FOURTH AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of March 15, 2002
among
MAGNUM HUNTER RESOURCES, INC.,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Banks,
and
BANKERS TRUST COMPANY,
as Administrative Agent, as Collateral Agent and as Issuer for the Banks,
and
CIBC INC.,
as Syndication Agent,
and
BNP PARIBAS,
as Documentation Agent and Co-Arranger,
and
CIBC WORLD MARKETS CORP.,
as Co-Arranger,
and
DEUTSCHE BANC ALEX. XXXXX INC.
as Sole Lead Arranger and Sole Bookrunner
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 15,
2002, among MAGNUM HUNTER RESOURCES, INC., a Nevada corporation ("Borrower"),
the various financial institutions that are or may become parties hereto
(collectively, the "Banks"), and BANKERS TRUST COMPANY ("Bankers Trust"), as
administrative agent (in such capacity together with any successors thereto, the
"Administrative Agent") for the Banks, as collateral agent for the Banks (in
such capacity together with any successor thereto, the "Collateral Agent"), and
as letter of credit issuing bank (in such capacity together with any successors
thereto, the "Issuer"), CIBC INC., as syndication agent for the Banks (in such
capacity together with any successors thereto, the "Syndication Agent"), BNP
PARIBAS, a French Bank acting through its Houston Agency, as documentation agent
for the Banks (in such capacity together with any successors thereto, the
"Documentation Agent") and as co-arranger, CIBC WORLD MARKETS CORP., as
co-arranger and DEUTSCHE BANC ALEX. XXXXX INC., as Sole Lead Arranger and Sole
Bookrunner.
W I T N E S S E T H:
WHEREAS, the Borrower, Bankers Trust, as administrative agent, collateral
agent and letter of credit issuing bank, CIBC Inc., as syndication agent, BNP
Paribas, as documentation agent, and certain banks (the "Original Banks") have
heretofore entered into a Third Amended and Restated Credit Agreement dated as
of May 17, 2001, as amended by that certain First Amendment to Third Amended and
Restated Credit Agreement dated as of June 26, 2001, and by that certain Second
Amendment to Third Amended and Restated Credit Agreement dated as of September
14, 2001, and by that certain Third Amendment to Third Amended and Restated
Credit Agreement dated as of September 20, 2001 (as so amended, the "Third
Amended and Restated Credit Agreement"), providing for commitments from the
Original Banks to make revolving loans for the benefit of the Borrower on the
terms and subject to the conditions set forth therein;
WHEREAS, the Borrower desires to amend and restate the Third Amended and
Restated Credit Agreement in order to restructure, rearrange, renew, extend and
continue all indebtedness evidenced by and outstanding under the Third Amended
and Restated Credit Agreement (the "Prior Indebtedness"), and to modify the
commitments from the Banks pursuant to which Loans will be made by the Banks to
the Borrower and Letters of Credit will be issued by the Issuer under the
several responsibilities of the Banks for the account of the Borrower from time
to time prior to the Commitment Termination Date;
WHEREAS, the Banks and the Issuer are willing, on the terms and subject to
the conditions hereinafter set forth (including Article V), to amend and restate
the Third Amended and Restated Credit Agreement in order to restructure,
rearrange, renew, extend and continue all Prior Indebtedness and to modify the
commitments and make such Loans to the Borrower and issue and participate in
such Letters of Credit for the account of the Borrower; and
WHEREAS, the proceeds of such Loans and Letters of Credit will be used
(a) to restructure, rearrange, renew, extend and continue the debt of the
Borrower under the Third Amended and Restated Credit Agreement;
(b) to finance the cash consideration component of the Prize Merger;
(c) to refinance the Prize Credit Facility;
(d) for general corporate purposes including working capital purposes of
the Borrower; and
(e) for the acquisition, exploration, development and production of oil and
gas properties and other energy related assets;
NOW, THEREFORE, the parties hereto agree that the Third Amended and
Restated Credit Agreement is amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"1997 Indenture" means that certain Indenture dated as of May 29, 1997,
executed by the Borrower, the guarantors party thereto and First Union National
Bank of North Carolina, as trustee, as the same may be amended, restated,
modified or supplemented from time to time.
"2002 Indenture" means, collectively, one or more Indentures executed by
the Borrower in connection with a Permitted 2002 Bond Transaction, as the same
may be amended, restated, modified or supplemented from time to time.
"Additional Mortgages" shall mean a mortgage, deed of trust, security
agreement, assignment and financing statement substantially in the form of
Exhibit G hereto, with appropriate insertions.
"Administrative Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor Administrative
Agent pursuant to Section 9.4.
"Affiliate" means, when used with respect to any Person, any other Person
(including any member of the immediate family of any such natural person) who,
directly or indirectly, beneficially owns or controls ten percent (10%) or more
of the total voting power of shares of Capital Stock of such Person having the
right to vote for directors under ordinary circumstances, and any Person
controlling, controlled by or under common control with any such Person. As used
in this definition, "control" means the possession, directly or indirectly, of
the power to
2
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Agent" means any of the Administrative Agent, the Syndication Agent, the
Documentation Agent, and the Collateral Agent. "Agents" means all of them.
"Agreement" means, on any date, this Fourth Amended and Restated Credit
Agreement as originally in effect on the Effective Date and as thereafter from
time to time amended, supplemented and restated, or otherwise modified and in
effect on such date.
"Alternate Base Rate" means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to the higher of (a) the rate of interest most
recently determined by Bankers Trust at its Domestic Office as its base rate for
Dollar loans; and (b) the Federal Funds Rate most recently determined by the
Administrative Agent plus one-half percent (1/2%). The Alternate Base Rate is
not necessarily intended to be the lowest rate of interest determined by Bankers
Trust in connection with extensions of credit. Changes in the rate of interest
on that portion of any Loans maintained as Base Rate Loans will take effect
simultaneously with each change in the Alternate Base Rate. The Administrative
Agent will give notice promptly to the Borrower and the Banks of changes in the
Alternate Base Rate; provided that failure to give such notice shall not give
rise to any liability.
"Applicable Margin" means, on any date, with respect to any Base Rate Loan
or LIBO Rate Loan or Letter of Credit then outstanding, as applicable, the
applicable per annum percentage set forth below based on the Borrowing Base
Usage on the immediately preceding Business Day:
================================ ========================== =========================== ===========================
Borrowing Base
Usage (BBU) Base Rate Loans LIBO Rate Loans Letters of Credit
BBU < 25% 0% 1.25% 1.25%
25% <= BBU < 50% 0.25% 1.50% 1.50%
50 <= BBU < 75% 0.50% 1.75% 1.75%
75% <= BBU < 90% 0.75% 2.00% 2.00%
BBU = 90% 1.00% 2.25% 2.25%
================================ ========================== =========================== ===========================
Changes in the Applicable Margin resulting from changes in the Borrowing
Base Usage will occur automatically without prior notice and will take immediate
effect.
"Approved Engineer" means any independent engineer recognized in the U.S.
oil and gas loan syndication market and reasonably satisfactory to the
Administrative Agent. It is agreed that Netherland & Xxxxxx, Associates, Inc.,
Xxxxxx, Xxxxxxxxx & Associates, Inc., and DeGolyler & XxxXxxxxxxx are each
deemed to be an Approved Engineer.
3
"Arranger" means any of Deutsche Banc Alex. Xxxxx Inc., as sole lead
arranger and sole bookrunner, or CIBC World Markets Corp. or BNP Paribas, as
co-arrangers. "Arrangers" means all of them.
"Asset" shall mean, as to any Person, all property of any kind, name or
nature, real or personal, tangible or intangible, legal or equitable, whether
now owned or hereafter acquired, including, without limitation, the Hydrocarbon
Interests, money, stock, contract rights, franchises, value as a going concern,
causes of action, undivided fractional ownership interests, intellectual
property rights, and anything of any value which can be made available for, or
may be appropriated to, the payment of debts.
"Assignee Bank" is defined in Section 10.11.1.
"Authorization" means any consent, registration, filing, agreement,
notarization, certificate, license, approval, permit, authority, grant, right,
easement, decree, waiver, privilege or exemption from, by or with any government
or Governmental Authority, whether given or withheld by express action or deemed
given or withheld by failure to act within any specified time period, and all
corporate, creditors and stockholders' approvals or consents.
"Authorized Officer" means those officers of the Borrower whose signatures
and incumbency shall have been certified to the Administrative Agent and the
Banks pursuant to Section 5.1.1.
"Bank Assignment Agreement" means a Bank Assignment Agreement substantially
in the form of Exhibit D hereto.
"Bankers Trust" is defined in the preamble.
"Banks" is defined in the preamble.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Beneficial Owner" shall be determined in accordance with Rules 13d-3 and
13d-5 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended and as it may be amended from time to time, or
any successor provision thereto, except that a Person shall be deemed to have
"beneficial ownership" of all shares that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of time.
"Borrower" is defined in the preamble.
"Borrower Pledge Agreement" means that certain Second Amended and Restated
Pledge Agreement of the Borrower, as amended by that certain First Amendment to
Borrower Pledge Agreement and as further amended by that certain Second
Amendment to Borrower Pledge Agreement in substantially the form of Exhibit H
hereto, in favor of the Collateral Agent for the benefit of itself, the other
Agents, the Banks and the Issuer, as the same may be amended, restated,
supplemented, or modified from time to time.
4
"Borrowing" means each extension of credit made by the Banks or the Issuer
by way of Loans of the same type, having the same Interest Period made by the
same Banks on the same Business Day pursuant to the same Borrowing Request or
pursuant to the same Letter of Credit.
"Borrowing Base" means the Borrowing Base from time to time certified by
the Administrative Agent and all the Banks pursuant to Section 2.8.
"Borrowing Base Deficiency" means that (x) the outstanding aggregate
principal amount of all Loans and Letter of Credit Liabilities, exceeds (y) the
Borrowing Base then in effect.
"Borrowing Base Deficiency Determination Date" means any date on which the
Administrative Agent shall have notified the Borrower that a Borrowing Base
Deficiency has occurred and is continuing.
"Borrowing Base Deficiency Payment Date" means, with respect to each
Borrowing Base Deficiency Determination Date, the corresponding day of the month
in each of the six consecutive months occurring immediately after such Borrowing
Base Deficiency Determination Date or if any of such months does not have a
corresponding day, then, with respect to such month(s), the last day of such
month(s), provided that if any such corresponding day is not a Business Day,
then the Borrowing Base Deficiency Payment Date for such month(s) shall be the
Business Day most closely preceding such corresponding day.
"Borrowing Base Usage" means, on any date, the ratio (expressed as a
percentage) of (a) the total unpaid principal amount of all outstanding
Borrowings (including, without limitation, all Loans and Letter of Credit
Liabilities) on such date after giving effect to all Borrowings made on such
date to (b) the Borrowing Base then in effect.
"Borrowing Request" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower, substantially in the form of Exhibit B-1
hereto.
"Business Day" means (a) any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York, New York, Dallas, Texas, Houston, Texas or London, England; (b) relative
to the making, continuing, prepaying or repaying of any LIBO Rate Loans, any day
on which dealings in Dollars are carried on in the New York interbank market;
and (c) relative to the issuance or renewal of, or payment or disbursement with
respect to, each Letter of Credit, any day on which the Issuer is not authorized
or required to be closed by the laws of the jurisdiction in which the Issuer is
domiciled.
"Capital Stock" means any and all shares, interests, participations, or
other equivalents (however designated) of capital stock of a corporation or
securities convertible into or exchangeable therefor, any and all equivalent
ownership interests in a Person (other than a corporation) and any and all
warrants or options to purchase any of the foregoing.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower under any leasing or similar arrangement which, in accordance with
GAAP, would be classified as capitalized leases, and, for purposes of this
Agreement and each other Loan Document, the amount of such obligations shall be
the capitalized amount thereof, determined in accordance with GAAP, and the
stated maturity thereof shall be the date of the last payment of rent or any
5
other amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year after
such time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than six months from the date of
issue, which is issued by (i) a corporation (other than an Affiliate of the
Borrower) organized under the laws of any state of the United States or of the
District of Columbia and rated one of the three highest rating categories by S&P
or Xxxxx'x, or (ii) any Bank (or its holding company);
(c) any certificate of deposit or bankers acceptance, maturing not more
than one year after such time, which is issued by either (i) a commercial
banking institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$250,000,000, and whose long-term certificates of deposit or bankers acceptances
are, at the time of acquisition thereof by the Borrower, rated A-1 by S&P or P-1
by Xxxxx'x or (ii) any Bank;
(d) any repurchase agreement entered into with any Bank (or other
commercial banking institution of the stature referred to in clause (c)(i))
which (i) is in any obligation of the type described in any of clauses (a)
through (c); and (ii) has a market value at the time such repurchase agreement
is entered into of not less than 100% of the repurchase obligation of such Bank
(or other commercial banking institution) thereunder;
(e) investments in certificates of deposit maturing within six months from
the date of issuance thereof issued by a bank or trust company organized under
the laws of the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $250,000,000 and whose long-term
certificates of deposit are, at the time of acquisition thereof by the Borrower,
rated A-1 by S&P or P-1 by Xxxxx'x;
(f) deposit accounts (i) in a bank or trust company organized under the
laws of the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $250,000,000 and whose commercial paper
or short term bank deposits (or that of the holding company with which such bank
or trust company is affiliated) are rated A-1 by S&P or P-1 by Xxxxx'x;
(g) marketable direct obligations issued or unconditionally guaranteed by
the United States government or issued by any agency thereof and backed by the
full faith and credit of the United States, as the case may be, in each case
maturing no later than one year from the date of acquisition; or
(h) money market, mutual or similar funds that invest in obligations
referred to clauses (a), (b), (c), (e), (f), or (g) of this definition, and in
each case such funds having assets in excess of $250,000,000.
6
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means an occurrence of one or more of the following
events: (a) any Person, or any Persons acting together in a manner which would
constitute a "group" (a "Group") for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended and as it may be amended from time to time, or
any successor provision thereto, together with any Affiliates thereof, become
the Beneficial Owners of Capital Stock of the Borrower through a purchase,
merger or other acquisition transaction (in one transaction or a series of
related transactions), entitling such Person or Persons and its or their
Affiliates to exercise more than 50% of the total voting power of all classes of
the Borrower's Capital Stock entitled to vote generally in the election of
directors, (b) a plan is adopted relating to the liquidation or dissolution of
the Borrower, (c) the Borrower shall consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person other than a Restricted Subsidiary, or any other
Person shall consolidate with or merge into the Borrower (other than, in the
case of this clause (c), pursuant to any consolidation or merger where Persons
who are Beneficial Owners of the Borrower's Capital Stock entitled to vote
generally in the election of directors immediately prior thereto become the
Beneficial Owners of shares of Capital Stock of the surviving corporation
entitling such Persons to exercise more than 50% of the total voting power of
all classes of such surviving corporation's Capital Stock entitled to vote
generally in the election of directors or persons holding similar positions), or
(d) during any calendar year period, individuals who at the beginning of such
period constituted the board of directors of the Borrower (together with any new
directors whose election to such board of directors, or whose nomination for
election by the stockholders of the Borrower, was approved by a vote of 66-2/3%
of the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the board of
directors of the Borrower then in office.
"Chevron L/C" means that certain letter of credit originally issued
September 27, 1999 by Fleet National Bank (formerly known as BankBoston) under
the Prize Credit Facility for the account of Prize and in favor of Chevron
U.S.A., Inc. in the stated amount of $2,500,000 expiring June 1, 2002; provided,
however, that the term "Chevron L/C" shall not include any renewal or extension
of such letter of credit.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral Property" means any Mortgaged Property, Collateral or Pledged
Collateral as defined in any Security Document.
"Commitment" means, relative to any Bank on any date, such Bank's
obligation to make Loans pursuant to Section 2.1.1 and to issue or participate
in Letters of Credit pursuant to Section 2.1.2 and Section 2.1.3.
7
"Commitment Amount" means, on any date, the lesser of (a) the Maximum
Facility Amount then in effect, and (b) the Borrowing Base then in effect,
provided that in the event that the aggregate value of all margin accounts
maintained by the Borrower or any Restricted Subsidiary with respect to Hedging
Obligations shall exceed $1,000,000, the Commitment Amount (as defined
immediately above) shall be further reduced automatically by an amount equal to
the aggregate value of all such margin accounts.
"Commitment Termination Date" means the earliest of (a) Stated Maturity
Date; (b) the date on which the Commitment Amount is terminated in full or
reduced to zero pursuant to Section 2.2; and (c) the date on which any
Commitment Termination Event occurs. Upon the occurrence of any event described
in clause (b) or (c), the Commitments shall terminate automatically and without
further action.
"Commitment Termination Event" means (a) the occurrence of any Default
described in clauses (a) through (d) of Section 8.1.9 with respect to the
Borrower; or (b) the occurrence and continuance of any other Event of Default
and either (i) the declaration of the Loans to be due and payable pursuant to
Section 8.3, or (ii) in the absence of such declaration, the giving of notice by
the Administrative Agent, acting at the direction of the Majority Banks, to the
Borrower that the Commitments have been terminated as a result of such Event of
Default.
"Consolidated Current Assets" means, at any particular time, (i) all
amounts which in conformity with GAAP, would be included as current assets on a
consolidated balance sheet of the Borrower and the Restricted Subsidiaries,
provided that current assets shall not include non-cash assets described in, and
calculated pursuant to, Financial Accounting Standard Bulletin 133, plus (ii)
Unused Availability.
"Consolidated Current Liabilities" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as current liabilities
on a consolidated balance sheet of the Borrower and the Restricted Subsidiaries;
provided, however, that current liabilities shall not include (i) the current
portion of long-term Indebtedness under this Agreement and the other Loan
Documents and (ii) liabilities described in, and calculated pursuant to,
Financial Accounting Standard Bulletin 133.
"Consolidated EBITDA" means, for the Borrower and the Restricted
Subsidiaries (including, on a pro forma basis with respect to any period prior
to the consummation of the Prize Merger, Prize and the Prize Subsidiaries) on a
consolidated basis, with respect to any period for which a determination is to
be made, the sum of (i) gross profit (revenues less cost of sales), minus (ii)
operating expenses, minus (iii) general and administrative expenses, plus (iv)
cash equity earnings of any unconsolidated Subsidiary of the Borrower or any
partnership, joint venture or entity in which the Borrower or any of its
Subsidiaries has an equity interest, minus (v) cash equity losses of any
unconsolidated Subsidiary of the Borrower or any partnership, joint venture or
entity in which the Borrower or any of its Subsidiaries has an equity interest,
plus (vi) interest, dividends or other income, all of (i) through (vi) as
determined in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means, at any particular time, the
ratio of (a) Consolidated EBITDA to (b) Total Interest Expense.
8
"Contingent Liability" means, as to any Person, those direct or indirect
liabilities of that Person with respect to any Indebtedness, lease, dividend,
letter of credit or other monetary or financial obligation (the "primary
obligations") of another Person (the "primary obligor"), including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase, repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor, or (b) to advance or
provide funds (i) for the payment or discharge of any such primary obligation,
or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligation, or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect thereof. The
amount of any Contingent Liabilities shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Liabilities are made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
"Controlled Group" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
"Current Ratio" means, at any date of determination, the ratio of (a)
Consolidated Current Assets to (b) Consolidated Current Liabilities.
"Default" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"Default Rate" is defined in Section 3.2.2.
"Determination Date" means each April 1 and October 1 of each year,
commencing October 1, 2002.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Majority Banks.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Bank, the office of such Bank
designated as such below its signature hereto or designated in the Bank
Assignment Agreement or such other office of a Bank (or any successor or assign
of such Bank) within the United States as may be designated from time to time by
notice from such Bank, as the case may be, to each other Person party hereto. A
Bank may have separate Domestic Offices for purposes of making, maintaining or
continuing, as the case may be, Base Rate Loans or its participation in Letters
of Credit.
9
"Effective Date" means the date this Agreement becomes effective pursuant
to Section 10.8.
"Environmental Laws" means federal, state or local laws, rules or
regulations, and any judicial, arbitral or administrative interpretations
thereof, including, without limitation, any applicable judicial, arbitral or
administrative order, judgment, permit, approval, decision or determination
pertaining to health, safety or the environment in effect at the time in
question, including, without limitation, CERCLA, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act, as amended, the
Resource Conservation and Recovery Act, as amended ("RCRA"), the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendment and Reauthorization Act of 1986, as amended, the Hazardous
Materials Transportation Act, as amended, comparable state and local laws, and
other environmental conservation and protection laws. The terms "hazardous
substance," "release" and "threatened release" shall have the meanings specified
in CERCLA, and the terms "solid waste" and "disposal" (or "disposed") shall have
the meanings specified in RCRA and the term "oil" shall have the meaning
specified in Oil Pollution Act, as amended ("OPA"); provided, that (i) in the
event either CERCLA, RCRA or OPA is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply, with respect to Section
6.12, from and after the date of adoption of such amendment, and, with respect
to Section 10.4, as of the earliest date to which such amendment has effect
(including retroactive effect), (ii) to the extent the laws of the state or
states in which any Property of the Borrower is located establish a meaning for
"hazardous substance," "release," "threatened release," "solid waste,"
"disposal" or "oil" which is broader than that specified in CERCLA, RCRA or OPA,
such broader meaning shall apply, with respect to Section 6.12, from and after
the date of adoption of such amendment, and, with respect to Section 10.4, as of
the earliest date to which such amendment has effect (including retroactive
effect).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 8.1.
"Existing Mortgages" means each of the mortgages, deeds of trust, security
agreements and financing statements described in Schedule II hereto.
"Extension Request" means a request to extend the then-current Stated
Maturity Date of this Agreement, substantially in the form of Exhibit K hereto.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to (a) the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding
10
Business Day) by the Federal Reserve Bank of New York; or (b) if such rate
is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Bankers Trust from
three federal funds brokers of recognized national standing selected by it.
"Fee Letter" means any fee letter or other agreement dated February 12,
2002, between or among the Borrower, Bankers Trust and Deutsche Bank Alex. Xxxxx
Inc. with respect to fees payable by the Borrower in connection with this
Agreement, as the same may be amended, supplemented, restated or otherwise
modified from time to time.
"Final Borrowing Base Deficiency Payment Date" means, with respect to each
Borrowing Base Deficiency Date, the corresponding day of the month in the sixth
month after notice is given by the Administrative Agent to the Borrower of the
occurrence of a Borrowing Base Deficiency, or if such month has no such
corresponding day, than the last day of such month.
"Fiscal Quarter" means any calendar quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months ending
on December 31; each reference to a Fiscal Year with a number corresponding to
any calendar year (e.g. the "2001 Fiscal Year") refers to the Fiscal Year ending
on the December 31 occurring during such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"Funded Debt" means, on a consolidated basis for the Borrower and the
Restricted Subsidiaries, as of any date of determination (without duplication):
(a) all obligations for borrowed money, (b) all obligations evidenced by bonds,
notes, debentures, or other similar instruments, (c) all obligations to pay the
deferred purchase price of property or services, except trade accounts payable
of such Person arising in the ordinary course of business that have not been
outstanding for more than one hundred twenty (120) days since the date of the
related invoice, (d) all Capital Lease Obligations, (e) all obligations secured
by a Lien existing on property owned by the Borrower and the Restricted
Subsidiaries, whether or not the obligations secured thereby have been assumed
by the Borrower or are non-recourse to the credit of such Person, (f) all
Contingent Liabilities, (g) all reimbursement obligations (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds and similar instruments and (h) all Hedging Obligations to the
extent secured by cash deposited as a result of margin calls; provided that for
purposes hereof, obligations of the types described in the foregoing clauses (a)
through (h) owing to an Unrestricted Subsidiary by the Borrower or one of its
Restricted Subsidiaries that have not been expressly subordinated to the
Obligations on terms reasonably satisfactory to the Administrative Agent shall
be deemed to be Funded Debt. Funded Debt shall not include any obligation
incurred in connection with Hedging Obligations (other than those described in
clause (h) above). Funded Debt shall not include Trade Guarantees except as
provided in the definition thereof.
11
"Funded Debt to EBITDA Ratio" means, at any particular time, the ratio of
(i) all Funded Debt of the Borrower and its Restricted Subsidiaries on a
consolidated basis to (ii) Consolidated EBITDA.
"GAAP" is defined in Section 1.4.
"Gas Gathering Systems" means the gas plant and those certain gas gathering
systems consisting of all equipment, assets, rights-of-way, surface leases,
contracts and related assets more particularly described on Schedule 1.1
attached hereto.
"Governmental Authority" means the government of the United States or any
other nation or country or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Gruy" means Gruy Petroleum Management Company, a Texas corporation and one
of the Guarantors.
"Guarantor" means each present and future Material Restricted Subsidiary of
the Borrower.
"Hazardous Material" means any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material or substance within the meaning of any
applicable national, regional, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, substance or material, all as amended or hereafter amended.
"Hedge Agreements" means (i) interest rate hedge agreements, interest rate
cap agreements, interest rate swap agreements and interest rate collar
agreements, or any other similar agreements or arrangements, or (ii) commodity
hedge, commodity swap, exchange, forward, futures, collar or cap agreements,
fixed price agreements or any other agreements or arrangements designed to
protect such Person against fluctuations in commodity prices, or (iii) foreign
exchange contract, currency hedge agreement, currency option or any other
agreement or arrangement designed to protect such Person against fluctuations in
currency exchange rates, in each case, as amended, supplemented, restated or
otherwise modified from time to time.
"Hedging Obligations" means, with respect to any Person, (a) all
liabilities of such Person under interest rate hedge agreements, interest rate
cap agreements, interest rate swap agreements and interest rate collar
agreements, or any other similar agreements or arrangements, and (b) all
liabilities of such Person under commodity xxxxxx, commodity swaps, exchanges,
forward, future, collar or cap agreements, fixed price agreements, and all other
agreements or arrangements designed to protect such Person against the
fluctuations in commodity prices.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
12
"Highest Lawful Rate" is defined in Section 4.11.
"Hydrocarbons" means oil, gas, casing head gas, condensate, distillate,
liquid hydrocarbons, gaseous hydrocarbons, all products refined, separated,
settled and dehydrated therefrom and all products refined therefrom, including,
without limitation, kerosene, liquefied petroleum gas, refined lubricating oils,
diesel fuel, drip gasoline, natural gasoline, helium, sulfur and all other
minerals.
"Hydrocarbon Interests" means all rights, titles, interests and estates now
owned or hereafter acquired by the Borrower or any of its Restricted
Subsidiaries in any and all oil, gas and other liquid or gaseous hydrocarbon
properties and interests, including without limitation, mineral fee or lease
interests, production sharing agreements, concession agreements, license
agreements, service agreements, risk service agreements or similar Hydrocarbon
interests granted by an appropriate Governmental Authority, farmout, overriding
royalty and royalty interests, net profit interests, oil payments, production
payment interests and similar interests in Hydrocarbons, including any reserved
or residual interests of whatever nature.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature; (b) which relates to the
limited scope of examination of matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in such
financial statement and which, as a condition to its removal, would require an
adjustment to such item the effect of which would be to cause the Borrower to be
in default of any of its obligations under Section 7.2.4.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication: (a) all
obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (b) all
reimbursement obligations, contingent or otherwise, relative to the face amount
of all letters of credit, whether or not drawn, and banker's acceptances issued
for the account of such Person; (c) all obligations of such Person as lessee
under leases which have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Liabilities; (d) liabilities of such Person under any Hedging
Agreements; to the extent secured by cash deposited as a result of a margin
call, but expressly excluding all other obligations incurred in connection with
Hedging Agreements; (e) all obligations of such Person to pay the deferred
purchase price of property or services (except trade accounts payable arising in
the ordinary course of business), and indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse; (f) all Contingent Liabilities of such Person
in respect of any of the foregoing; and (g) all liabilities in respect of
13
unfunded vested benefits under any Plan. For all purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner or a
joint venturer, provided, however, that notwithstanding the foregoing, the
Indebtedness of such Person shall not include (x) any Indebtedness of such
partnership or joint venture that is, by its express terms, non-recourse to such
Person, or (y) in the case of Indebtedness for which recourse to such Person is
limited, that portion of such Indebtedness for which such Person is not liable
pursuant to express limited recourse terms contained in the agreement
documenting such Indebtedness, in each case, such non-recourse or limited
recourse terms being subject to the prior approval of the Administrative Agent
(which approval shall not be unreasonably withheld).
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Indentures" means, collectively, the 1997 Indenture and the 2002
Indenture.
"Interest Period" means, relative to any LIBO Rate Loans, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.4
and shall end on (but exclude) the day which numerically corresponds to such
date one, two, three or six months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month), in
either case as the Borrower may select in its relevant notice pursuant to
Section 2.3 or 2.4; provided, however, that (a) the Borrower shall not be
permitted to select Interest Periods to be in effect at any one time which have
expiration dates occurring on more than five different dates; (b) if such
Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next following Business Day (unless, if such
Interest Period applies to LIBO Rate Loans, such next following Business Day is
the first Business Day of a calendar month, in which case such Interest Period
shall end on the Business Day next preceding such numerically corresponding
day); and (c) no Interest Period may end later than the date set forth in clause
(a) of the definition of "Commitment Termination Date"; and (d) until the
earlier of (i) the 90th day following the Effective Date and (ii) the date on
which the Administrative Agent shall have notified the Borrower that the primary
syndication of the credit facility evidenced by this Agreement has been
completed (in the Administrative Agent's sole discretion), no LIBO Rate Loan
shall be made or continued as, and no Base Rate Loan shall be converted into, a
LIBO Rate Loan, having an Interest Period exceeding one month.
"Investment" means, relative to any Person, (a) any loan or advance made by
such Person to any other Person (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business); (b)
any Contingent Liability of such Person; and (c) any ownership or similar
interest held by such Person in any other Person. The amount of any Investment
shall be the original principal or capital amount thereof (without adjustment by
reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Issuer" is defined in the preamble.
14
"Knowledge" means either (a) actual knowledge of a responsible officer of
the Borrower or employee of the Borrower charged with responsibility for the
matter at issue or in question or (b) knowledge that a prudent responsible
officer of the Borrower or employee of the Borrower charged with responsibility
for the matter at issue or in question could be expected to discover or
otherwise become aware of in the course of conducting the Borrower's business.
"Letter of Credit" is defined in Section 2.1.2.
"Letter of Credit Commitment Amount" means at any time the lesser of (i)
$20,000,000, as such amount may be reduced from time to time pursuant to Section
2.2 or (ii) the Borrowing Base then in effect.
"Letter of Credit Liabilities" means, at any time, with respect to any
Letter of Credit, the sum of (i) the undrawn face amount of such Letter of
Credit plus (ii) the aggregate unpaid amount, if any, of all obligations of the
Borrower to reimburse the Issuer and the Banks in respect of drawings under such
Letter of Credit.
"Letter of Credit Request" means a letter of credit request and certificate
duly executed by an Authorized Officer of the Borrower substantially in the form
of Exhibit B-2 hereto, with appropriate insertions made therein.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans, the
rate of interest equal to the offered quotation appearing on Telerate Page 3750
or if such Telerate Page shall not be available, on the LIBO page on the Reuters
Screen (or on any page that can reasonably be considered a replacement page) at
approximately 11:00 a.m. New York time (or as soon thereafter as practicable)
two Business Days prior to the beginning of such Interest Period for Dollar
deposits having a term comparable to such Interest Period. If no such Telerate
Page 3750 or Reuters Screen LIBO page (or replacement page) is available, then
the "LIBO Rate" shall mean, relative to any Interest Period for LIBO Rate Loans,
the rate of interest equal to (rounded upwards, if necessary, to the nearest
1/100 of 1%) the rate per annum at which Dollar deposits in immediately
available funds are offered to Bankers Trust LIBOR Office in the New York
interbank market as at or about 11:00 a.m. New York time (or as soon thereafter
as practicable) two Business Days prior to the beginning of such Interest Period
for delivery on the first day of such Interest Period, and in an amount
approximately equal to the amount of Bankers Trust LIBO Rate Loan and for a
period approximately equal to such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
15
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) determined pursuant to the following formula:
LIBO Rate = LIBO Rate
-------------------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Administrative Agent on the basis of the LIBOR
Reserve Percentage in effect two Business Days before the first day of such
Interest Period.
"LIBOR Office" means, relative to any Bank, the office of such Bank
designated as such below its signature hereto or designated in the Bank
Assignment Agreement or such other office of a Bank as designated from time to
time by notice from such Bank to the Borrower and the Administrative Agent,
whether or not outside the United States, which shall be making or maintaining
LIBO Rate Loans of such Bank hereunder.
"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBO
Rate Loans, the average maximum rate (expressed as a decimal) at which reserves
are required to be maintained during such Interest Period under Regulation D of
the F.R.S. Board by member banks of the Federal Reserve System in New York City
with deposits exceeding $1,000,000,000 (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements) as
"Eurocurrency Liabilities", as such term is defined in Regulation D of the
F.R.S. Board. Without limiting the effect of the foregoing, the LIBOR Reserve
Percentage shall reflect any other reserves required to be maintained by such
member banks by reason of any Regulatory Change against (i) any category of
liabilities which includes deposits by reference to which the LIBOR Rate
(Reserve Adjusted) is to be determined, or (ii) any category of extensions of
credit or other assets which include LIBO Rate Loans.
"Lien" means, with respect to any Person, any security interest, mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property to secure
payment of a debt or performance of an obligation or other priority or
preferential arrangement of any kind or nature whatsoever. For purposes of this
Agreement, the term "Lien" shall include any cash deposited as a result of a
margin call, but shall exclude contractual provisions contained in any Hedge
Agreement establishing margin requirements, set-off rights or netting
arrangements, and shall exclude negative pledges.
"Loan" is defined in Section 2.1.1.
"Loan Document" means this Agreement, the Notes, each Letter of Credit,
each application for a Letter of Credit, each Security Document, each Hedge
Agreement with any Bank or the Issuer, or any Affiliate of any thereof, each Fee
Letter, each Borrowing Request, each Subsidiary Guaranty Agreement together in
each case with all exhibits, schedules and attachments thereto, and all other
agreements, documents or instruments from time to time executed or delivered in
connection with or pursuant to any of the foregoing.
16
"Majority Banks" means, at any time, Banks in the aggregate holding at
least 66-2/3% of the then aggregate unpaid principal amount of the outstanding
Borrowings, or, if no such principal amount is then outstanding, Banks having at
least 66-2/3% of the Commitments.
"Marketing LLC" means NGTS LLC, a Texas limited liability company.
"Material Adverse Effect" means a material adverse effect on (i) the
business, operations, affairs, property, financial condition, assets or results
of operations of the Borrower and its Subsidiaries on a consolidated basis or
(ii) the ability of the Borrower or any other Obligor to perform its obligations
under any of the Loan Documents or (iii) the validity or enforceability of this
Agreement or the other Loan Documents.
"Material Restricted Subsidiary" means, at any time, each Restricted
Subsidiary having total gross assets equal to or exceeding $1,000,000.
"Maximum Facility Amount" means $750,000,000, as such amount may be reduced
pursuant to Section 2.2(a) or as such amount may be reduced from time to time
pursuant to Section 2.2(b) or terminated pursuant to Section 8.3.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Mortgage" means (i) the Mortgage, Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement dated as of March 15, 2002, executed
by Prize or any Prize Subsidiary in favor of the Collateral Agent, as the same
may be further amended, supplemented or otherwise modified from time to time,
and (ii) the Existing Mortgages, as amended, supplemented, or otherwise modified
from time to time, and (iii) any other Mortgage executed and delivered pursuant
to Section 7.1.7, whether substantially in the form of Exhibit G hereto or
otherwise, as amended, supplemented, restated or otherwise modified from time to
time.
"Mortgaged Properties" is defined in each Mortgage.
"Net Cash Proceeds" means in connection with (a) any issuance by the
Borrower or any of its Restricted Subsidiaries of any Indebtedness, equity or
debt securities or instruments, (b) the incurrence of other loans other than as
permitted by Section 7.2.2 or (c) the disposition of any assets permitted by
Section 7.2.9, the cash proceeds received from such issuance or sale, as
applicable, net of all investment banking fees, legal fees, accountants' fees,
underwriting discounts and commissions and other customary fees and expenses,
actually incurred and satisfactorily documented in connection therewith.
"Note" means a promissory note of the Borrower payable to any Bank, in the
form of Exhibit A hereto (as such promissory note may be amended, endorsed or
otherwise modified from time to time), evidencing the aggregate Indebtedness of
the Borrower to such Bank resulting from outstanding Loans, and also means all
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"Obligations" means all obligations, Indebtedness and liabilities of the
Borrower or any Restricted Subsidiary or any, some or all of them, to the
Agents, the Banks or the Issuer, or any Affiliate of any of the foregoing party
to a Hedge Agreement with a Loan Party, or any, some or
17
all of them, now existing or hereafter arising under or in connection with
this Agreement, the Notes, the Letters of Credit, and each other Loan Document,
whether direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including the obligations,
Indebtedness and liabilities of the Borrower, and all interest accruing thereon
(including any interest that accrues after the commencement of any proceeding by
or against the Borrower or any other Person under any bankruptcy, insolvency,
liquidation, moratorium, receivership, reorganization or other debtor relief
law) and all attorneys' fees and other expenses incurred in the collection or
enforcement thereof.
"Obligor" means the Borrower and each Subsidiary of the Borrower which is a
party to a Loan Document, including, without limitation, Prize and the Prize
Subsidiaries.
"Oil and Gas Business" means (a) the acquisition, exploration,
exploitation, development, operation, management and disposition of interests in
Hydrocarbon Interests and Hydrocarbons; (b) gathering, marketing, treating,
processing, storage, selling and transporting of any production from such
interests or Hydrocarbon Interests, including, without limitation, the marketing
of Hydrocarbons obtained from unrelated Persons; (c) any business relating to or
arising from exploration for or development, production, treatment, processing,
storage, transportation or marketing of oil, gas and other minerals and products
produced in association therewith; and (d) any activity that is ancillary or
necessary or desirable to facilitate the activities described in clauses (a)
through (c) of this definition.
"Oil and Gas Properties" means Hydrocarbon Interests; the Assets now or
hereafter pooled or unitized with Hydrocarbon Interests; all presently existing
or future unitization, pooling agreements and declarations of pooled units and
the units created thereby (including without limitation all units created under
orders, regulations and rules of any Governmental Authority) which may affect
all or any portion of the Hydrocarbon Interests; all operating agreements,
contracts and other agreements which relate to any of the Hydrocarbon Interests
or the production, sale, purchase, exchange or processing of Hydrocarbons from
or attributable to such Hydrocarbon Interest; all Hydrocarbons in and under and
which may be produced and saved or attributable to the Hydrocarbon Interests,
the lands covered thereby and all oil in tanks and all rents, issues, profits,
proceeds, products, revenues and other income from or attributable to the
Hydrocarbon Interests; all tenements, hereditaments, appurtenances and Assets in
any manner appertaining, belonging, affixed or incidental to the Hydrocarbon
Interests, Assets, Gas Gathering System, rights, titles, interests and estates
described or referred to above, including any and all Assets, real or personal,
now owned or hereinafter acquired and situated upon, used, held for use or
useful in connection with the operating, working or development of any of such
Hydrocarbon Interests or Asset (excluding drilling rigs, automotive equipment or
other personal property which may be on such premises for the purpose of
drilling a well or for other similar temporary uses) and including any and all
oil xxxxx, gas xxxxx, injection xxxxx or other xxxxx, buildings, structures,
fuel separators, liquid extraction plants, plant compressors, pumps, pumping
units, field gathering systems, tanks and tank batteries, fixtures, valves,
fittings, machinery and parts, engines, boilers, meters, apparatus, equipment,
appliances, tools, implements, cables, wires, towers, casing, tubing and rods,
surface leases, rights-of-way, easements and servitudes together with all
additions, substitutions, replacements, accessions and attachments to any and
all of the foregoing.
18
"Organic Document" means, for any Person, its certificate or articles of
incorporation, its by-laws, certificate of formation, regulations, limited
liability company agreement, partnership agreement, or similar governing
document, and all shareholder membership or partnership agreements, voting
trusts and similar arrangements.
"Participant" is defined in Section 10.11.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which the Borrower or
any corporation, trade or business that is, along with the Borrower, a member of
a Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Bank, the percentage set forth opposite
its name (i) from the Effective Date until the consummation of the first
Permitted 2002 Bond Transaction to be consummated, on Schedule III-A attached
hereto, or (ii) from and after the consummation of the first Permitted 2002 Bond
Transaction, on Schedule III-B attached hereto, in each case as such percentage
may be adjusted from time to time (x) pursuant to one or more Bank Assignment
Agreements executed by such Bank and its Assignee Bank(s) and delivered pursuant
to Section 10.11 or (y) as otherwise expressly permitted by this Agreement.
"Permitted 2002 Bond Transaction" means, collectively, the issuance by the
Borrower of senior unsecured notes or senior subordinated notes in an aggregate
principal amount not exceeding $350,000,000, and the execution and delivery by
the Borrower of one or more Indentures and related documentation containing
customary terms and conditions for senior unsecured notes or senior subordinated
notes of like tenor and amount, each satisfactory to the Administrative Agent,
the Arranger and the Borrower (including, without limitation, that the senior
unsecured notes shall not mature sooner than the sixth anniversary of the date
of issuance thereof) pursuant to which such senior unsecured notes or senior
subordinated notes shall have been issued; provided, however, that such issuance
of senior secured notes or senior subordinated notes shall have occurred on or
before the date that is six months immediately following the Effective Date. Any
issuance or proposed issuance by the Borrower of senior unsecured notes or
senior subordinated notes after such six month period shall not constitute a
Permitted 2002 Bond Transaction.
"Person" means any natural person, corporation, limited liability company,
partnership, firm, association, trust, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
19
"Pledge Agreement" means (i) the Borrower Pledge Agreement, and (ii) any
Subsidiary Pledge Agreement, as each may be amended, supplemented, restated or
otherwise modified from time to time.
"Prior Indebtedness" is defined in the second recital.
"Prize" means Prize Energy Corp., a Delaware corporation.
"Prize Credit Facility" means the Amended and Restated Credit Agreement,
dated as of February 8, 2000, between Prize Energy Resources, L.P., a Prize
Subsidiary, as borrower, Prize, as parent guarantor, and Fleet National Bank, as
administrative agent, certain other agents, and various banks, as lenders (as
amended, modified or supplemented).
"Prize Merger" means the merger of Prize with and into Pintail Energy,
Inc., a Delaware corporation, pursuant to the terms of the Prize Merger
Agreement.
"Prize Merger Agreement" means that certain Plan and Agreement of Merger
dated as of December 17, 2001, among the Borrower, Pintail Energy, Inc., and
Prize.
"Prize Properties" means those Oil and Gas Properties owned by Prize or any
Prize Subsidiary immediately prior to the consummation of the Prize Merger.
"Prize Subsidiary" means any Subsidiary of Prize. "Prize Subsidiaries"
means all Subsidiaries of Prize.
"Proved Producing Reserves" means Proved Reserves that are recoverable from
existing xxxxx with current operating methods and expenses and are producing.
"Proved Reserves" means those recoverable Hydrocarbons which have been
estimated with reasonable certainty, as demonstrated by geological and
engineering data, to be economically recoverable from the Oil and Gas Properties
by existing producing methods under existing economic conditions.
"Quarterly Payment Date" means the last day of each March, June, September,
and December or, if any such day is not a Business Day, the next succeeding
Business Day.
"Regulatory Change" means, with respect to any Bank, any change after the
date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D of the F.R.S. Board) or the adoption or
making after such date of any interpretations, directives, or requests applying
to a class of banks including such Bank of or under any United States federal or
state, or any foreign laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Release" means "release" as such terms are defined in CERCLA.
"Required Deficiency Payment" means, for each Borrowing Base Deficiency
Payment Date occurring after a Borrowing Base Deficiency Determination Date (the
"Subject
20
Determination Date") in accordance with the terms hereof, an amount equal
to one-sixth of the Borrowing Base Deficiency (plus accrued interest thereon)
existing on the Subject Determination Date; provided, that if the amount of the
Borrowing Base Deficiency has increased after the Subject Determination Date
then each remaining Required Deficiency Payment shall be increased to
substantially equal amounts sufficient to reduce to zero the Borrowing Base
Deficiency on or before the then Final Borrowing Base Deficiency Payment Date.
"Reserve Report" means a report setting forth the Proved Reserves by
reserve category attributable to the Hydrocarbon Interests constituting Proved
Reserves owned directly by the Borrower or any Restricted Subsidiary included in
the Borrowing Base, a projection of the rate of production and net operating
income with respect thereto, as of a specified date, and such other information
as is customarily obtained from and provided in such reports, satisfactory in
form and substance to the Administrative Agent, the Issuer or the Banks. All
Reserve Reports dated as of December 31, shall be prepared by an Approved
Engineer, and all other Reserve Reports shall be prepared by engineers employed
by, or under contract to, the Borrower and certified by an Authorized Officer of
the Borrower.
"Restricted Subsidiary" means each Subsidiary of the Borrower other than
the Unrestricted Subsidiaries of the Borrower.
"S&P" means Standard & Poor's Ratings Group.
"Security Documents" means, individually, (i) any Pledge Agreement and all
amendments, supplements, restatements or other modifications made from time to
time thereto, (ii) any Mortgage and all amendments, supplements, restatements or
other modifications made from time to time thereto, (iii) any additional similar
document required by the Collateral Agent pursuant to Section 7.1.7, and (iv)
collectively, all of the foregoing.
"Senior Unsecured Debt" means senior unsecured Indebtedness issued by the
Borrower pursuant to the terms of the Indentures upon the terms and conditions
set forth therein in an aggregate amount not exceeding the sum of $140,000,000
plus the aggregate principal amount of notes issued under the Permitted 2002
Bond Transaction.
"Solvent" means, with respect to any Person at any time, a condition under
which: (a) the fair saleable value of such Person's assets is, on the date of
determination, greater than the total amount of such Person's liabilities
(including contingent and unliquidated liabilities) at such time; (b) such
Person is able to pay all of its liabilities as such liabilities mature; (c)
such Person does not intend to, and does not, believe that it will, incur debts
or liabilities beyond such Person's ability to pay such debts and liabilities as
they mature; and (d) such Person does not have unreasonably small capital with
which to conduct its business. For purposes of this definition (i) the amount of
a Person's contingent or unliquidated liabilities at any time shall be that
amount which, in light of all the facts and circumstances then existing,
represents the amount which can reasonably be expected to become an actual or
matured liability; (ii) the "fair saleable value" of an asset shall be the
amount which may be realized within a reasonable time either through collection
or sale of such asset at its regular market value; and (iii) the "regular market
value" of an asset shall be the amount which a capable and diligent business
person could
21
obtain for such asset from an interested buyer who is willing to purchase
such asset under ordinary selling conditions.
"Stated Amount" has the meaning assigned to such term in the respective
Letter of Credit.
"Stated Maturity Date" means March 15, 2005 (as such date may be extended
from time to time pursuant to Section 2.9).
"Subordinated Debt" means all unsecured Indebtedness of the Borrower for
money borrowed which is subordinated, upon terms satisfactory to the
Administrative Agent, in right of payment to the payment of all Obligations.
"Subsidiary" means, with respect to any Person, (a) a corporation a
majority of whose voting stock is at the time, directly or indirectly, owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more subsidiaries of such Person, (b) a partnership in which such Person
or a Subsidiary of such Person is, at the date of determination, a general or
limited partner of such partnership, but only if such Person or its subsidiary
is entitled to receive more than 50% of the assets of such partnership upon its
dissolution and which is otherwise directly or indirectly controlled by such
Person, or (c) any other Person (other than a corporation or partnership) in
which such Person, directly or indirectly, at the date of determination thereof,
as (i) at least a majority ownership interest or (ii) the power to elect or
direct the election of a majority of the directors or other governing body of
such Person. Unless the context otherwise clearly requires, references in this
Agreement to a "Subsidiary" or the "Subsidiaries" refer to a Subsidiary or the
Subsidiaries of the Borrower. For purposes of this Agreement, Prize and the
Prize Subsidiaries are each deemed to be Subsidiaries of the Borrower.
"Subsidiary Guaranty Agreement" means (i) that certain Fourth Amended and
Restated Guaranty Agreement executed by the Material Restricted Subsidiaries,
including Prize and the Prize Subsidiaries, in substantially the form of Exhibit
J hereto, in favor of the Collateral Agent for the benefit of itself, the other
Agents, the Banks and the Issuer, as the foregoing may be amended, restated,
supplemented or modified from time to time, and (ii) each Subsidiary Guaranty
Agreement delivered pursuant to Section 7.1.7 hereto, as each of the foregoing
may be amended, restated, supplemented, or modified from time to time.
"Subsidiary Pledge Agreement" means that certain Second Amended and
Restated Pledge Agreement of the Material Restricted Subsidiaries as amended by
that certain First Amendment to Subsidiary Pledge Agreement and as further
amended by that certain Second Amendment to Subsidiary Pledge Agreement in
substantially the form of Exhibit I hereto, in favor of the Collateral Agent for
the benefit of itself, the other Agents, the Banks and the Issuer, and each
Subsidiary Pledge Agreement or counterpart thereof delivered pursuant to Section
7.1.7 hereto, as each may be amended, restated, supplemented, or modified.
"Taxes" is defined in Section 4.6.
"Total Interest Expense" means, with respect to any period for which a
determination thereof is to be made, the sum, without duplication, of (i) the
aggregate amount of all interest accrued (whether or not paid) or capitalized
during such period, on all Indebtedness plus (ii) the
22
portion of any Capitalized Lease Liabilities allocable to interest expense
in accordance with GAAP plus (iii) the interest portion of any deferred payment
obligation minus (iv) to the extent included in the foregoing clause (i), the
non-cash accretion of the discount and amortization of the fees payable
hereunder to the Administrative Agent, the Collateral Agent, the Documentation
Agent, the Issuer, the Banks and the Arrangers, all determined for the Borrower
and its Restricted Subsidiaries (including, on a pro forma basis with respect to
any period prior to the consummation of the Prize Merger, Prize and the Prize
Subsidiaries) on a consolidated basis in accordance with GAAP.
"Trade Guarantees" means Contingent Liabilities in lieu of letters of
credit issued on behalf of the Marketing LLC for which the Borrower or one of
its Subsidiaries is severally, or jointly and severally with one or more other
Persons, or both, liable, provided that all such Contingent Liabilities shall
not exceed $15,000,000 in the aggregate, unless otherwise incurred pursuant to
Section 7.2.2(m). All joint and several Trade Guarantees shall be subject to
written indemnification agreements, in form and substance and from Persons
satisfactory to the Agents, in their sole discretion, the effect of which shall
be to reduce the liability of the Borrower to not more than the percentage of
the joint and several Trade Guarantee equal to the Borrower's then current
ownership interest in Marketing LLC. Trade Guarantees up to $15,000,000 shall
not be treated as Funded Debt for purposes of computing the Borrower's Funded
Debt to EBITDA Ratio. For the avoidance of doubt, Contingent Liabilities that
would otherwise fall within the definition of Trade Guarantees but for the fact
that the aggregate amount of all such Contingent Liabilities exceeds
$15,000,000, may be incurred under Section 7.2.2(m). Notwithstanding the
foregoing, the Majority Banks shall at all times reserve the right to include
the entire amount of joint and several Trade Guarantees, or any portion thereof,
as Funded Debt in computing the Borrower's Funded Debt to EBITDA Ratio, based on
such factors as the Majority Banks may from time to time deem material, in their
discretion; provided, however, that the Administrative Agent on behalf of the
Majority Banks must give the Borrower written notice at least 90 days prior to
the end of the Fiscal Quarter in order for any amount of joint and several Trade
Guarantees in excess of the Borrower's and its Subsidiaries' ratable share of
such joint and several Trade Guarantees to be included as Funded Debt in
computing the Borrower's Funded Debt to EBITDA Ratio for such Fiscal Quarter.
"Transfer" is defined in Section 7.2.9.
"type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Unrestricted Subsidiaries" means (a) Xxxxxx Xxxxxxx International Limited
Liability Company, (b) Canvasback Energy, Inc., a Delaware corporation, (c) any
Subsidiary of an Unrestricted Subsidiary, and (d) any future Subsidiary formed
or acquired by the Borrower that is designated by the board of directors of the
Borrower as an Unrestricted Subsidiary; provided, however, that no Subsidiary
shall be designated as an Unrestricted Subsidiary if (i) a Default or Event of
Default has occurred and is continuing, (ii) all or any portion of such
Subsidiary's assets are pledged to the Agents and the Banks under this Agreement
or any other Loan
23
Document, (iii) all or any portion of such Subsidiary's Oil and Gas
Properties are included in the calculation of the Borrowing Base, (iv) the
creation or formation of such Subsidiary would not otherwise be permitted under
Section 10.3 or 10.5 hereof, or (v) the creation, existence, or formation of
such Subsidiary would not be permitted under any other material contract or
agreement to which the Borrower is a party.
"Unused Availability" means at any time an amount equal to the excess of
(i) the Commitment Amount over (ii) the sum of (a) outstanding Loans plus (b)
Letter of Credit Liabilities.
"Welfare Plan" means a "welfare plan", as such term is defined in section
3(1) of ERISA.
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary of the
Borrower all of whose Capital Stock, except for director's qualifying shares, is
owned directly or indirectly by the Borrower.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the Disclosure Schedule and in each Note,
Borrowing Request, Continuation/Conversion Notice, Loan Document, notice and
other communication delivered from time to time in connection with this
Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those United States generally accepted accounting principles
("GAAP") applied in the preparation of the financial statements referred to in
Section 6.5. In the event any change in GAAP after the date hereof would
materially affect the calculation of the financial covenants contained in
Section 7.2.4, the Borrower and the Majority Banks agrees to enter into good
faith negotiations for an agreement to revise such financial covenants or the
definitions of terms used therein to take into account such changes in GAAP;
provided, however, that until the Borrower and the Banks have entered into such
an agreement, such financial calculations shall continue to be made in
accordance with GAAP as in effect immediately prior to such change.
ARTICLE II
THE COMMITMENTS, BORROWING PROCEDURES, NOTES,
LETTERS OF CREDIT AND BORROWING BASE
24
SECTION 2.1. The Commitments. On the terms and subject to the conditions of
this Agreement (including Article V), each Bank severally agrees to make Loans
and participate in Letters of Credit, and the Issuer agrees to issue Letters of
Credit, as described in this Section 2.1.
SECTION 2.1.1. Loan Commitment. On the terms and subject to the conditions
of this Agreement (including Article V), each Bank hereby severally agrees to
make loans to the Borrower (relative to such Bank, and of any type, its "Loans")
from time to time on any Business Day occurring prior to the Commitment
Termination Date, equal to such Bank's Percentage of the aggregate amount of the
Borrowing requested by the Borrower to be made on such Business Day. The
commitment of each Bank described in this Section 2.1.1 is herein referred to as
its "Commitment". On the terms and conditions hereof, the Borrower may from time
to time borrow, prepay and reborrow Loans.
SECTION 2.1.2. Commitment to Issue Letters of Credit. The Issuer agrees to
issue under the several responsibilities of the Banks in accordance with their
respective Percentages, from time to time after the Effective Date and until the
date that is thirty (30) days prior to the Commitment Termination Date, one or
more standby letters of credit (herein collectively called the "Letters of
Credit" and individually called a "Letter of Credit") for the account of the
Borrower and in the name of the Borrower or any Restricted Subsidiary, and for
the general corporate purposes of the Borrower. Each Letter of Credit shall be
denominated in U.S. Dollars, shall be payable only upon presentation of sight
drafts or other forms of demand together with any other documents which may be
required to be presented at the time of any drawing thereunder (the exact
wording of any such documents, if any, having been specified in, or attached as
a copy to, the relevant Letter of Credit Request), and shall be otherwise upon
such terms as the Borrower may specify in a Letter of Credit Request delivered
to the Issuer at least three (3) Business Days (or such shorter period as may be
agreed among the Issuer, the Administrative Agent and the Borrower) before the
proposed date of issuance thereof. Each Letter of Credit must be in form and
substance satisfactory to the Issuer and shall have a fixed expiration date
occurring not later than one (1) year after the date of the issuance thereof,
provided that each Letter of Credit may contain provisions to extend the expiry
thereof automatically for one or more successive periods of not more than one
year; provided, however, that in no event shall any Letter of Credit provide for
an expiry later than ten (10) days prior to the Commitment Termination Date. It
is understood by the parties hereto that for all purposes of this Agreement,
each renewal, if applicable, of a Letter of Credit shall be considered an
issuance thereof and the Borrower shall be required to comply with all the
provisions of this Agreement with respect to any such renewal to the same extent
as if a new Letter of Credit was being issued on such renewal date. Upon
fulfillment of the applicable conditions set forth in Article V with respect to
such Letter of Credit and subject to the terms hereof, the Issuer shall issue
such Letter of Credit promptly to the requested beneficiary and give to the
Banks prompt written notice (in reasonable detail) of such issuance. Promptly
after the issuance of or amendment to a Letter of Credit, the Issuer shall
notify the Administrative Agent and the Borrower, in writing, of such issuance
or amendment, and such notice shall be accompanied by a copy of such issuance or
amendment. Upon receipt of such notice, the Administrative Agent shall notify
the Banks in writing of such issuance or amendment and, upon receipt of written
request from a Bank, shall provide such Bank with copies of such issuance or
amendment.
25
SECTION 2.1.3. Purchase and Sale of Participations in Each Letter of
Credit. Upon the terms and subject to the conditions of this Agreement, each
Bank hereby purchases from the Issuer, and the Issuer hereby sells to such Bank,
an undivided participation in and to each Letter of Credit and the obligations
of the Borrower under this Agreement with respect thereto equal to its
respective Percentage. The Borrower agrees that each Bank purchasing a
participation from the Issuer pursuant to this Section 2.1.3 may exercise all
its rights to payment against the Borrower including the right of setoff, with
respect to such participation as fully as if such Bank were the direct creditor
of the Borrower in the amount of such participation.
SECTION 2.1.4. Banks Not Permitted or Required to Make Loans. No Bank shall
be permitted or required to make any Loan and the Borrower shall not be
permitted to effectuate a reduction in the Maximum Facility Amount pursuant to
Section 2.2 if, after giving effect thereto,
(a) the aggregate outstanding principal amount of all Loans of all Banks
plus the aggregate amount of all Letter of Credit Liabilities would exceed the
Commitment Amount, or
(b) the aggregate outstanding principal amount of all Loans plus the
aggregate amount of all of the Letter of Credit Liabilities of such Bank would
exceed such Bank's Percentage of the Commitment Amount.
SECTION 2.1.5. Issuer Not Permitted or Required to Issue Letters of Credit.
The Issuer shall not be permitted or required to issue any Letter of Credit, nor
shall the Borrower be permitted to effectuate any reduction in the Letter of
Credit Commitment Amount pursuant to Section 2.2 if, after giving effect
thereto,
(a) the aggregate amount of all Letter of Credit Liabilities would exceed
the Letter of Credit Commitment Amount, or
(b) the aggregate amount of all outstanding Loans plus all Letter of Credit
Liabilities would exceed the Commitment Amount.
SECTION 2.2. Reduction of Maximum Facility Amount.
(a) Upon the consummation of the first Permitted 2002 Bond Transaction, the
Maximum Facility Amount shall automatically and without further action by the
Borrower, the Administrative Agent or the Banks, be reduced by an amount equal
to the aggregate amount of notes issued under such Permitted 2002 Bond
Transaction, provided that the Maximum Facility Amount shall not be reduced
below $500,000,000.
(b) The Borrower may, from time to time on any Business Day occurring after
the time of the initial extension of credit hereunder, voluntarily reduce the
Maximum Facility Amount; provided, however, that all such reductions shall
require at least three (3) Business Days' prior notice to the Administrative
Agent and shall be permanent, and any partial reduction of the Maximum Facility
Amount shall be in a minimum amount of $1,000,000 and in an integral multiple of
$500,000.
26
SECTION 2.3. Borrowing Procedures for Loans. By delivering a Borrowing
Request to the Administrative Agent on or before (i) 11:00 a.m., New York time
in the case of Base Rate Loans on the Business Day on which such Borrowing is to
be made and (ii) 12:00 noon, New York time in the case of a LIBO Rate Loan three
(3) Business Days prior to the Business Day on which such Borrowing is to be
made, the Borrower may from time to time irrevocably request that a Borrowing be
made in a minimum amount of $500,000 and an integral multiple of $100,000, or in
the unused amount of the Commitments. The Administrative Agent at its option may
accept telephonic requests for Loans, provided that such acceptance shall not
constitute a waiver of the Administrative Agent's right to delivery of a
Borrowing Request in connection with subsequent Loans. Any telephonic request
for a Loan by the Borrower shall be promptly confirmed by submission of a
properly completed Borrowing Request to the Administrative Agent. On the terms
and subject to the conditions of this Agreement, each Borrowing comprised of
Loans shall be comprised of the type of Loans, and shall be made on the Business
Day, specified in such Borrowing Request. On or before 12:00 noon (New York
time) on such Business Day each Bank shall deposit with the Administrative Agent
same day funds in an amount equal to such Bank's Percentage of the requested
Borrowing. Such deposit will be made to an account which the Administrative
Agent shall specify from time to time by notice to the Banks. To the extent
funds are received from the Banks, the Administrative Agent shall make such
funds available to the Borrower by wire transfer to the accounts the Borrower
shall have specified in its Borrowing Request. No Bank's obligation to make any
Loan shall be affected by any other Bank's failure to make any Loan.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 12:00
noon, New York time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than three (3) Business Days' notice, that all or
any portion in an aggregate minimum amount of $500,000 and an integral multiple
of $100,000, of any Loans to the Borrower be, in the case of Base Rate Loans,
converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, converted on
the last day of the then current Interest Period into a Base Rate Loan or
continued as a LIBO Rate Loan (in the absence of delivery of a
Continuation/Conversion Notice with respect to any LIBO Rate Loan at least three
(3) Business Days before the last day of the then current Interest Period with
respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a LIBO Rate Loan having an Interest Period of one month except as
provided in clause (ii) of the proviso to this Section 2.4); provided, however,
that (i) each such conversion or continuation shall be pro rated among the
applicable outstanding Loans of all Banks to the Borrower, (ii) no portion of
the outstanding principal amount of any Loans may be so continued as, or be so
converted into, LIBO Rate Loans when any Default has occurred and is continuing,
and (iii) continuation of a LIBO Rate Loan, the conversion of a Base Rate Loan
into a LIBO Rate Loan or the conversion of a LIBO Rate Loan into a Base Rate
Loan pursuant to this Section 2.4 shall not constitute a Borrowing for purposes
of Section 5.2.1 or Article VI of this Agreement.
SECTION 2.5. Funding. Each Bank may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Bank) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Bank, and the obligations of the Borrower to repay such
27
LIBO Rate Loan shall nevertheless be to such Bank for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of Sections 4.1, 4.2, 4.3 or 4.4, it shall be conclusively
assumed that each Bank elected to fund all LIBO Rate Loans by purchasing Dollar
deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.6. Notes. Each Bank's Loans under its Commitment shall be
evidenced by a Note payable to the order of such Bank in a maximum principal
amount equal to such Bank's Percentage of the Maximum Facility Amount. The
Borrower hereby irrevocably authorizes each Bank to make (or cause to be made)
appropriate notations on the grid attached to such Bank's Note (or on any
continuation of such grid or otherwise in its records), which notations, if
made, shall evidence, inter alia, the date of, the outstanding principal of, and
the interest rate and Interest Period applicable to the Loans evidenced thereby.
Such notations shall be conclusive and binding on the Borrower absent manifest
error; provided, however, that the failure of any Bank to make any such
notations shall not limit or otherwise affect any Obligations of the Borrower.
SECTION 2.7. Certain Provisions Relating to the Letters of Credit.
SECTION 2.7.1. Borrower's Agreement to Repay Letter of Credit Drawings. The
Borrower hereby agrees to reimburse the Issuer, forthwith, for each payment or
disbursement made by the Issuer to settle its obligations under any draft drawn
under any Letter of Credit, with interest on the amount so paid or disbursed by
the Issuer from and including the date of payment or disbursement to but not
including the date the Issuer is reimbursed therefor, at a rate per annum
(computed on the basis of a year consisting of 365, or where appropriate 366,
days) equal to the rate set forth in Section 3.2.1(a). In the event the Issuer
is not reimbursed by the Borrower on the disbursement date, or if the Issuer
must for any reason return or disgorge such reimbursement, the Banks shall, on
the terms and subject to the conditions of this Agreement, fund the
reimbursement obligation therefor by making, on the next Business Day, Base Rate
Loans as provided in Section 2.1.1 to the Borrower (the Borrower being deemed to
have given a timely Borrowing Request therefor for such amount) by the Banks
making payment to the Issuer's account; provided, however, for the purpose of
determining the availability of the Commitments to make Loans immediately prior
to giving effect to the application of the proceeds of such Loans, such
reimbursement obligation shall be deemed not to be outstanding at such time. The
Issuer agrees to provide to the Borrower prompt notice of any such payment or
disbursement made by the Issuer or Loans made by the Banks; provided that the
Issuer's failure to provide such prompt notice shall not limit or impair in any
way the Borrower's obligations hereunder. The Borrower's obligation to reimburse
the Issuer forthwith under this Section 2.7.1 for payments and disbursements
made by the Issuer under any Letter of Credit shall be irrespective of any set
off, counterclaim or defense to payment which the Borrower may have or have had
against the Issuer, or the legality, validity, regularity or enforceability of
such Letter of Credit; provided, however, the Borrower shall not be obligated to
reimburse the Issuer for any wrongful payment or disbursement made by the Issuer
under any Letter of Credit which payment occurs as a result of acts or omissions
constituting gross negligence or willful misconduct on the part of the Issuer or
any of its officers, employees or agents determined by a court of competent
jurisdiction in a final non-appealable judgment.
28
SECTION 2.7.2. Reimbursement Obligations of the Banks under the Letters of
Credit. If the Borrower shall fail pursuant to the terms of Section 2.7.1 hereof
forthwith to reimburse the Issuer for each payment or disbursement made by the
Issuer to settle its obligations under any draft drawn under any Letter of
Credit and the Banks shall not have made a Loan as provided in Section 2.7.1 to
fund such reimbursement obligation, then upon demand by the Issuer each Bank
shall forthwith make available to the Issuer at its office indicated on its
signature page hereto (or at such other address designated by the Issuer to the
Administrative Agent) immediately available funds in an amount equal to such
Bank's pro rata share (according to its respective Percentage) of the amount so
paid or disbursed by the Issuer. Each Bank shall jointly and severally indemnify
and hold harmless the Issuer from and against any and all losses, liabilities
(including, without limitation, liabilities for penalties), actions, suits,
judgments, demands, damages, costs and expenses (including, without limitation,
attorneys' fees and expenses) resulting from any failure on the part of such
Bank to provide, or from any delay in providing, the Issuer with such Bank's
share of the amount of any payment or disbursement made by the Issuer to settle
its obligations under any draft drawn under any Letter of Credit in accordance
with the provisions of the preceding sentence.
The obligation of each Bank to provide the Issuer with such Bank's pro rata
share of the amount of any payment or disbursement made by the Issuer to settle
its obligations under any draft drawn under any Letter of Credit in accordance
with the provisions of the preceding paragraph shall be absolute and
unconditional under any and all circumstances and irrespective of any set off,
withholding, abatement, reduction, counterclaim or defense to payment which such
Bank may have or have had against the Issuer, including, without limitation, any
defense based upon the occurrence of any Default, any draft, demand or
certificate or other document presented under a Letter of Credit proving to be
forged, fraudulent, invalid or insufficient, the failure of the demand for
payment under such Letter of Credit to conform to the terms of such Letter of
Credit or the legality, validity, regularity or enforceability of such Letter of
Credit or any failure of any disbursement to conform to the terms of the
applicable Letter of Credit (if, in the Issuer's good faith opinion, such
disbursement is determined to be appropriate) or any non-application or
misapplication by the beneficiary of the proceeds of such disbursement;
provided, however, that no Bank shall be obligated to reimburse the Issuer
pursuant to the preceding provisions of this Section 2.7.2 for any wrongful
payment or disbursement made by the Issuer under any Letter of Credit as a
result of acts or omissions constituting gross negligence or willful misconduct
on the part of the Issuer or any of its officers, employees or agents determined
by a court of competent jurisdiction in a final non-appealable judgment.
SECTION 2.7.3. Action Upon Occurrence of Default. If any Event of Default
described in clauses (a) through (d) of Section 8.1.9 shall occur and be
continuing, the Borrower shall automatically, without demand or request, and if
any other Event of Default shall occur and be continuing, the Borrower shall, if
requested by the Administrative Agent or the Majority Banks, immediately deposit
with and pledge to the Administrative Agent cash or Cash Equivalent Investments
satisfactory to the Administrative Agent, in an amount equal to the outstanding
Letter of Credit Liabilities as security for the Obligations.
SECTION 2.7.4. Cash Collateral Procedures. Any amounts so received by the
Administrative Agent pursuant to the provisions of Section 2.7.3 or Section 3.1
shall be held as collateral security first for the repayment of all Obligations
in connection with the Letters of
29
Credit and second for the repayment of all other Obligations. All amounts
being held pursuant to this Section 2.7.4 shall, until their application to any
Obligations or their return to the Borrower, as the case may be, at the written
request of an Authorized Officer of the Borrower, be invested in Cash Equivalent
Investments designated by the Borrower and reasonably satisfactory to the
Administrative Agent but under the sole dominion and control of the
Administrative Agent. Such amounts and such Cash Equivalent Investments shall be
held by the Administrative Agent as additional collateral security for, and the
Borrower hereby grants to the Administrative Agent and its bailees for the
benefit of the Agents, the Issuer and the Banks a security interest in such
amounts and such Cash Equivalent Investments (including all interest thereon and
all proceeds thereof) to secure, the repayment of the Obligations under and in
connection with the Letters of Credit and all other Obligations. Any losses, net
of earnings, and reasonable fees and expenses of such Cash Equivalent
Investments shall be charged against the principal amount invested. None of the
Agents, the Issuer and the Banks shall be liable for any loss resulting from any
Cash Equivalent Investment made by the Administrative Agent, whether at the
Borrower's request or otherwise. The Administrative Agent is not obligated
hereby, or by any other Loan Documents, to make or maintain any Cash Equivalent
Investment, except upon timely written request by an Authorized Officer of the
Borrower. If and to the extent that (a) all Obligations have been fully and
indefeasibly paid and satisfied, and (b) the commitments and obligations of the
Issuer and the Banks under the Letters of Credit and this Agreement have
terminated, the Administrative Agent shall promptly (and in any event by the end
of the next Business Day) return to the Borrower by wire transfer in immediately
available funds, all amounts previously paid to the Administrative Agent by the
Borrower pursuant to Section 2.7.3 or Section 3.1 together with interest
thereon, if any, not theretofore applied to reduce amounts payable by the
Borrower to the Agents, the Issuer or any Bank under this Agreement or any other
Loan Document.
SECTION 2.7.5. Nature of Reimbursement Obligations. The Borrower shall
assume, and, to the extent set forth in Section 2.7.2 each Bank shall severally
assume its pro rata share of, all risks of the acts, omissions, or misuse of any
Letter of Credit by the beneficiary thereof. The Issuer (except to the extent of
its own gross negligence or willful misconduct or that of any of its officers,
employees or agents as determined by a court of competent jurisdiction in a
final non-appealable judgment) shall not be responsible for (a) the form,
validity, sufficiency, accuracy, genuineness, or legal effect of any Letter of
Credit or any document submitted by any party in connection with the application
for and issuance of a Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent, ineffective
or forged; (b) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any instrument transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits thereunder or proceeds
thereof in whole or in part, which may prove to be invalid or ineffective for
any reason; (c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit, including failure
of any documents to bear adequate reference to such Letter of Credit; (d)
errors, omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, or otherwise; (e) any loss or delay
in the transmission or otherwise of any document or draft required in order to
make a payment or disbursement under a Letter of Credit or of the proceeds
thereof; (f) the use which may be made of any Letter of Credit or of any acts of
any beneficiary or transferee in connection therewith; (g) any error, neglect,
default, suspension or insolvency, of any of the Issuer's correspondents; (h)
errors in translation or for errors in interpretation of technical terms; or (i)
any other circumstance whatsoever in making or failing to
30
make payment under a Letter of Credit. None of the foregoing shall affect,
impair, or prevent the vesting of any of the rights or powers granted the Issuer
or any Bank hereunder. In furtherance and extension, and not in limitation or
derogation, of any of the foregoing, any action taken or omitted to be taken by
the Issuer in connection with a Letter of Credit in good faith (and not
constituting gross negligence or wilful misconduct as determined by a court of
competent jurisdiction in a final non-appealable judgment) shall be binding upon
the Borrower and each Bank and shall not put the Issuer under any resulting
liability to the Borrower or any Bank, as the case may be.
SECTION 2.8. Borrowing Base.
SECTION 2.8.1. Determination of the Borrowing Base. During the period from
the date hereof to the date of the first determination of the Borrowing Base
pursuant to the provisions of Section 2.8.2 or Section 2.8.3(i), the initial
amount of the Borrowing Base has been set by the Administrative Agent and
acknowledged by the Borrower and agreed to by the Banks to be $500,000,000;
provided, however, that (i) if the aggregate principal amount of notes issued by
the Borrower under a Permitted 2002 Bond Transaction that is consummated within
fifteen (15) days immediately following the Effective Date equals $250,000,000,
then the initial Borrowing Base shall be reduced automatically to $325,000,000;
(ii) if the aggregate principal amount of notes issued under a Permitted 2002
Bond Transaction that is consummated within fifteen (15) days immediately
following the Effective Date is greater than $250,000,000, then the initial
Borrowing Base shall be reduced automatically to an amount equal to $325,000,000
minus the difference between (x) the aggregate principal amount of all notes
issued under any Permitted 2002 Bond Transaction and (y) $250,000,000, until a
new Borrowing Base shall have been determined in accordance with Section
2.8.3(ii); and (iii) if any Permitted 2002 Bond Transaction is consummated after
fifteen (15) days immediately following the Effective Date (regardless of the
aggregate principal amount of notes issued thereunder), then the Borrowing Base
then in effect shall be reduced automatically by an amount equal to the
aggregate principal amount of all notes issued under such Permitted 2002 Bond
Transaction until a new Borrowing Base shall have been determined in accordance
with Section 2.8.3(ii).
SECTION 2.8.2. Redetermination of Borrowing Base. The Borrowing Base shall
be redetermined semiannually as provided below. Upon delivery of the Reserve
Reports required by Section 7.1.1(m) and such other reports, data and
supplemental information as may, from time to time, be reasonably requested by
the Administrative Agent and the Banks, together with a certificate from an
Authorized Officer certifying that, to the best of such officer's Knowledge, (A)
the factual information upon which such Reserve Reports are based is true and
correct, (B) the certificate identifies the Oil and Gas Properties covered by
the Reserve Reports that have not been previously included in any prior Reserve
Report, and (C) the Mortgaged Properties constitute not less than 80% of the
present value of the Proved Reserves (whether developed or undeveloped) and (D)
no Mortgaged Properties have been sold since the last Determination Date, on
each Determination Date or on such other date as otherwise permitted hereunder,
the Administrative Agent shall redetermine the Borrowing Base in accordance with
its customary practices and standards for loans secured by similar types of
property. Within 30 days of its receipt of the relevant Reserve Reports, the
Administrative Agent shall recommend a redetermined Borrowing Base in writing to
the Banks (the "Recommended Borrowing Base"). Within ten days after their
receipt of the Recommended Borrowing Base, each Bank shall give
31
the Administrative Agent written notice of whether such Bank approves of
the Recommended Borrowing Base, and if such Bank does not approve the
Recommended Borrowing Base, then the maximum Borrowing Base acceptable to such
Bank. For any redetermination of the Borrowing Base that would, if approved,
result in an increase of the then-effective Borrowing Base, the approval of all
of the Banks shall be required. For any other redetermination of the Borrowing
Base, the approval of the Majority Banks shall be required. In the event that
all of the Banks or the Majority Banks, as applicable, shall approve the
Recommended Borrowing Base, the Administrative Agent shall, by written notice to
each Bank and the Borrower, designate the Recommended Borrowing Base as the
Borrowing Base, which shall become immediately effective; provided, however,
that in the event that the Recommended Borrowing Base would, if approved, result
in an increase of the then-effective Borrowing Base and one or more of the Banks
shall disapprove (or be deemed to have disapproved) such Recommended Borrowing
Base but the Majority Banks shall approve such Recommended Borrowing Base (such
Bank hereinafter called a "Dissenting Bank"), then the Administrative Agent (i)
shall, by written notice to each Bank and the Borrower, designate as the
Borrowing Base the greater of (1) the greatest amount resulting in an increase
of the then-effective Borrowing Base that was approved by all the Banks and (2)
the greatest amount equal to or less than the then-effective Borrowing Base that
was approved by the Majority Banks, and (ii) shall notify the Borrower of the
name of each Dissenting Bank. The Borrower may, within 90 days after the date on
which the Borrower received notice of the Borrowing Base and the information
specified in clauses (i) and (ii) of the proviso above and so long as no Default
shall have occurred and be continuing, elect to terminate such Dissenting
Bank(s) as a party to this Agreement; provided that, concurrently with such
termination the Borrower shall (x) if the Administrative Agent, the Issuer and
each of the other Banks shall consent, pay to each such Dissenting Bank all
principal, interest and fees and other amounts owed to each such Dissenting Bank
through such date of termination or (y) have arranged for an assignee acceptable
to the Administrative Agent and the Issuer to become a substitute Bank for all
purposes under this Agreement in the manner provided in Section 10.11.1; and
further provided, however, that, prior to substitution for any Dissenting Bank,
the Borrower shall have given written notice to the Administrative Agent of such
intention and, if requested by the Borrower, the Banks other than any Dissenting
Bank shall have the option, but no obligation, to increase their Commitments in
order to replace the Dissenting Bank. Upon the termination of a Dissenting Bank
in any manner provided above, the Recommended Borrowing Base shall automatically
and immediately become the Borrowing Base. Anything herein contained to the
contrary notwithstanding, any determination or redetermination of the Borrowing
Base must be approved by all the Banks using their customary practices and
standards for oil and gas loans and letters of credit and based upon the most
recent Reserve Report and other information; it being understood that the Banks
have no commitment or obligation whatsoever to increase the Borrowing Base to
any amount in excess of (w) $500,000,000, if no Permitted 2002 Bond Transaction
shall have been consummated, (x) $325,000,000, if the aggregate principal amount
of notes issued under the Permitted 2002 Bond Transaction consummated within
fifteen (15) days of the Effective Date equals $250,000,000, (y) an amount equal
to $325,000,000 minus the difference between (A) the aggregate principal amount
of all notes issued under the Permitted 2002 Bond Transaction and (B)
$250,000,000 if the Permitted 2002 Bond Transaction shall have been consummated
within fifteen (15) days immediately following the Effective Date, or (z) an
amount equal to the Borrowing Base then in effect minus the aggregate principal
amount of all notes issued under any Permitted 2002 Bond Transactions
consummated after the effective date
32
of the Borrowing Base in effect at the time of such Permitted 2002 Bond
Transaction; and nothing herein contained shall be construed to be a commitment
to increase the Borrowing Base.
SECTION 2.8.3. Special Redetermination of Borrowing Base. In addition to
the redeterminations of the Borrowing Base required pursuant to Section 2.8.2,
special redeterminations thereof may be made (i) for any reason at the option of
either the Borrower or the Majority Banks (but not more than one time during
each calendar year by each) and (ii) automatically upon the consummation of the
Permitted 2002 Bond Transaction if the aggregate principal amount of notes
issued thereunder exceeds $250,000,000 or if any Permitted 2002 Bond Transaction
shall have been consummated after fifteen (15) days immediately following the
Effective Date. To request a special redetermination of the Borrowing Base, the
Person(s) requesting such redetermination shall provide the (x) Administrative
Agent and (y) the Borrower or the Banks, as applicable, with a written request
of such redetermination. Any such special redetermination of the Borrowing Base
shall be made by the Banks using their customary standards for oil and gas
lending and shall be based upon the most recent Reserve Report delivered to the
Banks by the Borrower and such other reports and data as the Banks may
reasonably request. Following (A) receipt of a request for a special
redetermination in accordance with clause (i) of this Section 2.8.3, or (B) the
occurrence of any event described in clause (ii) of this Section 2.8.3, the
Borrowing Base shall be redetermined in accordance with Section 2.8.2. If the
special redetermination results in a decrease in the Borrowing Base such that a
Borrowing Base Deficiency exists after giving effect to such redetermined
Borrowing Base, the Borrower shall (A) repay the Loans and/or deposit cash
collateral, as applicable, or (B) execute and deliver (or cause to be executed
and delivered) additional Security Documents, in either case as required by
Section 3.1(b) or (c) or both.
SECTION 2.8.4. General Provisions With Respect to the Borrowing Base. For
the purposes of this Agreement, the Borrowing Base to be certified by the
Administrative Agent and the Banks from time to time may be, at the discretion
of the Borrower, the lesser of (x) the sum of the aggregate principal amount of
the Loans and the aggregate face amount of the Letters of Credit that the
Administrative Agent, the Issuer and the Banks are willing to have outstanding
to the Borrower, and (y) the amount requested by the Borrower. The determination
of the Borrowing Base shall be made by the Administrative Agent, the Issuer and
the Banks in accordance with the other provisions of Section 2.8 based on the
most recently delivered Reserve Report and other relevant information and in
accordance with their customary practices for oil and gas loans and letters of
credit as in effect from time to time.
SECTION 2.9. Extension of Stated Maturity Date. (a) Provided no Default or
Event of Default shall have occurred and be continuing, the Borrower may request
not more than twice an extension of the then current Stated Maturity Date each
time for an additional one-year period by giving notice to the Administrative
Agent (an "Extension Request"), substantially in the form of Exhibit K hereto,
at the time that the Borrower delivers the Reserve Report required by Section
7.1.1(m)(i) for the period ending December 31, 2003, or not later than thirty
(30) days immediately following delivery of such Reserve Report, and, if
previously so extended, at the time that the Borrower delivers the Reserve
Report required by Section 7.1.1(m)(i) for the period ending December 31 2004,
or not later than thirty (30) days immediately following delivery of such
Reserve Report. The Administrative Agent shall promptly transmit the contents of
each such Extension Request to each Bank. Each Bank may, in its sole and
absolute discretion,
33
indicate its consent to such requested extension by acknowledging such
Extension Request and indicating in its acknowledgment whether it consents to
the extension of the then current Stated Maturity Date and returning such
acknowledgment to the Administrative Agent not later than the date on which such
Bank delivers its approval or disapproval of the Recommended Borrowing Base
required by Section 2.8.2 with respect to each such Reserve Report or fifteen
(15) days after receipt of the Extension Request, whichever is later. Failure to
acknowledge such Extension Request shall be deemed to be a rejection of the
Extension Request by such Bank and notwithstanding any other term or provision
hereof, no Bank shall have any obligation to consent to any extension of the
Stated Maturity Date and no extension shall be effective unless the
Administrative Agent shall have received acknowledged consents from all of the
Banks.
(b) Provided the Administrative Agent shall have received consents
acknowledged by all of the Banks with respect to a requested extension of the
Stated Maturity Date in accordance with Section 2.9(a), the then current Stated
Maturity Date shall be extended for an additional one-year period, in each case
subject to the other terms and conditions of this Agreement, and any other
modification agreed to by the parties in connection with such extension.
SECTION 2.10. Replacement of Issuer. The Issuer may be replaced at any time
by written agreement among the Borrower, the Administrative Agent, the replaced
Issuer and the successor Issuer, which successor Issuer must be a financial
institution that is a Bank; provided, however, that, Bankers Trust, as Issuer,
may by written agreement between Bankers Trust, as replaced Issuer, and Deutsche
Bank AG New York Branch, as successor Issuer, (with a copy of such written
agreement to be provided to the Administrative Agent) be replaced as Issuer
hereunder and under the other Loan Documents. The Administrative Agent shall
notify the Banks of any such replacement of the Issuer. At the time any such
replacement shall become effective, the Borrower shall pay any fees which have
become payable for the account of the replaced Issuer under this Agreement and
under any other Loan Document, and the Administrative Agent shall allocate
between the replaced Issuer and the successor Issuer the quarterly fronting fee
payments under Section 3.3.5 when and as received from the Borrower for the
account of the replaced Issuer and/or the successor Issuer, as the case may be.
From and after the effective date of any such replacement, (a) the successor
Issuer shall have all of the rights and obligations of the Issuer under this
Agreement and under the other Loan Documents with respect to the Letters of
Credit to be issued thereafter and (b) references herein and in the other Loan
Documents to the term "Issuer" shall be deemed to refer to such successor or to
any previous Issuer, as the context shall require. After the replacement of the
Issuer hereunder, the replaced Issuer shall remain a party hereto and shall
continue to have all the rights and obligations of the Issuer under this
Agreement with respect to the Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional, or any amendment to,
Letters of Credit.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall repay in full
the unpaid principal amount of each Loan upon the Stated Maturity Date therefor.
Prior thereto, the Borrower:
34
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans of the Borrower; provided, however, that (i) any such prepayment shall be
made pro rata among Loans to the Borrower of the same type and, if applicable,
having the same Interest Period, of all Banks; (ii) if the Borrower makes such
prepayment of any LIBO Rate Loan on any day other than the last day of the
Interest Period for such Loan then the Borrower shall be responsible for the
increased cost to the Banks as provided more fully in Section 4.4; (iii) all
such voluntary prepayments shall require at least three (3) but no more than
five (5) Business Days' prior written notice to the Administrative Agent; and
(iv) all such voluntary partial prepayments shall be in an aggregate minimum
amount of $500,000 and an integral multiple of $100,000;
(b) shall, on each date when any reduction in or termination of the
Commitment Amount shall become effective (including pursuant to Section 2.2, but
excluding any such reduction or termination resulting from a Borrowing Base
Deficiency), and on each date when the outstanding aggregate principal amount of
all Loans and Letter of Credit Liabilities, exceeds the Commitment Amount (as
reduced by the aggregate value of all margin accounts maintained by the Borrower
and any Restricted Subsidiary in respect of Hedging Obligations in accordance
with the definition of "Commitment Amount"), first, make a mandatory prepayment
in an amount at least equal to the aggregate, outstanding principal amount of
all Loans in excess of the Commitment Amount as reduced or terminated, and, if
such mandatory prepayment was not sufficient to reduce the unpaid principal
balance of the Loans to an amount that, when added to Letter of Credit
Liabilities, does not exceed the Commitment Amount as reduced or terminated,
then second, deposit cash collateral with the Administrative Agent as security
for the Obligations, such prepayments and cash deposits to be in an amount equal
to the excess, if any, of the aggregate, outstanding principal amount of all
Loans and Letter of Credit Liabilities over the Commitment Amount as so reduced
or terminated;
(c) shall, within ten (10) days of receipt of notice from the
Administrative Agent that a Borrowing Base Deficiency then exists (or delivery
of notice from the Borrower of a Borrowing Base Deficiency required pursuant to
Section 7.1.1(e)), either (i) make a mandatory prepayment equal to the amount of
the Borrowing Base Deficiency or elect to make payments at least equal to the
Required Deficiency Payment on each Borrowing Base Deficiency Payment Date, or
(ii) notify the Administrative Agent that it shall execute and deliver, or cause
one or more of its Restricted Subsidiaries to execute and deliver, to the
Collateral Agent within thirty (30) days from and after receipt by the Borrower
of notice of the Borrowing Base Deficiency, supplemental or additional Security
Documents, in form and substance reasonably satisfactory to the Administrative
Agent and the Collateral Agent securing payment of the Obligations and covering
other Properties of the Borrower or its Restricted Subsidiaries, including
additional Oil and Gas Properties directly owned by the Borrower or one or more
of the Restricted Subsidiaries which are not then covered by any Security
Document and which are of a type and nature satisfactory to the Administrative
Agent, and having a value (as determined by the Administrative Agent and the
Banks in their sole discretion), in addition to other Oil and Gas Properties
already subject to a Mortgage, sufficient to eliminate the Borrowing Base
35
Deficiency; provided, that if the Borrower shall elect to execute and
deliver (or cause one or more of its Restricted Subsidiaries to execute and
deliver) supplemental or additional Security Documents to the Administrative
Agent pursuant to subclause (ii) of this Section 3.1(c), it shall provide
concurrently with notice of such election to the Administrative Agent with
descriptions of the additional assets to be collaterally assigned (together with
current valuations, engineering reports, Security Documents described in such
subclause (ii), title evidence or opinions applicable thereto and other
documents including opinions of counsel, each of which shall be in form and
substance reasonably satisfactory to the Administrative Agent); and further
provided that if the Administrative Agent has not received within such ten (10)
day period the required notice from the Borrower that the Borrower shall take
the actions described in subclause (ii) within such thirty (30) day period, then
without any necessity for notice to the Borrower or any other person, the
Borrower shall be deemed to have elected to make mandatory prepayments equal to
at least the Required Deficiency Payment for each Borrowing Base Deficiency
Payment Date;
(d) shall, if a Permitted 2002 Bond Transaction is consummated after the
Effective Date under this Agreement, make a mandatory prepayment in an amount
equal to the lesser of (i) the aggregate principal amount of all Loans of the
Borrower then outstanding under this Agreement, and (ii) the aggregate principal
amount of the notes issued by the Borrower under such Permitted 2002 Bond
Transaction (net of any reasonable costs incurred by the Borrower as a result of
the issuance of such notes);
(e) shall, immediately upon any acceleration of the Stated Maturity Date of
any Loans pursuant to Section 8.2 or Section 8.3, repay all Loans and deposit
cash collateral with the Administrative Agent as security for the Letter of
Credit Liabilities, unless, pursuant to Section 8.3, only a portion of all Loans
and Letters of Credit is so accelerated;
(f) shall, on the first Business Day following any disposition of assets
(other than dispositions of Hydrocarbons in the ordinary course of business)
permitted by Section 7.2.9, make a payment of 100% of the Net Cash Proceeds
received from such disposition to be applied to the outstanding Loans (or
deposited as cash collateral with the Administrative Agent as security for the
Letter of Credit Liabilities); provided, however, that if no Borrowing Base
Deficiency shall exist as a result of such disposition and no Event of Default
has occurred and is continuing, then subject to the requirements of clause (g)
of this Section 3.1 the Borrower may retain such funds and such payment shall
not be required; and
(g) shall, if the Borrower and its Subsidiaries shall hold cash and Cash
Equivalents exceeding $100,000,000 in the aggregate for any period of three (3)
consecutive Business Days, make a payment on the first Business Day immediately
following such three (3) consecutive Business Day period in an amount equal to
the excess of the fair market value of the cash and Cash Equivalents held by the
Borrower and its Subsidiaries on such Business Day over $100,000,000; provided
that for purposes of this clause (g), cash or Cash Equivalents held by a
qualified intermediary pursuant to a
36
deferred exchange agreement shall not be treated as being held by the
Borrower or its Subsidiaries.
Each prepayment of any Loan made pursuant to this Section shall be without
premium or penalty, except for reimbursements as may be required by Section 4.4.
No prepayment of principal of any Loans shall cause a reduction in the
Commitment Amount. All amounts paid pursuant to this Section shall be applied
first as prepayments on the Loans and to the extent all Loans are repaid, any
excess amount shall be transferred to the Administrative Agent to be held as
cash collateral for the Obligations and applied thereto pursuant to Section
2.7.4.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable by the Borrower in accordance with
this Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing
8Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing to the Borrower accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Base Rate Loan, equal
to the sum of the Alternate Base Rate from time to time in effect plus the
Applicable Margin with respect to Base Rate Loans;
(b) on that portion maintained as a LIBO Rate Loan, during each Interest
Period applicable thereto, equal to the sum of the LIBO Rate (Reserve Adjusted)
for such Interest Period plus the Applicable Margin with respect to LIBO Rate
Loans.
All LIBO Rate Loans shall bear interest from and including the first day of
the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such LIBO Rate
Loan.
SECTION 3.2.2. Post-Default Rates. After the date (after giving effect to
any grace period) any principal amount of any Loan is due and payable (whether
on the Stated Maturity Date, upon acceleration or otherwise), or after any other
monetary Obligation of the Borrower shall have become due and payable, the
Borrower shall pay, but only to the extent permitted by law, interest (after as
well as before judgment) at a rate per annum equal to the sum of (x) the
Alternate Base Rate plus (y) 2.00% plus (z) the Applicable Margin from time to
time in effect for Base Rate Loans (the "Default Rate").
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication, by the Borrower: (a) on the Stated Maturity Date;
(b) on the date of any payment or prepayment, in whole or in part, of principal
outstanding on such Loan; (c) with respect to Base Rate Loans, on each Quarterly
Payment Date occurring after the Effective Date; (d) with respect to LIBO Rate
Loans, the last day of each applicable Interest Period (and, if such Interest
Period shall exceed 90 days, on the 90th day of such Interest Period); (e) with
respect to any Base Rate Loans converted into LIBO Rate Loans on a day when
interest would not otherwise have been payable pursuant to clause (c), on the
date of such conversion; and (f) on that portion of any Loans the Stated
Maturity Date of which is accelerated pursuant to Section 8.2 or Section 8.3,
immediately upon such acceleration. Interest accrued on Loans or other monetary
Obligations arising under this Agreement or any other Loan Document after the
date
37
such amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) or after the occurrence of an Event of Default shall
be payable, by the Borrower upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in this
Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Bank, for the period commencing on
the date hereof and continuing through the final Commitment Termination Date, a
commitment fee equal to (i) such Bank's Percentage of the sum of the average
daily unused portion of the Commitment Amount during the period preceding each
Quarterly Payment Date and occurring on or after the prior Quarterly Payment
Date, multiplied by (ii) the rate set forth in the following grid opposite the
applicable Borrowing Base Usage (which percentage shall change automatically
without notice as and when the Borrowing Base Usage changes). Such commitment
fees shall be payable by the Borrower in arrears on each Quarterly Payment Date,
commencing with the first such day following the Effective Date, and on the
Commitment Termination Date.
Borrowing Base Usage (BBU) Commitment Fee
-------------------------- --------------
BBU < 50% 25.0 bps
BBU >= 50% 37.5 bps
SECTION 3.3.2. [Intentionally Omitted].
SECTION 3.3.3. Fees Pursuant to Fee Letter. The Borrower agrees to pay to
the Agents and the Arrangers for their own respective accounts as provided in
any Fee Letter all fees set forth therein on the dates and in the amounts set
forth therein.
SECTION 3.3.4. Letter of Credit Standby Fee Payable to Banks. The Borrower
agrees to pay a fee to the Administrative Agent for the account of the Banks and
the Issuer, to be distributed ratably (in accordance with their respective
Percentages), for each Letter of Credit for the period from and including the
date of the issuance of such Letter of Credit to (and including) the date upon
which such Letter of Credit expires or terminates in accordance with its terms,
at a per annum rate equal to the Applicable Margin from time to time in effect
with respect to Letters of Credit on the daily undrawn face amount of such
Letter of Credit during the applicable period. Such fee shall be payable in
arrears on each Quarterly Payment Date, with the first such payment to be made
on the first Quarterly Payment Date following the issuance of such Letter of
Credit.
SECTION 3.3.5. Letter of Credit Fronting Fee Payable to Issuer. The
Borrower agrees to pay to the Issuer for its own account a fronting fee for each
Letter of Credit at a per annum rate equal to one-eighth of one percent (1/8 of
1%) of the daily undrawn face amount of such Letter of Credit but not less than
$500 (per annum) for each Letter of Credit. Such fee shall be payable in arrears
on each Quarterly Payment Date, with the first such payment to be made on the
first Quarterly Payment Date following the issuance of such Letter of Credit. In
addition to the foregoing fees, the Borrower shall pay or reimburse the Issuer
for such normal and customary
38
costs and expenses as are incurred by the Issuer in issuing, effecting
payment under, transferring, amending or otherwise administering any Letter of
Credit.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. Fixed Rate Lending Unlawful. If any Bank shall determine that
the introduction of or any change in or in the interpretation of any law after
the Effective Date makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for such Bank to make, continue or
maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan, the
obligations of such Bank to make, continue, maintain or convert any such Loans
shall, upon such determination, forthwith be suspended until such Bank shall
notify the Administrative Agent that the circumstances causing such suspension
no longer exist, and all such Bank's LIBO Rate Loans shall automatically convert
into Base Rate Loans at the end of the then current Interest Periods with
respect thereto or sooner, if required by such law or assertion.
SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall have
determined that (a) Dollar deposits in the relevant amount or for the relevant
Interest Period are not available to Bankers Trust in its relevant market (or
both); or (b) by reason of circumstances affecting Bankers Trust's relevant
market, adequate means do not exist for ascertaining the interest rate
applicable hereunder to LIBO Rate Loans, then, upon notice from the
Administrative Agent to the Borrower and the Banks, (x) the obligations of all
Banks under Section 2.3 and Section 2.4 to make or continue any Loans as, or to
convert any Loans into, LIBO Rate Loans shall forthwith be suspended until the
Administrative Agent shall notify the Borrower and the Banks that the
circumstances causing such suspension no longer exist; and (y) all LIBO Rate
Loans shall automatically convert into Base Rate Loans at the end of the then
current Interest Periods with respect thereto.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrower agrees to
reimburse each Bank for any increase in the cost to such Bank of, or any
reduction in the amount of any sum receivable by such Bank in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans. Such Bank shall promptly notify the Administrative
Agent and the Borrower in writing of the occurrence of any such event, and in
any event, within 180 days, after it obtains knowledge thereof and determines to
request such compensation such notice to state, in reasonable detail, the
reasons therefor, the additional amount required fully to compensate such Bank
for such increased cost or reduced amount and the basis upon which such amount
is computed (and including calculations in reasonable detail). Such additional
amount shall be payable by the Borrower directly to such Bank upon 45 days of
its receipt of such notice, and such notice shall, in the absence of manifest
error, be presumed correct. The Borrower shall not be obligated to pay for any
such amounts if such Bank does not notify the Borrower that such additional
amounts are owing within 180 days of the date such Bank obtains knowledge
thereof.
Anything in this Section 4.3 or in Section 4.5 below notwithstanding, if
any Bank elects to require payment by the Borrower of any amount under this
Section 4.3 or Section 4.5, the Borrower may, within 60 days after the date of
receiving notice thereof and so long as no Default
39
shall have occurred and be continuing, elect to terminate such Bank (for
purposes of this paragraph, the "Terminated Bank") as a party to this Agreement;
provided that, concurrently with such termination the Borrower shall (i) if the
Administrative Agent, the Issuer and each of the Banks other than the Terminated
Bank shall consent, pay the Terminated Bank all principal, interest and fees and
other amounts owed to such Terminated Bank through such date of termination, or
(ii) have arranged for an assignee acceptable to the Administrative Agent and
the Issuer to become a substitute Bank for all purposes under this Agreement in
the manner provided in Section 10.11.1; provided further that, prior to
substitution for any Terminated Bank, the Borrower shall have given written
notice to the Administrative Agent of such intention and, if requested by the
Borrower, the Banks (other than the Terminated Banks) shall have the option, but
no obligation, for a period of sixty (60) days after receipt of such notice, to
increase their Commitments in order to replace the Terminated Bank.
SECTION 4.4. Funding Losses. In the event any Bank shall incur any loss or
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to make, continue
or maintain any portion of the principal amount of any Loan as, or to convert
any portion of the principal amount of any Loan into, a LIBO Rate Loan) as a
result of (a) any conversion or repayment or prepayment of the principal amount
of any LIBO Rate Loans on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to Section 3.1 or
otherwise; (b) any Loans not being made as LIBO Rate Loans in accordance with
the Borrowing Request therefor; or (c) any Loans not being continued as, or
converted into, LIBO Rate Loans in accordance with the Continuation/Conversion
Notice therefor, then, upon the written notice of such Bank to the Borrower
(with a copy to the Administrative Agent), the Borrower shall, within forty-five
days of its receipt thereof, pay directly to such Bank such amount as will
reimburse such Bank for such loss or expense. Such written notice (which shall
include calculations in reasonable detail) shall, in the absence of manifest
error, be conclusive.
SECTION 4.5. Increased Capital Costs. If after the Effective Date any
change in, or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of, any law or regulation, directive, guideline,
decision or request (whether or not having the force of law) of any court,
central bank, regulator or other governmental authority affects or would affect
the amount of capital required or expected to be maintained by any Bank or the
Issuer or any Person controlling such Bank or the Issuer, and such Bank or the
Issuer determines (in its sole and absolute discretion) that the rate of return
on its or such controlling Person's capital as a consequence of its Commitment,
its issuance of a Letter of Credit or its participation in a Letter of Credit,
or the Loans made by such Bank or the Issuer is reduced to a level materially
below that which such Bank or the Issuer or such controlling Person could have
achieved but for the occurrence of any such circumstance, then, in any such case
upon notice from time to time by such Bank or the Issuer to the Borrower but in
no event later than 180 days after such Bank makes such determination, the
Borrower shall immediately pay directly to such Bank or the Issuer additional
amounts sufficient to compensate such Bank, the Issuer or such controlling
Person for such reduction in rate of return; provided, however, that the
Borrower shall not be required to make such payment if such Bank does not
provide notice of such determination within 180 days thereof. A statement of
such Bank or the Issuer as to any such additional amount or amounts (including
calculations thereof in reasonable detail) shall, in the absence of manifest
error or written objection by the Borrower within 10 days after its receipt of
such
40
statement, be conclusive. In determining such amount, such Bank or the
Issuer may use any reasonable method of averaging and attribution that it shall
deem applicable.
SECTION 4.6. Taxes. (a) All payments by the Borrower of principal of, and
interest on, the Loans, reimbursement of Letter of Credit Liabilities and all
other amounts payable hereunder and under any other Loan Document shall be made
free and clear of and without deduction for any present or future excise, stamp
or other similar taxes, fees, duties, withholdings or other charges of any
nature whatsoever imposed by any taxing authority, but excluding franchise taxes
and taxes imposed on or measured by any Bank's or the Issuer's income or gross
receipts (such non-excluded items being called "Taxes"). In the event that any
withholding or deduction from any payment to be made by the Borrower hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation (except for any withholding required in respect of any Agent or Bank
or the Issuer by the laws of any jurisdiction (other than the United States)
where such Agent or Bank or the Issuer is doing business), then the Borrower
will (i) pay directly to the relevant authority the full amount required to be
so withheld or deducted; (ii) promptly forward to the Administrative Agent an
official receipt or other documentation satisfactory to the Administrative Agent
evidencing such payment to such authority; and (iii) pay to the Administrative
Agent for the account of such Agent or Bank or the Issuer such additional amount
or amounts as is necessary to ensure that the net amount actually received by
such Agent or Bank or the Issuer will equal the full amount such Person would
have received had no such withholding or deduction been required. Moreover, if
any Taxes are directly asserted against any Agent or Bank or the Issuer with
respect to any payment received by such Agent or Bank or the Issuer hereunder,
such Agent or Bank or the Issuer may pay such Taxes and the Borrower will
promptly pay such additional amounts (including any penalties, interest or
expenses (other than any such penalties, interest or expense as a result of acts
or omissions constituting gross negligence as determined by a court of competent
jurisdiction in a final non-appealable judgment on the part of such Person)) as
is necessary in order that the net amount received by such Person after the
payment of such Taxes (including any Taxes on such additional amount) shall
equal the amount such Person would have received had such Taxes not been
asserted.
If a Bank becomes aware that any such withholding or deduction from any
payment to be made by the Borrower hereunder or under any other Loan Document is
required, then such Bank shall promptly notify the Administrative Agent and the
Borrower thereof stating the reasons therefor and the additional amount required
to be paid under this Section. Each Bank shall execute and deliver to the
Administrative Agent and the Borrower such forms as it may be required to
execute and deliver pursuant to Section 4.6(b). To the extent that any such
withholding or deduction results from the failure or unreasonable delay of a
Bank to provide a form required by Section 4.7(b) (unless such failure or delay
is due to some prohibition under applicable requirement of Law), the Borrower
shall have no obligation to pay the additional amount required by clause (b)
below. Anything in this Section 4.6 notwithstanding, if any Bank elects to
require payment by the Borrower of any material amount under this Section, the
Borrower may, within 60 days after the date of receiving notice thereof and so
long as no Default shall have occurred and be continuing, elect to terminate
such Bank (for purposes of this paragraph, the "Terminated Bank") as a party to
this Agreement; provided that, concurrently with such termination the Borrower
shall (i) if the Administrative Agent, the Issuer and each of the Banks other
than the Terminated Bank shall consent, pay the Terminated Bank all principal,
41
interest and fees and other amounts owed to such Terminated Bank through
such date of termination, or (ii) have arranged for an assignee acceptable to
the Administrative Agent and the Issuer to become a substitute Bank for all
purposes under this Agreement in the manner provided in Section 10.11.1;
provided further that, prior to substitution for any Terminated Bank, the
Borrower shall have given written notice to the Administrative Agent of such
intention and, if requested by the Borrower, the Banks (other than the
Terminated Banks) shall have the option, but no obligation, for a period of
sixty (60) days after receipt of such notice, to increase their Commitments in
order to replace the Terminated Bank.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent, for the account of any
Agent or Bank or the Issuer, the required receipts or other required documentary
evidence, the Borrower shall indemnify such Agent or Bank or the Issuer for any
incremental Taxes, interest or penalties that may become payable by such Agent
or Bank or the Issuer as a result of any such failure. For purposes of this
Section 4.6, a distribution hereunder by any Agent, any Bank or the Issuer to or
for the account of any Agent, any Bank or the Issuer shall be deemed a payment
by the Borrower.
(b) Each Bank which is organized under the laws of a jurisdiction outside
the United States shall, (i) on the day of the initial borrowing from each such
Bank hereunder and (ii) from time to time thereafter if requested by the
Borrower or the Administrative Agent, provide the Administrative Agent and the
Borrower with the forms prescribed by the Internal Revenue Service of the United
States certifying as to such Bank's status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to
such Bank hereunder and under the other Loan Documents or other documents
satisfactory to such Bank, the Borrower and the Administrative Agent and
indicating that all payments to be made to such Bank hereunder and under the
other Loan Documents are not subject to United States withholding tax. Unless
the Borrower and the Administrative Agent shall have received such forms or such
documents indicating that payments to such Bank hereunder and under the other
Loan Documents are not subject to United States withholding tax, the Borrower
and the Administrative Agent shall be entitled to withhold United States
withholding taxes from such payments at the applicable statutory rate.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrower to the Administrative
Agent for the pro rata account of the Banks and the Issuer entitled to receive
such payment. All such payments required to be made to the Administrative Agent
shall be made, without set off, deduction or counterclaim, not later than 12:00
noon, New York time, on the date due, in same day or immediately available
funds, to such account as the Administrative Agent shall specify from time to
time by notice to the Borrower. Funds received after that time shall be deemed
to have been received by the Administrative Agent on the next succeeding
Business Day. The Administrative Agent shall promptly remit in same day funds to
each Bank and the Issuer its share, if any, of such payments received by the
Administrative Agent for the account of such Bank and the Issuer. All interest
and fees shall be computed on the basis of the actual number of days (including
the first day but excluding the last day) occurring during the period for which
such interest or fee is payable over a year comprised of 360 days (or, in the
case of interest on a Base Rate Loan, 365 days or, if appropriate, 366 days).
Whenever any payment to be made shall otherwise be due on a day
42
which is not a Business Day, such payment shall (except as otherwise
required by clause (c) of the definition of the term "Interest Period" with
respect to LIBO Rate Loans) be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and fees, if any, in
connection with such payment.
SECTION 4.8. Sharing of Payments. (a) If any Bank shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of set off or
otherwise) on account of any Loan or any Letter of Credit Liability (other than
pursuant to the terms of Sections 4.3, 4.4 4.5 and 4.6) in excess of its pro
rata share of payments then or therewith obtained by all Banks, such Bank shall
purchase from the other Banks such participations in Loans made by them and
Letter of Credit Liabilities held by them as shall be necessary to cause such
purchasing Bank to share the excess payment or other recovery ratably with each
of them; provided, however, that if all or any portion of the excess payment or
other recovery is thereafter recovered from such purchasing Bank, the purchase
shall be rescinded and each Bank which has sold a participation to the
purchasing Bank shall repay to the purchasing Bank the purchase price to the
ratable extent of such recovery together with an amount equal to such selling
Bank's ratable share (according to the proportion of the amount of such selling
Bank's required repayment to the purchasing Bank to the total amount so
recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Borrower agrees that any Bank so purchasing a participation from another Bank
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its rights of payment (including pursuant to Section 4.9) with respect to
such participation as fully as if such Bank were the direct creditor of the
Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law, any Bank receives a secured claim
in lieu of a set off to which this Section applies, such Bank shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Banks entitled under this Section to
share in the benefits of any recovery on such secured claim.
SECTION 4.9. Set off. Each Bank shall, upon the occurrence of any Default
described in clauses (a) through (d) of Section 8.1.9 with respect to the
Borrower or, with the consent of the Majority Banks, upon the occurrence of any
other Event of Default, have the right to appropriate and apply in set off to
the payment of the Obligations owing to it (whether or not then due), and (as
security for such Obligations) any and all balances, credits, deposits, accounts
or moneys of the Borrower then or thereafter maintained with such Bank;
provided, however, that any such appropriation and application shall be subject
to the provisions of Section 4.8. Each Bank agrees promptly to notify the
Borrower and the Administrative Agent after any such set off and application
made by such Bank; provided, however, that the failure to give such notice shall
not affect the validity of such set off and application. The rights of each Bank
under this Section are in addition to other rights and remedies (including other
rights of set off under applicable law or otherwise) which such Bank may have.
SECTION 4.10. Use of Proceeds. The Borrower shall apply the proceeds of
each Borrowing in accordance with the fourth recital; without limiting the
foregoing, no proceeds of any Loan will be used to acquire any equity security
of a class which is registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or any "margin stock", as defined in F.R.S. Board Regulation U in
violation of F.R.S. Board Regulation U.
43
SECTION 4.11. Maximum Interest. It is the intention of the parties hereto
to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of the Borrower to each Bank and the
Issuer under this Agreement shall be subject to the limitation that payments of
interest shall not be required to the extent that receipt thereof would be
contrary to provisions of law applicable to such Bank or the Issuer limiting
rates of interest which may be charged or collected by such Bank or the Issuer.
Accordingly, if the transactions contemplated hereby would be usurious under
applicable law (including the Federal and state laws of the United States of
America, or of any other jurisdiction whose laws may be mandatorily applicable)
with respect to a Bank or the Issuer then, in that event, notwithstanding
anything to the contrary in this Agreement, it is agreed as follows: (a) the
provisions of this Section 4.11 shall govern and control; (b) the aggregate of
all consideration which constitutes interest under applicable law that is
contracted for, charged or received under this Agreement, or under any of the
other aforesaid agreements or otherwise in connection with this Agreement by
such Bank or the Issuer shall under no circumstances exceed the maximum amount
of interest allowed by applicable law (such maximum lawful interest rate, if
any, with respect to such Bank or the Issuer herein called the "Highest Lawful
Rate"), and any excess shall be credited to the Borrower by such Bank or the
Issuer (or, if such consideration shall have been paid in full, such excess
promptly refunded to the Borrower); (c) all sums paid, or agreed to be paid, to
such Bank or the Issuer for the use, forbearance and detention of the
indebtedness of the Borrower to such Bank or the Issuer hereunder shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest is uniform throughout the full term thereof; and (d) if
at any time the interest provided pursuant to Section 3.2 together with any
other fees payable pursuant to this Agreement and deemed interest under
applicable law, exceeds that amount which would have accrued at the Highest
Lawful Rate, the amount of interest and any such fees to accrue to such Bank or
the Issuer pursuant to this Agreement shall be limited, notwithstanding anything
to the contrary in this Agreement to that amount which would have accrued at the
Highest Lawful Rate, but any subsequent reductions, as applicable, shall not
reduce the interest to accrue to such Bank or the Issuer pursuant to this
Agreement below the Highest Lawful Rate until the total amount of interest
accrued pursuant to this Agreement and such fees deemed to be interest equals
the amount of interest which would have accrued to such Bank or the Issuer if a
varying rate per annum equal to the interest provided pursuant to Section 3.2
had at all times been in effect, plus the amount of fees which would have been
received but for the effect of this Section 4.11.
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1. Initial Borrowing. The obligations of the Banks to fund the
initial Borrowing shall be subject to the prior or concurrent satisfaction of
each of the conditions precedent set forth in this Section 5.1.
SECTION 5.1.1. Resolutions, etc. The Administrative Agent shall have
received from each Obligor a certificate, dated the date of the initial
Borrowing, of its Secretary or Assistant Secretary as to (a) resolutions of its
Board of Directors or other governing body then in full force and effect
authorizing the execution, delivery and performance of this Agreement, the
44
Notes and each other Loan Document to be executed by it; and (b) the
incumbency and signatures of those of its officers authorized to act with
respect to each Loan Document executed by it, upon which certificate each Bank
may conclusively rely until it shall have received a further certificate of the
Secretary of such Obligor canceling or amending such prior certificate. The
Administrative Agent shall have received certificates of the appropriate
government officials of the state of organization of each Obligor as to the
existence and good standing of such Person, each dated within 30 days prior to
the date of delivery pursuant hereto.
SECTION 5.1.2. Delivery of Notes and Subsidiary Guaranty Agreement. The
Administrative Agent shall have received, for the account of each Bank, its Note
duly executed and delivered by the Borrower and the Subsidiary Guaranty
Agreement executed and delivered by each Obligor party thereto.
SECTION 5.1.3. Payment of Outstanding Prize Indebtedness, etc. All
Indebtedness identified in Item 7.2.2(b) of the Disclosure Schedule (including
any Indebtedness of Prize or any Prize Subsidiary outstanding under the Prize
Credit Facility), together with all interest, all prepayment premiums and other
amounts due and payable with respect thereto, shall have been paid in full
(including, to the extent necessary, from proceeds of the initial Borrowing),
the Prize Credit Facility shall have been terminated, and all Liens securing
payment of any Indebtedness thereunder shall have been, or concurrently with the
Effective Date are being, released.
SECTION 5.1.4. Mortgage. The Collateral Agent shall have received (a)
amendments to the Existing Mortgages and Additional Mortgages covering Oil and
Gas Properties of Prize or the Prize Subsidiaries and/or the Borrower or its
Subsidiaries such that the Collateral Agent shall have a valid perfected first
Lien on not less than 80% in the aggregate of the value of all Oil and Gas
Properties set forth in the Reserve Reports dated as of December 31, 2001, each
duly executed and delivered by each Obligor party thereto in form and substance
satisfactory to the Administrative Agent and the Collateral Agent for the prompt
completion of all recording and filing of such Security Documents as may be
necessary or, in the reasonable opinion of the Administrative Agent or the
Collateral Agent, desirable to create or continue, as appropriate, a valid
perfected first Lien against the Collateral Property covered by the Mortgage,
(b) a schedule reconciling the present value of the Proved Reserves set forth in
the Reserve Reports delivered pursuant to Section 5.1.8 with the list of Oil and
Gas Properties covered by an Existing Mortgage or an Additional Mortgage, and
(c) an appropriate authorization in favor of the Collateral Agent to file
Uniform Commercial Code Form UCC-1 and UCC-3 statements, necessary or in the
opinion of the Administrative Agent or the Collateral Agent, desirable, to
create in the Collateral Agent for the benefit of the Agents, the Issuer and the
Banks all Liens and other rights of any Person as a valid, perfected first
priority Lien in the Collateral Property described in the Mortgage.
SECTION 5.1.5. Pledge Agreements; Stock Certificates and Blank Powers. The
Collateral Agent shall have received an amendment to the Borrower Pledge
Agreement and to each Subsidiary Pledge Agreement, duly executed by the relevant
Obligor together with an appropriate authorization in favor of the Collateral
Agent to file Uniform Commercial Code Form UCC-1 and UCC-3 statements, duly
executed blank stock powers and all stock certificates necessary or in the
opinion of the Administrative Agent or the Collateral Agent, desirable, to
create in the Collateral Agent for the benefit of the Agents, the Issuer and the
Banks all Liens
45
and other rights of any Person as a valid, perfected first priority Lien in
the Collateral Property described in the respective Pledge Agreements.
SECTION 5.1.6. Opinions of Counsel. (a) The Administrative Agent shall have
received opinions, dated the date of the initial extension of credit or such
other date acceptable to the Administrative Agent and addressed to the Agents,
the Issuer and all Banks, from (a) Xxxxxxxx & Xxxxxx, L.L.P., special counsel to
the Obligors, substantially in the form of Exhibit E hereto, and (b) Xxxxxx
Xxxxxxxx, general counsel for the Obligors, substantially in the form of Exhibit
F hereto.
(b) The Administrative Agent shall have received for distribution to each
Bank (in sufficient number to provide at least one copy to each Bank) favorable
opinions from a local counsel to the Obligors in the State of Louisiana dated as
of the date of delivery thereof, in form and substance reasonably satisfactory
to the Administrative Agent and its counsel which shall include an opinion that
the Mortgages dated March 15, 2002, and any corresponding UCC financing
statements to be filed in the State of Louisiana, respectively, are effective to
create a valid, perfected Lien in favor of the Collateral Agent on the Mortgaged
Properties located in the State of Louisiana and are in proper form for
recordation in such state.
SECTION 5.1.7. Financial Information. The Administrative Agent and the
Banks shall have received true and correct copies of the most recently prepared
audited and unaudited consolidated financial statements of the Borrower and its
Subsidiaries and audited and unaudited consolidated financial statements of
Prize and the Prize Subsidiaries, together with pro forma consolidated financial
statements for the Borrower, Prize and their respective Subsidiaries prepared in
accordance with the requirements of Regulation S-X for registration statements
on Form S-4 as if such a registration statement for a debt issuance by the
Borrower became effective on the Effective Date.
SECTION 5.1.8. Engineers' Report. The Administrative Agent shall have
received Reserve Reports dated as of December 31, 2001, prepared by Approved
Engineers covering the Hydrocarbon Interests included in the initial Borrowing
Base.
SECTION 5.1.9. Certificate as to Insurance Policies. The Administrative
Agent shall have received a certificate of the Borrower in form and substance
satisfactory to the Administrative Agent, certified by an Authorized Officer of
the Borrower as true and correct in all material respects and describing in
detail all insurance maintained by Borrower and its Subsidiaries as of the
Effective Date and certifying that such insurance satisfies the requirements of
Section 7.1.4.
SECTION 5.1.10. Material Adverse Change. No material adverse change shall
have occurred since September 30, 2001 in the financial condition, business,
operations, or prospects of the Borrower and the Restricted Subsidiaries taken
as a whole or in their consolidated assets, liabilities and properties and there
shall be no material threatened or pending litigation adversely affecting its
consolidated property.
SECTION 5.1.11. Satisfactory Review and Legal Form. All legal matters in
connection with this Agreement and the consummation of the transaction
contemplated hereby
46
and by the Loan Documents shall be approved by the Administrative Agent and
its legal counsel, and there shall have been furnished to the Administrative
Agent by the Borrower, at the Borrower's expense, such agreements with respect
to the Borrower's and the Restricted Subsidiaries' Oil and Gas Properties not
mortgaged under the Third Amended and Restated Credit Agreement (including,
without limitation, environmental reports, opinions of counsel, title opinions,
and other records and information) and such other documents, agreements,
information and records (including, without limitation, documents, agreement,
information and records pertaining to the hedging arrangements of the Borrower
and its Subsidaries), in form, substance, scope and methodology satisfactory to
the Administrative Agent in its sole discretion, as it may reasonably have
requested for that purpose.
SECTION 5.1.12. Closing Fees, Expenses, etc. The Administrative Agent shall
have received the Fee Letter, duly executed by the Borrower. The Administrative
Agent shall also have received for its own account, the account of the Issuer,
or for the account of the Arrangers or each Bank, as the case may be, all fees,
costs and expenses due and payable pursuant to Section 3.3 and, if then
invoiced, Section 10.3.
SECTION 5.1.13. UCC Searches. The Administrative Agent shall have received
from the Borrower copies of Uniform Commercial Code searches with respect to the
Obligors in the jurisdictions set forth in Schedule 5.1.13.
SECTION 5.1.14. Prize Merger Documentation. The Administrative Agent shall
have received a certificate from an Authorized Officer of each of the Borrower
and Pintail Energy, Inc., dated as of the Effective Date, certifying that
attached thereto is a true and correct copy of the Prize Merger Agreement and
certifying that: (a) on and as of the Effective Date, and except as otherwise
previously disclosed pursuant to the provisions hereof, there does not exist any
pending or threatened litigation, judgment, order, injunction or other restraint
issued or filed with respect to the making of the initial Borrowing hereunder or
which could reasonably be expected to impair materially the right or ability of
each of the Borrower, Pintail Energy, Inc. and Prize to effect the Prize Merger
substantially in accordance with the terms and conditions of the Prize Merger
Agreement and to comply with the requirements of Section 7.1.6 hereof; (b) the
Prize Merger Agreement, at the time of the mailing thereof to the shareholders
of Prize, and any documents, at the time of mailing thereof, mailed to Prize
shareholders in relation to any Prize Merger Agreement did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein contained, in light of the circumstances
under which made, not misleading; (c) each of the Borrower, Pintail Energy,
Inc., Prize and the Prize Subsidiaries, as the case may be, has received all
governmental and third party approvals necessary in connection with the Prize
Merger and the financing contemplated by this Agreement and such approvals are
in full force and effect; (d) holders of shares of stock of Prize constituting
at least a majority of all of the outstanding shares of capital stock having
ordinary voting power with respect to the election of the board of directors of
Prize (including all shares issuable upon the exercise of the exercisable
outstanding options or warrants), and all other conditions to the Prize Merger
have been satisfied (and not waived, except with the consent of the
Administrative Agent); (e) there are no government, corporate, contractual or
legal restrictions that would restrict, limit or otherwise impede prompt
consummation of the Prize Merger and the transactions contemplated by the Prize
Merger Agreement; and (f) after giving effect to the Prize Merger and the
transactions described in the Prize Merger Agreement, neither
47
Prize nor any Prize Subsidiary shall have outstanding any shares of stock
constituting preferred equity.
SECTION 5.1.15. Hedging Schedule. The Administrative Agent and each Bank
shall have received a schedule of all Hedging Agreements to which the Borrower
or any of its Subsidiaries (including Prize and the Prize Subsidiaries) is a
party, which schedule shall indicate the amount of all Hedging Obligations of
the Borrower or its Subsidiaries, as applicable, thereunder.
SECTION 5.2. All Borrowings and Letters of Credit. The obligation of each
Bank to fund any Loan on the occasion of any Borrowing (including the initial
Borrowing) and of the obligations of the Issuer to issue any Letter of Credit
(including the initial Letter of Credit) and of the Banks to participate therein
shall be subject to the satisfaction of each of the conditions precedent set
forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before and
after giving effect to any Borrowing (but, if any Default of the nature referred
to in Section 8.1.5 shall have occurred with respect to any other Indebtedness,
without giving effect to the application, directly or indirectly, of the
proceeds of such Borrowing) the following statements shall be true and correct:
(a) the representations and warranties set forth in Article VI and in the
other Loan Documents shall be true and correct with the same effect as if then
made (unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date);
(b) no labor controversy, litigation, arbitration or governmental
investigation or proceeding shall be pending or, to the knowledge of the
Borrower, threatened against the Borrower or any of their respective
Subsidiaries which would reasonably be expected to have a Material Adverse
Effect or which purports to affect the legality, validity or enforceability of
this Agreement, the Notes or any other Loan Document; and
(c) no Default shall have then occurred and be continuing, and the Obligors
are not in violation of any law or governmental regulation or court order or
decree except for such violations as would not reasonably be expected to have a
Material Adverse Effect.
SECTION 5.2.2. Borrowing Request. The Administrative Agent shall have
received a Borrowing Request or Letter of Credit Request for such Borrowing or
such Letter of Credit, as applicable. Each of the delivery of a Borrowing
Request or a Letter of Credit Request and the acceptance by the Borrower of the
proceeds of such Borrowing or the issuance of such Letter of Credit, as
applicable, shall constitute a representation and warranty by the Borrower that,
on the date of such Borrowing or the date of issuance of such Letter of Credit
(both immediately before and after giving effect to such Borrowing and the
issuance of such Letter of Credit and the application of the proceeds thereof),
the statements made in Section 5.2.1 are true and correct. By delivering the
initial Borrowing Request, the Borrower shall be deemed to have represented
48
and warranted that on and as of the date of the initial Borrowing each of
the conditions set forth in Article V has been satisfied.
SECTION 5.2.3. Satisfactory Legal Form. All documents executed or submitted
pursuant hereto by or on behalf of any Obligor shall be satisfactory in form and
substance to the Administrative Agent and its counsel; the Administrative Agent
and its counsel shall have received all information, approvals, opinions,
documents or instruments as the Administrative Agent or its counsel may
reasonably request.
SECTION 5.2.4. All Letters of Credit. The obligation of the Issuer to issue
each Letter of Credit is, in addition to the conditions precedent specified in
Sections 5.1 (with respect to the initial Letter of Credit) and Section 5.2
(with respect to all Letters of Credit), subject to the condition precedent that
the Issuer shall have received, at least three (3) Business Days prior to the
requested issuance thereof, a Letter of Credit Request from the Borrower
relating to such Letter of Credit.
SECTION 5.2.5. Excess Cash and Cash Equivalents. The Banks shall have no
obligation to make any Loans if, after giving effect to the application of the
proceeds of any Borrowings hereunder, the aggregate amount of cash and Cash
Equivalents held by the Borrower and its Subsidiaries shall have exceeded
$35,000,000 for the period of three (3) consecutive days ending on the day
immediately prior to such Borrowing; provided that for purposes of this Section
5.2.5, cash or Cash Equivalents held by a qualified intermediary pursuant to a
deferred exchange agreement shall not be treated as being held by the Borrower
or its Subsidiaries.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks, the Issuer and the Agents to enter into this
Agreement and to make Borrowings and issue Letters of Credit hereunder, the
Borrower represents and warrants unto the Agents, the Issuer and each Bank as
set forth in this Article VI.
SECTION 6.1. Organization, etc. Each Obligor is a corporation, partnership
or limited liability company validly organized and existing and in good standing
under the laws of the jurisdiction of its incorporation, organization or
formation. Each Obligor is qualified to do business and is in good standing as a
foreign entity in each jurisdiction where the nature of its business requires
such qualification, except where the failure to so qualify, would not reasonably
be expected to have a Material Adverse Effect. Each Obligor has full power and
authority and holds all requisite franchises, patents, copyrights, trademarks,
trade names or rights thereto, licenses, permits and other approvals (i) to
enter into and perform its Obligations under this Agreement, the Notes and each
other Loan Document to which it is a party and (ii) except where failure to do
so would not reasonably be expected to have a Material Adverse Effect, to own
and hold under lease its property and to conduct its business substantially as
currently conducted by it.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by each Obligor of this Agreement, the Notes and each
other Loan
49
Document executed or to be executed by it, are within such Obligor's
powers, have been duly authorized by all necessary action, and do not (a)
violate any Obligor's Organic Documents; (b) violate the terms or provisions of
the Indenture; (c) violate any other contractual restriction, law or
governmental regulation or court decree or order binding on or affecting any
Obligor or its Assets; or (d) result in, or require the creation or imposition
of, any Lien on any of any Obligor's properties except for Liens granted under
the Loan Documents.
SECTION 6.3. Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority or regulatory body or other Person is required for the due execution,
delivery or performance by any Obligor of this Agreement, the Notes or any other
Loan Document to which it is a party other than recording of Security Documents
with appropriate Governmental Authorities. No Obligor is an "investment company"
within the meaning of and subject to regulation under the Investment Company Act
of 1940, as amended, or a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of and subject to regulation
under the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes, and the Notes and
each other Loan Document executed by an Obligor will, on the due execution and
delivery thereof, constitute, the legal, valid and binding obligations of such
Obligor enforceable in accordance with their respective terms. Without limiting
the foregoing, each Security Document executed by an Obligor constitutes the
legal, valid and binding obligation of such Obligor enforceable in accordance
with its respective terms, and creates a valid and perfected first priority
security interest in the Assets of such Obligor as provided therein.
SECTION 6.5. Financial Information. The Borrower has delivered to the
Administrative Agent audited consolidated financial statements of the Borrower
and its Subsidiaries as at and for the fiscal year ended December 31, 2000, and
unaudited consolidated financial statements of (i) the Borrower and its
Subsidiaries and (ii) Prize and the Prize Subsidiaries, in each case, as at and
for each of the Fiscal Quarters ended March 31, 2001, June 30, 2001 and
September 30, 2001. Such financial statements have been prepared in accordance
with GAAP, and fairly and accurately present, on a consolidated basis, the
financial condition of the Borrower and its Subsidiaries as of the respective
dates indicated therein and the results of operations for the respective periods
indicated therein. To the Borrower's Knowledge, neither the Borrower nor any of
its Subsidiaries has any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments, or unrealized or anticipated losses
from any unfavorable commitments except as scheduled or referred to or reflected
in such financial statements.
SECTION 6.6. No Material Adverse Change. There has been no material adverse
change in the business, condition (financial or otherwise) operations,
prospects, or properties of the Borrower and its Subsidiaries taken as a whole
since the effective date of the most recent audited financial statements
delivered to the Agents, the Issuer and the Banks.
SECTION 6.7. Litigation, Labor Controversies, etc. There is no pending or,
to the Borrower's Knowledge, threatened litigation, action, proceeding, or labor
controversy affecting
50
Borrower or any Subsidiary, or any of their respective properties,
businesses, assets or revenues, which could reasonably be expected to have a
Material Adverse Effect or which purports to affect the legality, validity or
enforceability of this Agreement, the Notes or any other Loan Document, except
as disclosed in Item 6.7 ("Litigation, Labor Controversies") of the Disclosure
Schedule. To the Borrower's Knowledge, there are no outstanding judgments
against the Borrower or any Subsidiary.
SECTION 6.8. Subsidiaries. As of date hereof, the Borrower has no
Subsidiaries except those Subsidiaries set forth in Item 6.8 ("Subsidiaries") of
the Disclosure Schedule.
SECTION 6.9. Ownership of Properties. Each Obligor owns good and defensible
title to, or valid leasehold interests in, all of its properties and assets,
real and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights), free and clear
of all Liens, charges or claims (including infringement claims with respect to
patents, trademarks, copyrights and the like) and free and clear of all
limitations and restrictions on, and consent requirements for, disposition or
transfer, except as permitted pursuant to Section 7.2.3 and except for
imperfections and burdens that do not in the aggregate materially detract from
the value thereof. The interests and properties described in Schedule 6.9
constitute all the Hydrocarbon Interests owned by the Borrower and the other
Obligors as of the date of this Agreement. The Collateral Property includes all
the Capital Stock of each Obligor (other than the Borrower), all Hedge
Agreements to which any Obligor is a party and all notes receivable of each
Obligor.
SECTION 6.10. Taxes. Except as set forth in Item 6.10 ("Tax Matters") of
the Disclosure Schedule, the Borrower and each Subsidiary has filed all tax
returns and reports required by law to have been filed by it and has paid all
taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books. The Borrower knows of no pending investigation of
the Borrower or any Subsidiary by any taxing authority or of any pending but
unassessed tax liability of the Borrower or any Subsidiary.
SECTION 6.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date hereof and, on a rolling
basis, prior to the date of any Borrowing hereunder, no steps have been taken to
terminate any Pension Plan under Section 4041(c) of ERISA, and no contribution
failure has occurred with respect to any Pension Plan sufficient to give rise to
a Lien under section 302(f) of ERISA. No condition exists or event or
transaction has occurred with respect to any Pension Plan which might result in
the incurrence by the Borrower or any member of the Controlled Group of any
liability, fine or penalty. Except as disclosed in Item 6.11 ("Employee Benefit
Plans") of the Disclosure Schedule, neither the Borrower nor any member of the
Controlled Group has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
SECTION 6.12. Environmental Warranties. Except as set forth in Item 6.12
("Environmental Matters") of the Disclosure Schedule:
51
(a) To the Borrower's Knowledge, except where the failure to obtain or
comply could not reasonably be expected to have a Material Adverse Effect, the
Borrower and each Subsidiary and all of their respective Assets and operations
are in compliance in all material respects with all Environmental Laws. Neither
the Borrower nor any Subsidiary is aware of, and none of the Borrower or any of
its Subsidiaries has received notice of, any past, present, or future
conditions, events, activities, practices, or incidents which may interfere with
or prevent the material compliance or continued material compliance of any of
them with all Environmental Laws;
(b) To the Borrower's Knowledge, except where the failure to obtain or
comply could not reasonably be expected to have a Material Adverse Effect, the
Borrower and each of its Subsidiaries has obtained all permits, licenses, and
authorizations that are required under applicable Environmental Laws, and has
received no notice that all such permits are not in good standing, or that any
such Person is not in compliance with all of the terms and conditions of such
permits;
(c) To the Borrower's Knowledge, except where the failure to obtain or
comply could not reasonably be expected to have a Material Adverse Effect, no
Hazardous Materials exist on, about, or within or have been used, generated,
stored, transported, disposed of on, or Released from any of the Assets of the
Borrower or any of its Subsidiaries except in amounts that would not violate
applicable law. The use which the Borrower or any of its Subsidiaries makes and
intends to make of its properties and Assets will not result in the use,
generation, storage, transportation, accumulation, disposal, or Release of any
Hazardous Material on, in, or from any of their properties or assets except in
amounts that would not violate applicable law;
(d) To the Borrower's Knowledge, neither the Borrower nor any of its
Subsidiaries nor any of such Person's currently or previously owned or leased
properties or operations is subject to any outstanding or threatened order from
or agreement with any Governmental Authority or other Person or subject to any
judicial or docketed administrative proceeding with respect to any failure to
comply with Environmental Laws;
(e) To the Borrower's Knowledge, except where the failure to obtain or
comply could not reasonably be expected to have a Material Adverse Effect, there
are no conditions or circumstances associated with the currently or previously
owned or leased properties or operations of the Borrower or any of its
Subsidiaries that could reasonably be expected to give rise to any Environmental
Liabilities;
(f) Neither the Borrower nor any Subsidiary is a treatment, storage, or
disposal facility requiring a permit under the Resource Conservation and
Recovery Act, 42 U.S.C.ss.6901 et seq., regulations thereunder or any comparable
provision of state law. To the Borrower's Knowledge, the Borrower and each of
its Subsidiaries is in substantial compliance with all applicable financial
responsibility requirements of all Environmental Laws;
52
(g) Neither the Borrower nor any Subsidiary has filed, or to the best of
the Borrower's and each Subsidiary's Knowledge, failed to file, any notice
required under applicable Environmental Law reporting a Release; and
(h) Neither the Borrower nor any Subsidiary has received notice that a Lien
arising under any Environmental Law has attached to any of their property or
revenues.
SECTION 6.13. Regulations U and X. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation U or X. Terms for which
meanings are provided in F.R.S. Board Regulation U or X or any regulations
substituted therefor, as from time to time in effect, are used in this Section
with such meanings.
SECTION 6.14. Accuracy of Information. All factual information heretofore
or contemporaneously furnished by or on behalf of any of the Obligors in writing
to the Administrative Agent or the Collateral Agent or any Bank or the Issuer
for purposes of or in connection with this Agreement, any other Loan Document,
or any transaction contemplated hereby or thereby is, and all other such factual
information hereafter furnished by or on behalf of any of the Obligors to the
Administrative Agent or the Collateral Agent or any Bank or the Issuer will be,
true and accurate in every material respect on the date as of which such
information is dated or certified and as of the date of execution and delivery
of this Agreement by the Administrative Agent, the Collateral Agent and such
Bank or the Issuer, and such information is not, or shall not be, as the case
may be, incomplete by omitting to state any material fact necessary to make such
information not misleading in any material respect. There is no fact known to
any Obligor which has a Material Adverse Effect, or which could reasonable be
expected to have a Material Adverse Effect, on the business, condition
(financial or otherwise), operations, or properties of the Borrower and its
Subsidiaries taken as a whole that has not been disclosed in writing to the
Administrative Agent, the Collateral Agent, the Issuer and the Banks.
SECTION 6.15. No Defaults under Other Agreements. Except as disclosed in
Item 6.15 ("Existing Defaults") of the Disclosure Schedule, neither the Borrower
nor any of its Subsidiaries is in default in the payment when due (subject to
any applicable grace period), whether by acceleration or otherwise, of any
Indebtedness in excess of $5,000,000, and no defaults have occurred in the
performance or observance of any obligation or condition with respect to any
such Indebtedness if the effect of such default is to accelerate the maturity of
any Indebtedness.
SECTION 6.16. Solvency. Each Obligor is Solvent.
SECTION 6.17. Agreements. Neither the Borrower nor any Subsidiary is a
party to any indenture, loan, or credit agreement, or to any lease or other
material agreement or instrument, or subject to any charter or corporate
restriction which could have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or properties of the
Borrower and its Subsidiaries (taken as a whole), or the ability of the Borrower
or any Obligor to pay and perform its obligations under the Loan Documents to
which it is a party. Neither the Borrower nor any Restricted Subsidiary is in
default in any respect in the
53
performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any material agreement or instrument
material to its business to which it is a party.
SECTION 6.18. Compliance with Laws, etc. The Borrower and each of its
Subsidiaries has complied with all applicable statutes, rules, regulations,
orders and restrictions of any government or any instrumentality or agency
thereof, having jurisdiction over the conduct of their respective businesses or
the ownership of their respective Hydrocarbon Interests except where the failure
to so comply would not reasonably be expected to have a Material Adverse Effect.
SECTION 6.19. Direct Benefit. The initial Borrowings and Letters of Credit
hereunder and all additional Borrowings and Letters of Credit hereunder are for
the direct benefit of the Borrower, or in the case of any initial or additional
Letters of Credit, one or more of the Guarantors, and the initial Loans and
Letters of Credit hereunder are used to continue the Prior Indebtedness under
the Third Amended and Restated Credit Agreement, to refinance and replace direct
and indirect Indebtedness of Prize and the Prize Subsidiaries owing under the
Prize Credit Facility and to fund the cash portion of the merger consideration
and any expenses related to any of the foregoing purposes. The Borrower and the
Guarantors are engaged as an integrated group in the business of oil and gas
exploration and related fields, and any benefits to the Borrower or any
Guarantor is a benefit to all of them, both directly or indirectly, inasmuch as
the successful operation and condition of the Borrower and the Guarantors is
dependent upon the continued successful performance of the functions of the
integrated group as a whole.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with each Agent,
the Issuer and each Bank that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices, etc. The Borrower
will furnish, or will cause to be furnished, to the Administrative Agent for
distribution to each Bank copies (in sufficient number to provide at least one
copy to each Bank) of the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 50 days after the end of
each of the first three Fiscal Quarters of each Fiscal Year of the Borrower, (1)
consolidated balance sheets, statements of earnings, and statements of cash flow
as of the end of such Fiscal Quarter (and, if required by GAAP or by any
Governmental Authority, consolidating balance sheets, statements of earnings and
statements of cash flows) of the Borrower for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and ending with the end
of such Fiscal Quarter, certified by an Authorized Officer of the Borrower and
(2) a schedule of all Hedging Obligations of the Borrower and its Restricted
Subsidiaries in reasonable detail;
54
(b) as soon as available and in any event within 105 days after the end of
each Fiscal Year of the Borrower, (1) a copy of the annual audit report for such
Fiscal Year for the Borrower, including therein consolidated (and, if required
by GAAP or by any Governmental Authority, consolidating) financial statements of
the Borrower as of the end of such Fiscal Year prepared in the manner described
in clause (a) above and certified (without any Impermissible Qualification) by
independent certified public accountants of nationally recognized standing
selected by the Borrower and (2) a schedule of all Hedging Obligations of the
Borrower and its Restricted Subsidiaries in reasonable detail;
(c) as soon as available and in any event within 15 days of the delivery to
the Administrative Agent of the financial statements described in clauses (a)
and (b) above, a certificate, executed by an Authorized Officer of the Borrower,
showing (in reasonable detail and with appropriate calculations and computations
in all respects satisfactory to the Administrative Agent) compliance with the
financial covenants set forth in Section 7.2.4. together with a statement to the
effect that the Borrower has not become aware of any Default or Event of Default
that has occurred or is continuing, or, if the Borrower has become aware of such
Default or Event of Default, describing such Default or Event of Default and the
steps, if any, being taken to cure it;
(d) concurrently with the certificate delivered pursuant to clause (c)
above, (i) a production statement which identifies the most recent information
available relating to the gross volumes of Hydrocarbons produced in the
aggregate from the Hydrocarbon Interests included in the Borrowing Base, (ii) a
statement of revenues and expenses attributable to the Hydrocarbon Interests
included in the Borrowing Base for such Fiscal Quarter ended, and (iii) an
operating report which identifies the most recent information available relating
to the aggregate Hydrocarbons throughput of the Gas Gathering Systems, revenues
and expenses and operating reports each attributable to the Gas Gathering
Systems for such Fiscal Quarter then ended, such production report and statement
of revenues and expenses and operating reports each to be in a form and
substance reasonably satisfactory to the Administrative Agent and the Banks;
(e) promptly upon the Borrower learning of the occurrence of any Default or
Borrowing Base Deficiency, a statement of an Authorized Officer of the Borrower
setting forth details of such Default or Borrowing Base Deficiency and the
action which the Borrower has taken and proposes to take with respect thereto;
(f) promptly upon the Borrower learning of (x) the occurrence of any
material adverse development with respect to any litigation, action, proceeding,
or labor controversy described in Section 6.7 or (y) the commencement of any
labor controversy, litigation, action or proceeding of the type described in
Section 6.7, or (z) any material adverse development with respect to any
litigation, action, proceeding or controversy affecting any Obligor, which in
the Borrower's opinion, could reasonably be expected to have a material adverse
effect on the business, operations, affairs, condition (financial or otherwise),
prospects or assets of the Borrower on a consolidated basis;
55
(g) promptly after the sending or filing thereof, copies of all reports
which the Borrower sends to its stockholders generally, and all reports
on form 00-X, 00-X, 0-X, all definitive proxy statements, and effective
registration statements (other than registration statements on Form S-8
or successor forms for sales of securities under Plans) which the
Borrower files with the Securities and Exchange Commission or any
national securities exchange;
(h) immediately upon becoming aware of the institution of any steps by the
Borrower or any Affiliate of the Borrower to terminate any Pension Plan, or the
failure to make a required contribution to any Pension Plan if such failure is
sufficient to give rise to a Lien under section 302(f) of ERISA, or the taking
of any action with respect to a Pension Plan which could result in the
requirement that the Borrower furnish a bond or other security to the PBGC or
such Pension Plan, or the occurrence of any event with respect to any Pension
Plan which could result in the incurrence by the Borrower of any liability, fine
or penalty, or any material increase in the contingent liability of the Borrower
with respect to any post-retirement Welfare Plan benefit, notice thereof and
copies of all documentation relating thereto;
(i) as soon as possible, and in any event within 50 days after March 31,
2002, pro forma consolidated balance sheets, statements of earnings, and
statements of cash flow for Prize and the Prize Subsidiaries for the Fiscal
Quarter ended March 31, 2002, presented both for the whole Fiscal Quarter and as
of the end of each month of such Fiscal Quarter;
(j) Notice of Material Adverse Change. As soon as possible and in any event
within 10 days after the occurrence thereof, written notice of any matter that,
in the good faith opinion of the Borrower's management after exercising
reasonable business judgment, could reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), operations,
prospects, or properties of the Borrower and its Subsidiaries taken as a whole;
(k) promptly upon the aggregate value of all margin accounts established by
the Borrower or any of its Subsidiaries with respect to Hedging Obligations
exceeding $1,000,000, written notice of the aggregate value of all such margin
accounts;
(l) such other information respecting the condition or operations,
financial or otherwise, of the Borrower and its Subsidiaries as any Bank or the
Issuer through the Administrative Agent may from time to time reasonably
request; and
(m) Reserve Reports.
(i) On or before April 1 of each calendar year, commencing April 1, 2003,
at the Borrower's expense, Reserve Reports prepared by an Approved Engineer
dated as of December 31 of the preceding year; and
(ii) On or before October 1 of each calendar year, commencing October 1,
2002, at the Borrower's expense, Reserve Reports prepared by the Borrower dated
as of June 30 of such year;
56
SECTION 7.1.2. Compliance with Laws, Maintenance of Existence, etc. The
Borrower will and will cause each Material Restricted Subsidiary to (a) comply
in all material respects with all applicable laws, rules, regulations and
orders, (b) do all things necessary and proper to maintain and preserve its
respective corporate or other existence and franchises and privileges in the
jurisdiction of its formation and quality and remain qualified as a foreign
entity authorized to do business in each jurisdiction where it has Assets or
properties or conducts business except where a failure to so qualify or remain
qualified would not reasonably be expected to have a Material Adverse Effect;
and (c) pay, before the same become delinquent, all taxes, assessments and
governmental charges imposed upon it or upon its property except to the extent
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books. The Borrower will conduct, and will cause each Restricted Subsidiary to
conduct, its business in an orderly and efficient manner in accordance with good
business practices.
SECTION 7.1.3. Maintenance of Properties. The Borrower, in its reasonable
business judgment, and in the ordinary conduct of its business, will, and will
cause each Restricted Subsidiary to, maintain, preserve, protect and keep its
respective properties in good repair, working order and condition, and make
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times unless
the Borrower determines in good faith that the continued maintenance of any of
its properties is no longer economically desirable.
SECTION 7.1.4. Insurance. The Borrower will maintain or cause to be
maintained with responsible insurance companies insurance with respect to its
and its Restricted Subsidiaries' properties and business against such casualties
and contingencies and of such types and in such amounts as is customary in the
case of similar businesses in similar locales and will, upon request of the
Administrative Agent, furnish to each Bank at reasonable intervals a certificate
of an Authorized Officer setting forth the nature and extent of all insurance
maintained by the Borrower in accordance with this Section. Each insurance
policy covering Collateral Property shall provide that such policy will not be
canceled or reduced without 30 days' prior written notice to the Administrative
Agent. In the event an Event of Default occurs and continues for a period of 90
days, the Borrower will cause, within 5 days, each insurance policy covering
Collateral Property to name the Collateral Agent as additional insured and loss
payee for the benefit of itself, the other Agents, the Banks and the Issuer.
SECTION 7.1.5. Books and Records. The Borrower will and will cause its
Restricted Subsidiaries to keep books and records which accurately reflect all
of its business affairs and transactions and permit the Administrative Agent and
each Bank or any of their respective representatives, at reasonable times and
intervals, to visit all of its offices, to discuss its financial matters with
its officers and independent public accountant (and the Borrower hereby
authorizes such independent public accountant with prior notice to the Borrower
and an opportunity to attend, to discuss the Borrower's and its Subsidiaries'
financial matters with each Bank or its representatives) and to examine (and, at
the expense of the Borrower, photocopy extracts from) any of its or their books
or other records. The Borrower shall pay any fees of such independent public
accountant incurred in connection with the Administrative Agent's or any Bank's
exercise of its rights pursuant to this Section.
57
SECTION 7.1.6. Consummation the Merger. The Borrower agrees to cause its
Subsidiaries to take and complete not later than the close of business on the
Effective Date all actions necessary to effectuate the merger transaction
between Pintail Energy, Inc. and Prize described in the Prize Merger Agreement,
which actions shall include, but not be limited to, (a) the satisfaction of all
of the conditions set forth in article 6 of the Prize Merger Agreement (unless
such condition is amended or the satisfaction of such condition is validly
waived by the parties to the Prize Merger Agreement and, if the condition that
is being amended or waived is material in the opinion of the Administrative
Agent, the Administrative Agent shall have consented in advance in writing to
such amendment or waiver) and (b) the filing of a certificate of ownership in
the appropriate office in the State of Delaware, which certificate shall provide
an effective date for such merger transaction not later than the Effective Date.
The Borrower further agrees to cause evidence of the filing of the certificate
effectuating such merger transaction to be delivered to the Administrative Agent
not later than the close of business on the Effective Date and to provide to the
Administrative Agent an opinion of counsel to the surviving entity substantially
in the form of Exhibit L. Concurrently with the consummation of the Prize
Merger, the Borrower shall delist all securities of Prize other than warrants
for common stock of Prize from any national exchange on which such securities
have heretofore been listed and shall promptly deliver a Pledge Agreement to the
Administrative Agent, pursuant to which the Borrower shall have pledged all of
the shares of common stock of Prize.
SECTION 7.1.7. Agreement to Deliver Security Documents. The Borrower agrees
to and will cause its Restricted Subsidiaries to deliver promptly:
(a) to further secure the Obligations whenever requested by the Collateral
Agent or the Administrative Agent in good faith, Pledge Agreements, Mortgages,
mortgages, deeds, deeds of trust, security agreements, financing statements,
continuation statements, extensions agreements and other similar agreements or
instruments (in addition to those required to be delivered under Article V) in
form and substance satisfactory to the Collateral Agent or the Administrative
Agent in good faith for the purpose of granting, confirming and perfecting first
and prior liens or security interests in any property which is at such time (i)
Collateral Property or which was intended to be Collateral Property pursuant to
any Loan Document previously executed and not then released by the Collateral
Agent, or (ii) Capital Stock or other ownership interests in each Subsidiary of
the Borrower; provided, however, that the Borrower and the Restricted
Subsidiaries shall at all times maintain in effect in favor of the Collateral
Agent such Mortgages as are necessary to grant, confirm and perfect first and
prior liens or security interests in at least 80% of the present value of the
Proved Reserves (whether developed or undeveloped); and further provided,
however, that in the event that the Hydrocarbon Interests on which the
Collateral Agent has a first priority perfected Lien shall constitute less than
80% of the present value of the Proved Reserves (whether developed or
undeveloped), the Borrower shall promptly notify the Collateral Agent and
execute or cause to be executed additional Mortgages necessary to increase such
percentage to at least 80%. The Borrower shall cause each Person that becomes a
Material Restricted Subsidiary after the date hereof to execute and deliver to
the Collateral Agent a counterpart of each of the Subsidiary Pledge Agreement
and Subsidiary Guaranty Agreement within 15 days after such Person becomes a
Restricted Subsidiary. Contemporaneously with the execution and delivery of any
such counterpart of the Subsidiary Pledge Agreement, the Borrower shall deliver
to the Collateral Agent the original certificates evidencing all outstanding
Capital Stock of such Restricted Subsidiary, together with stock
58
powers relating thereto duly executed in blank and such other documents as
the Administrative Agent may reasonably request. The Borrower also agrees to
deliver whenever requested by the Collateral Agent in good faith, favorable
opinions (in addition to those required to be delivered under Article V) from
legal counsel acceptable to the Administrative Agent in good faith with respect
to any Collateral Property confirming that such Collateral Property is subject
to Security Documents securing Obligations that constitute and create legal,
valid and duly perfected Liens in such properties and interests and the proceeds
thereof, and covering such other matters as the Administrative Agent may request
in good faith; and
(b) if requested by the Administrative Agent, title opinions in form and
substance reasonably acceptable to the Administrative Agent from counsel
reasonably acceptable to the Administrative Agent with respect to any of the
Proved Reserves covered by a Mortgage or included in the Borrowing Base.
SECTION 7.1.8. Perfection and Protection of Security Interests and Liens.
The Borrower will and will cause its Subsidiaries to from time to time deliver
or cause to be delivered to the Collateral Agent any financing statements,
continuation statements, extension agreements and other documents, properly
completed and executed (and acknowledged when required) by the relevant Person,
in form and substance satisfactory to the Administrative Agent and the
Collateral Agent, which the Administrative Agent requests for the purpose of
perfecting, confirming or protecting any Liens or other rights in Collateral
Property.
SECTION 7.1.9. Compliance with Other Contractual Obligations. The Borrower
shall, and shall cause its Restricted Subsidiaries, to perform and observe in
all material respects all of the covenants and agreements contained in each
contract or agreement to which it is a party that are provided to be performed
and observed on the part of such Person, taking into account any grace period,
and shall in the reasonable business judgment of the Borrower diligently and in
good faith enforce, using appropriate procedures and proceedings, all of its and
its Subsidiaries' material rights and remedies under (including taking all
diligent actions required to collect amounts owed to such Person by any other
parties thereunder) each such contract or agreement.
SECTION 7.1.10. Replacement Notes. If a Permitted 2002 Bond Transaction
shall have been consummated after the Effective Date, then the Borrower agrees
to deliver to the Administrative Agent for the account of each Bank Notes in
replacement and substitution for any Notes delivered by the Borrower pursuant to
Section 5.1.2, which Notes shall be dated the same date as the original Notes
and shall be in an aggregate amount equal to the Maximum Facility Amount as
reduced pursuant to Section 2.2(a).
SECTION 7.2. Negative Covenants. The Borrower agrees with each Agent, the
Issuer and each Bank that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this Section 7.2.
SECTION 7.2.1. Business Activities. The Borrower will not and will not
permit its Restricted Subsidiaries to engage in any business activity, except
the Oil and Gas Business.
59
SECTION 7.2.2. Indebtedness. The Borrower will not and will not permit its
Restricted Subsidiaries to create, incur, assume or suffer to exist or otherwise
become or be liable in respect of any Indebtedness, other than, without
duplication, the following:
(a) Indebtedness in respect of the Loans and other Obligations;
(b) until the date of the initial Borrowing, Indebtedness identified in
Item 7.2.2(b) ("Indebtedness to be Repaid") of the Disclosure Schedule;
(c) Indebtedness existing as of the Effective Date which is identified in
Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure Schedule;
(d) unsecured accounts payable by the Borrower and its Restricted
Subsidiaries incurred in the ordinary course of business (including open
accounts extended by suppliers on normal trade terms in connection with
purchases of goods and services, but excluding Indebtedness incurred through the
borrowing of money or Contingent Liabilities);
(e) Trade Guarantees;
(f) Indebtedness subordinate to the Obligations on terms reasonably
satisfactory to the Administrative Agent (such approval not to be unreasonably
withheld) payable (i) solely in common stock of the Borrower or such Restricted
Subsidiary, or (ii) in cash or common stock of the Borrower or such Restricted
Subsidiary at the sole option of the obligor thereof, provided that neither the
Borrower nor any Restricted Subsidiary shall make aggregate cash payments after
the date hereof with respect to such Indebtedness in an amount in excess of
$5,000,000;
(g) unsecured Indebtedness of the Borrower or any Restricted Subsidiary, in
respect of performance bonds, surety bonds, and appeal bonds issued for its
account, in each case in the ordinary course of business;
(h) Indebtedness not otherwise permitted under this Section 7.2.2 that is
created, incurred or assumed after the Effective Date which is in respect of
Capitalized Lease Liabilities or sales leaseback transactions covering assets
sold and then leased back; provided that the aggregate outstanding principal
amount of all such Indebtedness does not exceed $17,500,000 in the aggregate at
any one time outstanding for all such Indebtedness of the Borrower and the
Restricted Subsidiaries;
(i) unsecured Indebtedness of the Borrower or any Restricted Subsidiary
owing to the Borrower or to any other Restricted Subsidiary provided that such
other Restricted Subsidiary is also a Guarantor;
(j) Indebtedness not otherwise permitted under this Section 7.2.2 that is
created, incurred or assumed after the Effective Date by the Borrower or one or
more Restricted Subsidiaries to a vendor of any equipment to finance its
acquisition of such equipment and costs associated with placing such acquired
equipment in service; provided that the aggregate outstanding principal amount
of all such Indebtedness does
60
not exceed $25,000,000 at any time outstanding and provided further that
the recourse of the vendor shall be limited to the equipment so acquired;
(k) [Intentionally Omitted];
(l) [Intentionally Omitted];
(m) unsecured Indebtedness of the Borrower or a Restricted Subsidiary owed
to a Person or Persons not otherwise permitted under this Section 7.2.2 that is
created, incurred or assumed after the Effective Date; provided that the
aggregate principal amount of such Indebtedness shall not exceed $20,000,000 at
any time outstanding; further provided that if the Person to whom such
Indebtedness is owed is an Unrestricted Subsidiary, such Indebtedness shall not,
without the prior express written consent of the Majority Banks, accrue interest
at a rate exceeding the rate of interest at which the Borrower could have
borrowed Base Rate Loans or LIBO Rate Loans, whichever is less, under this
Agreement on the date on which the borrower or its Restricted Subsidiary
incurred such Indebtedness;
(n) Indebtedness incurred under any Permitted 2002 Bond Transaction; and
(o) reimbursement obligations owing to Fleet National Bank in respect of
the Chevron L/C.
provided, however, that no additional Indebtedness otherwise permitted by
clauses (f), (h), (i), (j), (k), (l) or (m) shall be incurred if, after giving
effect to the incurrence thereof, any Default or Event of Default shall have
occurred and be continuing.
SECTION 7.2.3. Liens. The Borrower will not and will not permit any of its
Restricted Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its property, revenues or assets, whether now owned or hereafter
acquired, except:
(a) Liens securing payment of the Obligations and any Hedging Obligations
owed to a Bank, an Agent, or the Issuer or any Affiliate thereof, granted
pursuant to any Security Document;
(b) Liens granted to secure payment of Indebtedness of the type permitted
and described in Section 7.2.2(h) and (j) and covering only those assets or
equipment, as the case may be, acquired or financed with the proceeds of such
Indebtedness;
(c) Liens for taxes, assessments or other governmental charges or levies
not at the time delinquent or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(d) Liens of carriers, warehousemen, mechanics, materialmen, landlords and
other like Liens incurred in the ordinary course of business for sums not
overdue or being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books;
61
(e) Liens incurred in the ordinary course of business in connection with
workmen's compensation, unemployment insurance or other forms of governmental
insurance or benefits;
(f) judgment Liens resulting from a judgment or order to pay money not in
excess of $2,500,000 above applicable insurance coverage rendered against the
Borrower or any Restricted Subsidiary (or, in the event the Borrower or such
Restricted Subsidiary shall have an indemnity reasonably acceptable to the
Majority Banks from a Person satisfactory to the Majority Banks (which Person
acknowledges in writing its liability for such indemnity) in respect of such
judgment, decree or order for the payment of money, if after giving effect to
such indemnity, the Borrower's or such Restricted Subsidiary's liability in
respect of such judgment, decree or order is not in excess of $2,500,000, as the
case may be) and neither enforcement proceedings shall have been commenced by
any creditor upon such judgment or order, nor shall there have been any period
of 30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not have been in
effect;
(g) easements, rights-of-way, servitudes, permits, reservations,
exceptions, covenants and other restrictions as to the use of real property and
other similar encumbrances incurred in the ordinary course of business which,
with respect to all of the foregoing, do not secure the payment of Indebtedness
and which, in the aggregate, are not substantial in amount and which do not in
any case materially detract from the value of the Hydrocarbon Interest subject
thereto or materially interfere with the ordinary conduct of the business of the
Borrower;
(h) defects, irregularities and deficiencies in the title to any rights of
way or any Hydrocarbon Interest of the Borrower or any Restricted Subsidiary
which in the aggregate do not materially impair the use of such rights of way or
any Hydrocarbon Interest for the purposes for which such rights of way and any
other Hydrocarbon Interest are held by such Person, and defects, irregularities
and deficiencies in title to any Hydrocarbon Interest of the Borrower or any
Restricted Subsidiary, which defects, irregularities or deficiencies have been
cured by possession under applicable statutes of limitations;
(i) royalties, overriding royalties and revenue interests, provided that
the value of the Hydrocarbon Interests shown on the Reserve Reports is net of
such Liens;
(j) any Lien securing Indebtedness, neither assumed nor guaranteed by the
Borrower or any Restricted Subsidiary nor on which it customarily pays interest,
existing upon real estate or rights in or relating to real estate acquired by
such Obligor for substation, metering station, pump station, storage gathering
line, transmission line, transportation line, distribution line or for
right-of-way purposes, and any Liens reserved in leases for rent and for
compliance with the terms of the leases in the case of leasehold estates, to the
extent that any such Lien referred to in this clause (j) does not materially
impair the use or value of the property subject to such Lien for the purposes
for which such property is held;
62
(k) Liens arising out of all presently existing and future division and
transfer orders, advance payment agreements, processing contracts, gas
processing plant agreements, operating agreements, gas balancing or deferred
production agreements, pooling, unitization or communitization agreements,
pipeline, gathering or transportation agreements, platform agreements, drilling
contracts, injection or repressuring agreements, cycling agreements,
construction agreements, salt water or other disposal agreements, leases or
rental agreements, farm-out and farm-in agreements, exploration and development
agreements, and any and all other contracts or agreements covering, arising out,
used or useful in connection with or pertaining to the exploration, development,
operation, production, sale, use, purchase, exchange, storage, separation,
dehydration, treatment, compression, gathering, transportation, processing,
improvement, marketing, disposal, or handling of any Hydrocarbon Interest of the
Borrower or any Restricted Subsidiary provided that such agreements are entered
into in the ordinary course of business and contain terms customary for such
agreements in the industry and provided further that no Liens described in this
paragraph (k) shall be granted or created in connection with the incurrence of
Indebtedness;
(l) customary preferential rights to purchase and calls on production by
sellers relating to Hydrocarbon Interests acquired by the Borrower or any
Restricted Subsidiary after the Effective Date;
(m) Liens on required margin collateral in accounts which secure Hedging
Obligations; provided, that the obligations secured by such Liens shall not
exceed $20,000,000 in the aggregate;
(n) Liens existing as of the Effective Date which is identified in Item
7.2.3(n) ("Existing Liens") of the Disclosure Schedule;
(o) Liens securing performance of bids, tenders, trade contracts, statutory
obligations, return of money bonds and other obligations of a like nature
incurred in the ordinary course of business (all of the foregoing other than for
Indebtedness) or to secure obligations on surety or appeal bonds, not to exceed
$2,500,000 in the aggregate for all such obligations secured by such Liens at
any one time outstanding; and
(p) Liens arising solely by virtue of any statutory or common law provision
relating to banker's liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a creditor depository
institution; provided, that (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by the
Borrower or any Restricted Subsidiary in excess of those set forth by
regulations promulgated by the F.R.S. Board, and (ii) such deposit account is
not intended by the Borrower or any Subsidiary to provide collateral to the
depository institution.
SECTION 7.2.4. Financial Condition. The Borrower will not permit:
(a) its Funded Debt to EBITDA Ratio to be more than 3.5 to 1.0 for any
consecutive four-Fiscal Quarter period ending after September 30, 2001, provided
that
63
the Borrower, the Administrative Agent and the Banks agree that the pro
forma Consolidated EBITDA shall equal $35,700,000.00 for the Fiscal Quarter
ending December 31, 2001, $44,700,000.00 for the Fiscal Quarter ending September
30, 2001, $55,200,000.00 for the Fiscal Quarter ending June 30, 2001, and
$69,700,000.00 for the Fiscal Quarter ending March 31, 2001;
(b) Consolidated Interest Coverage Ratio to be less than 2.5 to 1.0 for any
four-Fiscal Quarter period ending on the last day of any Fiscal Quarter,
provided that the Borrower, the Administrative Agent and the Banks agree that
the pro forma Consolidated EBITDA shall equal the amounts set forth in the
preceding clause (a) of this Section 7.2.4 and the pro forma Total Interest
Expense shall equal $12,200,000.00 for the Fiscal Quarter ending December 31,
2001, $12,200,000.00 for the Fiscal Quarter ending September 30, 2001,
$12,200,000.00 for the Fiscal Quarter ending June 30, 2001, and $12,200,000.00
for the Fiscal Quarter ending March 31, 2001; or
(c) the Current Ratio to be less than 1.0 to 1.0 at the end of any Fiscal
Quarter.
SECTION 7.2.5. Investments. The Borrower will not and will not permit any
Restricted Subsidiary to, make, incur, or assume any Investment in any other
Person except as provided in this Section 7.2.5:
(a) Investments existing on the Effective Date and identified in Item
7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule;
(b) Investments permitted as Indebtedness pursuant to Section 7.2.2;
(c) extensions of trade credit in the ordinary course of business;
(d) Investments in Cash Equivalent Investments;
(e) [Intentionally Omitted];
(f) Investments in joint ventures made pursuant to exploration and
development activity in the ordinary course of business of the Borrower or any
Restricted Subsidiaries;
(g) the endorsement of negotiable instruments for collection in the
ordinary course of business;
(h) the acquisition of the Capital Stock or securities of a Wholly Owned
Restricted Subsidiary;
(i) Investments made with common stock of the Borrower or any Restricted
Subsidiary, provided that any such Investment shall not result in a Change in
Control;
(j) [Intentionally Omitted]; and
64
(k) so long as no Default has occurred and is continuing and so long as
after giving effect thereto Borrowing Base Usage is not greater than 80%, the
Borrower may make Investments not otherwise permitted pursuant to this Section
7.2.5 not to exceed $20,000,000 in the aggregate for all such Investments;
provided that if the Borrower or any of its Restricted Subsidiaries shall have
made any Investments pursuant to this clause (k) and the Borrower or any of its
Restricted Subsidiaries shall thereafter receive any dividends or returns of
capital from an Unrestricted Subsidiary (but expressly excluding any amounts
received as loans pursuant to Section 7.2.2(m)), then the amount available
thereafter to the Borrower and its Restricted Subsidiaries for additional
Investments pursuant to this clause (k) shall be increased dollar for dollar by
the amount of such dividends or returns of capital up to a maximum amount of
availability not to exceed $20,000,000 at any time;
provided, however, that (i) any Investment which when made complies with
the requirements of the definition of the term "Cash Equivalent Investment" may
continue to be held notwithstanding that such Investment if made thereafter
would not comply with such requirements; and (ii) no Investment otherwise
permitted by clause (k) shall be permitted to be made if, immediately before or
after giving effect thereto, any Default or Event of Default shall have occurred
and be continuing.
SECTION 7.2.6. Restricted Payments, etc. The Borrower shall not and shall
not permit any Restricted Subsidiary to (a) declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class of
the Borrower's Capital Stock (now or hereafter outstanding) or on any warrants,
options or other rights with respect to any shares of any class of its Capital
Stock (now or hereafter outstanding) other than dividends or distributions
payable in the Borrower's common stock or warrants to purchase the Borrower's
common stock or splitups or reclassifications of the Borrower's Capital Stock
into additional or other shares of its common stock or apply any of its or their
funds, property or assets to the purchase, redemption, sinking fund or other
retirement of, or purchase or redeem, any shares of any class of the Borrower's
Capital Stock (now or hereafter outstanding), or warrants, options or other
rights with respect to any shares of any class of its Capital Stock (now or
hereafter outstanding); (b) except as expressly permitted in writing by the
Administrative Agent with the consent of the Majority Banks, make any payment or
prepayment of principal of, or make any payment of interest on, any Indebtedness
on any day other than the stated, scheduled date for such payment or prepayment
set forth in the documents and instruments memorializing such Indebtedness, or
which would violate the subordination provisions of any Subordinated Debt; (c)
redeem, purchase or defease, any Subordinated Debt; and (d) make any deposit for
any of the foregoing purposes (collectively, the "Restricted Payments");
provided, however, that so long as no Default is continuing and, after giving
effect to any such payment, Borrowing Base Usage is not greater than 80%, the
Borrower and its Restricted Subsidiaries may make payments otherwise prohibited
by the foregoing clauses (a), (b) and (c) so long as the aggregate of all such
payments does not exceed the sum of (A) $20,000,000, plus (B) twenty-five
percent (25%) of the Borrower's consolidated net income, to be calculated on a
cumulative basis, for each Fiscal Year commencing with the Fiscal Year ending
December 31, 2001, minus (C) if the Borrower's consolidated net income shall be
a loss, one hundred percent (100%) of the Borrower's consolidated net loss, to
be calculated on a cumulative basis, for each Fiscal Year commencing with the
Fiscal Year ending December 31, 2001, minus (D) all Investments made pursuant to
65
Section 7.2.5(k) minus (E) the sum of all Restricted Payments made pursuant
to this Section 7.2.6. For purposes of this Section 7.2.6, consolidated net
income of the Borrower shall exclude the following items: (i) after-tax gains
from the sale of assets or abandonments or reserves relating thereto, (ii)
after-tax items classified as extraordinary or nonrecurring gains, (iii) net
income of any Person acquired in a "pooling of interests" transaction accrued
prior to the date such Person becomes a Restricted Subsidiary or is merged or
consolidated with the Borrower or any Restricted Subsidiary, (iv) the net income
(but not loss) of any Restricted Subsidiary to the extent that the declaration
of dividends or similar distributions by that Restricted Subsidiary of that
income is restricted by charter, contract, operation of law or otherwise, (v)
the net income of any Person other than a Restricted Subsidiary in which the
Borrower or any Restricted Subsidiary has an interest, except to the extent of
cash dividends or distributions actually paid to the Borrower or a Restricted
Subsidiary by such Person, (vi) income or loss attributable to discontinued
operations (including, without limitation, operations disposed of during such
period whether or not such operations were classified as discontinued), and
(vii) any non-cash charges related to a ceiling test write-down under GAAP.
SECTION 7.2.7. Limitation on Baskets. Notwithstanding the foregoing, the
Borrower will not and will not permit its Restricted Subsidiaries to create,
incur, assume or suffer to exist Indebtedness otherwise permitted pursuant to
Section 7.2.2(h), (j), or (m), Restricted Payments otherwise permitted pursuant
to Section 7.2.6 or Investments otherwise permitted pursuant to Section 7.2.5(k)
to the extent that the aggregate of all such Indebtedness created, incurred and
assumed as permitted by Section 7.2.2(h), (j), and (m) together with the
Restricted Payments made pursuant to Section 7.2.6 together with the aggregate
of all Investments made pursuant to Section 7.2.5(k) shall exceed in the
aggregate at any time outstanding $50,000,000.
SECTION 7.2.8. Consolidation, Merger, etc. The Borrower will not, and will
not permit any Restricted Subsidiary to, become a party to a merger or
consolidation, or purchase or otherwise acquire all or substantially all of the
business or assets of any Person or all or substantially all of the shares or
other evidence of beneficial ownership of any Person, or wind-up, dissolve, or
liquidate; provided, however, that: (a) the Borrower or any Restricted
Subsidiary shall be permitted to become a party to a merger or consolidation or
acquire all or substantially all of the assets of any Person or all or
substantially all of the shares or other beneficial ownership of any Person, so
long as (i) no Default is existing or would result therefrom, (ii) the Borrower
has given the Administrative Agent at least 10 days prior notice of such merger,
consolidation or acquisition, (iii) the Borrower has provided to the
Administrative Agent calculations demonstrating the pro forma compliance with
all financial and other covenants contained herein, after giving effect to such
merger, consolidation or acquisition, based on the most recently delivered
financial statements, (iv) the total cash consideration paid in connection with
all such mergers, consolidations, or acquisitions is otherwise permitted to be
paid by Section 7.2.5(k) and any Indebtedness assumed or incurred by the
Borrower or any Restricted Subsidiary in connection with all such mergers,
consolidations or acquisitions, is otherwise permitted to be incurred by Section
7.2.2, and (v) the Borrower or such Restricted Subsidiary (unless such merger is
with the Borrower), as the case may be, is the surviving corporation in such
merger or consolidation; and (b) any Restricted Subsidiary may be dissolved,
liquidated or merged into the Borrower or another Restricted Subsidiary, so long
as such
66
dissolution, liquidation or merger results in all assets of such Restricted
Subsidiary being owned by the Borrower or another Restricted Subsidiary.
SECTION 7.2.9. Disposition of Assets. The Borrower will not sell, lease,
assign, transfer, or otherwise dispose of any of its assets having a fair market
value in excess of $25,000, or permit any Restricted Subsidiary to do so with
any of its assets, except (a) dispositions of Hydrocarbons and other inventory
in the ordinary course of business, (b) dispositions of obsolete, damaged, worn
out or replaced equipment, (c) sales or transfers of assets from a Restricted
Subsidiary or the Borrower to another Restricted Subsidiary or the Borrower, (d)
sales for cash or pursuant to a like-kind exchange (whether such exchange is
consummated contemporaneously or pursuant to a deferred exchange agreement) of
Oil and Gas Properties (including volumetric production payments but excluding
sales of assets pursuant to sale/leaseback transactions permitted pursuant to
Section 7.2.2(h) hereof) having an aggregate fair market value of 10% or less of
the then current Borrowing Base during any fiscal year, (e) sales for cash or
pursuant to a like-kind exchange (whether such exchange is consummated
contemporaneously or pursuant to a deferred exchange agreement) of other assets
having a fair market value of not more than $2,500,000 during any fiscal year,
or (f) the assignment or termination of any Hedge Agreement.
SECTION 7.2.10. Transactions with Affiliates. The Borrower will not and
will not permit any Restricted Subsidiary to enter into, or cause, suffer or
permit to exist any arrangement or contract with any Affiliate unless such
arrangement or contract is fair and equitable to the Borrower or such Restricted
Subsidiary, as the case may be, and is on terms no less favorable to the
Borrower or such Restricted Subsidiary, as the case may be, than, and is
otherwise, an arrangement or contract of the kind which would be entered into by
a prudent Person in the position of the Borrower or such Restricted Subsidiary
with a Person which is not one of its Affiliates except for
(i) the payment of reasonable and customary regular fees to directors of
the Borrower,
(ii) loans and advances (A) to officers, directors and employees of the
Borrower or any Restricted Subsidiary for travel, entertainment and moving and
other relocation expenses made in direct furtherance and in the ordinary course
of business of the Borrower or such Restricted Subsidiary, (B) to officers and
directors of the Borrower or any Restricted Subsidiary as approved by the board
of directors of the Borrower, and (C) outstanding loans and advances existing as
of the Effective Date and identified in Item 7.2.10 ("Outstanding Loans") of the
Disclosure Schedule,
(iii) transactions in the ordinary course of business between the Borrower
and the Restricted Subsidiaries and between Restricted Subsidiaries,
provided, however, the aggregate principal amount of loans and advances
made pursuant to clauses (ii) (A) and (B) of this sentence shall not exceed
$500,000 at any one time outstanding.
67
SECTION 7.2.11. Negative Pledges, Restrictive Agreements, etc. The Borrower
will not and will not permit any Restricted Subsidiary to enter into any
agreement (excluding this Agreement, any other Loan Document and any agreement
governing any Indebtedness permitted either by clause (b) of Section 7.2.2 as in
effect on the Effective Date and, with respect to clause (a) below, by clauses
(h) and (j) of Section 7.2.2 solely as to the assets financed with the proceeds
of such Indebtedness) prohibiting (a) the creation or assumption of any Lien
upon its Oil and Gas Properties, whether now owned or hereafter acquired; or (b)
the ability of any Obligor to amend or otherwise modify this Agreement or any
other Loan Document; or (c) the ability of any Restricted Subsidiary to make any
payments, directly or indirectly, to the Borrower by way of dividends, advances,
repayments of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on investments, or
any other agreement or arrangement which restricts the ability of any such
Obligor to make any payment, directly or indirectly, to any other such Obligor.
SECTION 7.2.12. Limitation on Issuance of Subsidiaries' Capital Stock. The
Borrower will not and will not permit any of its Restricted Subsidiaries to, at
any time issue, sell, assign, or otherwise dispose of (a) any of such Restricted
Subsidiary's Capital Stock, (b) any securities exchangeable for or convertible
into or carrying any rights to acquire any of such Restricted Subsidiary's
Capital Stock, or (c) any option, warrant, or other right to acquire any of such
Restricted Subsidiary's Capital Stock; provided, however, nothing in this
Agreement of any of the Loan Documents shall restrict the Borrower or any of the
Restricted Subsidiaries from issuing Capital Stock of the Borrower or Capital
Stock in a Restricted Subsidiary which is convertible into Capital Stock of the
Borrower in connection with any purchase or investment in any Person that is
otherwise permitted under this Agreement.
SECTION 7.2.13. Environmental Protection. The Borrower will not, and will
not permit any of its Restricted Subsidiaries to, (a) use (or permit any tenant
to use) any of their respective properties or assets for the handling,
processing, storage, transportation, or disposal of any Hazardous Material
except in amounts that will not violate applicable law, (b) conduct any activity
that is likely to cause a Release or threatened Release of any Hazardous
Material, or (c) otherwise conduct any activity or use any of their respective
properties or assets in any manner that is likely in any material respect to
violate any Environmental Law or create any Environmental Liabilities for which
the Borrower or any of its Subsidiaries would be responsible.
SECTION 7.2.14. Accounting. The Borrower will not, and will not permit any
of the Restricted Subsidiaries to, change its fiscal year or make any change (a)
in accounting treatment or material reporting practices, except as required by
GAAP and disclosed to the Administrative Agent, or (b) in tax reporting
treatment, except as required by law and disclosed to the Administrative Agent.
SECTION 7.2.15. Hedge Agreements. The Borrower and the Restricted
Subsidiaries have not entered and shall not enter into Hedge Agreements of the
type described in clause (ii) of the definition thereof, provided that the
Borrower and the Restricted Subsidiaries may enter into (a) Hedge Agreements
which provide for a floor, but not a cap in an amount not to exceed during any
calendar year 100% of the Borrower's and the Restricted Subsidiaries' total
projected production from Oil and Gas Properties, which constitute Proved
Producing Reserves for such
68
year, and (b) Hedge Agreements which provide for a cap (including fixed
price swaps), provided such Hedge Agreements shall not cover during any calendar
year more than 75% of the Borrower's and the Restricted Subsidiaries' total
projected production from Oil and Gas Properties which constitute Proved
Producing Reserves for such year; provided that (x) such Hedge Agreements have a
tenor of no more than three (3) years from the date of such Hedge Agreement; (y)
such Hedge Agreements shall be with counterparties acceptable to the
Administrative Agent; and (z) for purposes hereof the Banks and their respective
Affiliates and ChevronTexaco, Inc., Xxxxxx Xxxxxxx Xxxx Xxxxxx, Inc., X. Xxxx,
Inc., and Cinergy Corp. and their respective Affiliates shall be deemed to be
acceptable counterparties. Such projections shall, at all times, be equal to the
projections set out in the most current Reserve Report then available for the
Borrower's and the Restricted Subsidiaries' Oil and Gas Properties which
constitute Proved Producing Reserves.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following events or
occurrences described in this Section 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1. Non-Payment of Obligations. Any Obligor shall default (and
such default shall continue unremedied for a period of three (3) days) in the
payment or prepayment when due of any principal of any Loan including any
Required Deficiency Payment, or in the payment when due of any interest,
commitment fee or of any other Obligation.
SECTION 8.1.2. Breach of Representation or Warranty. Any representation or
warranty of any Obligor made or deemed to be made hereunder or in any other Loan
Document executed by it or any other writing or certificate furnished by or on
behalf of any Obligor to the any Agent, the Arrangers, the Issuer or any Bank
for the purposes of or in connection with this Agreement or any such other Loan
Document (including any certificates delivered pursuant to Article V) is or
shall be false or in any material respect incorrect when made or deemed made.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations. The
Borrower shall default in the due performance and observance of any of its
obligations under Section 7.1.1(e), 7.1.2(b), 7.1.5, 7.2.2, 7.2.4, 7.2.5, 7.2.6,
7.2.8, 7.2.9 7.2.12, 7.2.13, or 7.2.15.
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations. Any
Obligor shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document executed by it, and
such default shall continue unremedied for a period of 10 days after notice
thereof shall have been given to such Obligor by the Administrative Agent or the
Issuer.
SECTION 8.1.5. Default on Other Indebtedness. A default shall occur in the
payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness the amount of which exceeds,
either individually or in the aggregate, $5,000,000 (other than Indebtedness
described in Section 8.1.1) of the Borrower, any Restricted Subsidiary or any
Obligor, or a default shall occur in the performance or observance
69
of any obligation or condition with respect to such Indebtedness, if the
effect of such default is to accelerate the maturity of any such Indebtedness or
such default shall continue unremedied for any applicable period of time
sufficient to permit the holder or holders of such Indebtedness or any trustee
or agent for such holders, to cause such Indebtedness to become or be declared
due and payable prior to its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment or order for the payment of money in
excess of $5,000,000 above applicable insurance coverage shall be rendered
against the Borrower, any Restricted Subsidiary or any Obligor (or, in the event
the Borrower, such Restricted Subsidiary or such Obligor shall have an indemnity
reasonably acceptable to the Majority Banks from a Person satisfactory to the
Majority Banks (which Person acknowledges in writing its liability for such
indemnity) in respect of such judgment, decree or order for the payment of
money, if after giving effect to such indemnity, the Borrower's, such Restricted
Subsidiary's or Obligor's liability in respect of such judgment, decree or order
is in excess of $5,000,000, as the case may be) and either (a) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order; or (b) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect.
SECTION 8.1.7. Pension Plans. Any of the following events shall occur with
respect to any Pension Plan: (a) the institution of any steps by the Borrower or
any Restricted Subsidiary, any member of its Controlled Group or any other
Person to terminate a Pension Plan if, as a result of such termination, the
Borrower or any Restricted Subsidiary or any such member could be required to
make a contribution to such Pension Plan, or could reasonably expect to incur a
liability or obligation to such Pension Plan, in excess of $5,000,000; or (b) a
contribution failure occurs with respect to any Pension Plan sufficient to give
rise to a Lien under Section 302(f) of ERISA.
SECTION 8.1.8. Change of Control. Any Change in Control shall occur.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower, any Restricted
Subsidiary or any Obligor shall (a) be liquidated or become insolvent or
generally fail to pay, or admit in writing its inability or unwillingness to
pay, debts as they become due; (b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian for the
Borrower, any Restricted Subsidiary or any Obligor or any property of any
thereof, or make a general assignment for the benefit of creditors; (c) in the
absence of such application, consent or acquiescence, permit or suffer to exist
the appointment of a trustee, receiver, sequestrator or other custodian for the
Borrower, any Restricted Subsidiary or any Obligor or for a substantial part of
the property of any thereof, and such trustee, receiver, sequestrator or other
custodian shall not be discharged within 60 days, provided that the Borrower,
each Restricted Subsidiary and each Obligor hereby expressly authorizes the
Administrative Agent, the Collateral Agent, the Issuer and each Bank to appear
in any court conducting any relevant proceeding during such 60-day period to
preserve, protect and defend their rights under the Loan Documents; (d) permit
or suffer to exist the commencement of any bankruptcy, reorganization,
liquidation, debt arrangement or other case or proceeding under any bankruptcy
or insolvency law, or any dissolution, winding up or liquidation proceeding, in
respect of the Borrower, any Restricted Subsidiary or any Obligor, and, if any
such case or proceeding is not commenced by the
70
Borrower, such Restricted Subsidiary or such Obligor, such case or
proceeding or winding up shall be consented to or acquiesced in by the Borrower,
such Restricted Subsidiary or such Obligor, or shall result in the entry of an
order for relief or shall remain for 60 days undismissed, or (e) take any action
authorizing, or in furtherance of, any of the foregoing.
SECTION 8.1.10. Impairment of Security, etc. Any Loan Document, or any Lien
granted thereunder, shall (except in accordance with its terms), terminate,
cease to be effective or cease to be the legally valid, binding and enforceable
obligation of any Obligor party thereto; any Obligor or any other party shall,
directly or indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability; or any Lien securing any Obligation shall
cease to be a perfected first priority Lien, subject only to those exceptions
expressly permitted by such Loan Document.
SECTION 8.1.11. Attachment, etc. The Borrower, any Restricted Subsidiary or
any Obligor shall fail to discharge within a period of 30 days after the
commencement thereof any attachment, sequestration, or similar proceeding or
proceedings involving an aggregate amount in excess of $2,500,000 against any of
its assets or properties unless the Borrower, such Restricted Subsidiary or such
Obligor is in good faith contesting such action and taking affirmative steps to
discharge the same, and adequate reserves have been set aside in accordance with
GAAP.
SECTION 8.1.12. Seizure, etc. The Borrower, any Restricted Subsidiary, or
any Obligor, or any of their properties, revenues, or assets aggregating
$1,000,000 or greater, shall become the subject of an order of forfeiture,
seizure, or divestiture (whether under RICO or otherwise) and the same shall not
have been discharged (or provisions shall not be made for such discharge) within
30 days from the date of entry thereof.
SECTION 8.1.13. Change of Control Offer. The holders of the Senior
Unsecured Debt shall require the Borrower to purchase all or a portion of the
notes issued under either or both of the Indentures pursuant to a "Change of
Control Offer" (as defined in each Indenture, or if not defined therein, then
pursuant to the comparable defined term used therein).
SECTION 8.2. Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.9 shall occur, the Commitments (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable, without notice or
demand and the Borrower shall be obligated to deliver cash collateral pursuant
to Section 2.7.4.
SECTION 8.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
8.1.9 with respect to the Borrower) shall occur for any reason, whether
voluntary or involuntary, and be continuing, the Administrative Agent, upon the
direction of the Majority Banks, shall by notice to the Borrower declare all or
any portion of the outstanding principal amount of the Loans and other
Obligations to be due and payable without further notice, demand or presentment,
and/or the Commitments (if not theretofore terminated) to be terminated,
whereupon the full unpaid amount of such Loans and other Obligations which shall
be so declared due and payable shall be and become
71
immediately due and payable and the Borrower shall be obligated to deliver
cash collateral pursuant to Section 2.7.4, without further notice, demand or
presentment, and/or, as the case may be, the Commitments shall terminate.
ARTICLE IX
THE AGENTS AND THE ISSUER
SECTION 9.1. Actions. Each Bank hereby appoints Bankers Trust as its
Administrative Agent and as its Collateral Agent under and for purposes of this
Agreement, the Notes and each other Loan Document. Each Bank authorizes the
Administrative Agent and the Collateral Agent to act on behalf of such Bank
under this Agreement, the Notes and each other Loan Document and, in the absence
of other written instructions from the Majority Banks received from time to time
by the Administrative Agent or the Collateral Agent (with respect to which the
Administrative Agent or the Collateral Agent agrees that it will comply, except
as otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Administrative Agent or the Collateral Agent by the terms
hereof and thereof, together with such powers as may be reasonably incidental
thereto. Each Bank hereby indemnifies (which indemnity shall survive any
termination of this Agreement) the Administrative Agent, the Collateral Agent
and the Issuer, pro rata according to such Bank's Percentage, whether or not
related to any singular, joint or concurrent negligence of the Administrative
Agent and the Collateral Agent and the Issuer, from and against any and all
liabilities, obligations, losses, damages, claims, costs or expenses of any kind
or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, the Administrative Agent, the Collateral Agent or the Issuer
in any way relating to or arising out of this Agreement, the Notes and any other
Loan Document, including reasonable attorneys' fees, and as to which the
Administrative Agent, the Collateral Agent or the Issuer, as the case may be, is
not reimbursed by the Borrower; provided, however, that no Bank shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final non-appealable judgment to have resulted solely from the
Administrative Agent's or the Collateral Agent's or the Issuer's gross
negligence or wilful misconduct. The Administrative Agent, the Collateral Agent,
and the Issuer shall not be required to take any action hereunder, under the
Notes or under any other Loan Document, or to prosecute or defend any suit in
respect of this Agreement, the Notes or any other Loan Document, unless it is
indemnified hereunder to its satisfaction. If any indemnity in favor of the
Administrative Agent, the Collateral Agent or the Issuer shall be or become
inadequate, in the Administrative Agent's, the Collateral Agent's or the
Issuer's determination, as the case may be, the Administrative Agent, the
Collateral Agent or the Issuer may call for additional indemnification from the
Banks and cease to do the acts indemnified against hereunder until such
additional indemnity is given. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent, the Collateral Agent and the Issuer shall not have any
duties or responsibilities, except as expressly set forth herein, and the
Administrative Agent, the Collateral Agent and the Issuer shall not have or be
deemed to have any fiduciary relationship with any Bank or any other Agent, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against any the Administrative Agent, the Collateral Agent or
the Issuer.
72
SECTION 9.2. Funding Reliance, etc. Unless the Administrative Agent shall
have been notified by telephone, confirmed in writing, by any Bank by 5:00 p.m.,
New York time, on the day prior to a Borrowing that such Bank will not make
available the amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Administrative Agent may assume that such Bank
has made such amount available to the Administrative Agent and, in reliance upon
such assumption, make available to the Borrower a corresponding amount. If and
to the extent that such Bank shall not have made such amount available to the
Administrative Agent, such Bank and the Borrower severally agree to repay the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date the Administrative Agent made such
amount available to the Borrower to the date such amount is repaid to the
Administrative Agent, at the interest rate applicable at the time to Loans
comprising such Borrowing.
SECTION 9.3. Exculpation. The Administrative Agent, the Collateral Agent
and the Issuer and their respective directors, officers, employees or agents
shall not be liable to any Bank or any Agent or the Issuer for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document, or
in connection herewith or therewith, except for its own wilful misconduct or
gross negligence as determined by a court of competent jurisdiction in a final
non-appealable judgment, nor responsible for any recitals or warranties herein
or therein, nor for the effectiveness, enforceability, validity or due execution
of this Agreement or any other Loan Document, nor for the creation, perfection
or priority of any Liens purported to be created by any of the Loan Documents,
or the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
the Borrower of its obligations hereunder or under any other Loan Document. Any
such inquiry which may be made by the Administrative Agent, the Collateral Agent
or the Issuer shall not obligate it to make any further inquiry or to take any
action. Each of the Administrative Agent, the Collateral Agent and the Issuer
shall be entitled to rely upon advice of counsel concerning legal matters and
upon any notice, consent, certificate, statement or writing which the
Administrative Agent, the Collateral Agent or the Issuer believes to be genuine
and to have been presented by a proper Person.
SECTION 9.4. Successor. Subject to the appointment of a successor as
provided below, the Administrative Agent or the Collateral Agent may resign at
any time upon at least 30 days' prior notice to the Borrower and all Banks. If
the Administrative Agent or the Collateral Agent at any time shall resign, so
long as no Event of Default shall have occurred and be continuing, the Borrower
with the consent of the remaining Agents (and if an Event of Default shall have
occurred and be continuing, the Majority Banks) may appoint another a successor
Administrative Agent or Collateral Agent which shall thereupon become the
Administrative Agent or Collateral Agent, respectively, hereunder. In the event
the successor Administrative Agent or the Collateral Agent is not at the time of
its appointment, a Bank hereunder, so long as no Event of Default shall have
occurred and be continuing, the Borrower shall have the right to consent to the
successor Administrative Agent or Collateral Agent, which consent shall not be
unreasonably withheld or delayed. If no successor Administrative Agent or
Collateral Agent shall have been so appointed by the Borrower and the Majority
Banks, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's or Collateral Agent's giving notice of
resignation, then the retiring Administrative Agent or the Collateral Agent may,
on behalf of the Banks, appoint a successor Administrative Agent or Collateral
Agent,
73
respectively, which shall be one of the Banks or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $100,000,000. Upon the acceptance of any
appointment as Administrative Agent or Collateral Agent hereunder by a successor
Administrative Agent or Collateral Agent, such successor Administrative Agent or
Collateral Agent shall be entitled to receive from the retiring Administrative
Agent or Collateral Agent such documents of transfer and assignment as such
successor Administrative Agent or Collateral Agent may reasonably request, and
shall thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring Administrative Agent or Collateral Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Administrative Agent's or
Collateral Agent's resignation hereunder as the Administrative Agent or
Collateral Agent, respectively, the provisions of (a) this Article IX shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Administrative Agent or Collateral Agent under this Agreement; and
(b) Section 10.3 and Section 10.4 shall continue to inure to its benefit.
SECTION 9.5. Extensions of Credit by the Agents, the Arrangers and the
Issuer. Each of the Agents, the Arrangers and the Issuer shall have the same
rights and powers with respect to (x) the Loans made by it or any of its
Affiliates, and (y) the Notes held by it or any of its Affiliates or any
interest in any Letter of Credit issued by it as any other Bank and may exercise
the same as if it were not an Agent, the Arrangers or the Issuer, as the case
may be. Each of the Agents, the Arrangers and the Issuer and their respective
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or Affiliate of the Borrower as if it were
not an Agent, the Arrangers or the Issuer hereunder, as the case may be.
SECTION 9.6. Credit Decisions. Each Bank acknowledges that it has,
independently of the Agents, the Arrangers, the Issuer and each other Bank, and
based on such Bank's review of the financial information and reserve based
information of the Borrower and its Subsidiaries (including Prize and the Prize
Subsidiaries), this Agreement, the other Loan Documents (the terms and
provisions of which being satisfactory to such Bank) and such other documents,
information and investigations as such Bank has deemed appropriate, made its own
credit decision to extend its Commitment. Each Bank also acknowledges that it
will, independently of the Agents, the Arrangers, the Issuer and each other
Bank, and based on such other documents, information and investigations as it
shall deem appropriate at any time, continue to make its own credit decisions as
to exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.
SECTION 9.7. Copies, etc. The Administrative Agent shall give prompt notice
to the Collateral Agent, the Issuer and each Bank of each notice or request
required or permitted to be given to the Administrative Agent by the Borrower
pursuant to the terms of this Agreement (unless concurrently delivered to the
Issuer or the Banks by such Borrower). The Administrative Agent will distribute
to the Collateral Agent, the Issuer and each Bank each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Collateral Agent,
the Issuer and the Banks by the Administrative Agent in accordance with the
terms of this Agreement.
74
SECTION 9.8. Documentation Agent, Syndication Agent, Arrangers and
Bookrunner. The Documentation Agent, the Syndication Agent, the Arrangers and
the sole bookrunner shall not have any obligations, liabilities,
responsibilities or duties under this Agreement or the other Loan Documents.
Without limiting the foregoing, the Documentation Agent, the Syndication Agent,
the Arrangers, and the sole bookrunner shall not have or be deemed to have any
fiduciary relationship with any Bank or any other Agent. Each Bank acknowledges
that it has not relied, and will not rely, on any of the Banks so identified or
on the Documentation Agent, the Syndication Agent, the Arrangers or the sole
bookrunner in deciding to enter into this Agreement or in taking or not taking
action hereunder.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Majority Banks; provided, however, that no such
amendment, modification or waiver which would: (a) modify any requirement
hereunder that any particular action be taken by all the Banks or by the
Majority Banks shall be effective unless consented to by each Bank; (b) modify
this Section 10.1 or Section 2.8, change the definition of "Majority Banks" or
"Borrowing Base", increase the Commitment Amount or the Percentage of any Bank,
reduce any fees described in Article III, release any collateral security except
that the Collateral Agent may release Collateral Property to the extent such
Collateral Property is disposed of pursuant to, and as permitted by, Section
7.2.9 of the this Agreement (however, nothing contained in this clause affects
the obligation of the Borrower to comply with Section 3.1(e)), reduce or limit
the Obligations of any Subsidiary Guarantor under the Subsidiary Guaranty
Agreement, or extend the Commitment Termination Date shall be made without the
consent of each Bank, and the Issuer; (c) except as otherwise provided pursuant
to Section 2.9, extend the due date for, or reduce the amount of, any scheduled
repayment or prepayment of principal of or interest on any Loan or any other
obligation (or reduce the principal amount of or rate of interest on any Loan)
shall be made without the consent of each Bank; (d) affect adversely the
interests, rights or obligations of the Administrative Agent qua the
Administrative Agent or the Collateral Agent qua Collateral Agent or the Issuer
qua the Issuer (including any change with respect to the obligations of the
Borrower or the Banks with respect to the Letter of Credit Liabilities) shall be
made without consent of the Administrative Agent, the Collateral Agent or the
Issuer, as the case may be, or (e) modify Section 10.4 without the consent of
the Issuer, the Administrative Agent, the Arrangers and each Bank. No failure or
delay on the part of any Agent, any Bank, the Issuer or the holder of any Note
in exercising any power or right under this Agreement or any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on the Borrower in
any case shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by any Agent, any Bank, the Issuer or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
75
SECTION 10.2. Notices. All notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in writing
or by facsimile and addressed, delivered or transmitted to such party at its
address or facsimile number set forth below its signature hereto or set forth in
the Bank Assignment Agreement or at such other address or facsimile number as
may be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted and
a receipt, demonstrating successful transmission, is received by the Sender.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or any other Loan Document shall be effective as
delivery of an original executed counterpart hereof.
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees to pay on
demand all reasonable expenses of the Administrative Agent, the Collateral
Agent, the Issuer and the Arrangers (including the reasonable fees and
out-of-pocket expenses of special New York counsel and of local counsel, if any,
who may be retained by said counsel) in connection with (a) the negotiation,
preparation, execution and delivery of this Agreement and of each other Loan
Document, including schedules and exhibits, and any amendments, waivers,
consents, supplements or other modifications to this Agreement or any other Loan
Document as may from time to time hereafter be required, whether or not the
transactions contemplated hereby are consummated, and (b) the filing, recording,
refiling or rerecording of each of the Security Documents and/or any Uniform
Commercial Code financing statements relating thereto and all amendments,
supplements and modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or refiled or
rerecorded by the terms hereof or of the Security Documents, and (c) the
preparation and review of the form of any document or instrument relevant to
this Agreement or any other Loan Document. Each Bank agrees to reimburse the
Administrative Agent, the Collateral Agent and the Issuer on demand for such
Bank's pro rata share (based upon its respective Percentage) of any such costs
or expenses not paid by the Borrower. The Borrower further agrees to pay, and to
save the Administrative Agent, the Collateral Agent, the Arrangers, the Issuer
and the Banks harmless from all liability for, any stamp or other taxes which
may be payable in connection with the execution or delivery of this Agreement,
the Borrowings hereunder, or the issuance of the Notes or any other Loan
Documents. The Borrower also agrees to reimburse the Administrative Agent, the
Collateral Agent and each Bank upon demand for all reasonable out-of-pocket
expenses (including reasonable attorneys' fees and legal expenses) incurred by
the Administrative Agent, the Collateral Agent or such Bank in connection with
(x) the negotiation of any restructuring or "work-out", whether or not
consummated, of any Obligations and (y) the enforcement of any Obligations. All
such requests for payment shall be accompanied by invoices containing reasonable
detail. The Administrative Agent, the Collateral Agent, the Issuer and each Bank
agree to the extent feasible, and to the extent a conflict of interest does not
exist in the reasonable opinion of any of the Administrative Agent, the
Collateral Agent, the Issuer and the Banks or their counsel, to use the same
counsel (i.e. one law firm in each relevant jurisdiction) in connection with any
investigation, litigation or other proceeding under this Section 10.3.
SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Bank, the Administrative Agent, the
Collateral Agent and the Issuer, and the extension of the Commitments, and the
arrangement of the facility represented by this
76
Agreement by the Arrangers, the Borrower hereby indemnifies, exonerates and
holds the Administrative Agent, the Collateral Agent, the Arrangers, the Issuer
and each Bank and each of their respective officers, directors, employees and
agents (collectively, the "Indemnified Parties") free and harmless from and
against any and all actions, causes of action, suits, losses, costs, liabilities
and damages, and expenses incurred in connection therewith (irrespective of
whether any such Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable attorneys' fees and
disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to (a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Borrowing or any Letter of
Credit; (b) the entering into and performance of this Agreement and any other
Loan Document by any of the Indemnified Parties; (c) any investigation,
litigation or proceeding related to any environmental cleanup, audit, compliance
or other matter relating to the protection of the environment or the Release by
the Borrower or any Subsidiary of any Hazardous Material; (d) the presence on or
under, or the escape, seepage, leakage, spillage, discharge, emission,
discharging or releases from, any real property owned or operated by the
Borrower or any Subsidiary of any Hazardous Material (including any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising
under any Environmental Law); or (e) any misrepresentation or inaccuracy or
breach of Section 6.12 regardless of whether caused by, or within the control
of, the Borrower or any Subsidiary; in each case except for any such Indemnified
Liabilities arising for the account of a particular Indemnified Party by reason
of the relevant Indemnified Party's gross negligence or wilful misconduct as
determined by a court of competent jurisdiction in a final non-appealable
judgment, or such Indemnified Party's own unexcused breach of any provision of
any Loan Document (as determined by the final non-appealable judgment of a court
of competent jurisdiction), PROVIDED THAT IT IS THE INTENTION OF THE PARTIES
HERETO THAT THE INDEMNIFIED PARTIES BE INDEMNIFIED IN THE CASE OF THEIR OWN
NEGLIGENCE, REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY,
ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. The
Administrative Agent, the Collateral Agent, the Issuer and each Bank agree to
the extent feasible, and to the extent a conflict of interest does not exist in
the reasonable opinion of the Administrative Agent, the Collateral Agent, the
Issuer and the Bank or their counsel, to use the same single counsel (i.e. one
law firm in each relevant jurisdiction) in connection with any investigation,
litigation or other proceeding under this Section 10.4.
SECTION 10.5. Survival. The obligations of the Borrower under Sections 4.3,
4.4, 4.5, 4.6, 9.3, 10.3 and 10.4, and the obligations of the Banks under
Section 9.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by the Borrower or by its Restricted
Subsidiaries in this Agreement and in each other Loan Document shall survive the
execution and delivery of this Agreement and each such other Loan Document.
SECTION 10.6. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without
77
invalidating the remaining provisions of this Agreement or such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement and of each
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness, etc. This Agreement
may be executed by the parties hereto in several counterparts and each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement. This Agreement shall become effective when
counterparts hereof executed on behalf of the Borrower and each Bank (or notice
thereof satisfactory to the Administrative Agent) shall have been received by
the Administrative Agent and notice thereof shall have been given by the
Administrative Agent to the Borrower and each Bank.
SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO
CONFLICT OF LAW, EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
This Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
SECTION 10.10. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that: (a) the Borrower may not assign
or transfer its rights or obligations hereunder without the prior written
consent of the Administrative Agent, the Issuer and all Banks; provided,
however, that for purposes of this Section 10.10 if the survivor of a merger is
obligated in respect of all obligations of the Borrower hereunder and under all
other Loan Documents, a merger permitted pursuant to Section 7.2.8 hereof shall
not be an assignment or transfer of the Borrower's rights or obligations
hereunder; and (b) the rights of sale, assignment and transfer of the Banks are
subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Loans and Note; Participations in Loans
and Note. Each Bank may assign, or sell participations in, its Loans and
Commitment to one or more other Persons in accordance with this Section 10.11.
SECTION 10.11.1. Assignments. Any Bank, (a) with the written consents of
the Administrative Agent, the Issuer and, so long as no Event of Default shall
have occurred and be continuing, the Borrower (which consents shall not be
unreasonably delayed or withheld) may at any time assign and delegate to one or
more commercial banks or other financial institutions, and (b) with notice to
the Borrower and the Administrative Agent and the Issuer, but without the
consent of the Borrower, the Administrative Agent or the Issuer, may assign and
delegate to any of its Affiliates or to any other Bank already a Bank hereunder
(each Person described in either
78
of the foregoing clauses as being the Person to whom such assignment and
delegation is to be made, being hereinafter referred to as an "Assignee Bank"),
all or any fraction of such Bank's total Loans, participations in Letters of
Credit and Commitment (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Bank's Loans and Commitment)
in a minimum aggregate amount of $5,000,000 except that no assignment to another
Bank already a Bank hereunder need be in such minimum amount so long as after
such assignment the assignor shall hold no interest or a minimum $5,000,000
interest; provided, however, that any such Assignee Bank will comply as a
condition precedent to the effectiveness of the assignment to it with the
provisions contained in Section 4.6(b) and further, provided, however, that, the
Borrower and the Administrative Agent and the Issuer shall be entitled to
continue to deal solely and directly with such Bank in connection with the
interests so assigned and delegated to an Assignee Bank until (i) written notice
of such assignment and delegation, together with payment instructions, addresses
and related information with respect to such Assignee Bank, shall have been
given to the Borrower and the Administrative Agent and the Issuer by such Bank
and such Assignee Bank, (ii) such Assignee Bank shall have executed and
delivered to the Borrower, the Issuer and the Administrative Agent a Bank
Assignment Agreement, accepted by the Administrative Agent and the Issuer, (iii)
if necessary, appropriate forms have been delivered by the prospective Assignee
Bank to the Borrower, as provided in Section 4.6(b), and (iv) the processing
fees described below shall have been paid and provided, further, however, that
so long as an Event of Default shall have occurred and be continuing, the
consent of the Borrower otherwise required by the foregoing clause (a) shall not
be required.
From and after the date that the Administrative Agent accepts such Bank
Assignment Agreement, (x) the Assignee Bank thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Bank in
connection with such Bank Assignment Agreement, shall have the rights and
obligations of a Bank hereunder and under the other Loan Documents, and (y) the
assignor Bank, to the extent that rights and obligations hereunder have been
assigned and delegated by it in connection with such Bank Assignment Agreement,
shall be released from its obligations hereunder and under the other Loan
Documents. Promptly after its receipt of notice that the Administrative Agent
has received an executed Bank Assignment Agreement, the Borrower shall consent
to such assignment, if applicable, and execute and deliver to the Administrative
Agent (for delivery to the relevant Assignee Bank) a new Note evidencing such
Assignee Bank's assigned Loans and Commitment and, if the assignor Bank has
retained Loans and a Commitment hereunder, a replacement Note in the principal
amount of the Loans and Commitment retained by the assignor Bank hereunder (such
Note to be in exchange for, but not in payment of, that Note then held by such
assignor Bank). Each such Note shall be dated the date of the predecessor Note.
The assignor Bank shall xxxx the predecessor Note "exchanged" and deliver it to
the Borrower. Accrued interest on that part of the predecessor Note evidenced by
the new Note, and accrued fees, shall be paid as provided in the Bank Assignment
Agreement. Accrued interest on that part of the predecessor Note evidenced by
the replacement Note shall be paid to the assignor Bank. Accrued interest and
accrued fees shall be paid at the same time or times provided in the predecessor
Note and in this Agreement. Such assignor Bank or such Assignee Bank must also
pay a processing fee to the Administrative Agent upon delivery of any Bank
Assignment Agreement in the amount of $3,500, it being understood that the
Borrower shall not be obligated to reimburse such assignor Bank or Assignee Bank
for such processing fee. Any attempted assignment and delegation not made in
accordance with this
79
Section 10.11.1 shall be null and void. The foregoing provisions shall not
apply to, or restrict, or require the consent of or notice of any Person to
effectuate, the pledge or assignment by any Bank of its rights under this
Agreement and its Notes and the other Loan Documents (i) if an Event of Default
has occurred and is continuing, or (b) to any Federal Reserve Bank.
SECTION 10.11.2. Participations. Any Bank may at any time sell to one or
more commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in any of
the Loans, its participation in Letters of Credit, its Commitment, or other
interests of such Bank hereunder; provided, however, that (a) no participation
contemplated in this Section 10.11 shall relieve such Bank from its Commitment
or its other obligations hereunder or under any other Loan Document, (b) such
Bank shall remain solely responsible for the performance of its Commitment and
such other obligations, (c) the Borrower and the Administrative Agent and the
Issuer shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement and each of the
other Loan Documents, (d) no Participant, unless such Participant is an
Affiliate of such Bank, or is itself a Bank, shall be entitled to require such
Bank to take or refrain from taking any action hereunder or under any other Loan
Document, except that such Bank may agree with any Participant that such Bank
will not, without such Participant's consent, take any actions of the type
described in clause (b) or (c) of Section 10.1, and (e) the Borrower shall not
be required to pay any amount under Section 4.6 that is greater than the amount
which it would have been required to pay had no participating interest been
sold.
SECTION 10.12. Renewal and Continuation of Existing Loans. On the Effective
Date, all of the Prior Indebtedness outstanding on such date shall hereby be
restructured, rearranged, renewed, extended and continued as provided in this
Agreement and all Loans outstanding under the Second Amended and Restated Credit
Agreement shall on the Effective Date become Loans outstanding hereunder.
In connection herewith, Banks party to the Second Amended and Restated
Credit Agreement (the "Existing Banks") hereby sell, assign, transfer and
convey, and Banks party to this Agreement hereby purchase and accept, so much of
the Prior Indebtedness (as defined in the second recital) such that each Bank's
percentage of the loans and obligations outstanding pursuant to the Second
Amended and Restated Credit Agreement, as continued pursuant to this Agreement,
shall be equal to such Bank's Percentage on the Effective Date. The foregoing
assignments, transfers and conveyances are without recourse to the Existing
Banks and without any warranties whatsoever by any Agent or any Existing Bank as
to title, enforceability, collectibility, documentation or freedom from liens or
encumbrances, in whole or in part, other than the warranty of each Existing Bank
that it has not previously sold, transferred, conveyed or encumbered such
Interests.
SECTION 10.13. Other Transactions. Nothing contained herein shall preclude
the Administrative Agent, the Collateral Agent, the Issuer, the Arrangers or any
other Bank from engaging in any transaction, in addition to those contemplated
by this Agreement or any other Loan Document, with the Borrower or any of its
Affiliates in which the Borrower or such Affiliate is not restricted hereby from
engaging with any other Person.
80
SECTION 10.14. [Intentionally Blank].
SECTION 10.15. Treatment of Certain Information; Confidentiality. Each
Bank, the Administrative Agent, the Collateral Agent, the Issuer and the
Arrangers agree (on behalf of itself and each of its affiliates, directors,
officers, employees and representatives) to keep confidential any non-public
information supplied to it by the Borrower pursuant to this Agreement that the
Borrower identifies to such Bank, the Administrative Agent, the Collateral
Agent, the Issuer or the Arrangers (as the case may be) as confidential at the
time Borrower so supplies such information, provided, that nothing herein shall
limit the disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel for any of the
Banks, the Administrative Agent, the Collateral Agent, the Issuer or the
Arrangers, (iii) to bank examiners, auditors or accountants, (iv) to the Issuer,
the Arrangers, the Administrative Agent, the Collateral Agent or any other Bank,
(v) in connection with any summons or subpoena to which any one or more of the
Banks, the Issuer, the Arrangers, the Administrative Agent or the Collateral
Agent is a party, (vi) to a subsidiary or affiliate of such Person, or (vii) to
any assignee or participant (or prospective assignee or participant) so long as
such subsidiary, affiliate, assignee or participant (or prospective assignee or
participant), as the case may be, first executes and delivers to the Borrower,
an agreement containing provisions substantially identical to those contained in
this Section 10.15; and provided further, that in no event shall any Bank, the
Issuer, the Arrangers, the Administrative Agent or the Collateral Agent be
obligated or required to return any materials furnished to it by the Borrower,
unless in violation of this Section 10.15, each Bank agrees that it will use its
reasonable efforts to advise the Borrower as soon as practicable, of any
disclosure of information in connection with (v) above.
SECTION 10.16. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE ISSUER, THE ARRANGER,
THE BANKS OR THE BORROWER MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE
STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH OF THE BORROWER, THE AGENTS, THE ISSUER, THE
ARRANGERS AND THE BANKS HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH OF
THE
81
BORROWER, THE AGENTS, THE ISSUER, THE ARRANGERS, AND THE BANKS HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. THE PARTIES HERETO AGREE THAT NOTHING IN THIS SECTION SHALL AFFECT
THEIR RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT ITS RIGHTS TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OTHER PARTY
HERETO OR TO SUCH PARTY'S PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.
SECTION 10.17. Waiver of Jury Trial. THE AGENTS, THE ISSUER, THE ARRANGERS,
THE BANKS AND THE BORROWER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY AGENT, THE ISSUER, ANY ARRANGER,
ANY BANK OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS, THE ISSUER, THE ARRANGERS AND
THE BANKS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
SECTION 10.18. No Oral Agreements. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
82
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
MAGNUM HUNTER RESOURCES, INC., as
Borrower
By
----------------------------------------
Name: Xxxx X. Xxxxx
Title: President and
Chief Executive Officer
Address: 000 Xxxx Xxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxx
S-1
BANKERS TRUST COMPANY, as Administrative Agent,
Collateral Agent and Issuer for the Banks
By
----------------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Director
Address: 00 Xxxx 00xx Xxxxxx, 0xx
Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxxx
X-0
CIBC INC., as Syndication Agent
By
-----------------------------------------
Name:
Title:
Address: CIBC Inc.
000 Xxxxxxxxx Xxxxxx, 0xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 212/856-3763
Attention: Xxxxxxxx Xxxx
S-3
BNP PARIBAS, as Documentation Agent
By
--------------------------------
Name:
Title:
By
--------------------------------------------
Name:
Title:
Address: 0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
S-4
BANKS
BANKERS TRUST COMPANY
By
Name: Xxxxxx X. Xxxxxxxxxx
Title: Director
Domestic
Office: 00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
LIBOR
Office: 00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
S-5
CIBC INC.
By
Name:
Title:
Domestic
Office: 0000 Xxxxx Xxxxx Xxxx, Xxxxx 0000
0 Xxxxx Xxxx, Xxxxxxxx 0
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxx Xxxxxx
LIBOR Office: 0000 Xxxxx Xxxxx Xxxx, Xxxxx 0000
0 Xxxxx Xxxx, Xxxxxxxx 0
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxx Xxxxxx
With a copy to:
CIBC Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxx
S-6
BNP PARIBAS
By
Name:
Title:
By
Name:
Title:
Domestic
Office: 0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxx
LIBOR Office: 0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
With a copy to: Xxxxxxx Xxxxxxx
S-7
BANK OF SCOTLAND
By
Name: Xxxxxx Xxxxxx
Title: Vice President
By
Name:
Title:
Domestic
Office: Bank of Scotland, New York Xxxxxx
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx
LIBOR Office: Bank of Scotland, New York Xxxxxx
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx
With a copy to: Bank of Scotland, Houston Office
One City Centre
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxx
X-0
XXXX XX XXXX XXXXXX
By
Name:
Title:
By
Name:
Title:
Domestic
Office: The Bank of Nova Scotia
Atlanta Agency
Suite 2700, 000 Xxxxxxxxx Xx. XX
Xxxxxxx, Xxxxxxx 00000
Telephone: (000)-000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
LIBOR Office: The Bank of Nova Scotia
Atlanta Agency
Suite 2700, 000 Xxxxxxxxx Xx. XX
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
With a copy to: Scotia Capital
Houston Rep. Xxxxxx
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
S-9
UNION BANK OF CALIFORNIA, N.A.
By
Name:
Title:
By
Name:
Title:
Domestic
Office: 000 X. Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
LIBOR Office: 000 X. Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
With a copy to:
S-10
FORTIS CAPITAL CORP.
By
Name:
Title:
By
Name:
Title:
Domestic
Office: 000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxx
Vice President
LIBOR Office: 000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxx
Vice President
With a copy to:
S-11
Schedule I
Item 6.7 - Litigation, Labor Controversies:
Item 6.8 - Subsidiaries
Item 6.10 - Tax Matters
Item 6.11 - Employee Benefits Plans:
Item 6.12 - Environmental Matters:
Item 6.15 - Existing Defaults:
Item 7.2.2(b) - Indebtedness to be Repaid:
Item 7.2.2(c) - Ongoing Indebtedness:
Item 7.2.3(n) - Existing Liens
Item 7.2.5(a) - Ongoing Investments:
Item 7.2.10 - Outstanding Loans
Schedule II
Schedule III-A
NAME OF BANK PERCENTAGE MAXIMUM NOTE AMOUNT
Bankers Trust Company 36.00000% 270,000,000.00
CIBC Inc. 21.60000% 162,000,000.00
BNP Paribas 14.40000% 108,000,000.00
Bank of Scotland 12.00000% 90,000,000.00
Bank of Nova Scotia 8.00000% 60,000,000.00
Fortis Capital Corp. 8.00000% 60,000,000.00
Union Bank of California, N.A. 0.00000% -0-
Schedule III-B
NAME OF BANK PERCENTAGE MAXIMUM NOTE AMOUNT
Bankers Trust Company 30.83334% 154,166,666.67
CIBC Inc. 18.50000% 92,500,000.00
BNP Paribas 12.33333% 61,666,666.67
Bank of Scotland 10.00000% 50,000,000.00
Bank of Nova Scotia 10.00000% 50,000,000.00
Fortis Capital Corp. 10.00000% 50,000,000.00
Union Bank of California, N.A. 8.33333% 41,666,666.66
Schedule 1.1 - Gas Gathering System
Schedule 5.1.13 - UCC Searches
(a) Prize Energy Corporation
Delaware Secretary of State
Oklahoma Secretary of State
(b) Prize Operating Company
Delaware Secretary of State
Oklahoma Secretary of State
Texas Secretary of State
(c) PEC (Delaware), Inc.
Delaware Secretary of State
Oklahoma Secretary of State
Texas Secretary of State
(d) Oklahoma Gas Processing, Inc.
Delaware Secretary of State
Oklahoma Secretary of State
(e) Prize Energy Resources, L.P.
Delaware Secretary of State
Oklahoma Secretary of State
Texas Secretary of State
Schedule 6.9 - Hydrocarbon Interests
Schedule 5.1.15 - Hedging Agreements and Obligations
EXHIBIT A
REVOLVING CREDIT NOTE
$_____________________ March 15, 2002
FOR VALUE RECEIVED, the undersigned, MAGNUM HUNTER RESOURCES, INC., a
Nevada corporation, (the "Borrower"), hereby promises to pay to the order of
______________________ (the "Bank") on the Stated -------- ---- Maturity Date
the principal sum of __________________ DOLLARS ($___________) or, if less, the
aggregate unpaid principal amount of all Loans shown on the books and records of
the Bank or shown on the schedule attached hereto (and any continuation thereof)
made by the Bank to the Borrower pursuant to that certain Fourth Amended and
Restated Credit Agreement, dated as of March 15, 2002 (together with all
amendments and other modifications, if any, from time to time thereafter made
thereto, the "Credit ------- Agreement"), among the Borrower, the various
financial institutions that are or may become a party --------- thereto
(including the Bank) (collectively, the "Banks"), Bankers Trust Company, as
administrative ----- agent (in such capacity together with any successors
thereto, the "Administrative Agent") for the --------------------- Banks, as
collateral agent for the Banks (in such capacity together with any successors
thereto, the "Collateral Agent"), and as letter of credit issuing bank (in such
capacity together with any successors ------------------ thereto, the "Issuer"),
CIBC Inc., as syndication agent for the Banks, BNP Paribas, as documentation
------ agent for the Banks and as co-arranger, CIBC World Markets Corp., as
co-arranger and Deutsche Banc Alex. Xxxxx Inc. and CIBC World Markets Corp., as
Sole Lead Arranger and Sole Bookrunner.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are payable in same day funds in
lawful money of the United States of America to Bankers Trust Company, as
Administrative Agent, at the office of the Administrative Agent located at 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as the
Administrative Agent shall designate in writing to the Borrower. The amount of
each Loan made by the Bank to the Borrower and the borrowing date, the rate of
interest applicable thereto and all payments made on account of principal and
interest hereof, shall be recorded by the Bank and, prior to any transfer
hereof, endorsed on the grid attached hereto which is part of this Note;
provided, however, that the failure of the Bank to make such notation or any
error therein shall not in any manner affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Note and the Credit
Agreement.
This Note is an extension, renewal, and replacement of, and is given in
substitution and exchange for, certain promissory notes of the Borrower in the
original aggregate principal amount of $225,000,000 executed by the Borrower
under that certain Third Amended and Restated Credit Agreement dated as of May
17, 2001 (the "Prior Credit Agreement"), among the Borrower, Bankers Trust
Company, as administrative agent, CIBC Inc., as syndication agent,
1
Paribas, as documentation agent and as collateral agent, and certain banks
and other financial institutions which were, or thereafter became, parties
thereto, as such Prior Credit Agreement was or may have been from time to time
thereafter amended or modified, and the indebtedness evidenced hereby and
thereby is a continuing indebtedness and nothing herein contained or implied
shall be construed to deem such indebtedness or any accrued and unpaid interest
thereon paid, satisfied, novated or terminated, or any collateral or security
therefore released or terminated.
Notwithstanding anything to the contrary, in accordance with Section 4.11
of the Credit Agreement, in no event shall any payment or consideration
applicable to any amount hereunder and which would constitute interest exceed
the maximum amount of interest allowed by applicable law, as amended from time
to time. Any payment of interest or in the nature of interest in excess of such
limitation shall be credited as a payment of principal unless the principal
amount hereunder has been paid in full, in which case such amount shall be
refunded.
This Note is a Note referred to in, and evidences Indebtedness incurred
under, the Credit Agreement, to which reference is made for a description of the
security for this Note and for a statement of the terms and conditions on which
the Borrower are permitted and required to make prepayments and repayments of
principal of the Indebtedness evidenced by this Note and on which such
Indebtedness may be declared to be immediately due and payable. Unless otherwise
defined, terms used herein have the meanings provided in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest, notice of dishonor, notice of
acceleration and notice of intent to accelerate.
[Remainder of this page intentionally left blank.]
2
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
MAGNUM HUNTER RESOURCES, INC.
By
----------------------------------
Name:
Title:
3
LOANS AND PRINCIPAL PAYMENTS
--------------------------------------------------------------------------------
Unpaid
Amount of Amount of Principal Principal
Loan Made Repaid Interest Balance
--------------- ------------------- ----------
--------------- ------------------- ----------
Base LIBO Period (if Base LIBO Base LIBO Total Notation
Date Rate Rate applicable) Rate Rate Rate Rate Made By
---- ---- ---- ----------- ---- ---- ---- ---- --------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4
EXHIBIT B-1
BORROWING REQUEST
Bankers Trust Company
-------------------
New York, New York ____
Attention: [Name]
[Title]
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to Section 2.3 of the
Fourth Amended and Restated Credit Agreement, dated as of March 15, 2002
(together with all amendments, if any, from time to time made thereto the
"Credit Agreement") among Magnum Hunter Resources, Inc., a Nevada corporation (
"Borrower"), the various financial institutions that are or may become a party
thereto (collectively, the "Banks"), Bankers Trust Company, as administrative
agent (in such capacity together with any successors thereto, the
"Administrative Agent") for the Banks, as collateral agent for the Banks (in
such capacity together with its successors thereto, the "Collateral Agent"), and
as letter of credit issuing bank (in such capacity together with any successors
thereto, the "Issuer"), CIBC Inc. as syndication agent for the Banks, BNP
Paribas, as documentation agent for the Bank and as co-arranger, CIBC World
Markets Corp., as co-arranger and Deutsche Banc Alex. Xxxxx Inc., as sole lead
arranger and sole bookrunner. Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided in the Credit
Agreement.
The undersigned Borrower hereby requests that a Loan be made in the
aggregate principal amount of $__________ on __________, ____ as a *[LIBO Rate
Loan having an Interest Period of _______ months] [Base Rate Loan].
The undersigned Borrower hereby acknowledges that, pursuant to Section
5.2.2 of the Credit Agreement, each of the delivery of this Borrowing Request
and the acceptance by Borrower of the proceeds of the Loans requested hereby
constitutes a representation and warranty by the undersigned Borrower that, on
the date of such Loans, and before and after giving effect thereto and to the
application of the proceeds therefrom, all statements set forth in Section 5.2.1
of the Credit Agreement are true and correct in all material respects.
The undersigned Borrower agrees that if, prior to the time of the Borrowing
requested hereby, any matter certified to herein by it will not be true and
correct at such time as if then made (except for representations and warranties
as are by their express terms limited to a specific date), it will immediately
so notify the Administrative Agent. Except to the extent, if any, that prior to
the time of the Borrowing requested hereby the Administrative Agent shall
receive written notice to the contrary from the undersigned Borrower, each
matter certified to herein __________________________________
*Select appropriate interest rate option.
shall be deemed once again to be certified as true and correct at the date
of such Borrowing as if then made (except for representations and warranties as
are by their express terms limited to a specific date).
After giving effect to the application of the proceeds of the Borrowing
requested hereby, the Borrower shall not have cash or Cash Equivalents in excess
of $35,000,000.
As of the date hereof, the aggregate value of all margin accounts
maintained by the Borrower or any Restricted Subsidiary with respect to the
Hedging Obligations equals $_____________.
Please wire transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated respectively:
Amount to Be Person to be Paid Name, Address, etc.
------------ ----------------------------- -------------------
Transferred Name Account No. of Transferee Bank
----------- ---- -----------
$
Attention:
$
Attention:
Balance of [Borrower]
such proceeds
Attention:
The undersigned Borrower has caused this Borrowing Request to be executed
and delivered, and the certification and warranties contained herein to be made,
by its duly Authorized Officer this ___ day of ___________, ___.
Magnum Hunter Resources, Inc.
By
--------------------
Name:
Title:
2
EXHIBIT B-2
LETTER OF CREDIT REQUEST
TO: Bankers Trust Company
as Administrative Agent
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Commercial Loan Division,
Standby Letter of Credit Unit
Mail Stop NYC60-1702
Ladies and Gentlemen:
The undersigned is an officer of MAGNUM HUNTER RESOURCES, INC., a Nevada
corporation (the "Borrower"), and is authorized to make and deliver this
certificate pursuant to that certain Fourth Amended and Restated Credit
Agreement dated as of March 15, 2002, among Borrower, Bankers Trust Company, as
administrative agent (in such capacity, the "Administrative Agent"), as
collateral agent and as letter of credit issuing bank, BNP Paribas, as
documentation agent, CIBC Inc., as syndication agent, the lenders from time to
time party thereto (as the same may be amended, supplemented or modified from
time to time, the "Credit Agreement"). All terms defined in the Credit Agreement
shall have the same meaning herein.
In accordance with the Credit Agreement, the Borrower hereby requests that
___________________** issue a Letter of Credit. The Letter of Credit shall:
(a) be issued on ___________________, 200__;***
(b) be in the amount of $_____________;****
(c) permit [a single drawing/multiple drawings];
(d) be payable upon presentation of a sight draft; and
(e) expire on _______________, 200__.*****
The Letter of Credit is to be delivered by the Issuer to
__________________.******
--------
** Insert name of Issuer.
*** Insert date not later than thirty days prior to Commitment Termination
Date.
**** Insert fax amount of Letter of Credit, which shall not exceed the sum
of the Letter of Credit Commitment Amount and all outstanding Letter of
Credit Liabilities.
***** Insert date not later than the earlier of (a) one year issuance or (b)
the date ten (10) days prior to the Commitment Termination Date.
****** Insert name of Borrower or name and address of beneficiary.
In connection with the foregoing and pursuant to the terms and provisions
of the Credit Agreement, the undersigned hereby certifies to the Agents, the
Banks and the Issuer that the following statements are true and correct:
(i) The representations and warranties contained in Article VI of the
Credit Agreement and in each of the other Loan Documents are not false or
misleading in any material respect on and as of the date hereof with the same
force and effect as if made on and as of such date.
(ii) No Default has occurred and is continuing or would result from the
issuance of the Letter of Credit requested hereunder.
(iii) The face amount of the Letter of Credit requested hereunder, when
added to all outstanding Loans and Letter of Credit Liabilities, will not exceed
the Commitment Amount.
(iv) The proposed terms of the Letter of Credit requested hereunder and the
transactions proposed to be supported thereby are accurately and completely
described herein.
(v) All information supplied below is true, correct, and complete as of the
date hereof.
2
Information
(a) Commitment Amount $_________
(b) Sublimit availability for Letters of Credit $20,000,000.00
(c) Aggregate outstanding principal amount of all Loans $_________
(d) Aggregate outstanding amount of all Letter of Credit
Liabilities $_________
(e) Net availability for Loans: [line (a) minus the sum of line
(c) and line (d)] $_________
(f) Net availability for Letters of Credit: [line (b) minus
line (d)] $_________
(g) Face amount of requested Letter of Credit $_________
(h) Date requested for issuance of Letter of Credit ______, 200__
As of the date hereof, the aggregate value of all margin accounts
maintained by the Borrower or any Restricted Subsidiary with respect to Hedging
Obligations equals $_____________.
BORROWER:
MAGNUM HUNTER RESOURCES, INC.
By:
------------------------------------
Name:
Title:
Dated as of:_________________
[insert date of proposed
issuance of Letter of Credit]
3
EXHIBIT C
CONTINUATION/CONVERSION NOTICE
Bankers Trust Company
-------------------
New York, New York _____
Attention: [Name]
[Title]
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to Section
2.4 of the Fourth Amended and Restated Credit Agreement, dated as of March 15,
2002 (together with all amendments, if any, from time to time made thereto the
"Credit Agreement") among Magnum Hunter Resources, Inc., a Nevada corporation (
"Borrower"), the various financial institutions that are or may become a party
thereto (collectively, the "Banks"), Bankers Trust Company, as administrative
agent (in such capacity together with any successors thereto, the
"Administrative Agent") for the Banks, as collateral agent for the Banks (in
such capacity together with its successors thereto, the "Collateral Agent"), and
as letter of credit issuing bank (in such capacity together with any successors
thereto, the "Issuer"), CIBC Inc. as syndication agent for the Banks, BNP
Paribas, as documentation agent and as co-arranger, CIBC World Markets Corp., as
co-arranger and Deutsche Banc Alex. Xxxxx Inc., as sole lead arranger and as
sole bookrunner. Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit Agreement.
The undersigned Borrower hereby requests that on ____________, ____,
(1) $___________ of the presently outstanding principal amount of the Loans
originally made on __________, _____ [and $__________ of the presently
outstanding principal amount of the Loans originally made on __________, _____],
(2) and all presently being maintained as *[Base Rate Loans] [LIBO Rate
Loans],
(3) be [converted into] [continued as],
(4) [LIBO Rate Loans having an Interest Period of ______ months] [Base Rate
Loans].
The undersigned Borrower hereby:
(a) certifies and warrants that no Default has occurred and is continuing;
and
------
* Select appropriate interest rate option.
(b) agrees that if prior to the time of such continuation or conversion any
matter certified to herein by it will not be true and correct at such time as if
then made, it will immediately so notify the Agent.
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Administrative Agent shall receive written
notice to the contrary from the undersigned Borrower, each matter certified to
herein shall be deemed to be certified at the date of such continuation or
conversion as if then made except for such representations and warranties as are
by their express terms limited to a specific date.
After giving effect to the application of the proceeds of the Borrowing
requested hereby, the Borrower shall not have cash or Cash Equivalents in excess
of $35,000,000.
As of the date hereof, the aggregate value of all margin accounts
maintained by the Borrower or any Restricted Subsidiary with respect to Hedging
Obligations equals $_____________.
The undersigned Borrower has caused this Continuation/Conversion Notice to
be executed and delivered, and the certification and warranties contained herein
to be made, by its Authorized Officer this ___ day of _________, _____.
Magnum Hunter Resources, Inc.
By
----------------------------------
Name:
Title:
2
EXHIBIT D
BANK ASSIGNMENT AGREEMENT
To: Magnum Hunter Resources, Inc.
To: Bankers Trust Company
as the Administrative Agent and as Issuer
Gentlemen and Ladies:
We refer to clause (d) of Section 10.11.1 of the of the Fourth Amended and
Restated Credit Agreement, dated as of March 15 , 2002 (together with all
amendments, if any, from time to time made thereto the "Credit Agreement") among
Magnum Hunter Resources, Inc., a Nevada corporation ( "Borrower"), the various
financial institutions that are or may become a party thereto (collectively, the
"Banks"), Bankers Trust Company, as administrative agent (in such capacity
together with any successors thereto, the "Administrative Agent") for the Banks,
as collateral agent for the Banks (in such capacity together with its successors
thereto, the "Collateral Agent"), and as letter of credit issuing bank (in such
capacity together with any successors thereto, the "Issuer"), CIBC Inc. as
syndication agent for the Banks, BNP Paribas, as documentation agent for the
Banks and as co-arranger, CIBC World Markets Corp., as co-arranger and Deutsche
Banc Alex. Xxxxx Inc., as sole lead arranger and sole bookrunner. Unless
otherwise defined herein or the context otherwise requires, terms used herein
have the meanings provided in the Credit Agreement.
This agreement is delivered to you pursuant to clause (d) of Section
10.11.1 of the Credit Agreement and also constitutes notice to each of you,
pursuant to clause (c) of Section 10.11.1 of the Credit Agreement, of the
assignment and delegation to _______________ (the "Assignee") of ___% of the
Loans, participations in Letters of Credit and Commitment of _____________ (the
"Assignor") outstanding under the Credit Agreement on the date hereof. After
giving effect to the foregoing assignment and delegation, the Assignor's and the
Assignee's Percentages for the purposes of the Credit Agreement are set forth
opposite such Person's name on the signature pages hereof.
[Add paragraph dealing with accrued interest and fees with respect to Loans
assigned.]
The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 7.1.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this Bank
Assignment Agreement and the Credit Agreement, (ii) agrees that it will,
independently and without reliance upon any Agent, any Assignor, the Issuer, any
Arranger or any Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) represents and
warrants that its name set forth herein is its legal name; (iv) appoints and
authorizes each Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to such
Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (vi) agrees that it will perform in accordance
with their terms all of the obligations that by the
terms of the Credit Agreement are required to be performed by it as a Bank;
and (vii) attaches any U.S. Internal Revenue Service forms required under
Section 4.6(b) of the Credit Agreement.
Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Administrative Agent and the Issuer
(a) the Assignee
(i) shall be deemed automatically to have become a party to the Credit
Agreement, have all the rights and obligations of a "Bank" under the Credit
Agreement and the other Loan Documents as if it were an original signatory
thereto to the extent specified in the second paragraph hereof; and
(ii) agrees to be bound by the terms and conditions set forth in the Credit
Agreement and the other Loan Documents as if it were an original signatory
thereto; and
(b) the Assignor shall be released from its obligations under the Credit
Agreement and the other Loan Documents to the extent specified in the second
paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor] [Assignee]
will pay to the Administrative Agent the processing fee referred to in Section
10.11.1 of the Credit Agreement upon the delivery hereof.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitment and requests the
Administrative Agent to acknowledge receipt of this document:
(A) Address for Notices:
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
Telex (Answerback):
LIBOR Office:
Telephone:
Facsimile:
Telex (Answerback):
(B) Payment Instructions:
The Assignee shall furnish the tax form required by the Section 4.6 of the
Credit Agreement, if any, no later than the date of acceptance hereof by the
Administrative Agent.
This Agreement may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
Adjusted Percentage [ASSIGNOR]
-------------------
Commitment
and
Loans: ___%
By:
Name:
Title:
Percentage [ASSIGNEE]
---------- ----------
Commitment
and
Loans: ___%
By:
Name:
Title:
Accepted and Acknowledged
this ___ day of _______, _____
BANKERS TRUST COMPANY,
as Administrative Agent and as Issuer
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
MAGNUM HUNTER RESOURCES, INC.
as the Borrower
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
EXHIBIT E
[Opinion of Special Counsel to the Obligors]
EXHIBIT F
[Opinion of In-House Counsel to the Obligors]
EXHIBIT G
[Form of Mortgage]
EXHIBIT H
[Form of First Amendment to Borrower Pledge Agreement]
EXHIBIT I
[Form of First Amendment to Subsidiary Pledge Agreement]
EXHIBIT J
[Form of Third Amended and Restated Subsidiary Guaranty Agreement]
EXHIBIT K
FORM OF
EXTENSION REQUEST
____________________, 200__
Bankers Trust Company
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: _______________
Gentlemen:
Reference is made to the Fourth Amended and Restated Credit Agreement,
dated as of March 15, 2002 (together with all amendments, if any, from time to
time made thereto the "Credit Agreement") among Magnum Hunter Resources, Inc., a
Nevada corporation ( "Borrower"), the various financial institutions that are or
may become a party thereto, Bankers Trust Company, as administrative agent (in
such capacity together with any successors thereto, the "Administrative Agent")
for the Banks, as collateral agent for the Banks (in such capacity together with
its successors thereto, the "Collateral Agent"), and as letter of credit issuing
bank, CIBC Inc. as syndication agent for the Banks, BNP Paribas, as
documentation agent for the Banks and as co-arranger, CIBC World Markets Corp.,
as co-arranger and Deutsche Banc Alex. Xxxxx Inc., as sole lead arranger and
sole bookrunner. Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit Agreement.
Borrower hereby gives notice to the Administrative Agent as required by
Section 2.9 of the Credit Agreement of its request to extend the Stated Maturity
Date for an additional one-year period.
Borrower hereby certifies that (i) this request complies with the terms of
the Credit Agreement and the provisions of Section 2.9 thereof and (ii) no
Default or Event of Default has occurred and is continuing as of the date of
this request.
Sincerely,
MAGNUM HUNTER RESOURCES, INC.
By:
-------------------------------
Name:
Title:
EXHIBIT L
FORM OF
POST-MERGER LEGAL OPINION
Table of Contents
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...........................................................2
SECTION 1.1. Defined Terms................................................................2
SECTION 1.2. Use of Defined Terms........................................................24
SECTION 1.3. Cross-References............................................................24
SECTION 1.4. Accounting and Financial Determinations.....................................24
ARTICLE II THE COMMITMENTS, BORROWING PROCEDURES, NOTES, LETTERS OF CREDIT AND
BORROWING BASE............................................................................24
SECTION 2.1. The Commitments.............................................................25
SECTION 2.1.1. Loan Commitment.....................................................25
SECTION 2.1.2. Commitment to Issue Letters of Credit...............................25
SECTION 2.1.3. Purchase and Sale of Participations in Each Letter
of Credit...........................................................26
SECTION 2.1.4. Banks Not Permitted or Required to Make Loans.......................26
SECTION 2.1.5. Issuer Not Permitted or Required to Issue Letters
of Credit...........................................................26
SECTION 2.2. Reduction of Maximum Facility Amount........................................26
SECTION 2.3. Borrowing Procedures for Loans..............................................27
SECTION 2.4. Continuation and Conversion Elections.......................................27
SECTION 2.5. Funding.....................................................................27
SECTION 2.6. Notes.......................................................................28
SECTION 2.7. Certain Provisions Relating to the Letters of Credit........................28
SECTION 2.7.1. Borrower's Agreement to Repay Letter of Credit
Drawings............................................................28
SECTION 2.7.2. Reimbursement Obligations of the Banks under the
Letters of Credit...................................................29
SECTION 2.7.3. Action Upon Occurrence of Default...................................29
SECTION 2.7.4. Cash Collateral Procedures..........................................29
SECTION 2.7.5. Nature of Reimbursement Obligations.................................30
SECTION 2.8. Borrowing Base..............................................................31
SECTION 2.8.1. Determination of the Borrowing Base.................................31
SECTION 2.8.2. Redetermination of Borrowing Base...................................31
SECTION 2.8.3. Special Redetermination of Borrowing Base...........................33
-i-
TABLE OF CONTENTS
(continued)
Page
SECTION 2.8.4. General Provisions With Respect to the Borrowing
Base................................................................33
SECTION 2.9. Extension of Stated Maturity Date...........................................33
SECTION 2.10. Replacement of Issuer.......................................................34
ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES................................................34
SECTION 3.1. Repayments and Prepayments..................................................34
SECTION 3.2. Interest Provisions.........................................................37
SECTION 3.2.1. Rates...............................................................37
SECTION 3.2.2. Post-Default Rates..................................................37
SECTION 3.2.3. Payment Dates.......................................................37
SECTION 3.3. Fees........................................................................38
SECTION 3.3.1. Commitment Fee......................................................38
SECTION 3.3.2. [Intentionally Omitted].............................................38
SECTION 3.3.3. Fees Pursuant to Fee Letter.........................................38
SECTION 3.3.4. Letter of Credit Standby Fee Payable to Banks.......................38
SECTION 3.3.5. Letter of Credit Fronting Fee Payable to Issuer.....................38
ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS....................................................39
SECTION 4.1. Fixed Rate Lending Unlawful.................................................39
SECTION 4.2. Deposits Unavailable........................................................39
SECTION 4.3. Increased LIBO Rate Loan Costs, etc.........................................39
SECTION 4.4. Funding Losses..............................................................40
SECTION 4.5. Increased Capital Costs.....................................................40
SECTION 4.6. Taxes.......................................................................41
SECTION 4.7. Payments, Computations, etc.................................................42
SECTION 4.8. Sharing of Payments.........................................................43
SECTION 4.9. Set off.....................................................................43
SECTION 4.10. Use of Proceeds.............................................................43
SECTION 4.11. Maximum Interest............................................................44
ARTICLE V CONDITIONS TO BORROWING...................................................................44
SECTION 5.1. Initial Borrowing...........................................................44
SECTION 5.1.1. Resolutions, etc....................................................44
-ii-
TABLE OF CONTENTS
(continued)
Page
SECTION 5.1.2. Delivery of Notes and Subsidiary Guaranty Agreement.................45
SECTION 5.1.3. Payment of Outstanding Prize Indebtedness, etc......................45
SECTION 5.1.4. Mortgage............................................................45
SECTION 5.1.5. Pledge Agreements; Stock Certificates and Blank
Powers..............................................................45
SECTION 5.1.6. Opinions of Counsel.................................................46
SECTION 5.1.7. Financial Information...............................................46
SECTION 5.1.8. Engineers' Report...................................................46
SECTION 5.1.9. Certificate as to Insurance Policies................................46
SECTION 5.1.10. Material Adverse Change.............................................46
SECTION 5.1.11. Satisfactory Review and Legal Form..................................46
SECTION 5.1.12. Closing Fees, Expenses, etc.........................................47
SECTION 5.1.13. UCC Searches........................................................47
SECTION 5.1.14. Prize Merger Documentation..........................................47
SECTION 5.1.15. Hedging Schedule....................................................48
SECTION 5.2. All Borrowings and Letters of Credit........................................48
SECTION 5.2.1. Compliance with Warranties, No Default, etc.........................48
SECTION 5.2.2. Borrowing Request...................................................48
SECTION 5.2.3. Satisfactory Legal Form.............................................49
SECTION 5.2.4. All Letters of Credit...............................................49
SECTION 5.2.5. Excess Cash and Cash Equivalents....................................49
ARTICLE VI REPRESENTATIONS AND WARRANTIES............................................................49
SECTION 6.1. Organization, etc...........................................................49
SECTION 6.2. Due Authorization, Non-Contravention, etc...................................49
SECTION 6.3. Government Approval, Regulation, etc........................................50
SECTION 6.4. Validity, etc...............................................................50
SECTION 6.5. Financial Information.......................................................50
SECTION 6.6. No Material Adverse Change..................................................50
SECTION 6.7. Litigation, Labor Controversies, etc........................................50
SECTION 6.8. Subsidiaries................................................................51
-iii-
TABLE OF CONTENTS
(continued)
Page
SECTION 6.9. Ownership of Properties.....................................................51
SECTION 6.10. Taxes.......................................................................51
SECTION 6.11. Pension and Welfare Plans...................................................51
SECTION 6.12. Environmental Warranties....................................................51
SECTION 6.13. Regulations U and X.........................................................53
SECTION 6.14. Accuracy of Information.....................................................53
SECTION 6.15. No Defaults under Other Agreements..........................................53
SECTION 6.16. Solvency....................................................................53
SECTION 6.17. Agreements..................................................................53
SECTION 6.18. Compliance with Laws, etc...................................................54
SECTION 6.19. Direct Benefit..............................................................54
ARTICLE VII COVENANTS.................................................................................54
SECTION 7.1. Affirmative Covenants.......................................................54
SECTION 7.1.1. Financial Information, Reports, Notices, etc........................54
SECTION 7.1.2. Compliance with Laws, Maintenance of Existence, etc.................57
SECTION 7.1.3. Maintenance of Properties...........................................57
SECTION 7.1.4. Insurance...........................................................57
SECTION 7.1.5. Books and Records...................................................57
SECTION 7.1.6. Consummation the Merger.............................................58
SECTION 7.1.7. Agreement to Deliver Security Documents.............................58
SECTION 7.1.8. Perfection and Protection of Security Interests
and Liens...........................................................59
SECTION 7.1.9. Compliance with Other Contractual Obligations.......................59
SECTION 7.1.10. Replacement Notes...................................................59
SECTION 7.2. Negative Covenants..........................................................59
SECTION 7.2.1. Business Activities.................................................59
SECTION 7.2.2. Indebtedness........................................................60
SECTION 7.2.3. Liens...............................................................61
SECTION 7.2.4. Financial Condition.................................................63
SECTION 7.2.5. Investments.........................................................64
-iv-
TABLE OF CONTENTS
(continued)
Page
SECTION 7.2.6. Restricted Payments, etc............................................65
SECTION 7.2.7. Limitation on Baskets...............................................66
SECTION 7.2.8. Consolidation, Merger, etc..........................................66
SECTION 7.2.9. Disposition of Assets...............................................67
SECTION 7.2.10. Transactions with Affiliates........................................67
SECTION 7.2.11. Negative Pledges, Restrictive Agreements, etc.......................68
SECTION 7.2.12. Limitation on Issuance of Subsidiaries' Capital
Stock...............................................................68
SECTION 7.2.13. Environmental Protection............................................68
SECTION 7.2.14. Accounting..........................................................68
SECTION 7.2.15. Hedge Agreements....................................................68
ARTICLE VIII EVENTS OF DEFAULT.........................................................................69
SECTION 8.1. Listing of Events of Default................................................69
SECTION 8.1.1. Non-Payment of Obligations..........................................69
SECTION 8.1.2. Breach of Representation or Warranty................................69
SECTION 8.1.3. Non-Performance of Certain Covenants and
Obligations.........................................................69
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations..................69
SECTION 8.1.5. Default on Other Indebtedness.......................................69
SECTION 8.1.6. Judgments...........................................................70
SECTION 8.1.7. Pension Plans.......................................................70
SECTION 8.1.8. Change of Control...................................................70
SECTION 8.1.9. Bankruptcy, Insolvency, etc.........................................70
SECTION 8.1.10. Impairment of Security, etc.........................................71
SECTION 8.1.11. Attachment, etc.....................................................71
SECTION 8.1.12. Seizure, etc........................................................71
SECTION 8.1.13. Change of Control Offer.............................................71
SECTION 8.2. Action if Bankruptcy........................................................71
SECTION 8.3. Action if Other Event of Default............................................71
ARTICLE IX THE AGENTS AND THE ISSUER.................................................................72
-v-
TABLE OF CONTENTS
(continued)
Page
SECTION 9.1. Actions.....................................................................72
SECTION 9.2. Funding Reliance, etc.......................................................73
SECTION 9.3. Exculpation.................................................................73
SECTION 9.4. Successor...................................................................73
SECTION 9.5. Extensions of Credit by the Agents, the Arrangers and the
Issuer......................................................................74
SECTION 9.6. Credit Decisions............................................................74
SECTION 9.7. Copies, etc.................................................................74
SECTION 9.8. Documentation Agent, Syndication Agent, Arrangers and
Bookrunner..................................................................75
ARTICLE X MISCELLANEOUS PROVISIONS..................................................................75
SECTION 10.1. Waivers, Amendments, etc....................................................75
SECTION 10.2. Notices.....................................................................76
SECTION 10.3. Payment of Costs and Expenses...............................................76
SECTION 10.4. Indemnification.............................................................76
SECTION 10.5. Survival....................................................................77
SECTION 10.6. Severability................................................................77
SECTION 10.7. Headings....................................................................78
SECTION 10.8. Execution in Counterparts, Effectiveness, etc...............................78
SECTION 10.9. Governing Law; Entire Agreement.............................................78
SECTION 10.10. Successors and Assigns......................................................78
SECTION 10.11. Sale and Transfer of Loans and Note; Participations in
Loans and Note..............................................................78
SECTION 10.11.1. Assignments.........................................................78
SECTION 10.11.2. Participations......................................................80
SECTION 10.12. Renewal and Continuation of Existing Loans..................................80
SECTION 10.13. Other Transactions..........................................................80
SECTION 10.14. [Intentionally Blank].......................................................81
SECTION 10.15. Treatment of Certain Information; Confidentiality...........................81
SECTION 10.16. Forum Selection and Consent to Jurisdiction.................................81
SECTION 10.17. Waiver of Jury Trial........................................................82
-vi-
TABLE OF CONTENTS
(continued)
Page
SECTION 10.18. No Oral Agreements..........................................................82
-vii-
TABLE OF CONTENTS
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Existing Mortgages
SCHEDULE III-A - Percentages (Prior to Permitted 2002 Bond Transaction)
SCHEDULE III-B - Percentages (After Permitted 2002 Bond Transaction)
SCHEDULE 1.1 - Gas Gathering Systems
SCHEDULE 5.1.13 - UCC Searches
SCHEDULE 5.1.15 - Hedging Agreements and Obligations
SCHEDULE 6.9 - Hydrocarbon Interests
EXHIBIT A - Form of Note
EXHIBIT B-1 - Form of Borrowing Request
EXHIBIT B-2 - Form of Letter of Credit Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Bank Assignment Agreement
EXHIBIT E - Form of Opinion of Special Counsel to Obligors
EXHIBIT F - Form of Opinion of In-House Counsel to Obligors
EXHIBIT G - Form of Mortgage
EXHIBIT H - Form of Second Amendment to Borrower Pledge Agreement
EXHIBIT I - Form of Second Amendment to Subsidiary Pledge Agreement
EXHIBIT J - Form of Fourth Amended and Restated Subsidiary Guaranty
Agreement
EXHIBIT K - Form of Extension Request
EXHIBIT L - Form of Post-Merger Legal Opinion
