energy regulations of all federal, state, county,
municipal and other governments, departments, commissions, boards,
agencies, courts, authorities, officials and officers, domestic or
foreign.
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(f) Further Assurances. Borrowers will cure promptly any defects in
the creation and issuance of the Notes and the execution and delivery of
the Notes and each Borrower and Guarantor will cure promptly any defects
in the execution and delivery of the other Loan Documents, including this
Agreement, to which it is a party. Each Borrower and Guarantor at its sole
expense will promptly execute and deliver to Agent upon its reasonable
request all such other and further documents, agreements and instruments
in compliance with or accomplishment of the covenants and agreements in
this Agreement, or to correct any omissions in the Notes or the other Loan
Documents or more fully to state the obligations set out herein.
(g) Performance of Obligations. Borrowers will pay the Notes and
other obligations incurred by it hereunder according to the reading, tenor
and effect thereof and hereof; and each Borrower and Guarantor will do and
perform every act and discharge all of the obligations provided to be
performed and discharged by it under the Loan Documents, including this
Agreement, at the time or times and in the manner specified.
(h) Insurance. Each Borrower now maintains and will continue to
maintain insurance with financially sound and reputable insurers with
respect to its assets and the assets of its Subsidiaries against such
liabilities, fires, casualties, risks and contingencies and in such types
and amounts as is customary in the case of persons engaged in the same or
similar businesses and similarly situated. Upon request of the Agent, each
Borrower will furnish or cause to be furnished to the Agent from time to
time a summary of its insurance coverage in form and substance reasonably
satisfactory to the Agent, and, if requested, will furnish the Agent
copies of the applicable policies. Upon demand by Agent any insurance
policies covering any such property shall be endorsed (i) to provide that
such policies may not be canceled, reduced or affected in any manner for
any reason without thirty (30) days prior notice to Agent, (ii) to provide
for insurance against fire, casualty and other hazards normally insured
against, in the amount of the full value (less a reasonable deductible not
to exceed amounts customary in the industry for similarly situated
business and properties) of the property insured, (iii) in favor of and
made jointly payable to Agent as its interests may appear, (iv) to name
Agent and the Lenders as "additional insureds", and (v) to provide for
such other matters as the Agent may reasonably require. PPC will at all
times maintain adequate insurance with respect to all of its assets and
the assets of its Subsidiaries, including but not limited to, the Oil and
Gas Properties or any Collateral against their liability for injury to
persons or property, which insurance shall be by financially sound and
reputable insurers and shall without limitation provide the following
coverages: comprehensive general liability (including coverage for damage
to underground resources and equipment, damages caused by blowouts or
cratering, damage caused by explosion, damage to underground minerals or
resources caused by saline substances, broad form property damage
coverage, broad form coverage for contractually assumed liabilities and
broad form coverage for acts of independent
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contractors), workers compensation, automobile liability and environmental
liability. PPC shall at all times maintain adequate insurance with respect
to all of its and its Subsidiaries other assets and xxxxx in accordance
with prudent business practices.
(i) Accounts and Records. Each Borrower and Guarantor will keep
books, records and accounts in which full, true and correct entries will
be made of all dealings or transactions in relation to its business and
activities, prepared in a manner consistent with prior years, subject to
changes suggested by Borrowers' auditors or with which Borrowers' auditors
concur.
(j) Right of Inspection. Each Borrower and Guarantor will permit any
officer, employee or agent of the Lenders to examine each Borrower's and
Guarantor's books, records and accounts, and take copies and extracts
therefrom, all at such reasonable times during normal business hours and
as often as the Lenders may reasonably request. The Lenders will use best
efforts to keep all Confidential Information (as herein defined)
confidential and will not disclose or reveal the Confidential Information
or any part thereof other than (i) as required by law, and (ii) to the
Lenders', and the Lenders' subsidiaries', Affiliates, officers, employees,
legal counsel and regulatory authorities or advisors to whom it is
necessary to reveal such information for the purpose of effectuating the
agreements and undertakings specified herein or as otherwise required in
connection with the enforcement of the Lenders' and the Agent's rights and
remedies under the Notes, this Agreement and the other Loan Documents. As
used herein, "Confidential Information" means information about Borrowers
or Guarantor furnished by either Borrower or Guarantor to the Lenders, but
does not include information (i) which was publicly known, or otherwise
known to the Lenders, at the time of the disclosure, (ii) which
subsequently becomes publicly known through no act or omission by the
Lenders, or (iii) which otherwise becomes known to the Lenders, other than
through disclosure by either Borrower or Guarantor.
(k) Notice of Certain Events. Each Borrower and Guarantor shall
promptly notify the Agent if it learns of the occurrence of (i) any event
which constitutes an Event of Default together with a detailed statement
of the steps being taken to cure such Event of Default; (ii) any legal,
judicial or regulatory proceedings affecting either Borrower or Guarantor
or any of the assets or properties of either Borrower or Guarantor which,
if adversely determined, would reasonably be expected to have a Material
Adverse Effect; (iii) any dispute between either Borrower or Guarantor and
any governmental or regulatory body or any other Person or entity which,
if adversely determined, would reasonably be expected to cause a Material
Adverse Effect; (iv) any other matter which in either Borrower's or
Guarantor's reasonable opinion could have a Material Adverse Effect.
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(l) ERISA Information and Compliance. Each Borrower and Guarantor
will promptly furnish to the Agent upon becoming aware of the occurrence
of any "reportable event", as such term is defined in Section 4043 of
ERISA, or of any "prohibited transaction", as such term is defined in
Section 4975 of the Internal Revenue Code of 1986, as amended, in
connection with any Plan or any trust created thereunder, a written notice
signed by the President or chief financial officer of each Borrower
specifying the nature thereof, what action such party is taking or
proposes to take with respect thereto, and, when known, any action taken
by the Internal Revenue Service with respect thereto.
(m) Environmental Reports and Notices. Borrowers will deliver to the
Agent (i) promptly upon its becoming available, one copy of each report
(other than routine informational filings) sent by either Borrower or
Guarantor to any court, governmental agency or instrumentality pursuant to
any Environmental Law, (ii) notice, in writing, promptly upon either
Borrower's or Guarantor's receipt of notice or otherwise learning of any
claim, demand, action, event, condition, report or investigation
indicating any potential or actual liability arising in connection with
(x) the non-compliance with or violation of the requirements of any
Environmental Law which reasonably could be expected to have a Material
Adverse Effect; (y) the release or threatened release of any toxic or
hazardous waste into the environment which reasonably would be expected to
have a Material Adverse Effect or which release either Borrower or
Guarantor would have a duty to report to any court or government agency or
instrumentality, and (iii) promptly a copy of any notice evidencing the
existence of any Environmental Lien on any properties or assets of either
Borrower or Guarantor.
(n) Compliance and Maintenance. Each Borrower and Guarantor will (i)
observe and comply in all material respects with all Environmental Laws;
(ii) except as provided in Subsections 12(p) and 12(q) below, maintain the
Oil and Gas Properties and other assets and properties in good and
workable condition at all times and make all repairs, replacements,
additions, betterments and improvements to the Oil and Gas Properties and
other assets and properties as are needed and proper so that the business
carried on in connection therewith may be conducted properly and
efficiently at all times; (iii) take or cause to be taken whatever actions
are necessary or desirable to prevent an event or condition of default by
either Borrower or Guarantor under the provisions of any gas purchase or
sales contract or any other contract, agreement or lease comprising a part
of the Oil and Gas Properties or other collateral security hereunder which
default could reasonably be expected to result in a Material Adverse
Effect; and (iv) furnish Agent upon request evidence reasonably
satisfactory to Agent that there are no Liens, claims or encumbrances on
the Oil and Gas Properties, except Permitted Liens.
(o) Operation of Properties. Except as provided in Subsections 12(p)
and (q) below, Borrowers will operate, or use reasonable efforts to cause
to be operated, all Oil
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and Gas Properties in a careful and efficient manner in accordance with
the practice of the industry and in compliance in all material respects
with all applicable laws, rules, and regulations, and in compliance in all
material respects with all applicable proration and conservation laws of
the jurisdiction in which the properties are situated, and all applicable
laws, rules, and regulations, of every other agency and authority from
time to time constituted to regulate the development and operation of the
properties and the production and sale of hydrocarbons and other minerals
therefrom; provided, however, that Borrowers shall have the right to
contest in good faith by appropriate proceedings, the applicability or
lawfulness of any such law, rule or regulation and pending such contest
may defer compliance therewith, as long as such deferment shall not
subject the properties or any part thereof to foreclosure or loss.
(p) Compliance with Leases and Other Instruments. Borrowers will pay
or cause to be paid and discharge all rentals, delay rentals, royalties,
production payment, and indebtedness required to be paid by either
Borrower (or required to keep unimpaired in all material respects the
rights of either Borrower in the Oil and Gas Properties) accruing under,
and perform or cause to be performed in all material respects each and
every act, matter, or thing required of Borrowers by each and all of the
assignments, deeds, leases, subleases, contracts, and agreements in any
way relating to Borrowers or any of the Oil and Gas Properties and do all
other things necessary of Borrowers to keep unimpaired in all material
respects the rights of Borrowers thereunder and to prevent the forfeiture
thereof or default thereunder; provided, however, that nothing in this
Agreement shall be deemed to require either Borrower to perpetuate or
renew any oil and gas lease or other lease by payment of rental or delay
rental or by commencement or continuation of operations nor to prevent
either Borrower from abandoning or releasing any oil and gas lease or
other lease or well thereon when, in any of such events, in the opinion of
Borrowers exercised in good faith, it is not in the best interest of
Borrowers to perpetuate the same.
(q) Certain Additional Assurances Regarding Maintenance and
Operations of Properties. With respect to those Oil and Gas Properties
which are being operated by operators other than the Borrowers, Borrowers
shall not be obligated to perform any undertakings contemplated by the
covenants and agreement contained in Subsections 12(n) or 12(o) hereof
which are performable only by such operators and are beyond the control of
Borrowers; however, Borrowers agree to promptly take all reasonable
actions available under any operating agreements or otherwise to bring
about the performance of any such material undertakings required to be
performed thereunder.
(r) Sale of Certain Assets/Prepayment of Proceeds. Borrowers will
immediately pay over to the Agent for the ratable benefit of the Lenders
as a prepayment of principal on the Notes and a reduction of the
Commitment, an amount equal to 100%
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of the net proceeds received by either Borrower from the sale of the Oil
and Gas Properties, which sale has been approved in advance by the
Lenders. Any such prepayment of principal on the Notes required by this
Section 12(r), shall not be in lieu of, but shall be in addition to, any
mandatory prepayment of principal required to be paid pursuant to Section
9(b) hereof.
(s) Title Matters. Within sixty (60) days after the Effective Date
with respect to the Oil and Gas Properties listed on Schedule "6" hereto,
Borrowers shall furnish Agent with title opinions and/or title information
reasonably satisfactory to Agent showing good and defensible record title
of Borrowers to such Oil and Gas Properties subject only to the Permitted
Liens. As to any Oil and Gas Properties hereafter mortgaged to Agent,
Borrowers will promptly (but in no event more than sixty (60) days
following such mortgaging), furnish, if requested, Agent with title
opinions and/or title information reasonably satisfactory to Agent showing
good and defensible title of Borrowers to such Oil and Gas Properties
subject only to Permitted Liens.
(t) Curative Matters. Within sixty (60) days after the Effective
Date with respect to matters listed on Schedule "7" and, thereafter,
within sixty (60) days after receipt by Borrowers from Agent or its
counsel of written notice of title defects the Agent reasonably requires
to be cured, Borrowers shall either (i) provide such curative information,
in form and substance satisfactory to Agent, or (ii) substitute Oil and
Gas Properties of value and quality satisfactory to the Agent for all of
Oil and Gas Properties for which such title curative was requested but
upon which Borrowers elected not to provide such title curative
information, and, within sixty (60) days of such substitution, provide
title opinions or title information satisfactory to the Agent covering the
Oil and Gas Properties so substituted. If the Borrowers fail to satisfy
(i) or (ii) above within the time specified, the loan collateral value
assigned by the Lenders to the Oil and Gas Properties for which such
curative information was requested shall be deducted from the Borrowing
Base resulting in a reduction thereof.
(u) Change of Principal Place of Business. Each Borrower and
Guarantor shall give Agent at least thirty (30) days prior written notice
of its intention to move its principal place of business from the address
set forth in Section 17 hereof.
(v) Additional Collateral. Borrowers agree to regularly monitor
engineering data covering all producing oil and gas properties and
interests owned or acquired by either Borrower on or after the date hereof
and to mortgage or cause to be mortgaged such of the same to Agent for the
ratable benefit of the Lenders in substantially the form of the Security
Instruments, as applicable, to the extent that the Lenders shall at all
times during the existence of the Commitment be secured by perfected Liens
and security interests covering (i) not less than eighty percent (80%) of
the Engineered Value of all proved
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developed producing Oil and Gas Properties of Borrowers, and (ii) not less
than eighty percent (80%) of the Engineered Value of all other proved Oil
and Gas Properties of Borrowers. In addition, the Borrowers agree that in
connection with the mortgaging of such additional oil and gas properties,
they shall within a reasonable time thereafter, deliver or cause to be
delivered to the Agent such mortgage and title opinions and other title
information with respect to the title and Lien status of such oil and gas
properties as may be necessary to maintain at all times a level of such
title opinions and title information of not less than eighty percent (80%)
of the Engineered Value of all Oil and Gas Properties mortgaged to the
Agent for the ratable benefit of the Lenders.
(w) Crude Oil and Natural Gas Hedging. Borrowers shall maintain with
counterparties acceptable to the Agent non-speculative crude oil and
natural gas price xxxxxx for rolling twenty-four (24) month periods, but
not to extend beyond the Maturity Date unless Borrowers otherwise elect,
and with prices and other terms as shall be approved in advance by Agent
covering at least fifty percent (50%) of Borrowers' aggregate estimated
monthly crude oil and natural gas production from Borrowers' proved
producing Oil and Gas Properties, determined on a BOE Basis (defined
below). The foregoing hedging requirement shall be based upon the then
most current reserve evaluation delivered by Borrowers to Agent pursuant
to Section 12(a)(iii) above, and Borrowers shall be in compliance with the
required volumes to be hedged within ninety (90) days after the effective
date of each such most current reserve evaluation. As used in this
Agreement, the term "BOE Basis" shall mean in the case of crude oil,
barrels of crude oil, and in the case of natural gas and natural gas
liquids, quantities of natural gas and natural gas liquids translated into
barrels of crude oil based on equal energy content.
(x) Subordinated Loan Agreement. Borrowers and Guarantor will (i)
furnish to Agent copies of all documents, instruments, notices, reports,
certificates or other items which are furnished to or received from the
administrative agent or any lender pursuant to the terms of the
Subordinated Loan Agreement or any Loan Documents (as defined in the
Subordinated Loan Agreement), at the same time as the same are furnished
to or received from the administrative agent or any lender pursuant to the
terms of Subordinated Loan Agreement or any such Subordinated Loan
Documents (except to the extent a copy of any such item has previously
been furnished to Agent and Lenders), and (ii) grant to Agent for the
ratable benefit of the Lenders a first and prior Lien on any of their
assets upon which the administrative agent or any lender under the
Subordinated Loan Agreement is granted a Lien, prior to granting any such
Lien to the administrative agent or any lender under the Subordinated Loan
Agreement.
(y) Existence; Conduct of Business. Each Borrower will, and will
cause each of its Subsidiaries 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
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and franchises material to the conduct of its business and maintain, if
necessary, its qualification to do business in each other jurisdiction in
which any of its Oil and Gas Properties is located or the ownership of its
properties requires such qualification, except where 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 13(e).
13. Negative Covenants. A deviation from the provisions of this Section 13
shall not constitute an Event of Default under this Agreement if such deviation
is consented to in writing by Majority Lenders prior to the date of deviation.
Each Borrower and Guarantor, as applicable, will at all times comply with the
covenants contained in this Section 13 from the date hereof and for so long as
the Commitment is in existence or any amount is owed to the Agent or the Lenders
under this Agreement or the other Loan Documents.
(a) Negative Pledge. Neither either Borrower nor Guarantor will, and
will not permit any Subsidiary to:
(i) create, incur, assume or permit to exist any Lien,
security interest or other encumbrance on any of its respective
assets or properties except Permitted Liens; or
(ii) sell, lease, transfer or otherwise dispose of, in any
fiscal year, any of its respective assets except for (A) sales of
extracted petroleum hydrocarbons made in the ordinary course of
either Borrower's oil and gas business, and (B) to the extent not
otherwise forbidden under the Security Instruments, equipment that
is worthless or obsolete or which is replaced by equipment of equal
suitability in value, and interests in oil and gas leases, or
portions thereof, so long as no well situated on any such lease or
located on any unit containing all or any part thereof, is capable
(or is subject to being made capable through commercially feasible
operations) of production oil, gas or other hydrocarbons or minerals
in commercial quantities.
(b) Current Ratio. PPC shall not allow its Current Ratio to be less
than 1.0 to 1.0 as of the end of any fiscal quarter beginning with the
fiscal quarter ending December 31, 2005.
(c) Funded Debt Ratio. PPC will not allow its ratio of Consolidated
Funded Debt to Consolidated EBITDA to exceed (i) 3.70 to 1.00, calculated
at the end of the fiscal quarter of PPC ending December 31, 2005, with
Consolidated EBITDA to be calculated on an annualized basis based on the
results of such fiscal quarter, (ii) 3.60 to
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1.00, calculated at the end of the fiscal quarter of PPC ending March
31, 2006, with Consolidated EBITDA to be calculated on an annualized basis
based on the results of the six month period immediately preceding Xxxxx
00, 0000, (xxx) 3.60 to 1.00, calculated at the end of the fiscal quarter
of PPC ending June 30, 2006, with Consolidated EBITDA to be calculated on
an annualized basis based on the results of the nine month period
immediately preceding June 30, 2006, and (iv) 3.60 to 1.00, calculated at
the end of the fiscal quarters of PPC ending September 30, 2006 and
December 31, 2006, using the results of the twelve month period
immediately preceding the end of each such fiscal quarter, and (v) 3.50 to
1.00 during the year 2007 and thereafter during the term hereof. Except as
specifically provided above, this ratio shall be calculated at the end of
each fiscal quarter of PPC using the results of the twelve month period
immediately preceding the end of each such fiscal quarter.
(d) Adjusted Consolidated Net Worth. At all times during the term
hereof, PPC's Adjusted Consolidated Net Worth shall not be less than (a)
$85,000,000, plus (b) seventy-five percent (75%) of the net proceeds from
any equity securities issued by the PPC on or after the date of this
Agreement, plus (c) fifty percent (50%) of PPC's Consolidated Net Income
for each fiscal quarter, if positive, and zero percent (0%) if negative,
determined on a cumulative basis, for the period beginning September 30,
2005, and ending on the last day of the most recent fiscal quarter as of
the time in question.
(e) Subsidiaries; Consolidations and Mergers. Neither either
Borrower, Guarantor nor any Subsidiary will form any new Subsidiary or
consolidate or merge with or into any other Person, except that any
Subsidiary may consolidate or merge with or into either Borrower if such
Borrower is the surviving entity in such consolidation or merger and if,
after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing.
(f) Debts, Guaranties and Other Obligations. Neither either Borrower
nor Guarantor will, and will not permit any Subsidiary to, incur, create,
assume or in any manner become or be liable in respect of any
indebtedness, or guarantee or otherwise in any manner become or be liable
in respect of any indebtedness, liabilities or other obligations of any
other Person, whether by agreement to purchase the indebtedness of any
other Person or agreement for the furnishing of funds to any other Person
through the purchase or lease of goods, supplies or services (or by way of
stock purchase, capital contribution, advance or loan) for the purpose of
paying or discharging the indebtedness of any other Person, or otherwise,
except that the foregoing restrictions shall not apply to:
(i) the Notes and any renewal or increase thereof, or other
indebtedness heretofore disclosed to Lenders in the Borrowers' or
Guarantor's Financial Statements or on Schedule "4" hereto; or
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(ii) taxes, assessments or other government charges which are
not yet due or are being contested in good faith by appropriate
action promptly initiated and diligently conducted, if such reserve
as shall be required by GAAP shall have been made therefor and levy
and execution thereon have been stayed and continue to be stayed; or
(iii) indebtedness (other than in connection with a loan or
lending transaction) incurred in the ordinary course of business
which is not more than 60 days past due, including, but not limited
to indebtedness for drilling, completing, leasing and reworking oil
and gas xxxxx; or
(iv) obligations under Rate Management Transactions permitted
pursuant to Section 13(l) hereof; or
(v) the Subordinated Debt, not to exceed an aggregate
principal amount of $75,000,000 outstanding at any time; or
(vi) other indebtedness not exceeding $1,000,000 in the
aggregate for Borrowers, Guarantor and Subsidiaries outstanding at
any time; or
(vii) any renewals or extensions of (but, other than in the
case of the Notes, not increases in) any of the foregoing.
(g) Dividend and Distributions. Neither either Borrower nor
Guarantor will, and will not permit any Subsidiary to, declare, pay or
make any loans, advances, dividends or distributions of any kind to its
stockholders or other equity owners, or make any other distribution on
account of, or purchase, acquire or redeem or retire any stock or other
security issued by it, except that (i) either Borrower's Subsidiaries may
declare, pay or make dividends or distributions to such Borrower, and (ii)
PLP may make distributions to Guarantor, provided that Guarantor
immediately redistributes such distributions to PPC.
(h) Loans and Advances. Neither either Borrower nor Guarantor will,
and will not permit any Subsidiary to, make or permit to remain
outstanding any loans or advances to or in any Person, except that the
foregoing restriction shall not apply to:
(i) loans or advances to any Person, the material details of
which have been set forth in the Financial Statements of the
Borrowers and the Guarantor heretofore furnished to Lenders; or
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(ii) advances made in the ordinary course of either Borrower's
or Guarantor's oil and gas business; or
(iii) other loans or advances to any third party or Affiliate
(other than a Borrower) not in excess of $1,000,000 in the aggregate
outstanding; or
(iv) loans or advances to either Borrower.
(i) Receivables and Payables. Neither either Borrower nor Guarantor
will, and will not permit any Subsidiary to, discount or sell with
recourse, or sell for less than the market value thereof, any of its notes
receivable or accounts receivable.
(j) Nature of Business. Neither either Borrower nor Guarantor will,
and will not permit any Subsidiary to, permit any material change to be
made in the character of its businesses as carried on at the date hereof.
(k) Transactions with Affiliates. Neither either Borrower nor
Guarantor will, and will not permit any Subsidiary to, enter into any
transaction with any Affiliate, except transactions upon terms that are no
less favorable to it than could be obtained in a transaction negotiated at
arm's length with an unrelated third party.
(l) Rate Management Transactions. Neither either Borrower nor
Guarantor will, and will not permit any Subsidiary to, enter into any Rate
Management Transactions, except the foregoing prohibitions shall not apply
to (x) transactions required by this Agreement or consented to in writing
by the Majority Lenders, in each case which are on terms acceptable to the
Majority Lenders, or (y) transactions by Borrowers designed to hedge,
provide a floor price for, or swap crude oil or natural gas, provided that
(i) the same do not cover more than eighty-five percent (85%) of
Borrowers' aggregate estimated monthly crude oil and natural gas
production from Borrowers' proved producing crude oil and natural gas
reserves existing as of the date of the execution thereof based upon the
then most current reserve evaluation required pursuant to Section
12(a)(iii) above and determined on a BOE Basis, (ii) the same do not cover
more than 100% of Borrowers' aggregate estimated proved producing crude
oil production or more than 100% of Borrowers' aggregate estimated proved
producing natural gas production, each as existing as of the date of the
execution thereof based upon the then most current reserve evaluation
required pursuant to Section 12(a)(iii) above, (iii) the same do not
contain terms or provisions which would require margin calls, (iv) the
counterparty to any such transaction has a minimum rating of "A-1" by
Standard & Poors' Corporation or "A-3" by Xxxxx'x Investors Service, Inc.,
(v) the same are for a term not extending beyond the Maturity Date, and
(vi) the same include provisions for
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payment to Borrowers upon the occurrence of specified price indexes of a
price per unit of measurement equal to or greater than that under the
Agent's then current pricing policies; or, provided that (A) the same do
not cover more than ninety percent (90%) of Borrowers' aggregate estimated
monthly crude oil and natural gas production from Borrowers' proved
producing crude oil and natural gas reserves existing as of the date of
the execution thereof based upon the then most current reserve evaluation
required pursuant to Section 12(a)(iii) above and determined on a BOE
Basis, (B) the same do not cover more than seventy-five percent (75%) of
Borrowers' aggregate estimated monthly crude oil and natural gas
production from all categories of Borrowers' proved crude oil and natural
gas reserves existing as of the date of the execution thereof based upon
the then most current reserve evaluation required pursuant to Section
12(a)(iii) above and determined on a BOE Basis, (C) as of the date of the
execution thereof, Borrowers' aggregate actual production from proved
producing crude oil and natural gas reserves exceeds Borrowers' aggregate
forecasted production from proved producing crude oil and natural gas
reserves for such date based on the then most current reserve evaluation
required pursuant to Section 12(a)(iii) above, (D) the same are for a term
of twelve (12) months or less, and (E) the same satisfy the requirements
set forth in items (ii), (iii), (iv) and (vi) above.
(m) Investments. Neither either Borrower nor Guarantor will, and
will not permit any Subsidiary to, make any investments in any Person or
entity, except such restriction shall not apply to:
(i) investments with maturities of not more than 180 days in
direct obligations of the United States of America or any agency
thereof; or
(ii) investments in certificates of deposit issued by a
Lender; or
(iii) PLP's existing investments in First Permian GP, L.L.C.
and in First Permian, L.P. and PPC's existing investments in West
Fork Pipeline Company GP, LLC and in West Fork Pipeline Company LP;
or
(iv) other investments not to exceed (A) $5,000,000 in the
aggregate for Borrowers, Guarantor and Subsidiaries during the 2005
calendar year, when aggregated with loans and advances allowed
pursuant to Section 13(h)(iii), (B) $7,000,000 in the aggregate for
Borrowers, Guarantor and Subsidiaries during the 2006 calendar year,
when aggregated with loans and advances allowed pursuant to Section
13(h)(iii), and (C) $1,000,000 in the aggregate for Borrowers,
Guarantor and Subsidiaries during any calendar year after the 2006
calendar year, when aggregated with loans and advances allowed
pursuant to Section 13(h)(iii); or
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(v) investments in Subsidiaries to the extent of such
investments as of the Effective Date.
(n) Amendment to Organizational Documents. Neither either Borrower
nor Guarantor will, and will not permit any Subsidiary to, permit any
material amendment to, or any material alteration of, its Articles or
Certificate of Incorporation, Articles or Certificate of Organization,
Agreement or Certificate of Limited Partnership, Certificate of Formation,
Bylaws, Limited Liability Company Agreement or other governing documents,
as applicable.
(o) ERISA Compliance. Neither either Borrower nor Guarantor will,
and will not permit any Subsidiary to, permit any plan subject to ERISA
maintained by it to (i) engage in any "prohibited transaction" as such
term is defined in Section 4975 of the Internal Revenue Code of 1986, as
amended; (ii) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA; or (iii) terminate in a manner which
could result in the imposition of a lien on its property pursuant to
Section 4068 of ERISA.
(p) Accounting Method and Fiscal Year. Neither either Borrower nor
Guarantor will, and will not permit any Subsidiary to, make any change in
its present accounting method unless such changes are required for
conformity with GAAP.
(q) Issuance of Equity Interests Neither PLP nor Guarantor will
issue or sell to any Person (other than PPC) any equity interest in it, or
any option, warrant or other right to acquire any such equity interest.
(r) Subordinated Debt. Neither either Borrower nor Guarantor will
(i) amend or enter into any agreement to amend or otherwise change the
Subordinated Loan Agreement or any agreement or instrument executed in
connection therewith, except as permitted by Section 2.16 of the
Intercreditor Agreement, (ii) fail to comply in any material respect with
the provisions of the Intercreditor Agreement, or (iii) make any
prepayment of amounts owing under the Subordinated Notes.
(s) Limitation on Leases. Neither of the Borrowers nor any of their
Subsidiaries will create, incur, assume or suffer to exist any obligation
for the payment of rent or hire of property of any kind whatsoever (real
or personal, but excluding oil and/or gas leases and leases of compressors
or other oilfield equipment), under leases or lease agreements which would
cause the aggregate amount of all payments by the Borrowers and their
Subsidiaries pursuant to all such leases or lease agreements, including,
without
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limitation, any residual payments at the end of any lease, to exceed
$1,000,000 in any period of twelve (12) consecutive calendar months during
the life of such leases.
14. Events of Default. Any one or more of the following events shall be
considered an "Event of Default" as that term is used herein:
(a) Borrowers shall fail to pay when due or declared due the
principal of, and the interest on, the Notes or any fee or any other
indebtedness of Borrowers incurred pursuant to this Agreement or any of
the other Loan Documents; or
(b) Any representation or warranty made by either Borrower or
Guarantor under this Agreement, or in any certificate or statement
furnished or made to the Lenders pursuant hereto, or in connection
herewith, or in connection with any document furnished hereunder, shall
prove to be untrue in any material respect as of the date on which such
representation or warranty is made (or deemed made), or any
representation, statement (including Financial Statements), certificate,
report or other data furnished or to be furnished or made by either
Borrower or Guarantor under any Loan Document, including this Agreement,
proves to have been untrue in any material respect, as of the date as of
which the facts therein set forth were stated or certified; or
(c) Default shall be made in the due observance or performance of
any of the covenants or agreements of either Borrower or Guarantor
contained in the Loan Documents, including this Agreement (excluding
covenants contained in Section 13 of the Agreement for which there is no
cure period), and such default shall continue for more than thirty (30)
days after written notice from Agent is received by Borrowers; or
(d) Default shall be made in the due observance or performance of
the covenants of either Borrower or Guarantor contained in Section 13 of
this Agreement; or
(e) Default shall be made in respect of any obligation for borrowed
money other than the Notes, for which either Borrower, Guarantor or any
Subsidiary is liable (directly, by assumption, as guarantor or otherwise),
or any obligations secured by any mortgage, pledge or other consensual
security interest with respect thereto, on any asset or property of either
Borrower, Guarantor or any Subsidiary or in respect of any agreement
relating to any such obligations, unless the aggregate amount of such
obligations in respect of which such default shall have occurred is less
than $1,000,000; or
(f) Either Borrower, Guarantor or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter
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in effect or seeking an appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action authorizing the foregoing;
or
(g) An involuntary case or other proceeding, shall be commenced
against either Borrower, Guarantor or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of thirty (30) days; or an order for relief shall be
entered against either Borrower, Guarantor or any Subsidiary under the
federal bankruptcy laws as now or hereinafter in effect; or
(h) A final judgment or order for the payment of money in excess of
$1,000,000 (or judgments or orders aggregating in excess of $1,000,000)
shall be rendered against either Borrower, Guarantor or any Subsidiary and
such judgments or orders shall continue unsatisfied and unstayed for a
period of thirty (30) days; or
(i) In the event the Total Outstandings shall at any time exceed the
Borrowing Base established for the Notes, and Borrowers shall fail to
comply with the provisions of Section 9(b) hereof; or
(j) An event of default (as defined therein) shall occur under any
agreement entered into in connection with any Rate Management Transaction;
or
(k) A Change of Control shall occur; or
(l) Any Lien for failure to pay income, payroll, FICA or similar
taxes shall be filed by the U. S. Government or any agent or
instrumentality thereof against either Borrower, Guarantor or any
Subsidiary, or any of their respective assets; or
(m) Any of the Loan Documents shall cease, for any reason, to be in
full force and effect, or either Borrower or Guarantor shall so assert; or
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(n) An Event of Default (as defined therein) shall occur under the
terms of the Subordinated Loan Agreement or under any document or
instrument executed in connection therewith; or
(o) The Intercreditor Agreement, except to the extent permitted by
the terms thereof, ceases to be in full force and effect and valid, and
binding and enforceable in accordance with its terms against the Borrowers
or any other party thereto or holder of the indebtedness subordinated
thereby.
Upon occurrence of any Event of Default specified in Subsections 14(f) and
(g) hereof, the entire principal amount due under the Notes and all interest
then accrued thereon, and any other liabilities of Borrowers hereunder, shall
become automatically and immediately due and payable all without notice and
without presentment, demand, protest, notice of protest or dishonor or any other
notice of default of any kind, all of which are hereby expressly waived by the
Borrowers and Guarantor. Upon the occurrence of any other Event of Default, the
Agent, upon request of Majority Lenders, shall by written notice to the
Borrowers declare the principal of, and all interest then accrued on, the Notes
and any other liabilities hereunder to be forthwith due and payable, whereupon
the same shall forthwith become due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other notice
of any kind, all of which the Borrowers and Guarantor hereby expressly waive,
anything contained herein or in the Notes to the contrary notwithstanding.
Upon the occurrence and during the continuance of any Event of Default,
the Lenders are hereby authorized at any time and from time to time, without
notice to the Borrowers or the Guarantor (any such notice being expressly waived
by the Borrowers and the Guarantor), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by any of the Lenders to or for the credit
or the account of either Borrower or Guarantor against any and all of the
indebtedness of the Borrowers under the Notes and the Loan Documents, including
this Agreement, irrespective of whether or not the Lenders shall have made any
demand under the Loan Documents, including this Agreement or the Notes and
although such indebtedness may be unmatured. Any amount set-off by any of the
Lenders shall be applied against the indebtedness owed the Lenders by the
Borrowers pursuant to this Agreement and the Notes. The Lenders agree promptly
to notify the Borrowers after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Lenders may have.
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15. The Agent and the Lenders.
(a) Appointment and Authorization. Each Lender hereby appoints Agent
as its nominee and agent, in its name and on its behalf: (i) to act as
nominee for and on behalf of such Lender in and under all Loan Documents;
(ii) to arrange the means whereby the funds of Lenders are to be made
available to the Borrowers under the Loan Documents; (iii) to take such
action as may be requested by any Lender under the Loan Documents (when
such Lender is entitled to make such request under the Loan Documents);
(iv) to receive all documents and items to be furnished to Lenders under
the Loan Documents; (v) to be the secured party, mortgagee, beneficiary,
and similar party in respect of, and to receive, as the case may be, any
collateral for the benefit of Lenders; (vi) to promptly distribute to each
Lender all material information, requests, documents and items received
from the Borrowers or Guarantor under the Loan Documents; (vii) to
promptly distribute to each Lender such Lender's Pro Rata Part of each
payment or prepayment (whether voluntary, as proceeds of insurance
thereon, or otherwise) in accordance with the terms of the Loan Documents
and (viii) to deliver to the appropriate Persons requests, demands,
approvals and consents received from Lenders. Each Lender hereby
authorizes Agent to take all actions and to exercise such powers under the
Loan Documents as are specifically delegated to Agent by the terms hereof
or thereof, together with all other powers reasonably incidental thereto.
With respect to its Commitment hereunder and the Notes issued to it, Agent
and any successor Agent shall have the same rights under the Loan
Documents as any other Lender and may exercise the same as though it were
not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include Agent and any successor Agent in its capacity
as a Lender. Agent and any successor Agent and its Affiliates may accept
deposits from, lend money to, act as trustee under indentures of and
generally engage in any kind of business with the Borrowers or Guarantor,
and any Person which may do business with the Borrowers or Guarantor, all
as if Agent and any successor Agent was not Agent hereunder and without
any duty to account therefor to the Lenders; provided that, if any
payments in respect of any property (or the proceeds thereof) now or
hereafter in the possession or control of Agent which may be or become
security for the obligations of the Borrowers or Guarantor arising under
the Loan Documents by reason of the general description of indebtedness
secured or of property contained in any other agreements, documents or
instruments related to any such other business shall be applied to
reduction of the obligations of the Borrowers and Guarantor arising under
the Loan Documents, then each Lender shall be entitled to share in such
application according to its Pro Rata Part thereof. Each Lender, upon
request of any other Lender, shall disclose to all other Lenders all
indebtedness and liabilities, direct and contingent, of the Borrowers and
Guarantor to such Lender as of the time of such request.
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(b) Note Holders. From time to time as other Lenders become a party
to this Agreement, Agent shall obtain execution by Borrowers of additional
Notes in amounts representing the Commitments of each such new Lender, up
to an aggregate face amount of all Notes not exceeding $350,000,000. The
obligation of such Lender shall be governed by the provisions of this
Agreement, including but not limited to, the obligations specified in
Section 2 hereof. From time to time, Agent may require that the Lenders
exchange their Notes for newly issued Notes to better reflect the
Commitments of the Lenders. Agent may treat the payee of any Note as the
holder thereof until written notice of transfer has been filed with it,
signed by such payee and in form satisfactory to Agent.
(c) Consultation with Counsel. Lenders agree that Agent may consult
with legal counsel selected by Agent and shall not be liable for any
action taken or suffered in good faith by it in accordance with the advice
of such counsel. LENDERS ACKNOWLEDGE THAT COTTON, XXXXXXX, XXXXX & XXXXXX
IS COUNSEL FOR CITIBANK TEXAS, BOTH AS AGENT AND AS A LENDER, AND THAT
SUCH FIRM DOES NOT REPRESENT ANY OF THE OTHER LENDERS IN CONNECTION WITH
THIS TRANSACTION.
(d) Documents. Agent shall not be under a duty to examine or pass
upon the validity, effectiveness, enforceability, genuineness or value of
any of the Loan Documents or any other instrument or document furnished
pursuant thereto or in connection therewith, and Agent shall be entitled
to assume that the same are valid, effective, enforceable and genuine and
what they purport to be.
(e) Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any
time by giving written notice thereof to Lenders and Borrowers, and Agent
may be removed at any time with or without cause by all Lenders (excluding
the Agent). If no successor Agent has been so appointed by Majority
Lenders (and approved by the Borrowers) and has accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation or removal of the retiring Agent, then the retiring Agent may,
on behalf of Lenders, appoint a successor Agent. Any successor Agent must
be approved by Borrowers, which approval will not be unreasonably
withheld. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights and duties of the retiring Agent, and
the retiring Agent, as the case may be, shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation
or removal hereunder as Agent, the provisions of this Section 15 shall
continue in effect for its benefit in respect to any actions taken or
omitted to be taken by it while it was acting as Agent. To be eligible to
be an Agent hereunder the party serving, or to serve, in such capacity
must
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own a Pro Rata Part of the Commitments equal to the level of Commitment
required to be held by any Lender pursuant to Section 29 hereof.
(f) Responsibility of Agent. It is expressly understood and agreed
that the obligations of Agent under the Loan Documents are only those
expressly set forth in the Loan Documents and that Agent shall be entitled
to assume that no Default or Event of Default has occurred and is
continuing, unless Agent has actual knowledge of such fact or has received
notice from a Lender or the Borrowers that such Lender or the Borrowers
consider that a Default or an Event of Default has occurred and is
continuing and specifying the nature thereof. Neither Agent nor any of its
directors, officers, attorneys or employees shall be liable for any action
taken or omitted to be taken by them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful
misconduct. Agent shall not incur liability under or in respect of any of
the Loan Documents by acting upon any notice, consent, certificate,
warranty or other paper or instrument believed by it to be genuine or
authentic or to be signed by the proper party or parties, or with respect
to anything which it may do or refrain from doing in the reasonable
exercise of its judgment, or which may seem to it to be necessary or
desirable. The Syndication Agent shall have no responsibilities as an
agent hereunder.
Agent shall not be responsible to Lenders for any of the Borrowers'
or Guarantor's recitals, statements, representations or warranties
contained in any of the Loan Documents, or in any certificate or other
document referred to or provided for in, or received by any Lender under,
the Loan Documents, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any of the Loan Documents or
for any failure by the Borrowers or Guarantor to perform any of their
obligations hereunder or thereunder. Agent may employ agents and
attorneys-in-fact and shall not be answerable, except as to money or
securities received by it or its authorized agents, for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care.
The relationship between Agent and each Lender is only that of agent
and principal and has no fiduciary aspects. Nothing in the Loan Documents
or elsewhere shall be construed to impose on Agent any duties or
responsibilities other than those for which express provision is therein
made. In performing its duties and functions hereunder, Agent does not
assume and shall not be deemed to have assumed, and hereby expressly
disclaims, any obligation or responsibility toward or any relationship of
agency or trust with or for the Borrowers or any of their beneficiaries or
other creditors. As to any matters not expressly provided for by the Loan
Documents, Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of all Lenders and such instructions shall be binding upon
all
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Lenders and all holders of the Notes; provided, however, that Agent shall
not be required to take any action which is contrary to the Loan Documents
or applicable law.
Agent shall have the right to exercise or refrain from exercising,
without notice or liability to the Lenders, any and all rights afforded to
Agent by the Loan Documents or which Agent may have as a matter of law;
provided, however, Agent shall not (i) without the consent of all Lenders
designate the amount of the Borrowing Base or (ii) without the consent of
Majority Lenders, take any other action with regard to amending the Loan
Documents, waiving any default under the Loan Documents, releasing or
substituting any Collateral (except as permitted in Section 15(q) hereof)
or taking any other action with respect to the Loan Documents. Provided
further, however, that no amendment, waiver, or other action shall be
effected pursuant to the preceding clause (ii) without the consent of all
Lenders which: (a) would increase the Borrowing Base, (b) would reduce any
fees hereunder, or the principal of, or the interest on, any Lender's Note
or Notes, (c) would postpone any date fixed for any payment of any fees
hereunder, or any principal or interest of any Lender's Note or Notes, (d)
would increase the aggregate Commitments or any Lender's individual
Commitment hereunder or would materially alter Agent's obligations to any
Lender hereunder, (e) would release Borrowers from their obligation to pay
any Lender's Note or Notes, (f) would change the definition of Majority
Lenders, (g) would extend the Maturity Date, (h) would release all or
substantially all of the Collateral, or (i) would amend this sentence or
the previous sentence. Agent shall not have liability to Lenders for
failure or delay in exercising any right or power possessed by Agent
pursuant to the Loan Documents or otherwise unless such failure or delay
is caused by the gross negligence of the Agent, in which case only the
Agent responsible for such gross negligence shall have liability therefor
to the Lenders.
(g) Independent Investigation. Each Lender expressly acknowledges
that neither the Agent nor any of its officers, directors, employees,
agents, attorneys in fact or Affiliates has made any representations or
warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrowers and Guarantor, shall be deemed
to constitute any representation or warranty by the Agent to any Lender.
Each Lender severally represents and warrants to Agent that it has made
its own independent investigation and assessment of the financial
condition and affairs of the Borrowers and Guarantor in connection with
the making and continuation of its participation hereunder and has not
relied exclusively on any information provided to such Lender by Agent in
connection herewith, and each Lender represents, warrants and undertakes
to Agent that it shall continue to make its own independent appraisal of
the credit worthiness of the Borrowers and Guarantor while the Notes are
outstanding or its Commitments hereunder are in force. Agent shall not be
required to keep itself informed as to the performance or observance by
the Borrowers and Guarantor of this Agreement or any other document
referred to or provided for herein or to inspect the properties or
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books of the Borrowers and Guarantor. Other than as provided in this
Agreement, Agent shall not have any duty, responsibility or liability to
provide any Lender with any credit or other information concerning the
affairs, financial condition or business of the Borrowers and Guarantor
which may come into the possession of Agent.
(h) Indemnification. Lenders agree to indemnify Agent and the
Syndication Agent ("Indemnified Agents") ratably according to their
respective Commitments on a Pro Rata basis, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any proper and reasonable kind
or nature whatsoever which may be imposed on, incurred by or asserted
against any Indemnified Agent in any way relating to or arising out of the
Loan Documents or any action taken or omitted by any Indemnified Agent
under the Loan Documents, provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
any Indemnified Agent's gross negligence or willful misconduct. Each
Lender shall be entitled to be reimbursed by any such Indemnified Agent
for any amount such Lender paid to any such Indemnified Agent under this
Section 15(h) to the extent such Indemnified Agent has been reimbursed for
such payments by Borrowers or any other Person. THE PARTIES INTEND FOR THE
PROVISIONS OF THIS SECTION TO APPLY TO AND PROTECT THE INDEMNIFIED AGENTS
FROM THE CONSEQUENCES OF ANY LIABILITY, INCLUDING STRICT LIABILITY,
IMPOSED OR THREATENED TO BE IMPOSED ON ANY INDEMNFIED AGENT AS WELL AS
FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER OR NOT THAT
NEGLIGENCE IS THE SOLE, CONTRIBUTING OR CONCURRING CAUSE OF ANY SUCH
LIABILITY.
(i) Benefit of Section 15. The agreements contained in this Section
15 are solely for the benefit of Agent, Syndication Agent and the Lenders
and are not for the benefit of, or to be relied upon by, the Borrower, any
Affiliate of the Borrowers or any other Person.
(j) Pro Rata Treatment. Subject to the provisions of this Agreement,
each payment (including each prepayment) by the Borrowers and each
collection by Lenders (including offsets) on account of the principal of
and interest on the Notes and fees provided for in this Agreement, that
are payable by the Borrowers, shall be made Pro Rata; provided, however,
in the event that any Defaulting Lender shall have failed to make an
Advance as contemplated under Section 3 hereof and Agent or another Lender
or Lenders shall have made such Advance, payment received by Agent for the
account of such Defaulting Lender or Lenders shall not be distributed to
such Defaulting Lender or
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Lenders until such Advance or Advances shall have been repaid in full to
the Lender or Lenders who funded such Advance or Advances.
(k) Assumption as to Payments. Except as specifically provided
herein, unless Agent shall have received notice from the Borrowers prior
to the date on which any payment is due to Lenders hereunder that the
Borrowers will not make such payment in full, Agent may, but shall not be
required to, assume that the Borrowers have made such payment in full to
Agent on such date and Agent may, in reliance upon such assumption, cause
to be distributed to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrowers shall not
have made such payment in full to Agent, each Lender shall repay to Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to
such Lender until the date such Lender repays such amount to Agent, at the
interest rate applicable to such portion of the Loan.
(l) Other Financings. Without limiting the rights to which any
Lender otherwise is or may become entitled, such Lender shall have no
interest, by virtue of this Agreement or the Loan Documents, in (a) any
present or future loans from, letters of credit issued by, or leasing or
other financial transactions by, any other Lender to, on behalf of, or
with either Borrowers or Guarantor (collectively referred to herein as
"Other Financings") other than the obligations hereunder; (b) any present
or future guarantees by or for the account of either Borrower or Guarantor
which are not contemplated by the Loan Documents; (c) any present or
future property taken as security for any such Other Financings; or (d)
any property now or hereafter in the possession or control of any other
Lender which may be or become security for the obligations of either
Borrower or Guarantor arising under any loan document by reason of the
general description of indebtedness secured or property contained in any
other agreements, documents or instruments relating to any such Other
Financings.
(m) Interests of Lenders. Nothing in this Agreement shall be
construed to create a partnership or joint venture between Lenders for any
purpose. Agent, Lenders, Borrowers and Guarantor recognize that the
respective obligations of Lenders under the Commitments shall be several
and not joint and that neither Agent nor any of Lenders shall be
responsible or liable to perform any of the obligations of the other under
this Agreement. Each Lender is deemed to be the owner of an undivided
interest in and to all rights, titles, benefits and interests belonging
and accruing to Agent under the Security Instruments, including, without
limitation, liens and security interests in any collateral, fees and
payments of principal and interest by the Borrowers under the Commitments
on a Pro Rata basis. Each Lender shall perform all duties and obligations
of Lenders under this Agreement in the same proportion as its ownership
interest in the Loans outstanding at the date of determination thereof.
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(n) Investments. Whenever Agent in good faith determines that it is
uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any
dispute among the Lenders about how such funds should be distributed,
Agent may choose to defer distribution of the funds which are the subject
of such uncertainty or dispute. If Agent in good faith believes that the
uncertainty or dispute will not be promptly resolved, or if Agent is
otherwise required to invest funds pending distribution to the Lenders,
Agent may invest such funds pending distribution (at the risk of the
Borrowers). All interest on any such investment shall be distributed upon
the distribution of such investment and in the same proportions and to the
same Persons as such investment. All monies received by Agent for
distribution to the Lenders (other than to the Person who is Agent in its
separate capacity as a Lender) shall be held by the Agent pending such
distribution solely as Agent for such Lenders, and Agent shall have no
equitable title to any portion thereof.
(o) Delegation to Affiliates. The Borrowers, Guarantor and the
Lenders agree that the Agent may delegate any of its duties under this
Agreement to any of its Affiliates. Any such Affiliate (and such
Affiliate's directors, officers, agents and employees) which perform
duties in connection with this Agreement shall be entitled to the same
benefits of the indemnification, waiver and other protective provisions to
which the Agent is entitled under this Section 15 and Section 19.
(p) Execution of Collateral Documents. The Lenders hereby empower
and authorize the Agent to execute and deliver the Security Instruments
and all related financing statements and other financing statements,
agreements, documents or instruments that shall be necessary or
appropriate to effect the purposes of the Security Instruments.
(q) Collateral Releases. The Lenders hereby empower and authorize
the Agent to execute and deliver to the Borrowers and Guarantor on their
behalf any agreements, documents, or instruments as shall be necessary or
appropriate to reflect any releases of Collateral which shall be permitted
by the terms hereof (including, without limitation, the release of
Collateral that Borrowers or Guarantor are permitted to sell pursuant to
Section 13(a)(ii) hereof) or of any other Loan Document or which shall
otherwise have been approved by the requisite Lenders pursuant to this
Section 15.
(r) Internal Revenue Service Forms. At least five (5) Business Days
prior to the first date on which interest or fees are payable hereunder
for the account of any Lender, each Lender that is not incorporated under
the laws of the United States of America, or a state thereof, agrees that
it will deliver to the Agent two duly completed copies of United States
Internal Revenue Service Form W-8 BEN or W-8 ECI or W-8
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IMY or W-8 EXP or such other form as may be applicable and allowable under
the Internal Revenue Code and the regulations thereunder (collectively, a
"Withholding Form"), certifying in either case that such Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each
Lender which so delivers a Withholding Form further undertakes to deliver
to the Agent two additional copies of such form (or a successor form) on
or before the date that such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent Withholding
Form so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Agent, in each case
certifying that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation
any change in treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which renders all such
Withholding Forms inapplicable or which would prevent such Lender from
duly completing and delivering any such Withholding Form with respect to
it and such Lender advises the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal
income tax.
(s) Syndication Agent. The Lender identified in this Agreement as
the Syndication Agent shall not have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. Without limiting the foregoing, the
Syndication Agent shall not have or be deemed to have a fiduciary
relationship with any Lender. Each Lender hereby makes the same
acknowledgments with respect to the Syndication Agent as it makes with
respect to the Agent in Section 15(f).
16. Exercise of Rights. No failure to exercise, and no delay in
exercising, on the part of the Agent or the Lenders, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right. The rights of the Agent and the Lenders hereunder shall be in addition to
all other rights provided by law.
17. Notices. Any notices or other communications required or permitted to
be given by this Agreement or any other documents or instruments referred to
herein must be given in writing (which may be by bank wire, telecopy or similar
writing) and shall be given to the party to whom such notice or communication is
directed at the address or telecopy number of such party as follows:
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(a) BORROWERS:
0000 Xxxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile (000) 000-0000
Attention: Xxxxx X. Xxxxxx, President
(b) GUARANTOR:
0000-X Xxxxxxxxxxx Xxxxx, Xxxxx 0
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, President
Facsimile (000) 000-0000
With copy to:
Xxxxx X. Xxxxxx
0000 Xxxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile (000) 000-0000
(c) AGENT and LENDERS:
c/o CITIBANK TEXAS
0000 X. Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Senior Vice President
Any such notice or other communication shall be effective (a) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section 17 and the appropriate answerback is received or receipt is
otherwise confirmed, (b) if given by mail, three (3) days after deposit in the
mails with first-class postage, prepaid, as addressed as aforesaid or (c) if
given by any other method, when delivered at the address specified in this
Section 17; provided, however, that notices to the Agent under Sections 2, 3, 4
or 5 hereof shall not be effective until received. Any notice required to be
given to the Lenders shall be given to the Agent and distributed to all Lenders
by the Agent.
18. Expenses. The Borrowers shall pay (i) all reasonable and necessary
out-of-pocket expenses of the Agent, including reasonable fees and disbursements
of special counsel for the Agent, in connection with the preparation of this
Agreement, any waiver or consent
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hereunder or any amendment hereof or any Default or Event of Default or alleged
Default or Event of Default hereunder, (ii) all reasonable and necessary
out-of-pocket expenses of the Agent, including reasonable fees and disbursements
of special counsel for the Agent in connection with the preparation of any
participation agreement for a participant or participants or any amendment
thereof and (iii) if a Default or an Event of Default occurs, all reasonable and
necessary out-of-pocket expenses incurred by the Lenders, including reasonable
fees and disbursements of counsel, in connection with such Default and Event of
Default and collection and other enforcement proceedings resulting therefrom.
THE BORROWERS AND GUARANTOR HEREBY ACKNOWLEDGE THAT COTTON, XXXXXXX, XXXXX &
XXXXXX IS SPECIAL COUNSEL TO CITIBANK TEXAS, AS AGENT AND AS A LENDER, UNDER
THIS AGREEMENT AND THAT IT IS NOT COUNSEL TO, NOR DOES IT REPRESENT THE
BORROWERS OR GUARANTOR IN CONNECTION WITH THE TRANSACTIONS DESCRIBED IN THIS
AGREEMENT. The Borrowers and Guarantor are relying on separate counsel in the
transaction described herein. The Borrowers and Guarantor shall indemnify the
Lenders against any transfer taxes, document taxes, assessments or charges made
by any governmental authority by reason of the execution, delivery and filing of
the Loan Documents. The obligations of this Section 18 shall survive any
termination of this Agreement, the expiration of the Loans and the payment of
all indebtedness of the Borrowers to the Lenders hereunder and under the Notes.
19. Indemnity. The Borrowers and Guarantor hereby, jointly and severally,
agree to indemnify the Agent, each Lender, their respective Affiliates, and each
of their directors, officers, and employees (the "Indemnified Parties") against
all losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all attorney's fees and expenses of litigation
or preparation therefor of any Indemnified Party) which any of them may pay or
incur arising out of or relating to this Agreement, the other Loan Documents,
the transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Loan hereunder even if any of the
foregoing arises out of the ordinary negligence of the party seeking
indemnification except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the party seeking
indemnification. The indemnity set forth herein shall be in addition to any
other obligations or liabilities of the Borrowers or Guarantor to any
Indemnified Party hereunder or at common law or otherwise, and shall survive any
termination of this Agreement, the expiration of the Loans and the payment of
all indebtedness of the Borrowers to the Lenders hereunder and under the Notes.
THE PARTIES INTEND FOR THE PROVISIONS OF THIS SECTION TO APPLY TO AND PROTECT
EACH INDEMNIFIED PARTY FROM THE CONSEQUENCES OF ANY LIABILITY INCLUDING STRICT
LIABILITY IMPOSED OR THREATENED TO BE IMPOSED ON THE INDEMNIFIED PARTY AS WELL
AS FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER OR NOT THAT NEGLIGENCE
IS THE SOLE, CONTRIBUTING, OR CONCURRING CAUSE OF ANY CLAIM.
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20.Non-Liability of Lenders. The relationship between the Borrowers and
Guarantor on the one hand and the Lenders and the Agent on the other hand shall
be solely that of borrower/guarantor and lender. Neither the Agent nor any
Lender shall have any fiduciary responsibility to the Borrowers or Guarantor.
Neither the Agent nor any Lender undertakes any responsibility to the Borrowers
or Guarantor to review or inform the Borrowers or Guarantor of any matter in
connection with any phase of the Borrowers' or Guarantor's businesses or
operations. The Borrowers and Guarantor agree that neither the Agent nor any
Lender shall have any liability to the Borrowers or Guarantor (whether sounding
in tort, contract or otherwise) for losses suffered by the Borrowers or
Guarantor in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by this Agreement and
the other Loan Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment by a court
of competent jurisdiction that such loss resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the Agent
nor any Lender shall have any liability with respect to, and the Borrowers and
Guarantor hereby waive, release and agree not to xxx for, any special, indirect,
consequential or punitive damages suffered by the Borrowers or Guarantor in
connection with, arising out of, or in any way related to this Agreement, the
Loan Documents or any transaction contemplated thereby.
21. Governing Law. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED, AND IS
INTENDED TO BE PERFORMED, IN MIDLAND, MIDLAND COUNTY, TEXAS, AND THE SUBSTANTIVE
LAWS OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND INSTRUMENTS
REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.
22. Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Agreement, such provisions shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of the Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement.
23. Maximum Interest Rate. Regardless of any provisions contained in this
Agreement or in any other documents and instruments referred to herein, the
Lenders shall never be deemed to have contracted for or be entitled to receive,
collect or apply as interest on the Notes any amount in excess of the Maximum
Rate, and in the event any Lender ever receives, collects or applies as interest
any such excess, or if an acceleration of the maturities of any Notes or if any
prepayment by the Borrowers results in the Borrowers having paid any interest in
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excess of the Maximum Rate, such amount which would be excessive interest shall
be applied to the reduction of the unpaid principal balance of the Notes for
which such excess was received, collected or applied, and, if the principal
balance of such Note is paid in full, any remaining excess shall forthwith be
paid to the Borrowers. All sums paid or agreed to be paid to the Lenders for the
use, forbearance or detention of the indebtedness evidenced by the Notes and/or
this Agreement shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the Maximum Rate. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum Rate
of interest permitted by law, the Borrowers and the Lenders shall, to the
maximum extent permitted under applicable law, (i) characterize any
non-principal payment as an expense, fee or premium, rather than as interest;
and (ii) exclude voluntary prepayments and the effect thereof; and (iii) compare
the total amount of interest contracted for, charged or received with the total
amount of interest which could be contracted for, charged or received throughout
the entire contemplated term of the Note at the Maximum Rate.
For purposes of Section 303 of the Texas Finance Code, to the extent
applicable to any Lender or Agent, Borrowers agree that the Maximum Rate shall
be the "weekly ceiling" as defined in said Chapter, provided that such Lender or
Agent, as applicable, may also rely, to the extent permitted by applicable laws
of the State of Texas and the United States of America, on alternative maximum
rates of interest under the Texas Finance Code or other laws applicable to such
Lender or Agent from time to time if greater. Chapter 346 of the Texas Finance
Code does not apply to the Borrowers' obligations hereunder.
24. Amendments. This Agreement may be amended only by an instrument in
writing executed by an authorized officer of the party against whom such
amendment is sought to be enforced. No modification or waiver of any provision
of the Loan Documents, including this Agreement, or the Notes nor consent to
departure therefrom, shall be effective unless in writing signed by Borrowers
and/or Guarantor, as applicable, and Majority Lenders (or by Agent on behalf of
Majority Lenders) subject to the additional requirements of Section 15(f)
hereof, to the extent applicable. No such consent or waiver shall extend beyond
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other circumstances without such notice or demand. No amendment of any
provision of this Agreement relating to the Agent shall be effective without the
written consent of the Agent.
25. Multiple Counterparts. This Agreement may be executed in a number of
identical separate counterparts (including by facsimile transmission), each of
which for all purposes is to be deemed an original, but all of which shall
constitute, collectively, one agreement. No party to this Agreement shall be
bound hereby until a counterpart of this Agreement has been executed by all
parties hereto.
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26. Conflict. In the event any term or provision hereof is inconsistent
with or conflicts with any provision of the Loan Documents, the terms or
provisions contained in this Agreement shall be controlling.
27. Survival. All covenants, agreements, undertakings, representations and
warranties made in the Loan Documents, including this Agreement, the Notes or
other documents and instruments referred to herein shall survive all closings
hereunder and shall not be affected by any investigation made by any party.
28. Parties Bound. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs,
legal representatives and estates, provided, however, that neither the Borrowers
nor the Guarantor may, without the prior written consent of all of the Lenders,
assign any rights, powers, duties or obligations hereunder.
29. Assignments and Participations.
(a) Each Lender shall have the right to sell, assign or transfer all
or any part of its Note or Notes, its Commitment and its rights and
obligations hereunder to one or more Affiliates, Lenders, financial
institutions, pension plans, insurance companies, investment funds, or
similar Persons who are Eligible Assignees or to a Federal Reserve Bank;
provided, that each sale, assignment or transfer (other than to an
Affiliate, a Lender or a Federal Reserve Bank) shall require the consent
of Agent and the Borrowers, which consents will not be unreasonably
withheld; provided, however, that if an Event of Default has occurred and
is continuing, the consent of the Borrower shall not be required. Any such
assignee, transferee or recipient shall have, to the extent of such sale,
assignment, or transfer, the same rights, benefits and obligations as it
would if it were such Lender and a holder of such Note, Commitment and
rights and obligations, including, without limitation, the right to vote
on decisions requiring consent or approval of all Lenders or Majority
Lenders and the obligation to fund its Commitment; provided, that (1) each
such sale, assignment, or transfer (other than to an
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Affiliate, a Lender or a Federal Reserve Bank) shall be in an aggregate
principal amount not less than $5,000,000, (2) each remaining Lender shall
at all times maintain its Commitment then outstanding in an aggregate
principal amount at least equal to $5,000,000; (3) each such sale,
assignment or transfer shall be of a Pro Rata portion of such Lender's
Commitment, (4) no Lender may offer to sell its Note or Notes, Commitment,
rights and obligations or interests therein in violation of any securities
laws; and (5) no such assignments (other than to a Federal Reserve Bank)
shall become effective until the assigning Lender and its assignee
delivers to Agent and Borrowers an Assignment and Acceptance and the Note
or Notes subject to such assignment and other documents evidencing any
such assignment. An assignment fee in the amount of $3,500 for each such
assignment (other than to an Affiliate, a Lender or the Federal Reserve
Bank) will be payable to Agent by assignor or assignee. Within five (5)
Business Days after its receipt of copies of the Assignment and Acceptance
and the other documents relating thereto and the Note or Notes, the
Borrowers shall execute and deliver to Agent (for delivery to the relevant
assignee) a new Note or Notes evidencing such assignee's assigned
Commitment and if the assignor Lender has retained a portion of its
Commitment, a replacement Note in the principal amount of the Commitment
retained by the assignor (except as provided in the last sentence of this
paragraph (a) such Note or Notes to be in exchange for, but not in payment
of, the Note or Notes held by such Lender). On and after the effective
date of an assignment hereunder, the assignee shall for all purposes be a
Lender, party to this Agreement and any other Loan Document executed by
the Lenders and shall have all the rights and obligations of a Lender
under the Loan Documents, to the same extent as if it were an original
party thereto, and no further consent or action by Borrowers, Lenders or
the Agent shall be required to release the transferor Lender with respect
to its Commitment assigned to such assignee and the transferor Lender
shall henceforth be so released.
(b) Each Lender shall have the right to grant participations in all
or any part of such Lender's Notes and Commitment hereunder to one or more
pension plans, investment funds, insurance companies, financial
institutions or other Persons, provided, that:
(i) each Lender granting a participation shall retain the
right to vote hereunder, and no participant shall be entitled to
vote hereunder on decisions requiring consent or approval of Lenders
or Majority Lenders (except as set forth in (iii) below);
(ii) in the event any Lender grants a participation hereunder,
such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender
shall remain the holder of any such Note or Notes for all purposes
under the Loan Documents, and Agent, each Lender and Borrowers shall
be entitled to deal with the Lender granting a participation in the
same manner as if no participation had been granted; and
(iii) no participant shall ever have any right by reason of
its participation to exercise any of the rights of Lenders
hereunder, except that any Lender may agree with any participant
that such Lender will not, without the consent of such participant
(which consent may not be
-69-
unreasonably withheld) consent to any amendment or waiver requiring
approval of all Lenders.
(c) It is understood and agreed that any Lender may provide to
assignees and participants and prospective assignees and participants
financial information and reports and data concerning Borrowers' or
Guarantor's properties and operations which was provided to such Lender
pursuant to this Agreement, provided, that each recipient thereto has
first agreed, for the benefit of Borrowers and Guarantor, to hold such
information, reports and data in confidence on the terms set out in
Section 12(j) hereof.
(d) Upon the reasonable request of either Agent or Borrower, each
Lender will identify those to whom it has assigned or participated any
part of its Notes and Commitment, and provide the amounts so assigned or
participated.
30. Choice of Forum: Consent to Service of Process and Jurisdiction. THE
OBLIGATIONS OF BORROWERS AND GUARANTOR UNDER THE LOAN DOCUMENTS ARE PERFORMABLE
IN MIDLAND COUNTY, TEXAS. ANY SUIT, ACTION OR PROCEEDING AGAINST EITHER BORROWER
OR GUARANTOR WITH RESPECT TO THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY
COURT IN RESPECT THEREOF, MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS,
COUNTY OF MIDLAND, OR IN THE UNITED STATES COURTS LOCATED IN MIDLAND COUNTY,
TEXAS AND THE BORROWER AND EACH GUARANTOR HEREBY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH SUIT, ACTION OR
PROCEEDING. EACH BORROWER AND GUARANTOR HEREBY IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN SAID COURT BY THE MAILING
THEREOF BY AGENT BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWERS OR GUARANTOR, AT THE ADDRESSES FOR NOTICES AS PROVIDED IN SECTION 17.
EACH BORROWER AND GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT BROUGHT IN THE COURTS LOCATED IN
THE STATE OF TEXAS, COUNTY OF MIDLAND, AND HEREBY FURTHER IRREVOCABLY WAIVES ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
31. Waiver of Jury Trial. THE PARTIES TO THIS AGREEMENT HEREBY,
UNCONDITIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COUNSEL, WAIVE,
RELINQUISH AND FOREVER FOREGO TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN
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ANY LEGAL PROCEEDING OR ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
32. Other Agreements. THIS WRITTEN CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
33. Financial Terms. All accounting terms used in this Agreement which are
not specifically defined herein shall be construed in accordance with GAAP.
34. Communications Via Internet. Borrowers and Guarantor hereby authorize
the Agent and each Lender and their respective counsel, engineers and advisors
to communicate and transfer documents and other information (including
confidential information) concerning this transaction or Borrowers and Guarantor
and the Collateral or the business affairs of Borrowers and Guarantor via the
Internet or other electronic communication without regard to the lack of
security of such communications.
35. Amendment and Restatement. This Agreement amends and restates in its
entirety the Prior Credit Agreement.
36. USA Patriot Act Notice. Each Lender and the Agent (for itself and not
on behalf of any Lender) hereby notifies the Borrowers 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 each Borrower, which information includes the name
and address of each Borrower and other information that will allow such Lender
or the Agent, as applicable, to identify each Borrower in accordance with the
Act.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWERS:
PARALLEL PETROLEUM CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Chief Financial Officer
PARALLEL, L.P., a Texas limited
partnership
By: Parallel Petroleum Corporation,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Chief Financial Officer
GUARANTOR:
PARALLEL, L.L.C., a Delaware
limited liability company
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Chief Financial Officer
-72-
LENDERS:
COMMITMENT PERCENTAGE AS OF EFFECTIVE DATE: CITIBANK TEXAS, N.A.,
a national banking association,
as Joint Lead Arranger and
Administrative Agent and as a
Lender
12% By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President
[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT]
-73-
COMMITMENT PERCENTAGE AS OF EFFECTIVE DATE: BNP PARIBAS, as Joint Lead Arranger
and Syndication Agent and as a
Lender
24% By: /s/ Xxxxx Xxxx
-------------------------------
Name: Xxxxx Xxxx
Title: Director
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Title: Director
[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT]
-74-
COMMITMENT PERCENTAGE AS OF EFFECTIVE DATE: WESTERN NATIONAL BANK,
as a Lender
5.6% By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
President
[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT]
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COMMITMENT PERCENTAGE AS OF EFFECTIVE DATE: CITIBANK, F.S.B.,
as a Lender
12% By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT]
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COMMITMENT PERCENTAGE AS OF EFFECTIVE DATE: COMPASS BANK,
as a Lender
12.8% By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Senior Vice President
[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT]
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COMMITMENT PERCENTAGE AS OF EFFECTIVE DATE: COMERICA BANK,
as a Lender
11.2% By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT]
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COMMITMENT PERCENTAGE AS OF EFFECTIVE DATE: BANK OF SCOTLAND,
as a Lender
11.2% By: /s/ Xxxxx Xxxxx
-------------------------------
Name: Xxxxx Xxxxx
Title: Assistant Vice President
[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT]
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COMMITMENT PERCENTAGE AS OF EFFECTIVE DATE: FORTIS CAPITAL CORP.,
as a Lender
11.2% By: /s/ Xxxxx Xxxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Senior Vice President
By: /s/ Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT]
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EXHIBIT "A"
NOTICE OF BORROWING
The undersigned hereby certifies that he is the ___________________ of
PARALLEL PETROLEUM CORPORATION, a Delaware corporation ("PPC") and that PPC is
the sole general partner of PARALLEL, L.P., a Texas limited partnership ("PLP",
and together with PPC "Borrowers"), and that as such he is authorized to execute
this Notice of Borrowing on behalf of Borrowers. With reference to that certain
Third Amended and Restated Credit Agreement dated as of December 23, 2005 (as
same may be amended, modified, increased, supplemented and/or restated from time
to time, the "Agreement") entered into by and among Borrowers, the Guarantor
party thereto, Citibank Texas, N.A., as Joint Lead Arranger and Administrative
Agent, BNP Paribas, as Joint Lead Arranger and Syndication Agent and CITIBANK
TEXAS, N.A., and the other financial institutions party thereto (the "Lenders"),
the undersigned further certifies, represents and warrants on behalf of
Borrowers that all of the foregoing statements are true and correct (each
capitalized term used herein having the same meaning given to it in the
Agreement unless otherwise specified):
(a) Borrowers request that the Lenders advance Borrowers on the Loan
the aggregate sum of $ ________________ by no later than
__________________. Immediately following such Advance, the aggregate
outstanding balance of Advances shall equal $ _________________ on the
Loan.
(b) This Advance shall be a Base Rate Loan ____________, or a LIBOR
Loan ______________, (if LIBOR please state requested Interest Period:
____ months).
(c) As of the date hereof, and as a result of the making of the
requested Advance, there does not and will not exist any Default or Event
of Default.
(d) Borrowers have and, to the knowledge of Borrowers, Guarantor has
performed and complied with all agreements and conditions contained in the
Agreement and the other Loan Documents which are required to be performed
or complied with by Borrowers and/or Guarantor before or on the date
hereof.
(e) The representations and warranties contained in the Agreement
are true and correct in all material respects as of the date hereof and
shall be true and correct upon the making of the Advance, with the same
force and effect as though made on and as of the date hereof and thereof
(except to the extent such representations and warranties relate solely to
an earlier date).
(f) No change that would cause a Material Adverse Effect to the
condition, financial or otherwise, of Borrowers or, to the knowledge of
Borrowers, Guarantor has
A-1
occurred since the most recent Financial Statement provided to the
Lenders.
EXECUTED AND DELIVERED this _____ day of ___________, 20____.
PARALLEL PETROLEUM CORPORATION,
a Delaware corporation
By: _______________________________
Name: _____________________________
Title: ____________________________
PARALLEL, L.P., a Texas limited
partnership
By: Parallel Petroleum Corporation,
Its General Partner
By: _______________________________
Name: _____________________________
Title: ____________________________
X-0
XXXXXXX "X"
REVOLVING NOTE
$ ____________ Midland, Texas ___________, ____
FOR VALUE RECEIVED, the undersigned PARALLEL PETROLEUM CORPORATION, a
Delaware corporation, and PARALLEL, L.P., a Texas limited partnership
(hereinafter collectively referred to as "Borrowers"), hereby jointly and
severally and unconditionally promise to pay to the order of
_____________________ (the "Lender") at the offices of CITIBANK TEXAS, N.A. (the
"Agent") in Midland County, Texas, the principal sum of _____________________
AND __/100 DOLLARS ($______________), or so much thereof as may be advanced and
outstanding at any time or from time to time pursuant to the Credit Agreement
(as hereinafter defined) in lawful money of the United States of America
together with interest from the date hereof until paid at the rates specified in
the Credit Agreement. All payments of principal and interest due hereunder are
payable at the offices of Agent at 0000 X. Xxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000, or at such other address as Lender shall designate in writing to
Borrowers.
The principal and all accrued interest on this Note shall be due and
payable in accordance with the terms and provisions of the Credit Agreement.
This Note is executed pursuant to that certain Third Amended and Restated
Credit Agreement dated of even date herewith among Borrowers, the Guarantor
named therein, Citibank Texas, N.A., as Joint Lead Arranger and Administrative
Agent, BNP Paribas, as Joint Lead Arranger and Syndication Agent, and the
Lenders from time to time parties thereto (as the same may be modified or
amended from time to time, the "Credit Agreement"), and is one of the Notes
referred to therein. Reference is made to the Credit Agreement and the Loan
Documents (as that term is defined in the Credit Agreement) for a statement of
prepayment rights and obligations of Borrowers, for a statement of the terms and
conditions under which the due date of this Note may be accelerated and for
statements regarding other matters affecting this Note (including without
limitation the obligations of the holder hereof to advance funds hereunder,
principal and interest payment due dates, voluntary and mandatory prepayments,
exercise of rights and remedies, payment of attorneys' fees, court costs and
other costs of collection and certain waivers by Borrowers and others now or
hereafter obligated for payment of any sums due hereunder). Upon the occurrence
of an Event of Default, as that term is defined in the Credit Agreement and Loan
Documents, the Agent may declare forthwith to be entirely and immediately due
and payable the principal balance hereof and the interest accrued hereon, and
the Lender shall have all rights and remedies of the Lender under the Credit
Agreement and Loan Documents. This Note may be prepaid in accordance with the
terms and provisions of the Credit Agreement.
Regardless of any provision contained in this Note, the holder hereof
shall never be
B-1
entitled to receive, collect or apply, as interest on this Note, any amount in
excess of the Maximum Rate (as such term is defined in the Credit Agreement),
and, if the holder hereof ever receives, collects, or applies as interest, any
such amount which would be excessive interest, it shall be deemed a partial
prepayment of principal and treated hereunder as such; and, if the indebtedness
evidenced hereby is paid in full, any remaining excess shall forthwith be paid
to Borrowers. In determining whether or not the interest paid or payable, under
any specific contingency, exceeds the Maximum Rate, Borrowers and the holder
hereof shall, to the maximum extent permitted under applicable law (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) spread the total amount of interest throughout the entire contemplated
term of the obligations evidenced by this Note and/or referred to in the Credit
Agreement so that the interest rate is uniform throughout the entire term of
this Note; provided that, if this Note is paid and performed in full prior to
the end of the full contemplated term thereof; and if the interest received for
the actual period of existence thereof exceeds the Maximum Rate, the holder
hereof shall refund to Borrowers the amount of such excess or credit the amount
of such excess against the indebtedness evidenced hereby, and, in such event,
the holder hereof shall not be subject to any penalties provided by any laws for
contracting for, charging, taking, reserving or receiving interest in excess of
the Maximum Rate.
If any payment of principal or interest on this Note shall become due on a
day other than a Business Day (as such term is defined in the Credit Agreement),
such payment shall be made on the next succeeding Business Day and such
extension of time shall in such case be included in computing interest in
connection with such payment.
If this Note is placed in the hands of an attorney for collection, or if
it is collected through any legal proceeding at law or in equity or in
bankruptcy, receivership or other court proceedings, Borrowers agree to pay all
costs of collection, including, but not limited to, court costs and reasonable
attorneys' fees.
Borrowers and each surety, endorser, guarantor and other party ever liable
for payment of any sums of money payable on this Note, jointly and severally
waive presentment and demand for payment, notice of intention to accelerate the
maturity, protest, notice of protest and nonpayment, as to this Note and as to
each and all installments hereof, and agree that their liability under this Note
shall not be affected by any renewal or extension in the time of payment hereof,
or in any indulgences, or by any release or change in any security for the
payment of this Note, and hereby consent to any and all renewals, extensions,
indulgences, releases or changes.
This Note shall be governed by and construed in accordance with the
applicable laws of the United States of America and the laws of the State of
Texas.
THIS INSTRUMENT SECURES A LINE OF CREDIT USED PRIMARILY FOR BUSINESS,
COMMERCIAL OR AGRICULTURAL PURPOSES.
B-2
This Note is executed in renewal, extension, increase and rearrangement,
but not in extinguishment or novation, of that certain Revolving Note dated
__________________, in the original principal amount of $ _______________,
executed by Borrowers and payable to the order of Lender.
THIS WRITTEN NOTE, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date and year first above written.
BORROWERS:
PARALLEL PETROLEUM CORPORATION
a Delaware corporation
By:
-------------------------------
Xxxxxx X. Xxxxxx
Chief Financial Officer
PARALLEL, L.P., a Texas limited
partnership
By: Parallel Petroleum Corporation,
Its General Partner
By:
-------------------------------
Xxxxxx X. Xxxxxx
Chief Financial Officer
B-3
EXHIBIT "C"
GUARANTY
THIS GUARANTY (this "Guaranty") is made as of the 23rd day of December,
2005, by PARALLEL, L.L.C., a Delaware limited liability company (the
"Guarantor") in favor of the Agent, for the benefit of the Lenders, under the
Credit Agreement referred to below;
WITNESSETH:
WHEREAS, PARALLEL PETROLEUM CORPORATION, a Delaware corporation ("PPC")
and PARALLEL, L.P., a Texas limited partnership ("PLP") (PPC and PLP
collectively are hereinafter referred to as the "Principal"), Guarantor,
CITIBANK TEXAS, N.A., a national banking association, having its principal
office in Midland, Texas, as Joint Lead Arranger and Administrative Agent (the
"Agent"), BNP PARIBAS, as Joint Lead Arranger and Syndication Agent, and certain
other financial institutions from time to time parties thereto (the "Lenders")
have entered into a certain Third Amended and Restated Credit Agreement dated of
even date herewith (as same may be amended, modified or restated from time to
time, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit to be made by the Lenders to the Principal;
WHEREAS, it is a condition precedent to the Agent and the Lenders
executing the Credit Agreement that Guarantor execute and deliver this Guaranty
whereby the Guarantor shall guarantee the payment when due, subject to Section 9
hereof, of all Guaranteed Obligations and Rate Management Obligations, as
defined below; and
WHEREAS, in consideration of the financial and other support that the
Principal has provided, and such financial and other support as the Principal
may in the future provide, to the Guarantor, and in order to induce the Lenders
and the Agent to enter into the Credit Agreement, and the Lenders and their
Affiliates to enter into one or more Rate Management Transactions with the
Principal, and because the Guarantor has determined that executing this Guaranty
is in its interest and to its financial benefit, the Guarantor is willing to
guarantee the obligations of the Principal under the Credit Agreement, any Note,
any Rate Management Transaction, and the other Loan Documents;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION l.1. Selected Terms Used Herein.
"Guaranteed Obligations" is defined to mean (i) all indebtedness,
obligations and
C-1
liabilities of either Principal to Agent or any Lender arising out of or
pursuant to the provisions of the Credit Agreement, the Notes and other Loan
Documents, (ii) all Rate Management Obligations, (iii) all indebtedness,
obligations and liabilities of either Principal to any Lender of any kind or
character now existing or hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint
and several, and regardless of whether such indebtedness, obligations and
liabilities may, prior to their acquisition by any Lender, be or have been
payable to or in favor of a third party and subsequently acquired by any Lender
(it being contemplated that any Lender may make such acquisitions from third
parties), including without limitation all indebtedness, obligations and
liabilities of either Principal to any Lender now existing or hereafter arising
by note, draft, acceptance, guaranty, endorsement, letter of credit, assignment,
purchase, overdraft, discount, indemnity agreement or otherwise, (iv) all
accrued but unpaid interest on any of the indebtedness described in (i), (ii)
and (iii) above, (v) all obligations of either Principal to any Lender under any
documents evidencing, securing, governing and/or pertaining to all or any part
of the indebtedness described in (i), (ii), (iii) or (iv) above, (vi) all costs
and expenses incurred by any Lender in connection with the collection and
administration of all or any part of the indebtedness and obligations described
in (i), (ii), (iii), (iv) or (v) above or the protection or preservation of, or
realization upon, the collateral securing all or any part of such indebtedness
and obligations, including without limitation all reasonable attorneys' fees,
and (vii) all renewals, extensions, modifications and rearrangements of the
indebtedness and obligations described in (i), (ii), (iii), (iv), (v) and (vi)
above.
"Rate Management Obligations" means any and all obligations of either
Principal, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions with Agent or a Lender or an Affiliate of Agent or a
Lender, and (ii) any and all cancellations, buy backs, reversals, terminations
or assignments of any Rate Management Transactions.
SECTION 1.2. Terms in Credit Agreement. Other capitalized terms used
herein but not defined herein shall have the meaning set forth in the Credit
Agreement.
SECTION 2.1. Representations and Warranties. The Guarantor represents and
warrants (which representations and warranties shall be deemed to have been
renewed upon each Borrowing Date under the Credit Agreement) that:
(a) It is a limited liability company duly and properly organized,
validly existing and in good standing under the laws of the State of
Delaware and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
(b) It has the power and authority and legal right to execute and
deliver this Guaranty and to perform its obligations hereunder. The
execution and delivery by it of
C-2
this Guaranty and the performance of its obligations hereunder have been
duly authorized by proper corporate, partnership or limited liability
company proceedings, and this Guaranty constitutes a legal, valid and
binding obligation of Guarantor enforceable against it in accordance with
its terms, except as enforceability may be limited by general principles
of equity and bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.
(c) Neither the execution and delivery by it of this Guaranty, nor
the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof will violate (i) any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on it or any of
its subsidiaries or (ii) its articles or certificate of incorporation,
partnership agreement, limited liability company agreement, certificate of
partnership, articles or certificate of organization, by-laws, or
operating or other management agreement, as the case may be, or (iii) the
provisions of any indenture, instrument or agreement to which it or any of
its subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder,
or result in, or require, the creation or imposition of any Lien in, of or
on the property of Guarantor or a subsidiary thereof pursuant to the terms
of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, or other action
in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by it or any of its
subsidiaries, is required to be obtained by it or any of its subsidiaries
in connection with the execution and delivery of this Guaranty or the
performance by it of its obligations hereunder or the legality, validity,
binding effect or enforceability of this Guaranty.
SECTION 2.2. Covenants. The Guarantor covenants that, so long as any
Lender has any Commitment outstanding under the Credit Agreement, any
Reimbursement Obligations remain outstanding, any Rate Management Transaction
remains in effect or any of the Guaranteed Obligations shall remain unpaid, that
it will, and, if necessary, will enable the Principal to, fully comply with
those covenants and agreements set forth in the Credit Agreement.
SECTION 3. The Guaranty. Subject to Section 9 hereof, the Guarantor hereby
absolutely and unconditionally guarantees, as primary obligor and not as surety,
the full and punctual payment (whether at stated maturity, upon acceleration or
early termination or otherwise, and at all times thereafter) and performance of
the Guaranteed Obligations, including without limitation any such Guaranteed
Obligations incurred or accrued during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, whether or not allowed or
allowable in such proceeding. Upon failure by the Principal to pay punctually
any such amount, the Guarantor agrees that it shall forthwith on demand pay to
the Agent for the benefit of the Lenders and, if applicable, their Affiliates,
the amount not so paid at the place and in the manner specified in the Credit
Agreement, any Note, any Rate Management Transaction or the relevant
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Loan Document, as the case may be. This Guaranty is a guaranty of payment and
not of collection. The Guarantor waives any right to require any Lender, or any
Affiliate of any Lender, to xxx the Principal, any other guarantor, or any other
Person obligated for all or any part of the Guaranteed Obligations, or otherwise
to enforce its payment against any Collateral securing all or any part of the
Guaranteed Obligations.
SECTION 4. Guaranty Unconditional. Subject to Section 9 hereof, the
obligations of the Guarantor hereunder shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any of the Guaranteed Obligations, by operation of
law or otherwise, or any obligation of any other guarantor of any of the
Guaranteed Obligations, or any default, failure or delay, willful or
otherwise, in the payment or performance of the Guaranteed Obligations;
(ii) any modification or amendment of or supplement to the Credit
Agreement, any Note, any Rate Management Transaction or any other Loan
Document;
(iii) any release, nonperfection or invalidity of any direct or
indirect security for any obligation of the Principal under the Credit
Agreement, any Note, the Security Instrument, any Rate Management
Transaction, any other Loan Document, or any obligations of any other
guarantor of any of the Guaranteed Obligations, or any action or failure
to act by the Agent, any Lender or any Affiliate of any Lender with
respect to any collateral securing all or any part of the Guaranteed
Obligations;
(iv) any change in the corporate existence, structure or ownership
of the Principal or any other guarantor of any of the Guaranteed
Obligations, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Principal, or any other guarantor of the
Guaranteed Obligations, or its assets or any resulting release or
discharge of any obligation of the Principal, or any other guarantor of
any of the Guaranteed Obligations;
(v) the existence of any claim, setoff or other rights which the
Guarantor may have at any time against the Principal, any other guarantor
of any of the Guaranteed Obligations, the Agent, any Lender or any other
Person, whether in connection herewith or any unrelated transactions;
(vi) any invalidity or unenforceability relating to or against the
Principal, or any other guarantor of any of the Guaranteed Obligations,
for any reason related to the Credit Agreement, any Rate Management
Transaction, any other Loan Document, or any provision of applicable law
or regulation purporting to prohibit the payment by the
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Principal, or any other guarantor of the Guaranteed Obligations, of the
principal of or interest on any Note or any other amount payable by the
Principal under the Credit Agreement, any Note, any Rate Management
Transaction or any other Loan Document; or
(vii) any other act or omission to act or delay of any kind by the
Principal, any other guarantor of the Guaranteed Obligations, the Agent,
any Lender or any other Person or any other circumstance whatsoever which
might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of Guarantor's obligations hereunder.
SECTION 5. Discharge Only Upon Payment In Full: Reinstatement In Certain
Circumstances. The Guarantor's obligations hereunder shall remain in full force
and effect until all Guaranteed Obligations shall have been indefeasibly paid in
full, the Commitments under the Credit Agreement shall have terminated or
expired and all Rate Management Transactions have terminated or expired. If at
any time any payment of the principal of or interest on any Note or any other
amount payable by the Principal or any other party under the Credit Agreement,
any Rate Management Transaction or any other Loan Document is rescinded or must
be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Principal or otherwise, the Guarantor's obligations
hereunder with respect to such payment shall be reinstated as though such
payment had been due but not made at such time.
SECTION 6. Waivers. The Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and, to the fullest extent permitted by law, any
notice not provided for herein, as well as any requirement that at any time any
action be taken by any Person against the Principal, any other guarantor of any
of the Guaranteed Obligations, or any other Person.
SECTION 7. Subrogation. The Guarantor hereby agrees not to assert any
right, claim or cause of action, including, without limitation, a claim for
subrogation, reimbursement, indemnification or otherwise, against the Principal
arising out of or by reason of this Guaranty or the obligations hereunder,
including, without limitation, the payment or securing or purchasing of any of
the Guaranteed Obligations by the Guarantor unless and until the Guaranteed
Obligations are indefeasibly paid in full, any commitment to lend under the
Credit Agreement and any other Loan Documents is terminated and all Rate
Management Transactions have terminated or expired.
SECTION 8. Stay of Acceleration. If acceleration of the time for payment
of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy
or reorganization of the Principal, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, any Note, any Rate
Management Transaction or any other Loan Document shall nonetheless be payable
by the Guarantor hereunder forthwith on demand by the Agent made at the request
of the Majority Lenders.
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SECTION 9. Limitation on Obligations.
(a) The provisions of this Guaranty are severable, and in any action
or proceeding involving any state corporate law, or any state, federal or
foreign bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the obligations of Guarantor under this
Guaranty would otherwise be held or determined to be avoidable, invalid or
unenforceable on account of the amount of Guarantor's liability under this
Guaranty, then, notwithstanding any other provision of this Guaranty to
the contrary, the amount of such liability shall, without any further
action by the Guarantor, the Agent or any Lender, be automatically limited
and reduced to the highest amount that is valid and enforceable as
determined in such action or proceeding (such highest amount determined
hereunder being the Guarantor's "Maximum Liability"). This Section 9(a)
with respect to the Maximum Liability of the Guarantor is intended solely
to preserve the rights of the Agent hereunder to the maximum extent not
subject to avoidance under applicable law, and neither the Guarantor nor
any other person or entity shall have any right or claim under this
Section 9(a) with respect to the Maximum Liability, except to the extent
necessary so that the obligations of the Guarantor hereunder shall not be
rendered voidable under applicable law.
(b) The Guarantor agrees that the Guaranteed Obligations may at any
time and from time to time exceed the Maximum Liability of the Guarantor,
without impairing this Guaranty or affecting the rights and remedies of
the Agent hereunder. Nothing in this Section 9(b) shall be construed to
increase Guarantor's obligations hereunder beyond its Maximum Liability.
SECTION 10. Application of Payments. All payments received by the Agent
hereunder shall be applied by the Agent to payment of the Guaranteed Obligations
in the following order unless a court of competent jurisdiction shall otherwise
direct:
(a) FIRST, to payment of all costs and expenses of the Agent
incurred in connection with the collection and enforcement of the
Guaranteed Obligations or of any security interest granted to the Agent in
connection with any Collateral securing the Guaranteed Obligations;
(b) SECOND, to payment of that portion of the Guaranteed Obligations
constituting accrued and unpaid interest and fees, pro rata among the
Lenders and their Affiliates in accordance with the amount of such accrued
and unpaid interest and fees owing to each of them;
(c) THIRD, to payment of the principal of the Guaranteed Obligations
then due and unpaid from the Principal to any of the Lenders or their
Affiliates, Pro Rata among the Lenders and their Affiliates in accordance
with the amount of such principal
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then due and unpaid to each of them; and
(d) FOURTH, to payment of any Guaranteed Obligations (other than
those listed above) Pro Rata among those parties to whom such Guaranteed
Obligations are due in accordance with the amounts owing to each of them.
SECTION 11. Notices. All notices, requests and other communications to any
party hereunder shall be given or made by telecopier or other writing and
telecopied, or mailed or delivered to the intended recipient at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for such purpose by
notice to the Agent in accordance with the provisions of Section 17 of the
Credit Agreement. Except as otherwise provided in this Guaranty, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice sent by
certified mail return-receipt requested, on the date set forth on the receipt
(provided, that any refusal to accept any such notice shall be deemed to be
notice thereof as of the time of any such refusal), in each case given or
addressed as aforesaid.
SECTION 12. No Waivers. No failure or delay by the Agent or any Lender in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Guaranty, the Credit Agreement, any
Note, any Rate Management Transaction and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 13. No Duty to Advise. The Guarantor assumes all responsibility
for being and keeping itself informed of the Principal's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
the Guarantor assumes and incurs under this Guaranty, and agrees that neither
the Agent nor any Lender has any duty to advise the Guarantor of information
known to it regarding those circumstances or risks.
SECTION 14. Successors and Assigns. This Guaranty is for the benefit of
the Agent and the Lenders and their respective successors and permitted assigns
and in the event of an assignment of any amounts payable under the Credit
Agreement, any Note, any Rate Management Transaction, or the other Loan
Documents, the rights hereunder, to the extent applicable to the indebtedness so
assigned, shall be transferred with such indebtedness. This Guaranty shall be
binding upon the Guarantor and its successors and permitted assigns.
SECTION 15. Changes in Writing. Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by the Guarantor and the Agent with the consent of the Majority
Lenders.
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SECTION 16. Costs of Enforcement. The Guarantor agrees to pay all costs
and expenses including, without limitation, all court costs and attorneys' fees
and expenses paid or incurred by the Agent or any Lender or any Affiliate of any
Lender in endeavoring to collect all or any part of the Guaranteed Obligations
from, or in prosecuting any action against, the Principal, the Guarantor or any
other guarantor of all or any part of the Guaranteed Obligations.
SECTION 17. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF TEXAS. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF
TEXAS (MIDLAND DIVISION) AND OF ANY TEXAS STATE COURT SITTING IN MIDLAND, TEXAS
AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTY (INCLUDING, WITHOUT LIMITATION, ANY OF THE OTHER LOAN DOCUMENTS) OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTOR IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 18. Taxes, etc. All payments required to be made by the Guarantor
hereunder shall be made without setoff or counterclaim and free and clear of and
without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, duties or other charges of whatsoever nature imposed by
any government or any political or taxing authority thereof (but excluding
income and franchise taxes), provided, however, that if the Guarantor is
required by law to make such deduction or withholding, Guarantor shall forthwith
(i) pay to the Agent or any Lender, as applicable, such additional amount as
results in the net amount received by the Agent or any Lender, as applicable,
equaling the full amount which would have been received by the Agent or any
Lender, as applicable, had no such deduction or withholding been made, (ii) pay
the full amount deducted to the relevant authority in accordance with applicable
law, and (iii) furnish to the Agent or any Lender, as applicable, certified
copies of official receipts evidencing payment of such withholding taxes within
30 days after such payment is made.
SECTION 19. Setoff. Without limiting the rights of the Agent or the
Lenders under applicable law, if all or any part of the Guaranteed Obligations
is then due, whether pursuant to the occurrence of a Default or otherwise, then
the Guarantor authorizes the Agent and the Lenders to apply any sums standing to
the credit of the Guarantor with the Agent or any Lender
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toward the payment of the Guaranteed Obligations.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed, under seal, by its authorized officer as of the day and year first
above written.
GUARANTOR:
PARALLEL, L.L.C., a Delaware limited
liability company
By:
----------------------------------
Xxxxxx X. Xxxxxx
Chief Financial Officer
C-9
EXHIBIT "D"
CERTIFICATE OF COMPLIANCE
The undersigned hereby certifies that he is the ___________________ of
PARALLEL PETROLEUM CORPORATION, a Delaware corporation ("PPC") and that PPC is
the sole general partner of Parallel, L.P., a Texas limited partnership ("PLP",
and together with PPC "Borrowers"), and that as such he is authorized to execute
this Certificate of Compliance on behalf of Borrowers. With reference to that
certain Third Amended and Restated Credit Agreement, dated as of December 23,
2005 (as same may be amended, modified, increased, supplemented and/or restated
from time to time, the "Agreement") entered into by and among the Borrowers, the
Guarantor party thereto, Citibank Texas, N.A., as Joint Lead Arranger and
Administrative Agent, BNP Paribas, as Joint Lead Arranger and Syndication Agent,
and CITIBANK TEXAS, N.A., as "Agent," for itself and the Lenders signatory
thereto (the "Lenders"), the undersigned further certifies, represents and
warrants on behalf of Borrowers that all of the following statements are true
and correct (each capitalized term used herein having the same meaning given to
it in the Agreement unless otherwise specified):
(a) Borrowers have and, to the knowledge of Borrowers, Guarantor has
fulfilled in all material respects their respective obligations under the
Notes and Loan Documents, including the Agreement, and all representations
and warranties made herein and therein continue (except to the extent they
relate solely to an earlier date) to be true and correct in all material
respects [if the representations and warranties are not true and correct,
the party signing this certificate shall except from the foregoing
statement the matters for which such representations and warranties are no
longer true specifying the nature of any such change.]
(b) No Default or Event of Default has occurred under the Loan
Documents, including the Agreement [if a Default or Event of Default has
occurred, the party certifying hereto shall specify the facts constituting
the Default or Event of Default and the nature and status thereof].
(c) To the extent requested from time to time by the Agent, the
certifying party shall specifically affirm compliance of the Borrowers in
all material respects with any of its representations and warranties
(except to the extent they relate solely to an earlier date) or
obligations under the Loan Documents.
(d) Financial Computations for the period ending ________________
(provide calculations on a consolidated basis):
(i) Current Ratio;
(ii) Funded Debt Ratio; and
D-1
(iii) Adjusted Consolidated Net Worth.
EXECUTED, DELIVERED AND CERTIFIED TO this ____ day of ______________,
20_______.
PARALLEL PETROLEUM CORPORATION,
a Delaware corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
PARALLEL, L.P., a Texas limited
partnership
By: Parallel Petroleum Corporation,
Its General Partner
By: _________________________________
Name: _______________________________
Title: ______________________________
D-2
EXHIBIT "E"
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This Assignment and Acceptance Agreement (this "Assignment Agreement")
between ___________________ (the "Assignor") and ____________________________
(the "Assignee") is dated as of ____________, 20_____. The parties hereto agree
as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Third Amended and
Restated Credit Agreement (which, as it may be amended, modified, restated,
renewed or extended from time to time is herein called the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents, such that after giving effect to such
assignment the Assignee shall have purchased pursuant to this Assignment
Agreement the percentage interest specified in Item 2 of Schedule 1 of all
outstanding rights and obligations under the Credit Agreement and the other Loan
Documents relating to the facilities listed in Item 3 of Schedule 1. The
aggregate Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in Item 4 of
Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter period agreed to by the Agent) after
this Assignment Agreement, together with any consents required under the Credit
Agreement, are delivered to the Agent. In no event will the Effective Date occur
if the payments required to be made by the Assignee to the Assignor on the
Effective Date are not made on the proposed Effective Date.
4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of
Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the
amount agreed to by the Assignor and the Assignee. On and after the Effective
Date, the Assignee shall be entitled to receive from the Agent all payments of
principal, interest and fees with respect to the interest assigned hereby. The
Assignee will promptly remit to the Assignor any interest on Loans and fees
received from the Agent which relate to the portion of the Commitment or Loans
assigned to the Assignee hereunder for periods prior to the Effective Date and
not previously paid by the Assignee to the Assignor. In the event that either
party hereto receives any payment
E-1
to which the other party hereto is entitled under this Assignment Agreement,
then the party receiving such amount shall promptly remit it to the other party
hereto.
5. RECORDATION FEE. The Assignor and Assignee each agree to pay one-half
of the recordation fee required to be paid to the Agent in connection with this
Assignment Agreement unless otherwise specified in Item 6 of Schedule 1.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder, (ii) such
interest is free and clear of any adverse claim created by the Assignor and
(iii) the execution and delivery of this Assignment Agreement by the Assignor is
duly authorized. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor makes
no other representation or warranty of any kind to the Assignee. Neither the
Assignor nor any of its officers, directors, employees, agents or attorneys
shall be responsible for (i) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectability of any Loan Document,
including without limitation, documents granting the Assignor and the other
Lenders a security interest in assets of the Borrowers or Guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrowers or Guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any of the
property, books or records of the Borrowers or Guarantor, (vi) the validity,
enforceability, perfection, priority, condition, value or sufficiency of any
collateral securing or purporting to secure the Loans or (vii) any mistake,
error of judgment, or action taken or omitted to be taken in connection with the
Loans or the Loan Documents.
7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i)
confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements requested by the Assignee and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment Agreement, (ii) agrees that
it will, independently and without reliance upon the Agent, the Assignor or any
other Lender and based on such documents and information at it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, (iii) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, (iv) confirms
that the execution and delivery of this Assignment Agreement by the Assignee is
duly authorized, (v) agrees that it will perform in accordance with its terms
all of the obligations which by the terms of the Loan Documents are required to
be performed by it as a Lender, (vi) agrees that its payment instructions and
notice instructions are as set forth in the attachment to
X-0
Xxxxxxxx 0, (xxx) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are "plan
assets" as defined under ERISA and that its rights, benefits and interests in
and under the Loan Documents will not be "plan assets" under ERISA, (viii)
agrees to indemnify and hold the Assignor harmless against all losses, costs and
expenses (including, without limitation, reasonable attorneys' fees) and
liabilities incurred by the Assignor in connection with or arising in any manner
from the Assignee's non-performance of the obligations assumed under this
Assignment Agreement, and (ix) if applicable, attaches the forms prescribed by
the Internal Revenue Service of the United States certifying that the Assignee
is entitled to receive payments under the Loan Documents without deduction or
withholding of any United States federal income taxes.
8. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Texas
9. NOTICES. Notices shall be given under this Assignment Agreement in the
manner set forth in the Credit Agreement. For the purpose hereof, the addresses
of the parties hereto (until notice of a change is delivered) shall be the
address set forth in the attachment to Schedule 1.
10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be
executed in counterparts. Transmission by facsimile of an executed counterpart
of this Assignment Agreement shall be deemed to constitute due and sufficient
delivery of such counterpart and such facsimile shall be deemed to be an
original counterpart of this Assignment Agreement.
IN WITNESS WHEREOF, the duly authorized officers of the parties hereto
have executed this Assignment Agreement as of the date first above written.
[ASSIGNOR]
By: _________________________________
Title: ______________________________
Address: ____________________________
____________________________
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[ASSIGNEE]
By: _________________________________
Title: ______________________________
Address: ____________________________
____________________________
(If required)
ACKNOWLEDGED AND CONSENTED TO:
CITIBANK TEXAS, N.A.
as Administrative Agent
By: _____________________________________
Name: ___________________________________
Title: __________________________________
PARALLEL PETROLEUM CORPORATION
a Delaware corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
PARALLEL, L.P., a Texas limited partnership
By: Parallel Petroleum Corporation,
Its General Partner
By: _____________________________________
Name: ___________________________________
Title: __________________________________
X-0
X-0
SCHEDULE "1"
(Section 10(v))
LIENS
None.
SCHEDULE "2"
(Section 10(f))
FINANCIAL CONDITION
None.
SCHEDULE "3"
(Section 10(g))
LIABILITIES
Obligations of PLP in connection with the closing of the remaining portion of
the Acquisition.
SCHEDULE "4"
(Section 10(h))
LITIGATION
Pending or Threatened Litigation,
Legal or Administrative Proceedings
None.
SCHEDULE "5"
(Section 10(y))
GAS IMBALANCES; PREPAYMENTS
None.
SCHEDULE "6"
(Section 12(s))
TITLE MATTERS
1. Webernick Unit Xx. 0, Xx. 0X xxx Xx. 0X, Xxxxxxx Xxxxxx, Xxxxx
2. Xxxxxxxxx-Xxxx Xx. 0X, Xx. 0X xxx Xx. 0, Xxxxxxx Xxxxxx, Xxxxx
3. XXX Xx. 0, Xxxxxxx Xxxxxx, Xxxxx
4. Xxxxxxx Xxxx Xxxxxxxxx Xx. 0, Xxxxxxx Xxxxxx, Xxxxx
5. Brentwood No. 1, Tarrant County, Texas
6. Xxxxxx No. 1, Tarrant County, Texas
7. Xxxxxxx Xxxx Xx. 0, Xxxxxxx Xxxxxx, Xxxxx
8. Xxxxxxx Xxxx Xx. 0, Xxxxxxx Xxxxxx, Xxxxx
9. Fucik, Xxxxxxx Xxxxxx, Xxxxx
00. Xxxxxxxx Xx. 0, Xxxxxxx Xxxxxx, Xxxxx
11. GCW Glorietta, Xxxxxx County, Texas
12. Lion Diamond M Unit and Deep, Xxxxxx County, Texas
13. Diamond M. Shallow, Xxxxxx County, Texas
SCHEDULE "7"
(Section 12(t))
CURATIVE MATTERS
None.
