Credit Agreement Dated as of September 28, 2007 among Rex Energy Corporation, as Borrower, KeyBank National Association, as Administrative Agent, BNP Paribas, as Syndication Agent, Sovereign Bank, as Documentation Agent, and The Lenders Party Hereto...
Exhibit
10.1
Execution
Version
Dated
as of
September
28, 2007
among
Xxx
Energy
Corporation,
as
Borrower,
KeyBank
National Association,
as
Administrative Agent,
BNP
Paribas,
as
Syndication Agent,
Sovereign
Bank,
as
Documentation Agent,
and
The
Lenders Party Hereto
Sole
Lead Arranger and Sole Bookrunner
KeyBank
National Association
TABLE
OF CONTENTS
Page
|
|
ARTICLE
I
|
|
DEFINITIONS
AND ACCOUNTING MATTERS
|
|
Section
1.01 Terms
Defined Above
|
1
|
Section
1.02 Certain
Defined Terms
|
1
|
Section
1.03 Types
of Loans and Borrowings
|
20
|
Section
1.04 Terms
Generally; Rules of Construction
|
20
|
Section
1.05 Accounting
Terms and Determinations; GAAP
|
21
|
ARTICLE
II
|
|
THE
CREDITS
|
|
Section
2.01 Commitments
|
21
|
Section
2.02 Loans
and Borrowings
|
21
|
Section
2.03 Requests
for Borrowings
|
23
|
Section
2.04 Interest
Elections
|
24
|
Section
2.05 Funding
of Borrowings
|
25
|
Section
2.06 Termination,
Reduction and Increase of Aggregate Maximum Credit Amounts
|
26
|
Section
2.07 Borrowing
Base
|
28
|
Section
2.08 Letters
of Credit
|
30
|
ARTICLE
III
|
|
PAYMENTS
OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
|
|
Section
3.01 Repayment
of Loans
|
35
|
Section
3.02 Interest
|
35
|
Section
3.03 Alternate
Rate of Interest
|
36
|
Section
3.04 Prepayments
|
36
|
Section
3.05 Fees
|
38
|
ARTICLE
IV
|
|
PAYMENTS;
PRO RATA TREATMENT; SHARING OF SET-OFFS
|
|
Section
4.01 Payments
Generally; Pro Rata Treatment; Sharing of Set-offs
|
39
|
Section
4.02 Presumption
of Payment by the Borrower
|
40
|
Section
4.03 Certain
Deductions by the Administrative Agent
|
40
|
Section
4.04 Disposition
of Proceeds
|
40
|
ARTICLE
V
|
|
INCREASED
COSTS; BREAK FUNDING PAYMENTS; TAXES;
ILLEGALITY
|
|
Section
5.01 Increased
Costs
|
41
|
Section
5.02 Break
Funding Payments
|
42
|
Section
5.03 Taxes
|
42
|
Section
5.04 Mitigation
Obligations; Replacement of Lenders
|
44
|
Section
5.05 Illegality
|
45
|
ARTICLE
VI
|
|
CONDITIONS
PRECEDENT
|
|
Section
6.01 Effective
Date
|
45
|
Section
6.02 Each
Credit Event
|
48
|
ARTICLE
VII
|
|
REPRESENTATIONS
AND WARRANTIES
|
|
Section
7.01 Organization;
Powers
|
49
|
Section
7.02 Authority;
Enforceability
|
49
|
Section
7.03 Approvals;
No Conflicts
|
50
|
Section
7.04 Financial
Condition; No Material Adverse Change
|
50
|
Section
7.05 Litigation
|
51
|
Section
7.06 Environmental
Matters
|
51
|
Section
7.07 Compliance
with the Laws and Agreements; No Defaults
|
52
|
Section
7.08 Investment
Company Act
|
52
|
Section
7.09 Taxes
|
52
|
Section
7.10 ERISA
|
53
|
Section
7.11 Disclosure;
No Material Misstatements
|
54
|
Section
7.12 Insurance
|
54
|
Section
7.13 Restriction
on Liens
|
54
|
Section
7.14 Subsidiaries
|
55
|
Section
7.15 Location
of Business and Offices
|
55
|
Section
7.16 Properties;
Titles, Etc.
|
55
|
Section
7.17 Maintenance
of Properties
|
56
|
Section
7.18 Gas
Imbalances, Prepayments
|
57
|
Section
7.19 Marketing
of Production
|
57
|
Section
7.20 Swap
Agreements
|
57
|
Section
7.21 Use
of Loans and Letters of Credit
|
57
|
Section
7.22 Solvency
|
57
|
ARTICLE
VIII
|
|
AFFIRMATIVE
COVENANTS
|
|
Section
8.01 Financial
Statements; Other Information
|
58
|
Section
8.02 Notices
of Material Events
|
61
|
Section
8.03 Existence;
Conduct of Business
|
62
|
Section
8.04 Payment
of Obligations
|
62
|
Section
8.05 Performance
of Obligations under Loan Documents
|
62
|
Section
8.06 Operation
and Maintenance of Properties
|
62
|
Section
8.07 Insurance
|
63
|
Section
8.08 Books
and Records; Inspection Rights
|
64
|
Section
8.09 Compliance
with Laws
|
64
|
Section
8.10 Environmental
Matters
|
64
|
Section
8.11 Further
Assurances
|
65
|
Section
8.12 Reserve
Reports
|
66
|
Section
8.13 Title
Information
|
67
|
Section
8.14 Additional
Collateral; Additional Guarantors
|
67
|
Section
8.15 ERISA
Compliance
|
68
|
Section
8.16 Swap
Agreements
|
69
|
Section
8.17 Marketing
Activities
|
69
|
ARTICLE
IX
|
|
NEGATIVE
COVENANTS
|
|
Section
9.01 Financial
Covenants
|
70
|
Section
9.02 Debt
|
70
|
Section
9.03 Liens
|
71
|
Section
9.04 Dividends,
Distributions and Redemptions
|
72
|
Section
9.05 Investments,
Loans and Advances
|
72
|
Section
9.06 Nature
of Business
|
74
|
Section
9.07 Limitation
on Leases
|
74
|
Section
9.08 Proceeds
of Loans
|
74
|
Section
9.09 ERISA
Compliance
|
75
|
Section
9.10 Sale
or Discount of Receivables
|
76
|
Section
9.11 Mergers,
Etc
|
76
|
Section
9.12 Sale
of Properties
|
76
|
Section
9.13 Environmental
Matters
|
77
|
Section
9.14 Transactions
with Affiliates
|
77
|
Section
9.15 Subsidiaries
|
78
|
Section
9.16 Negative
Pledge Agreements; Dividend Restrictions
|
78
|
Section
9.17 Gas
Imbalances, Take-or-Pay or Other Prepayments
|
78
|
Section
9.18 Swap
Agreements
|
79
|
ARTICLE
X
|
|
EVENTS
OF DEFAULT; REMEDIES
|
|
Section
10.01 Events
of Default
|
79
|
Section
10.02 Remedies
|
81
|
ARTICLE
XI
|
|
THE
AGENTS
|
|
Section
11.01 Appointment;
Powers
|
82
|
Section
11.02 Duties
and Obligations of Administrative Agent
|
82
|
Section
11.03 Action
by Administrative Agent
|
83
|
Section
11.04 Reliance
by Administrative Agent
|
84
|
Section
11.05 Subagents
|
84
|
Section
11.06 Resignation
or Removal of Administrative Agent
|
84
|
Section
11.07 Agents
as Lenders
|
85
|
Section
11.08 No
Reliance
|
85
|
Section
11.09 Administrative
Agent May File Proofs of Claim
|
86
|
Section
11.10 Authority
of Administrative Agent to Release Collateral, Liens and
Guarantors
|
86
|
Section
11.11 The
Arranger, the Syndication Agent and the Documentation
Agent
|
87
|
ARTICLE
XII
|
|
MISCELLANEOUS
|
|
Section
12.01 Notices
|
87
|
Section
12.02 Waivers;
Amendments
|
87
|
Section
12.03 Expenses,
Indemnity; Damage Waiver
|
89
|
Section
12.04 Successors
and Assigns
|
91
|
Section
12.05 Survival;
Revival; Reinstatement
|
94
|
Section
12.06 Counterparts;
Integration; Effectiveness
|
95
|
Section
12.07 Severability
|
95
|
Section
12.08 Right
of Setoff
|
96
|
Section
12.09 Governing
Law; Jurisdiction; Service Of Process
|
96
|
Section
12.10 Headings
|
97
|
Section
12.11 Confidentiality
|
97
|
Section
12.12 Interest
Rate Limitation
|
98
|
Section
12.13 Exculpation
Provisions
|
99
|
Section
12.14 Existing
Credit Agreement
|
99
|
Section
12.15 Collateral
Matters; Swap Agreements
|
99
|
Section
12.16 No
Third Party Beneficiaries
|
100
|
Section
12.17 USA
Patriot Act Notice
|
100
|
ANNEXES,
EXHIBITS AND SCHEDULES
|
|
Annex
I
|
List
of Maximum Credit Amounts
|
Exhibit
A
|
Form
of Note
|
Exhibit
B
|
Form
of Borrowing Request
|
Exhibit
C
|
Form
of Interest Election Request
|
Exhibit
D-1
|
Form
of Compliance Certificate
|
Exhibit
D-2
|
Form
of Section 8.01(c) Certificate
|
Exhibit
E
|
Security
Instruments
|
Exhibit
F
|
Form
of Assignment and Assumption
|
Exhibit
G-1
|
Form
of Maximum Credit Amount Increase Certificate
|
Exhibit
G-2
|
Form
of Additional Lender Certificate
|
Schedule
1.02
|
Holders
of Equity Interests
|
Schedule
7.05
|
Litigation
|
Schedule
7.06
|
Environmental
|
Schedule
7.14
|
Subsidiaries
and Partnerships
|
Schedule
7.18
|
Gas
Imbalances
|
Schedule
7.19
|
Marketing
Contracts
|
Schedule
7.20
|
Swap
Agreements
|
Schedule
9.02
|
Existing
Debt
|
Schedule
9.03
|
Existing
Liens
|
Schedule
9.05
|
Investments
|
Schedule
9.14
|
Existing
Affiliate Transactions
|
Schedule
9.16
|
Existing
Negative Pledge Agreements; Dividend
Restrictions
|
THIS
CREDIT AGREEMENT dated as of September 28, 2007 is
among: Xxx Energy
Corporation, a corporation duly
formed and existing under the laws of the State of Delaware (the
“Borrower”);
each of the Lenders from time to time party hereto; KeyBank National
Association (in its individual capacity,
“KeyBank”), as administrative agent for the Lenders
(in such capacity,
together with its successors in such capacity, the “Administrative
Agent”); BNP
Paribas, as syndication agent for the Lenders (in such capacity, together
with its successors in such capacity, the “Syndication Agent”); and Sovereign
Bank, as
documentation agent for the Lenders (in such capacity, together with its
successors in such capacity, the “Documentation Agent”).
R
E C I T A L S
A. The
Borrower has requested that the Lenders provide certain loans to and extensions
of credit on behalf of the Borrower.
B. The
Lenders have agreed to make such loans and extensions of credit subject to
the
terms and conditions of this Agreement.
C. In
consideration of the mutual covenants and agreements herein contained and of
the
loans, extensions of credit and commitments hereinafter referred to, the parties
hereto agree as follows:
ARTICLE
I
Definitions
and Accounting Matters
Section
1.01 Terms Defined
Above. As
used in this Agreement, each term defined above has the meaning indicated
above.
Section
1.02 Certain Defined
Terms . As
used in this Agreement, the following terms have the meanings specified
below:
“ABR”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or
the Loans comprising such Borrowing, are bearing interest at a rate determined
by reference to the Alternate Base Rate.
“Additional
Lender” has the meaning assigned to such term in Section
2.06(c)(i).
“Additional
Lender Certificate” has the meaning assigned to such term in Section
2.06(c)(ii)(F).
“Adjusted
LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to (i) the LIBO Rate for such Interest Period multiplied
by
(ii) the Statutory Reserve Rate.
“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Administrative Agent.
-1-
“Affiliate”
means, with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by
or
is under common Control with the Person specified.
“Agents”
means, collectively, the Administrative Agent, the Syndication Agent and the
Documentation Agent; and “Agent” shall mean either the Administrative Agent, the
Syndication Agent or the Documentation Agent, as the context
requires.
“Aggregate
Maximum Credit Amounts” at any time shall equal the sum of the Maximum
Credit Amounts, as the same may be reduced, terminated or increased pursuant
to
Section 2.06.
“Agreement”
means this Credit Agreement, as the same may from time to time be amended,
modified, supplemented or restated.
“Alternate
Base Rate” means, for any day, a rate per annum equal to the greater of (a)
the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate
in
effect on such day plus ½ of 1%. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall
be effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.
“Applicable
Margin” means, for any day, with respect to any ABR Loan or Eurodollar Loan,
or with respect to the Commitment Fee Rate, as the case may be, the rate per
annum set forth in the Borrowing Base Utilization Grid below based upon the
Borrowing Base Utilization Percentage then in effect:
Borrowing
Base Utilization Grid
|
||||
Borrowing
Base Utilization Percentage
|
<33.0%
|
³33.0%
<66.0%
|
³66.0%
<90.0%
|
³90.0%
|
Eurodollar
Loans
|
1.000%
|
1.250%
|
1.500%
|
1.750%
|
ABR
Loans
|
0.000%
|
0.000%
|
0.000%
|
0.250%
|
Commitment
Fee Rate
|
0.250%
|
0.250%
|
0.375%
|
0.375%
|
Each
change in the Applicable Margin shall apply during the period commencing on
the
effective date of such change and ending on the date immediately preceding
the
effective date of the next such change, provided, however, that if at any time
the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a),
then
the “Applicable Margin” means the rate per annum set forth on the grid
when the Borrowing Base Utilization Percentage is at its highest level until
the
day that such Reserve Report is delivered to the Administrative Agent, and
as of
such delivery date and until the effective date of the next change in the
Applicable Margin, the Applicable Margin shall be based on the Borrowing Base
reflected by such Reserve Report.
“Applicable
Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit
Amount as such percentage is set forth on Annex I.
-2-
“Approved
Counterparty” means (a) any Lender or any Affiliate of a Lender and (b) any
other Person whose long term senior unsecured debt rating is A-/A3 by S&P or
Xxxxx’x (or their equivalent) or higher.
“Approved
Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank revolving loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c)
an
entity or an Affiliate of an entity that administers or manages a
Lender.
“Approved
Petroleum Engineers” means (a) Netherland, Xxxxxx & Associates, Inc.,
(b) Xxxxx Xxxxx Company Petroleum Consultants, L.P. and (c) any other
independent petroleum engineers reasonably acceptable to the Administrative
Agent.
“Arranger”
means KeyBank National
Association, in its capacities as the sole lead arranger and sole
bookrunner hereunder.
“Assignment
and Assumption” means an assignment and assumption entered into by a Lender
and an assignee (with the consent of any party whose consent is required
by Section 12.04(b)), and accepted by the Administrative Agent, in the form
of Exhibit F or any other form approved by the Administrative
Agent.
“Availability
Period” means the period from and including the Effective Date to but
excluding the Termination Date.
“Board”
means the Board of Governors of the Federal Reserve System of the United States
of America or any successor Governmental Authority.
“Borrowing”
means Loans of the same Type, made, converted or continued on the same date
and,
in the case of Eurodollar Loans, as to which a single Interest Period is in
effect.
“Borrowing
Base” means at any time an amount equal to the amount determined in
accordance with Section 2.07, as the same may be adjusted from time to time
pursuant to Section 8.13(c) or Section 9.12.
“Borrowing
Base Deficiency” means the deficiency which occurs any time the total
Revolving Credit Exposures exceeds the Borrowing Base then in
effect.
“Borrowing
Base Utilization Percentage” means, as of any day, the fraction expressed as
a percentage, the numerator of which is the sum of the Revolving Credit
Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.
“Borrowing
Request” means a request by the Borrower for a Borrowing in accordance with
Section 2.03.
“Business
Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in Cleveland, Ohio are authorized or required by law to remain
closed; and if such day relates to a Borrowing or continuation of, a payment
or
prepayment of principal of or
-3-
interest
on, or a conversion of or into, or the Interest Period for, a Eurodollar Loan
or
a notice by the Borrower with respect to any such Borrowing or continuation,
payment, prepayment, conversion or Interest Period, any day which is also a
day
on which dealings in dollar deposits are carried out in the London interbank
market.
“Capital
Leases” means, in respect of any Person, all leases which shall have been,
or should have been, in accordance with GAAP, recorded as capital leases on
the
balance sheet of the Person liable (whether contingent or otherwise) for the
payment of rent thereunder.
“Casualty
Event” means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of its Subsidiaries
having a fair market value in excess of $5,000,000 in the
aggregate
for any calendar year.
“Change
in Control” means (a) any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the SEC thereunder, but
excluding any employee benefit plan of such Person or its Subsidiaries, and
any
Person acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan), other than the holders of Equity Interests
of
the Borrower shown on Schedule 1.02 hereto, any wholly-owned enterprise or
subsidiary of any such voting member or any of their Wholly-Owned Subsidiaries
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 of the
Securities Exchange Act of 1934) of 51% or more of the equity securities of
the
Borrower entitled to vote for members of the board of directors of the Borrower,
or (b) during any period of 24 consecutive months, a majority of the members
on
the board of directors of the Borrower cease to be Persons who were either
(i)
nominated by the board of directors of the Borrower or (ii) appointed by
directors so nominated.
“Change
in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or,
for purposes of Section 5.01(b), by any lending office of such Lender or by
such
Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this
Agreement.
“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and
any
successor statute.
“Commitment”
means, with respect to each Lender, the commitment of such Lender to make Loans
and to acquire participations in Letters of Credit hereunder, expressed as
an
amount representing the maximum aggregate amount of such Lender’s Revolving
Credit Exposure hereunder, as such commitment may be (a) modified from time
to
time pursuant to Section 2.06 and (b) modified from time to time pursuant
to assignments by or to such Lender pursuant to Section 12.04(b). The
amount representing each Lender’s Commitment shall at any time be the lesser of
such Lender’s Maximum Credit Amount and such Lender’s Applicable Percentage of
the then effective Borrowing Base.
-4-
“Commitment
Fee Rate” has the meaning set forth in the definition of “Applicable
Margin”.
“Consolidated
Net Income” means with respect to the Borrower and the Consolidated
Subsidiaries, for any period, the aggregate of the net income (or loss) of
the
Borrower and the Consolidated Subsidiaries after allowances for taxes for such
period determined on a consolidated basis in accordance with GAAP; provided
that
there shall be excluded from such net income (to the extent otherwise included
therein) the following: (a) the net income of any Person in which the Borrower
or any Consolidated Subsidiary has an interest (which interest does not cause
the net income of such other Person to be consolidated with the net income
of
the Borrower and the Consolidated Subsidiaries in accordance with GAAP), except
to the extent of the amount of dividends or distributions actually paid in
cash
during such period by such other Person to the Borrower or to a Consolidated
Subsidiary, as the case may be; (b) the net income (but not loss) during such
period of any Consolidated Subsidiary to the extent that the declaration or
payment of dividends or similar distributions or transfers or loans by that
Consolidated Subsidiary is not at the time permitted by operation of the terms
of its charter or any agreement, instrument or Governmental Requirement
applicable to such Consolidated Subsidiary or is otherwise restricted or
prohibited, in each case determined in accordance with GAAP; (c) the net income
(or loss) of any Person acquired in a pooling-of-interests transaction for
any
period prior to the date of such transaction; (d) any extraordinary gains or
losses during such period, (e) non-cash gains, losses or adjustments under
FASB
Statement No. 133 as a result of changes in the fair market value of derivatives
and (f) any gains or losses attributable to writeups or writedowns of assets;
and provided further that if the Borrower or any Consolidated Subsidiary shall
acquire or dispose of any Property during such period, then Consolidated Net
Income shall be calculated after giving pro forma effect to such
acquisition or disposition, as if such acquisition or disposition had occurred
on the first day of such period.
“Consolidated
Subsidiaries” means each Subsidiary of the Borrower (whether now existing or
hereafter created or acquired) the financial statements of which shall be (or
should have been) consolidated with the financial statements of the Borrower
in
accordance with GAAP.
“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ability to exercise voting power, by contract (other than a contract under
which
a Person, or one or more Persons that otherwise constitute a Subsidiary of
such
Person, provides management, operation or similar services but does not control
the policies of such Person (including the appointment of such management))
or
otherwise. For the purposes of this definition, and without limiting
the generality of the foregoing, any Person that owns directly or indirectly
10%
or more of the Equity Interests having ordinary voting power for the election
of
the directors or other governing body of a Person (other than as a limited
partner of such other Person) will be deemed to “control” such other
Person. “Controlling” and “Controlled” have meanings
correlative thereto.
“Debt”
means, for any Person, each of the following (without duplication): (a) all
obligations of such Person for borrowed money or evidenced by bonds, bankers’
acceptances, debentures, notes or other similar instruments; (b) all
reimbursement obligations of such Person (whether contingent or otherwise)
in
respect of letters of credit, surety or other bonds and similar
-5-
instruments;
(c) all accounts payable and all accrued expenses, liabilities or other
obligations of such Person to pay the deferred purchase price of Property or
services; (d) all obligations of such Person under Capital Leases; (e) all
obligations under Synthetic Leases; (f) all Debt (as defined in the other
clauses of this definition) of others secured by (or for which the holder of
such Debt has an existing right, contingent or otherwise, to be secured by)
a
Lien on any Property of such Person, whether or not such Debt is assumed by
such
Person; (g) all Debt (as defined in the other clauses of this definition) of
others guaranteed by such Person or in which such Person otherwise assures
a
creditor against loss of such Debt (howsoever such assurance shall be made)
to
the extent of the lesser of the amount of such Debt and the maximum stated
amount of such guarantee or assurance against loss; (h) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial
position or covenants of others or to purchase the Debt or Property of others;
(i) obligations of such Person to deliver commodities, goods or services,
including, without limitation, Hydrocarbons, in consideration of one or more
advance payments, other than gas balancing arrangements, take or pay
arrangements or other similar arrangements, in each case in the ordinary course
of business; (j) obligations of such Person to pay for goods or services even
if
such goods or services are not actually received or utilized by such Person;
(k)
any Debt of a partnership for which such Person is liable either by agreement,
by operation of law or by a Governmental Requirement but only to the extent
of
such liability; (l) Disqualified Capital Stock of such Person; and (m) the
undischarged balance of any production payment created by such Person or for
the
creation of which such Person directly or indirectly received
payment. Provided however, the term “Debt” shall not include accruals
for plugging and abandonment costs. The Debt of any Person shall
include all obligations of such Person of the character described above to
the
extent such Person remains legally liable in respect thereof notwithstanding
that any such obligation is not included as a liability of such Person under
GAAP.
“Default”
means any event or condition which constitutes an Event of Default or which
upon
notice, lapse of time or both would, unless cured or waived, become an Event
of
Default.
“Disqualified
Capital Stock” means any Equity Interest that, by its terms (or by the terms
of any security into which, mandatorily or at the option of the holder, it
is
convertible or for which it is exchangeable) or upon the happening of any event,
(i) matures or is mandatorily redeemable for any consideration other than other
Equity Interests (which would not constitute Disqualified Capital Stock),
pursuant to a sinking fund obligation or otherwise, or (ii) is convertible
or
exchangeable for Debt or redeemable for any consideration other than other
Equity Interests (which would not constitute Disqualified Capital Stock) at
the
option of the holder thereof, in whole or in part, in either case, on or prior
to the date that is one year after the earlier of (a) the Maturity Date and
(b)
the date on which there are no Loans, LC Exposure or other obligations hereunder
outstanding and all of the Commitments are terminated.
“dollars”
or “$” refers to lawful money of the United States of America.
“Domestic
Subsidiary” means any Subsidiary that is organized under the laws of the
United States of America or any state thereof or the District of
Columbia.
“EBITDAX”
means, for any period, the sum of Consolidated Net Income for such period plus
the following expenses or charges to the extent deducted from Consolidated
Net
Income in
-6-
such
period: interest, income taxes, depreciation, depletion, amortization,
exploration expenses and other similar non-cash charges (including non-cash
expenses associated with the granting of stock options to employees and
directors of the Borrower or its Subsidiaries), minus all non-cash income added
to Consolidated Net Income.
“Effective
Date” means the date on which the conditions specified in Section 6.01are
satisfied (or waived in accordance with Section 12.02).
“Engineering
Reports” has the meaning assigned such term in Section
2.07(c)(i).
“Environmental
Laws” means any and all Governmental Requirements pertaining in any way to
health, safety, the environment or the preservation or reclamation of natural
resources, in effect in any and all jurisdictions in which the Borrower or
any
Subsidiary is conducting or at any time has conducted business, or where any
Property of the Borrower or any Subsidiary is located, including without
limitation, the Oil Pollution Act of 1990 (“OPA”), as amended, the Clean
Air Act, as amended, the Comprehensive Environmental, Response, Compensation,
and Liability Act of 1980 (“CERCLA”), as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Safety and Health Act of
1970, as amended, the Resource Conservation and Recovery Act of 1976
(“RCRA”), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection Governmental
Requirements. The term “oil” shall have the meaning specified in OPA,
the terms “hazardous substance” and “Release” (or “threatened
Release”) have the meanings specified in CERCLA, the terms “solid
waste” and “disposal” (or “disposed”) have the meanings
specified in RCRA and the term “oil and gas waste” shall mean those waste
that are excluded from the definition of “hazardous waste” pursuant to 40
C.F.R. Section 261.4(b)(5) (“Section 261.4(b)(5)”); provided, however,
that (a) in the event either OPA, CERCLA, RCRA or Section 261.4(b)(5) is amended
so as to broaden the meaning of any term defined thereby, such broader meaning
shall apply subsequent to the effective date of such amendment and (b) to the
extent the laws of the state or other jurisdiction in which any Property of
the
Borrower or any Subsidiary is located establish a meaning for “oil,”
“hazardous substance,” “Release,” “solid waste,”
“disposal” or “oil and gas waste” which is broader than that
specified in either OPA, CERCLA, RCRA or Section 261.4(b)(5), such broader
meaning shall apply.
“Environmental
Permit” means any permit, registration, license, approval, consent,
exemption, variance, or other authorization required under or issued pursuant
to
applicable Environmental Laws.
“Equity
Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or
other equity ownership interests in a Person, and any warrants, options or
other
rights entitling the holder thereof to purchase or acquire any such Equity
Interest.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and
any
successor statute.
-7-
“ERISA
Affiliate” means each trade or business (whether or not incorporated) which
together with the Borrower or a Subsidiary would be deemed to be a “single
employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b),
(c), (m) or (o) of section 414 of the Code.
“ERISA
Event” means (a) a “Reportable Event” described in section 4043 of ERISA and
the regulations issued thereunder (other than an award for which the 30-day
notice period is waived), (b) the withdrawal of the Borrower, a Subsidiary
or
any ERISA Affiliate from a Plan during a plan year in which it was a
“substantial employer” as defined in section 4001(a)(2) of ERISA, (c) the filing
of a notice of intent to terminate a Plan in a distress termination under
Section 4041(c) of ERISA or the treatment of a Plan amendment as a termination
under section 4041 of ERISA, (d) the institution of proceedings to terminate
a
Plan by the PBGC, (e) receipt of a notice of withdrawal liability pursuant
to
Section 4202 of ERISA or (f) any other event or condition which might constitute
grounds under section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan.
“Eurodollar”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or
the Loans comprising such Borrowing, are bearing interest at a rate determined
by reference to the Adjusted LIBO Rate.
“Event
of Default” has the meaning assigned such term in Section
10.01.
“Excepted
Liens” means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens in connection with
workers’ compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) landlord’s liens,
operators’, vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’,
suppliers’, workers’, materialmen’s, construction or other like Liens, in each
case arising in the ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties each of which
is in respect of obligations that are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (d) contractual Liens which arise
in the ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or exchange
of oil and natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements, overriding royalty agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which
are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Subsidiary or materially impair
the
value of such
-8-
Property
subject thereto; (e) Liens arising solely by virtue of any statutory or common
law provision relating to banker’s liens, rights of set-off or similar rights
and remedies and burdening only deposit accounts or other funds maintained
with
a creditor depository institution, provided that no such deposit account is
a
dedicated cash collateral account or is subject to restrictions against access
by the depositor in excess of those set forth by regulations promulgated by
the
Board and no such deposit account is intended by the Borrower or any of its
Subsidiaries to provide collateral to the depository institution for any other
purpose; (f) easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations in any Property of the Borrower or any
Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal
or
other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, that do not secure
any monetary obligations and which in the aggregate do not materially impair
the
use of such Property for the purposes of which such Property is held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (g) Liens on cash or securities pledged to secure performance
of tenders, surety and appeal bonds, government contracts, performance and
return of money bonds, bids, trade contracts, leases, statutory obligations,
regulatory obligations and other obligations of a like nature incurred in the
ordinary course of business and (h) judgment and attachment Liens not giving
rise to an Event of Default, provided that any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall not
have been finally terminated or the period within which such proceeding may
be
initiated shall not have expired and no action to enforce such Lien has been
commenced; provided, further that Liens described in clauses (a) through (e)
shall remain “Excepted Liens” only for so long as no action to enforce such Lien
has been commenced and no intention to subordinate the first priority Lien
granted in favor of the Administrative Agent and the Lenders is to be hereby
implied or expressed by the permitted existence of such Excepted
Liens.
“Excluded
Taxes” means, with respect to the Administrative Agent, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrower or any Guarantor hereunder or under any other
Loan Document, (a) income or franchise taxes (however denominated) imposed
on
(or measured by) its net income by the United States of America or such other
jurisdiction under the laws of which such recipient is organized or in which
its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed
by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower or any Guarantor is located and (c) in the
case of a Foreign Lender, any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender’s failure to comply with Section 5.03(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time
of
designation of a new lending office (or assignment), to receive additional
amounts with respect to such withholding tax pursuant to Section 5.03(a)
or Section 5.03(c).
“Existing
Credit
Agreement”
means that
certain Credit Agreement dated October 2, 2006 by and among Xxx Energy IV,
LLC,
as borrower and KeyBank National Association, as administrative
agent.
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“Federal
Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day
by
the Federal Reserve Bank of New York, or, if such rate is not so published
for
any day that is a Business Day, the average (rounded upwards, if necessary,
to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
“Financial
Officer” means, for any Person, the chief financial officer, principal
accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.
“Financial
Statements” means the financial statement or statements of the Borrower and
its Consolidated Subsidiaries referred to in Section 7.04(a).
“Foreign
Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single
jurisdiction.
“Foreign
Subsidiary” means any Subsidiary that is not a Domestic
Subsidiary.
“GAAP”
means generally accepted accounting principles in the United States of America
as in effect from time to time subject to the terms and conditions set forth
in
Section 1.05.
“Governmental
Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory
or
administrative powers or functions of or pertaining to government over the
Borrower, any Subsidiary, any of their Properties, any Agent, the Issuing Bank
or any Lender.
“Governmental
Requirement” means any law, statute, code, ordinance, order, determination,
rule, regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other directive or requirement, whether now or
hereinafter in effect, including, without limitation, Environmental Laws, energy
regulations and occupational, safety and health standards or controls, of any
Governmental Authority.
“Guarantors”
means, until it or any of them is released as a Guarantor pursuant to the Loan
Documents:
(a) Xxx
Energy I, LLC,
(b) Xxx
Energy Operating Corp.,
(c) Penn
Tex Energy, Inc.,
-10-
(d) PennTex
Resources Illinois, Inc.,
(e) Xxx
Energy IV, LLC
(f) PennTex
Resources, L.P.,
and
(g) each
other Subsidiary that guarantees the Indebtedness pursuant to Section
8.14(b).
“Guaranty
Agreement” means an agreement executed by the Guarantors in form and
substance satisfactory to the Administrative Agent, unconditionally guarantying
on a joint and several basis, payment of the Indebtedness, as the same may
be
amended, modified or supplemented from time to time.
“Hazardous
Material” means any substance regulated or as to which liability might arise
under any applicable Environmental Law and including, without
limitation: (a) any chemical, compound, material, product, byproduct,
substance or waste defined as or included in the definition or meaning of
“hazardous substance,” “hazardous material,” “hazardous waste,” “solid waste,”
“toxic waste,” “extremely hazardous substance,” “toxic substance,”
“contaminant,” “pollutant,” or words of similar meaning or import found in any
applicable Environmental Law; (b) petroleum hydrocarbons, petroleum products,
petroleum substances, natural gas, oil, oil and gas waste, crude oil, and any
components, fractions, or derivatives thereof; and (c) radioactive materials,
asbestos containing materials, polychlorinated biphenyls, or radon.
“Highest
Lawful Rate” means, with respect to each Lender, the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the Notes or on other Indebtedness
under laws applicable to such Lender which are presently in effect or, to the
extent allowed by law, under such laws from time to time in effect.
“Hydrocarbon
Interests” means all rights, titles, interests and estates now or hereafter
acquired in and to oil and gas leases, oil, gas and mineral leases, or other
liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty
and royalty interests, net profit interests and production payment interests,
including any reserved or residual interests of whatever nature.
“Hydrocarbons”
means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined
or separated therefrom.
“Indebtedness”
means, without duplication, any and all amounts owing or to be owing by the
Borrower, any Subsidiary or any Guarantor whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due,
now
existing or hereafter arising: (a) to the Administrative Agent, the Issuing
Bank
or any Lender under any Loan Document; (b) to any Lender or any Affiliate of
a
Lender under any Swap Agreement between the Borrower or any Subsidiary and
such
Lender or Affiliate of a Lender while such Person (or in the case of its
Affiliate, the Person affiliated therewith) is a Lender hereunder and (c) all
renewals, extensions and/or rearrangements of any of the above.
-11-
“Indemnified
Taxes” means Taxes other than Excluded Taxes.
“Index
Debt” means senior, unsecured, long-term indebtedness for borrowed money of
the Borrower that is not guaranteed by any other Person (other than a Guarantor)
or subject to any other credit enhancement.
“Initial
Reserve Report” means the report of Netherland, Xxxxxx
and
Associates, Inc. dated as of February 22,
2007,
with respect to certain Oil and Gas Properties of the Borrower and its
Subsidiaries as of December 31, 2006.
“Interest
Election Request” means a request by the Borrower to convert or continue a
Borrowing in accordance with Section 2.04.
“Interest
Expense” means, for any period, the sum (determined without duplication) of
the aggregate gross interest expense of the Borrower and the Consolidated
Subsidiaries for such period, including to the extent included in interest
expense under GAAP: (a) amortization of debt discount, (b)
capitalized interest and (c) the portion of any payments or accruals under
Capital Leases allocable to interest expense, plus the portion of any payments
or accruals under Synthetic Leases allocable to interest expense whether or
not
the same constitutes interest expense under GAAP.
“Interest
Payment Date” means (a) with respect to any ABR Loan, the last day of each
March, June, September and December and (b) with respect to any Eurodollar
Loan,
the last day of the Interest Period applicable to the Borrowing of which such
Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period.
“Interest
Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three, six or nine
months thereafter, as the Borrower may elect; provided, that (a) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day
of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.
“Interim
Redetermination” has the meaning assigned such term in Section
2.07(b).
“Interim
Redetermination Date” means the date on which a Borrowing Base that has been
redetermined pursuant to an Interim Redetermination becomes effective as
provided in Section 2.07(d).
-12-
“Investment”
means, for any Person: (a) the acquisition (whether for cash, Property, services
or securities or otherwise) of Equity Interests of any other Person or any
agreement to make any such acquisition (including, without limitation, any
“short sale” or any sale of any securities at a time when such securities are
not owned by the Person entering into such short sale); (b) the making of any
deposit with, or advance, loan or capital contribution to, the assumption of
Debt of, the purchase or other acquisition of any other Debt of or equity
participation or interest in, or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property
to
such Person, but excluding any such advance, loan or extension of credit having
a term not exceeding ninety (90) days representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business);
(c) the purchase or acquisition (in one or a series of transactions) of Property
of another Person that constitutes a business unit or (d) the entering into
of
any guarantee of, or other contingent obligation (including the deposit of
any
Equity Interests to be sold) with respect to, Debt or other liability of any
other Person and (without duplication) any amount committed to be advanced,
lent
or extended to such Person.
“Issuing
Bank” means KeyBank National
Association, in its capacity as the issuer of Letters of Credit
hereunder, and its successors in such capacity as provided in Section
2.08(i). The Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which
case the term “Issuing Bank” shall include any such Affiliate with
respect to Letters of Credit issued by such Affiliate.
“LC
Commitment” at any time means ten million dollars
($10,000,000).
“LC
Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.
“LC
Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount
of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Lender at any time
shall be its Applicable Percentage of the total LC Exposure at such
time.
“Lenders”
means the Persons listed on Annex I and any Person that shall have become a
party hereto pursuant to an Assignment and Assumption, other than any such
Person that ceases to be a party hereto pursuant to an Assignment and
Assumption, and any Person that shall have become a party hereto as an
Additional Lender pursuant to Section 2.06(c).
“Letter
of Credit” means any letter of credit issued pursuant to this
Agreement.
“Letter
of Credit Agreements” means all letter of credit applications and other
agreements (including any amendments, modifications or supplements thereto)
submitted by the Borrower, or entered into by the Borrower, with the Issuing
Bank relating to any Letter of Credit.
“LIBO
Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Page 3750 of the Dow Xxxxx Market Service (or
on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate
-13-
quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the
event that such rate is not available at such time for any reason, then the
“LIBO Rate” with respect to such Eurodollar Borrowing for such Interest
Period shall be the rate at which dollar deposits of $5,000,000 and for a
maturity comparable to such Interest Period are offered by the principal London
office of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.
“Lien”
means any interest in Property securing an obligation owed to, or a claim by,
a
Person other than the owner of the Property, whether such interest is based
on
the common law, statute or contract, and whether such obligation or claim is
fixed or contingent, and including but not limited to (a) the lien or security
interest arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes or (b) production payments and the like payable out of Oil
and
Gas Properties. The term “Lien” shall include easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations.
“Loan
Documents” means this Agreement, the Notes, the Letter of Credit Agreements,
the Letters of Credit and the Security Instruments.
“Loans”
means the loans made by the Lenders to the Borrower pursuant to this
Agreement.
“Majority
Lenders” means, at any time while no Loans or LC Exposure is outstanding,
Lenders having at least sixty-six and two-thirds percent (66-2/3%) of the
Aggregate Maximum Credit Amounts; and at any time while any Loans or LC Exposure
is outstanding, Lenders holding at least sixty-six and two-thirds percent
(66-2/3%) of the outstanding aggregate principal amount of the Loans and
participation interests in Letters of Credit (without regard to any sale by
a
Lender of a participation in any Loan under Section 12.04(c)).
“Material
Adverse Effect” means a material adverse change in, or material adverse
effect on (a) the business, operations, Property, condition (financial or
otherwise) or prospects of the Borrower and the Subsidiaries taken as a whole,
(b) the ability of the Borrower, any Subsidiary or any Guarantor to perform
any
of its obligations under any Loan Document to which it is a party, (c) the
validity or enforceability of any Loan Document or (d) the rights and remedies
of or benefits available to the Administrative Agent, any other Agent, the
Issuing Bank or any Lender under any Loan Document.
“Material
Domestic Subsidiary” means, as of any date, any Domestic Subsidiary that (a)
is a Wholly-Owned Subsidiary and (b) together with its Subsidiaries, owns
Property having a fair market value of $5,000,000 or
more.
-14-
“Material
Indebtedness” means any Debt (other than the Loans and Letters of Credit),
or net obligations in respect of one or more Swap Agreements, of any one or
more
of the Borrower and its Subsidiaries, in either case in principal amount
exceeding $2,000,000. For
purposes of determining Material Indebtedness, the “principal amount” of the
obligations of the Borrower or any Subsidiary in respect of any Swap Agreement
at any time shall be the Swap Termination Value determined under the
circumstances and in accordance with the provision of clause (a) of such term
“Swap Termination Value”.
“Maturity
Date” means September 28,
2012.
“Maximum
Credit Amount” means, as to each Lender, the amount set forth opposite such
Lender’s name on Annex I under the caption “Maximum Credit Amounts”, as the same
may be (a) reduced or terminated from time to time in connection with a
reduction or termination of the Aggregate Maximum Credit Amounts pursuant to
Section 2.06(b), (b) increased from time to time pursuant to Section 2.06(c),
or
(c) modified from time to time pursuant to any assignment permitted by Section
12.04(b).
“Maximum
Credit Amount Increase Certificate” has the meaning assigned to such term in
Section 2.06(c)(ii)(E).
“Moody’s”
means Xxxxx’x Investors Service, Inc. and any successor thereto that is a
nationally recognized rating agency.
“Mortgaged
Property” means any Property owned by the Borrower or any Guarantor which is
subject to the Liens existing and to exist under the terms of the Security
Instruments.
“Multiemployer
Plan” means any employee pension plan as defined in Section 3(2) of ERISA
covered by Title IV of ERISA that is a multiemployer plan as defined in section
3(37) or 4001 (a)(3) of ERISA.
“New
Borrowing Base Notice” has the meaning assigned such term in Section
2.07(d).
“Notes”
means the promissory notes of the Borrower described in Section 2.07(d) and
being substantially in the form of Exhibit A, together with all amendments,
modifications, replacements, extensions and rearrangements thereof.
“Oil
and Gas Properties” means (a) Hydrocarbon Interests; (b) the Properties now
or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority)
which
may affect all or any portion of the Hydrocarbon Interests; (d) all
operating agreements, contracts and other agreements, including production
sharing contracts and agreements, which relate to any of the Hydrocarbon
Interests or the production, sale, purchase, exchange or processing of
Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all
Hydrocarbons in and under and which may be produced and saved or attributable
to
the Hydrocarbon Interests, including all oil in tanks, and all rents, issues,
profits, proceeds, products, revenues and other incomes from or attributable
to
the Hydrocarbon Interests; (f) all tenements, hereditaments, appurtenances
and
Properties in any manner
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appertaining,
belonging, affixed or incidental to the Hydrocarbon Interests and (g) all
Properties, rights, titles, interests and estates described or referred to
above, including any and all Property, real or personal, now owned or
hereinafter acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of such Hydrocarbon
Interests or Property (excluding drilling rigs, automotive equipment, rental
equipment or other personal Property which may be on such premises for the
purpose of drilling a well or for other similar temporary uses) and including
any and all oil xxxxx, gas xxxxx, injection xxxxx or other xxxxx, buildings,
structures, fuel separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, tanks and tank batteries, fixtures,
valves, fittings, machinery and parts, engines, boilers, meters, apparatus,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, surface leases, rights-of-way, easements and servitudes together
with
all additions, substitutions, replacements, accessions and attachments to any
and all of the foregoing.
“Organizational
Documents” means, with respect to any Person, (a) in the case of any
corporation, the certificate of incorporation and by-laws (or similar documents)
of such Person, (b) in the case of any limited liability company, the
certificate of formation and limited liability company agreement (or similar
documents) of such Person, (c) in the case of any limited partnership, the
certificate of formation and limited partnership agreement (or similar
documents) of such Person, (d) in the case of any general partnership, the
partnership agreement (or similar document) of such Person and (e) in any other
case, the functional equivalent of the foregoing.
“Other
Taxes” means any and all present or future stamp or documentary taxes or any
other excise or Property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement and any other Loan
Document.
“Participant”
has the meaning set forth in Section 12.04(c)(i).
“PBGC”
means the Pension Benefit Guaranty Corporation, or any successor
thereto.
“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.
“Plan”
means any employee pension benefit plan, as defined in section 3(2) of ERISA,
that is subject to Title IV of ERISA, other than a Multiemployer Plan, which
(a)
is currently or hereafter sponsored, maintained or contributed to by the
Borrower, a Subsidiary or an ERISA Affiliate or (b) the Borrower or a Subsidiary
or an ERISA Affiliate may have any liability or obligation, whether known or
unknown, asserted or unasserted, determined or determinable, absolute or
contingent, accrued or unaccrued and whether due or to become due.
“Prime
Rate” means the rate of interest per annum publicly announced from time to
time by KeyBank
as its prime
rate in effect at its principal office in Cleveland, Ohio;
each change in the Prime Rate shall be effective from and including the date
such change is publicly announced as being effective. Such rate is
set by KeyBank as a general reference rate of interest, taking into account
such
factors as KeyBank may deem appropriate; it being understood that many
of
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KeyBank’s
commercial or other loans are priced in relation to such rate, that it is not
necessarily the lowest or best rate actually charged to any customer and that
KeyBank may make various commercial or other loans at rates of interest having
no relationship to such rate.
“Property”
means any interest in any kind of property or asset, whether real, personal
or
mixed, or tangible or intangible, including, without limitation, cash,
securities, accounts and contract rights.
“Proposed
Borrowing Base” has the meaning assigned to such term in Section
2.07(c)(i).
“Proposed
Borrowing Base Notice” has the meaning assigned to such term in Section
2.07(c)(ii).
“Proved
Reserves” means “Proved Reserves” as defined in the Definitions for Oil and
Gas Reserves (in this paragraph, the “Definitions”) promulgated by the
Society of Petroleum Engineers (or any generally recognized successor) as in
effect at the time in question. “Proved Developed Producing
Reserves” means Proved Reserves which are categorized as both “Developed”
and “Producing” in the Definitions, “Proved Developed Nonproducing
Reserves” means Proved Reserves which are categorized as both “Developed”
and “Nonproducing” in the Definitions, “Proved Developed Reserves” means
the sum of Proved Developed Producing Reserves and Proved Developed Nonproducing
Reserves, and “Proved Undeveloped Reserves” means Proved Reserves which
are categorized as “Undeveloped” in the Definitions.
“Redemption”
means with respect to any Debt, the repurchase, redemption, prepayment,
repayment, defeasance or any other acquisition or retirement for value (or
the
segregation of funds with respect to any of the foregoing) of such
Debt. “Redeem” has the correlative meaning
thereto.
“Redetermination
Date” means, with respect to any Scheduled Redetermination or any Interim
Redetermination, the date that the redetermined Borrowing Base related thereto
becomes effective pursuant to Section 2.07(d).
“Register”
has the meaning assigned such term
in Section 12.04(b)(iv).
“Regulation
D” means Regulation D of the Board, as the same may be amended, supplemented
or replaced from time to time.
“Related
Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors (including attorneys, accountants and experts) of such Person and
such
Person’s Affiliates.
“Release”
has the meaning assigned such term in the definition of the term “Environmental
Laws”.
“Remedial
Work” has the meaning assigned such term in Section 8.10(a).
“Reserve
Report” means a report, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth, as of each January 1st or July 1st (or
such
other date in the
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event
of
an Interim Redetermination) the oil and gas reserves attributable to the Oil
and
Gas Properties of the Borrower and the Subsidiaries, together with a projection
of the rate of production and future net income, taxes, operating expenses
and
capital expenditures with respect thereto as of such date, based upon the
economic assumptions consistent with the Administrative Agent’s lending
requirements at the time.
“Responsible
Officer” means, as to any Person, the Chief Executive Officer, the
President, any Financial Officer or any Vice President of such
Person. Unless otherwise specified, all references to a Responsible
Officer herein shall mean a Responsible Officer of the Borrower.
“Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in the
Borrower or any of its Subsidiaries, or any payment (whether in cash, securities
or other Property), including any sinking fund or similar deposit, on account
of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such Equity Interests in the Borrower or any of its Subsidiaries or
any
option, warrant or other right to acquire any such Equity Interests in the
Borrower or any of its Subsidiaries.
“Revolving
Credit Exposure” means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Loans and its LC Exposure at
such time.
“Scheduled
Redetermination” has the meaning assigned such term in Section
2.07(b).
“Scheduled
Redetermination Date” means the date on which a Borrowing Base that has been
redetermined pursuant to a Scheduled Redetermination becomes effective as
provided in Section 2.07(d).
“SEC”
means the Securities and Exchange Commission or any successor Governmental
Authority.
“Security
Instruments” means the Guaranty Agreement, mortgages, deeds of trust and
other agreements, instruments or certificates described or referred to in
Exhibit E, and any and all other agreements, instruments, consents or
certificates now or hereafter executed and delivered by the Borrower or any
other Person (other than Swap Agreements with the Lenders or any Affiliate
of a
Lender or participation or similar agreements between any Lender and any other
lender or creditor with respect to any Indebtedness pursuant to this Agreement)
in connection with, or as security for the payment or performance of the
Indebtedness, the Notes, this Agreement, or reimbursement obligations under
the
Letters of Credit, as such agreements may be amended, modified, supplemented
or
restated from time to time.
“Senior
Debt” means all Debt incurred under this Agreement.
“S&P”
means Standard & Poor’s Ratings Group, a division of The XxXxxx-Xxxx
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
“Statutory
Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus
the
aggregate of
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the
maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board to which
the Administrative Agent is subject, with respect to the Adjusted LIBO Rate,
for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board). Such reserve percentages shall include
those imposed pursuant to such Regulation D. Eurodollar Loans shall
be deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation
D or
any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
“Subsidiary”
means: (a) any Person of which at least a majority of the outstanding Equity
Interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors, manager or other governing body of such Person
(irrespective of whether or not at the time Equity Interests of any other class
or classes of such Person shall have or might have voting power by reason of
the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the Borrower or one or more of its Subsidiaries or by the Borrower
and one or more of its Subsidiaries and (b) any partnership of which the
Borrower or any of its Subsidiaries is a general partner. Unless
otherwise indicated herein, each reference to the term “Subsidiary” shall
mean a Subsidiary of the Borrower.
“Swap
Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement, whether exchange traded,
“over-the-counter” or otherwise, involving, or settled by reference to, one or
more interest rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any combination
of these transactions; provided that no phantom stock or similar plan providing
for payments only on account of services provided by current or former
directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.
“Swap
Termination Value” means, in respect of any one or more Swap Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Agreements, (a) for any date on or after the
date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as
the
xxxx-to-market value(s) for such Swap Agreements, as determined by the
counterparties to such Swap Agreements.
“Synthetic
Leases” means, in respect of any Person, all leases which shall have been,
or should have been, in accordance with GAAP, treated as operating leases on
the
financial statements of the Person liable (whether contingently or otherwise)
for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes,
if
the lessee in respect thereof is obligated to either purchase for an amount
in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.
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“Taxes”
means any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.
“Termination
Date” means the earlier of the Maturity Date and the date of termination of
the Commitments.
“Total
Debt” means, at any date, all Debt of the Borrower and the Consolidated
Subsidiaries on a consolidated basis, excluding (i) non-cash obligations under
FAS 133 and (ii) accounts payable and other accrued liabilities (for the
deferred purchase price of Property or services) from time to time incurred
in
the ordinary course of business which are not greater than sixty (60) days
past
the date of invoice or which are being contested in good faith by appropriate
action and for which adequate reserves have been maintained in accordance with
GAAP.
“Transactions”
means, with respect to (a) the Borrower, the execution, delivery and performance
by the Borrower of this Agreement and each other Loan Document, the borrowing
of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder, and the grant of Liens by the Borrower on Mortgaged Properties and
other Properties pursuant to the Security Instruments and (b) each Guarantor,
the execution, delivery and performance by such Guarantor of each Loan Document
to which it is a party, the guaranteeing of the Indebtedness and the other
obligations under the Guaranty Agreement by such Guarantor and such Guarantor’s
grant of the security interests and provision of collateral under the Security
Instruments, and the grant of Liens by such Guarantor on Mortgaged Properties
and other Properties pursuant to the Security Instruments.
“Type”,
when used in reference to any Loan or Borrowing, refers to whether the rate
of
interest on such Loan, or on the Loans comprising such Borrowing, is determined
by reference to the Alternate Base Rate or the Adjusted LIBO Rate.
“Wholly-Owned
Subsidiary” means any Subsidiary of which all of the outstanding Equity
Interests (other than any directors’ qualifying shares mandated by applicable
law), on a fully-diluted basis, are owned by the Borrower or one or more of
the
Wholly-Owned Subsidiaries or are owned by the Borrower and one or more of the
Wholly-Owned Subsidiaries.
Section
1.03 Types of
Loans and Borrowings. For
purposes of this Agreement, Loans and Borrowings, respectively, may be
classified and referred to by Type (e.g., a “Eurodollar Loan” or a
“Eurodollar Borrowing”).
Section
1.04 Terms
Generally; Rules of Construction. The
definitions of terms herein shall apply equally to the singular and plural
forms
of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter
forms. The words “include”, “includes” and “including” shall be
deemed to be followed by the phrase “without limitation”. The word
“will” shall be construed to have the same meaning and effect as the word
“shall”. Unless the context requires otherwise, the word “or” is not
exclusive. Unless the context requires otherwise (a) any definition
of or reference to any agreement, instrument or other document herein shall
be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth in
the
Loan
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Documents),
(b) any reference herein to any law shall be construed as referring to such
law
as amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be construed
to
include such Person’s successors and assigns (subject to the restrictions
contained in the Loan Documents), (d) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (e) with
respect to the determination of any time period, the word “from” means “from and
including” and the word “to” means “to and including” and (f) any reference
herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to,
this Agreement. No provision of this Agreement or any other Loan
Document shall be interpreted or construed against any Person solely because
such Person or its legal representative drafted such provision.
Section
1.05 Accounting Terms and
Determinations; GAAP. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as
to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a
basis
consistent with the Financial Statements except for changes in which the
Borrower’s independent certified public accountants concur and which are
disclosed to the Administrative Agent on the next date on which financial
statements are required to be delivered to the Lenders pursuant to Section
8.01(a); provided that, unless the Borrower and the Majority Lenders shall
otherwise agree in writing, no such change shall modify or affect the manner
in
which compliance with the covenants contained herein is computed such that
all
such computations shall be conducted utilizing financial information presented
consistently with prior periods.
ARTICLE
II
Credits
Section
2.01
Commitments. Subject
to the terms and conditions set forth herein, each Lender agrees to make Loans
to the Borrower during the Availability Period in an aggregate principal amount
that will not result in (a) such Lender’s Revolving Credit Exposure exceeding
such Lender’s Commitment or (b) the total Revolving Credit Exposures exceeding
the total Commitments. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, repay and
reborrow the Loans.
Section
2.02 Loans
and Borrowings.
(a)
Borrowings; Several Obligations. Each Loan shall be made as
part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments are several
and no Lender shall be responsible for any other Lender’s failure to make Loans
as required.
(b)
Types of Loans. Subject to Section 3.03, each Borrowing shall
be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Each Lender at its option may make
any Eurodollar Loan by causing any
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domestic
or foreign branch or Affiliate of such Lender to make such Loan; provided that
any exercise of such option shall not affect the obligation of the Borrower
to
repay such Loan in accordance with the terms of this Agreement.
(c) Minimum
Amounts; Limitation on Number of Borrowings. At the commencement
of each Interest Period for any Eurodollar Borrowing, such Borrowing shall
be in
an aggregate amount that is an integral multiple of $1,000,000 and not less
than $1,000,000. At the time that each ABR Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $1,000,000; provided that an ABR Borrowing may
be
in an aggregate amount that is equal to the entire unused balance of the total
Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.08(e). Borrowings of more
than one Type may be outstanding at the same time, provided that there shall
not
at any time be more than a total of six Eurodollar
Borrowings outstanding. Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request, or to elect to convert
or continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.
(d)
Notes. The
Loans made by each Lender shall be evidenced by a single promissory note of
the
Borrower in substantially the form of Exhibit A, dated, in the case of (i)
any
Lender party hereto as of the date of this Agreement, as of the date of this
Agreement, or (ii) any Lender that becomes a party hereto pursuant to an
Assignment and Assumption, as of the effective date of the Assignment and
Assumption, payable to the order of such Lender in a principal amount equal to
its Maximum Credit Amount as in effect on such date, and otherwise duly
completed. In the event that any Lender’s Maximum Credit Amount
increases or decreases for any reason (whether pursuant to Section 2.06, Section
12.04(b) or otherwise), the Borrower shall deliver or cause to be delivered
on
the effective date of such increase or decrease, a new Note payable to the
order
of such Lender in a principal amount equal to its Maximum Credit Amount after
giving effect to such increase or decrease, and otherwise duly completed (and
the prior Note shall be destroyed or, upon request of the Borrower, returned
to
the Borrower with an indication that the same has been
discharged). The date, amount, Type, interest rate and, if
applicable, Interest Period of each Loan made by each Lender, and all payments
made on account of the principal thereof, shall be recorded by such Lender
on
its books for its Note, and, prior to any transfer, may be endorsed by such
Lender on a schedule attached to such Note or any continuation thereof or on
any
separate record maintained by such Lender. Failure to make any such
notation or to attach a schedule shall not affect any Lender’s or the Borrower’s
rights or obligations in respect of such Loans or affect the validity of such
transfer by any Lender of its Note.
(e)
Loans and Borrowings under the Existing Credit
Agreement. On the Effective Date:
(i) the
Borrower
shall pay all accrued and unpaid commitment fees, break funding fees under
Section 5.02 and all other fees that are outstanding under the Existing Credit
Agreement for the account of each “Lender” under the Existing Credit
Agreement;
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(ii)
each “ABR Loan” and “Eurodollar Loan” outstanding under the Existing Credit
Agreement shall be deemed to be repaid with the proceeds of a new ABR Loan
or
Eurodollar Loan, as applicable, under this Agreement;
(iii)
any letters of credit outstanding under the Existing Credit Agreement shall
be
deemed issued under this Agreement; and
(iv) the
Existing Credit Agreement and the commitments thereunder shall be superceded
by
this Agreement and such commitments shall terminate.
Section
2.03 Requests for
Borrowings. To
request a Borrowing, the Borrower shall notify the Administrative Agent of
such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
12:00 noon, New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00
noon, New York City time, one Business Day before the date of the proposed
Borrowing; provided that no such notice shall be required for any deemed request
of an ABR Borrowing to finance the reimbursement of an LC Disbursement as
provided in Section 2.08(e). Each such telephonic Borrowing Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in
substantially the form of Exhibit B and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information:
(i) the
aggregate amount of the requested Borrowing;
(ii) the
date of such Borrowing, which shall be a Business Day;
(iii) whether
such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(iv)
in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition
of
the term “Interest Period”;
(v) the
amount of the then effective Borrowing Base, the current total Revolving Credit
Exposures (without regard to the requested Borrowing) and the pro forma
total Revolving Credit Exposures (giving effect to the requested Borrowing);
and
(vi) the
location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section
2.05.
If
no
election as to the Type of Borrowing is specified, then the requested Borrowing
shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Each
Borrowing Request shall constitute a representation that the amount of the
requested Borrowing shall not cause the total Revolving Credit Exposures to
exceed the total Commitments (i.e., the lesser of the Aggregate Maximum Credit
Amounts and the then effective Borrowing Base).
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Promptly
following receipt of a Borrowing Request in accordance with this Section 2.03,
the Administrative Agent shall advise each Lender of the details thereof and
of
the amount of such Lender’s Loan to be made as part of the requested
Borrowing.
Section
2.04 Interest
Elections.
(a)
Conversion and Continuance. Each Borrowing initially shall be
of the Type specified in the applicable Borrowing Request and, in the case
of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in
such
Borrowing Request. Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case
of
a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided
in
this Section 2.04. The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each
such
portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall
be
considered a separate Borrowing.
(b) Interest
Election Requests. To make an election pursuant to this Section
2.04, the Borrower shall notify the Administrative Agent of such election by
telephone, fax (or transmit by electronic communication, if arrangements for
doing so have been approved by the Administrative Agent) by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made
on
the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in substantially the form of Exhibit C and signed by the
Borrower.
(c)
Information in Interest Election Requests. Each telephonic,
fax, other approved electronic transmission and written Interest Election
Request shall specify the following information:
(i) the
Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case
the
information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall
be
specified for each resulting Borrowing);
(ii)
the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;
(iii) whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
and
(iv) if
the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.
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If
any
such Interest Election Request requests a Eurodollar Borrowing but does not
specify an Interest Period, then the Borrower shall be deemed to have selected
an Interest Period of one month’s duration.
(d) Notice
to Lenders by the Administrative Agent. Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.
(e) Effect
of Failure to Deliver Timely Interest Election Request and Events of Default
and
Borrowing Base Deficiencies on Interest Election. If the Borrower
fails to deliver a timely Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event
of Default or a Borrowing Base Deficiency has occurred and is
continuing: (i) no outstanding Borrowing may be converted to or, at
the end of its applicable Interest Period, continued as a Eurodollar Borrowing
(and any Interest Election Request that requests such conversion of any
Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall
be ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
Section
2.05 Funding of
Borrowings.
(a) Funding
by Lenders. Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 1:00 p.m., New York City time, to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the
Lenders. The Administrative Agent will make such Loans available to
the Borrower by promptly crediting the amounts so received, in like funds,
to an
account of the Borrower designated by the Borrower in the applicable Borrowing
Request; provided that ABR Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.08(e) shall be remitted by the
Administrative Agent to the Issuing Bank. Nothing herein shall be
deemed to obligate any Lender to obtain the funds for its Loan in any particular
place or manner or to constitute a representation by any Lender that it has
obtained or will obtain the funds for its Loan in any particular place or
manner.
(b) Presumption
of Funding by the Lenders. Unless the Administrative Agent shall
have received notice from a Lender prior to the proposed date of any Borrowing
that such Lender will not make available to the Administrative Agent such
Lender’s share of such Borrowing, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with Section
2.05(a) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not
in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment
to
the Administrative Agent, at (i) in the case of such Lender, the greater of
the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with
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banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan included in such Borrowing.
Section
2.06 Termination,
Reduction and Increase of Aggregate Maximum Credit Amounts.
(a) Scheduled
Termination of Commitments. Unless previously terminated, the
Commitments shall terminate on the Maturity Date. If at any time the
Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or reduced
to zero, then the Commitments shall terminate on the effective date of such
termination or reduction.
(b) Optional
Termination and Reduction of Aggregate Credit Amounts.
(i) The
Borrower may at any time terminate, or from time to time reduce, the Aggregate
Maximum Credit Amounts; provided that (a) each reduction of the Aggregate
Maximum Credit Amounts shall be in an amount that is an integral multiple of
$1,000,000 and
not less than $1,000,000 and (b) the Borrower shall not terminate or reduce
the
Aggregate Maximum Credit Amounts if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 3.04(c), the total Revolving
Credit Exposures would exceed the total Commitments.
(ii) The
Borrower shall notify the Administrative Agent of any election to terminate
or
reduce the Aggregate Maximum Credit Amounts under Section 2.06(b)(i) at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative
Agent shall advise the Lenders of the contents thereof. Each notice
delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall be
irrevocable. Any termination or reduction of the Aggregate Maximum
Credit Amounts shall be permanent and may not be reinstated. Each
reduction of the Aggregate Maximum Credit Amounts shall be made ratably among
the Lenders in accordance with each Lender’s Applicable Percentage.
(c) Optional
Increase in Aggregate Maximum Credit Amounts.
(i) Subject
to the conditions set forth in Section 2.06(c)(ii), the Borrower may increase
the Aggregate Maximum Credit Amounts then in effect with the prior written
consent of the Administrative Agent by increasing the Maximum Credit Amount
of a
Lender or by causing a Person that at such time is not a Lender to become a
Lender (an “Additional Lender”).
(ii) Any
increase in the Aggregate Maximum Credit Amounts shall be subject to the
following additional conditions:
(A) such
increase shall not be less than $10,000,000 unless the
Administrative Agent otherwise consents, and no such increase shall be permitted
if after giving effect thereto the Aggregate Maximum Credit Amounts would exceed
$200,000,000;
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(B) no
Default shall have occurred and be continuing at the effective date of such
increase;
(C)
on the effective date of such increase, no Eurodollar Borrowings shall be
outstanding or if any Eurodollar Borrowings are outstanding, then the effective
date of such increase shall be the last day of the Interest Period in respect
of
such Eurodollar Borrowings unless the Borrower pays compensation required by
Section 5.02;
(D) no
Lender’s Maximum Credit Amount may be increased without the consent of such
Lender;
(E)
if the Borrower elects to increase the Aggregate Maximum Credit Amount by
increasing the Maximum Credit Amount of a Lender, the Borrower and such Lender
shall execute and deliver to the Administrative Agent a certificate
substantially in the form of Exhibit G-1 (a “Maximum Credit Amount Increase
Certificate”), together with a processing and recordation fee of $5,000, and
the Borrower shall deliver a new Note payable to the order of such Lender in
a
principal amount equal to its Maximum Credit Amount after giving effect to
such
increase, and otherwise duly completed; and
(F) If
the Borrower elects to increase the Aggregate Maximum Credit Amounts by causing
an Additional Lender to become a party to this Agreement, then the Borrower
and
such Additional Lender shall execute and deliver to the Administrative Agent
a
certificate substantially in the form of Exhibit G-2 (an “Additional Lender
Certificate”), together with an Administrative Questionnaire and a
processing and recordation fee of $5,000, and the Borrower shall deliver a
Note
payable to the order of such Additional Lender in a principal amount equal
to
its Maximum Credit Amount, and otherwise duly completed.
(iii) Subject
to acceptance and recording thereof pursuant to Section 2.06(c)(iv), from and
after the effective date specified in the Maximum Credit Amount Increase
Certificate or the Additional Lender Certificate (or if any Eurodollar
Borrowings are outstanding, then the last day of the Interest Period in respect
of such Eurodollar Borrowings, unless the Borrower has paid compensation
required by Section 5.02): (c) the amount of the Aggregate Maximum
Credit Amounts shall be increased as set forth therein, and (d) in the case
of
an Additional Lender Certificate, any Additional Lender party thereto shall
be a
party to this Agreement and the other Loan Documents and have the rights and
obligations of a Lender under this Agreement and the other Loan
Documents. In addition, the Lender or the Additional Lender, as
applicable, shall purchase a pro rata portion of the outstanding Loans (and
participation interests in Letters of Credit) of each of the other Lenders
(and
such Lenders hereby agree to sell and to take all such further action to
effectuate such sale) such that each Lender (including any Additional Lender,
if
applicable) shall hold its Applicable Percentage of the outstanding Loans (and
participation interests) after giving effect to the increase in the Aggregate
Maximum Credit Amount.
(iv) Upon
its receipt of a duly completed Maximum Credit Amount Increase Certificate
or an
Additional Lender Certificate, executed by the Borrower and the Lender or the
Borrower and the Additional Lender party thereto, as applicable,
the
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processing
and recording fee referred to in Section 2.06(c)(ii), the Administrative
Questionnaire referred to in Section 2.06(c)(ii), if applicable, and the written
consent of the Administrative Agent to such increase required by Section
2.06(c)(i), the Administrative Agent shall accept such Maximum Credit Amount
Increase Certificate or Additional Lender Certificate and record the information
contained therein in the Register required to be maintained by the
Administrative Agent pursuant to Section 12.04(b)(iv). No increase in
the Aggregate Maximum Credit Amount shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
Section 2.06(c)(iv).
Section
2.07 Borrowing
Base.
(a) Initial
Borrowing Base. For the period from and including the Effective
Date to but excluding the first Redetermination Date, the amount of the
Borrowing Base shall be $75,000,000. Notwithstanding
the foregoing, the Borrowing Base may be subject to further adjustments from
time to time pursuant to Section 8.13(c) or 0.
(b) Scheduled
and Interim Redeterminations. The Borrowing Base shall be
redetermined semi-annually in accordance with this Section 2.07 (a “Scheduled
Redetermination”), and, subject to Section 2.07(d), such redetermined
Borrowing Base shall become effective and applicable to the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders on April 1st and October
1st of each year, commencing October 1, 2007. In
addition, the Borrower may, by notifying the Administrative Agent thereof,
and
the Administrative Agent may, at the direction of the Majority Lenders, by
notifying the Borrower thereof, one time during any calendar year, each elect
to
cause the Borrowing Base to be redetermined between Scheduled Redeterminations
(each redetermination made pursuant to this sentence or the following sentence,
an “Interim Redetermination”) in accordance with this Section
2.07. The Borrower shall have the right to request Interim
Redeterminations in addition to the one otherwise provided in this Section
2.07(b) upon the proposed acquisition of Proved Developed Producing Reserves
(whether by purchase of the actual properties or of the Equity Interests in
the
Person owning such properties) whose purchase price is greater than 10% of
the
Borrowing Base, provided such Interim Redetermination is in accordance with
this
Section 2.07.
(c) Scheduled
and Interim Redetermination Procedure.
(i) Each
Scheduled Redetermination and each Interim Redetermination shall be effectuated
as follows: Upon receipt by the Administrative Agent of (e) the
Reserve Report and the certificate required to be delivered by the Borrower
to
the Administrative Agent, in the case of a Scheduled Redetermination, pursuant
to Section 8.12(a) and (c), and, in the case of an Interim Redetermination,
pursuant to Section 8.12(b) and (c), and (f) such other reports, data and
supplemental information, including, without limitation, the information
provided pursuant to Section 8.12(c), as may, from time to time, be reasonably
requested by the Majority Lenders (the Reserve Report, such certificate and
such
other reports, data and supplemental information being the “Engineering
Reports”), the Administrative Agent shall evaluate the information contained
in the Engineering Reports and shall, in good faith, propose a new Borrowing
Base (the “Proposed Borrowing Base”) based upon such
information
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and
such
other information (including, without limitation, the status of title
information with respect to the Oil and Gas Properties as described in the
Engineering Reports and the existence of any other Debt) as the Administrative
Agent deems appropriate in its sole discretion and consistent with its normal
oil and gas lending criteria as it exists at the particular time. In
no event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit
Amounts.
(ii) The
Administrative Agent shall notify the Borrower and the Lenders of the Proposed
Borrowing Base (the “Proposed Borrowing Base Notice”):
(A) in
the case of a Scheduled Redetermination (i) if the Administrative Agent shall
have received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on
or
before the March 15th and September 15th of such year following the date of
delivery or (ii) if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrower pursuant to Section
8.12(a) and (c) in a timely and complete manner, then promptly after the
Administrative Agent has received complete Engineering Reports from the Borrower
and has had a reasonable opportunity to determine the Proposed Borrowing Base
in
accordance with Section 2.07(c)(i); and
(B) in
the case of an Interim Redetermination, promptly, and in any event, within
fifteen (15) days after the Administrative Agent has received the required
Engineering Reports.
(iii) Any
Proposed Borrowing Base that would increase the Borrowing Base then in effect
must be approved or deemed to have been approved by all of the Lenders as
provided in this Section 2.07(c)(iii); and any Proposed Borrowing Base that
would decrease or maintain the Borrowing Base then in effect must be approved
or
be deemed to have been approved by the Majority Lenders as provided in this
Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing Base
Notice, each Lender shall have fifteen (15) days to agree with the Proposed
Borrowing Base or disagree with the Proposed Borrowing Base by proposing an
alternate Borrowing Base. If at the end of such fifteen (15) days,
any Lender has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Borrowing Base. If, at the end of such 15-day period, all of
the Lenders, in the case of a Proposed Borrowing Base that would increase the
Borrowing Base then in effect, or the Majority Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base
then
in effect, have approved or deemed to have approved, as aforesaid, then the
Proposed Borrowing Base shall become the new Borrowing Base, effective on the
date specified in Section 2.07(d). If, however, at the end of such
15-day period, all of the Lenders or the Majority Lenders, as applicable, have
not approved or deemed to have approved, as aforesaid, then the Administrative
Agent shall poll the Lenders to ascertain the highest Borrowing Base then
acceptable to all of the Lenders (if the Borrowing Base will be increased)
or
the Majority Lenders (if the Borrowing Base will be decreased), as the case
may
be, and such amount shall become the new Borrowing Base, effective on the date
specified in Section 2.07(d).
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(d) Effectiveness
of a Redetermined
Borrowing Base. After a redetermined
Borrowing Base is approved or is deemed to have been approved by all of the
Lenders or the Majority Lenders, as applicable, pursuant
to Section
2.07(c)(iii), the
Administrative Agent shall notify the Borrower and the Lenders of the amount
of
the redetermined Borrowing Base (the “New Borrowing
Base
Notice”), and such
amount shall become the new Borrowing Base, effective and applicable to the
Borrower, the Administrative Agent, the Issuing Bank and the
Lenders:
(i) in
the case of a Scheduled Redetermination, (A) if the Administrative Agent shall
have received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (b) in a timely and complete manner, then on
the
April 1st or October 1st, as applicable, following such notice, or (B) if the
Administrative Agent shall not have received the Engineering Reports required
to
be delivered by the Borrower pursuant to Section 8.12(a) and (b) in a timely
and
complete manner, then on the Business Day next succeeding delivery of such
notice; and
(ii) in
the case of an Interim Redetermination, on the Business Day next succeeding
delivery of such notice.
Such
amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 8.13(c) or 0, whichever occurs
first. Notwithstanding the foregoing, no Scheduled Redetermination or
Interim Redetermination shall become effective until the New Borrowing Base
Notice related thereto is received by the Borrower.
Section
2.08 Letters of
Credit.
(a) General. Subject
to the terms and conditions set forth herein, the Borrower may request the
issuance of dollar denominated Letters of Credit for its own account or for
the
account of any of its Subsidiaries, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Availability Period; provided that the Borrower may not request
the
issuance, amendment (other than an amendment in respect to the reduction of
the
outstanding amount of a Letter of Credit or the termination of a Letter of
Credit prior to its stated expiration date), renewal or extension of Letters
of
Credit hereunder if a Borrowing Base Deficiency exists at such time or would
exist as a result thereof. In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of
any
form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating
to
any Letter of Credit, the terms and conditions of this Agreement shall
control.
(b) Notice
of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the
amendment, renewal or extension of an outstanding Letter of Credit), the
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (not less than five
(5)
Business Days in advance of the requested date of issuance, amendment, renewal
or extension) a notice:
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(i) requesting
the issuance of a Letter of Credit or identifying the Letter of Credit to be
amended, renewed or extended;
(ii) specifying
the date of issuance, amendment, renewal or extension (which shall be a Business
Day);
(iii) specifying
the date on which such Letter of Credit is to expire (which shall comply with
Section 2.08(c));
(iv)
specifying the amount of such Letter of Credit;
(v)
specifying the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit; and
(vi)
specifying the amount of the then effective Borrowing Base and whether a
Borrowing Base Deficiency exists at such time, the current total Revolving
Credit Exposures (without regard to the requested Letter of Credit or the
requested amendment, renewal or extension of an outstanding Letter of Credit)
and the pro forma total Revolving Credit Exposures (giving effect to
the requested Letter of Credit or the requested amendment, renewal or extension
of an outstanding Letter of Credit).
Each
notice shall constitute a representation that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the
LC
Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing
Base).
If
requested by the Issuing Bank, the Borrower also shall submit a letter of credit
application on the Issuing Bank’s standard form in connection with any request
for a Letter of Credit.
(c) Expiration
Date. Each Letter of Credit shall expire at or prior to the close
of business on the earlier of (2) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (3) the date that is
five
Business Days prior to the Maturity Date.
(d) Participations. By
the issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action on the part of
the
Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender,
and
each Lender hereby acquires from the Issuing Bank, a participation in such
Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate
amount available to be drawn under such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees to pay to the Administrative Agent, for the account
of the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement
made by the Issuing Bank and not reimbursed by the Borrower on the date due
as
provided in Section 2.08(e), or of any reimbursement payment required to be
refunded to the Borrower for any reason. Each Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this Section
2.08(d) in respect of Letters of Credit is absolute and unconditional and shall
not be affected by
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any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default, the existence
of a Borrowing Base Deficiency or reduction or termination of the Commitments,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.
(e) Reimbursement. If
the Issuing Bank shall make any LC Disbursement in respect of a Letter of
Credit, the Borrower shall reimburse such LC Disbursement by paying to the
Administrative Agent an amount equal to such LC Disbursement not later than
12:00 noon, New York City time, on the date that such LC Disbursement is made,
if the Borrower shall have received notice of such LC Disbursement prior to
10:00 a.m., New York City time, on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than
12:00 noon, New York City time, on (i) the Business Day that the Borrower
receives such notice, if such notice is received prior to 10:00 a.m., New York
City time, on the day of receipt, or (ii) the Business Day immediately following
the day that the Borrower receives such notice, if such notice is not received
prior to such time on the day of receipt; provided that if such LC Disbursement
is not less than $1,000,000, the Borrower shall, subject to the conditions
to
Borrowing set forth herein, be deemed to have requested, and the Borrower does
hereby request under such circumstances, that such payment be financed with
an
ABR Borrowing in an equivalent amount and, to the extent so financed, the
Borrower’s obligation to make such payment shall be discharged and replaced by
the resulting ABR Borrowing. If the Borrower fails to make such
payment when due, the Administrative Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender’s Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower,
in
the same manner as provided in Section 2.05 with respect to Loans made by such
Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay
to
the Issuing Bank the amounts so received by it from the
Lenders. Promptly following receipt by the Administrative Agent of
any payment from the Borrower pursuant to this Section 2.08(e), the
Administrative Agent shall distribute such payment to the Issuing Bank or,
to
the extent that Lenders have made payments pursuant to this Section 2.08(e)
to
reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their
interests may appear. Any payment made by a Lender pursuant to this
Section 2.08(e) to reimburse the Issuing Bank for any LC Disbursement (other
than the funding of ABR Loans as contemplated above) shall not constitute a
Loan
and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.
(f) Obligations
Absolute. The Borrower’s obligation to reimburse LC Disbursements
as provided in Section 2.08(e) shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
under any and all circumstances whatsoever and irrespective of (i) any lack
of
validity or enforceability of any Letter of Credit, any Letter of Credit
Agreement or this Agreement, or any term or provision therein, (ii) any draft
or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue
or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter
of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit or any Letter of Credit Agreement,
or
(iv) any other event or circumstance whatsoever, whether or not similar to
any
of the foregoing, that might, but for the provisions of this Section 2.08(f),
constitute a legal
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or
equitable discharge of, or provide a right of setoff against, the Borrower’s
obligations hereunder. Neither the Administrative Agent, the Lenders
nor the Issuing Bank, nor any of their Related Parties shall have any liability
or responsibility by reason of or in connection with the issuance or transfer
of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to
any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; provided that the foregoing
shall
not be construed to excuse the Issuing Bank from liability to the Borrower
to
the extent of any direct damages (as opposed to consequential damages, claims
in
respect of which are hereby waived by the Borrower to the extent permitted
by
applicable law) suffered by the Borrower that are caused by the Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The
parties hereto expressly agree that, in the absence of gross negligence or
willful misconduct on the part of the Issuing Bank (as finally determined by
a
court of competent jurisdiction), the Issuing Bank shall be deemed to have
exercised all requisite care in each such determination. In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit,
the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless
of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(g) Disbursement
Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made
or
will make an LC Disbursement thereunder; provided that any failure to give
or
delay in giving such notice shall not relieve the Borrower of its obligation
to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.
(h) Interim
Interest. If the Issuing Bank shall make any LC Disbursement,
then, until the Borrower shall have reimbursed the Issuing Bank for such LC
Disbursement (either with its own funds or a Borrowing under Section 2.08(e)),
the unpaid amount thereof shall bear interest, for each day from and including
the date such LC Disbursement is made to but excluding the date that the
Borrower reimburses such LC Disbursement, at the rate per annum then applicable
to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse
the Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement
of the Issuing Bank. The Issuing Bank may be replaced at any time
by written agreement among the Borrower, the Administrative Agent, the replaced
Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing
Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing
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Bank
pursuant to Section 3.05(b). From and after the effective date of any
such replacement, (i) the successor Issuing Bank shall have all the rights
and
obligations of the Issuing Bank under this Agreement with respect to Letters
of
Credit to be issued thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the replacement of the Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have
all
the rights and obligations of the Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such replacement, but shall not
be
required to issue additional Letters of Credit.
(j) Cash
Collateralization. If (i) any Event of Default shall occur and be
continuing and the Borrower receives notice from the Administrative Agent or
the
Majority Lenders demanding the deposit of cash collateral pursuant to this
Section 2.08(j), or (ii) the Borrower is required to pay to the Administrative
Agent the excess attributable to an LC Exposure in connection with any
prepayment pursuant to Section 3.04(c), then the Borrower shall deposit, in
an
interest bearing account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash
equal
to, in the case of an Event of Default, the LC Exposure, and in the case of
a
payment required by Section 3.04(c), the amount of such excess as provided
in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of
any
Event of Default with respect to the Borrower or any Subsidiary described in
Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to
the Administrative Agent, for the benefit of the Issuing Bank and the Lenders,
an exclusive first priority and continuing perfected security interest in and
Lien on such account and all cash, checks, drafts, certificates and instruments,
if any, from time to time deposited or held in such account, all deposits or
wire transfers made thereto, any and all investments purchased with funds
deposited in such account, all interest, dividends, cash, instruments, financial
assets and other Property from time to time received, receivable or otherwise
payable in respect of, or in exchange for, any or all of the foregoing, and
all
proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor. The Borrower’s
obligation to deposit amounts pursuant to this Section 2.08(j) shall be absolute
and unconditional, without regard to whether any beneficiary of any such Letter
of Credit has attempted to draw down all or a portion of such amount under
the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower or any of its Subsidiaries may
now
or hereafter have against any such beneficiary, the Issuing Bank, the
Administrative Agent, the Lenders or any other Person for any reason
whatsoever. Such deposit shall be held as collateral securing the
payment and performance of the Borrower’s and the Guarantor’s obligations under
this Agreement and the other Loan Documents. The Administrative Agent
shall, subject to the terms of the Loan Documents, have exclusive dominion
and
control, including the exclusive right of withdrawal, over such
account. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied
by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements
for which it has not been reimbursed and, to the extent not so applied, shall
be
held for the satisfaction of the reimbursement obligations of the Borrower
for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated, be applied to satisfy other
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obligations
of the Borrower and the Guarantors under this Agreement or the other Loan
Documents. If the Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default,
and
the Borrower is not otherwise required to pay to the Administrative Agent the
excess attributable to an LC Exposure in connection with any prepayment pursuant
to Section 3.04(c), then such amount (to the extent not applied as aforesaid)
shall be returned to the Borrower within three Business Days after all Events
of
Default have been cured or waived.
ARTICLE
III
Payments
of Principal and Interest; Prepayments; Fees
Section
3.01 Repayment of
Loans. The
Borrower hereby unconditionally promises to pay to the Administrative Agent
for
the account of each Lender the then unpaid principal amount of each Loan on
the
Termination Date.
Section
3.02 Interest.
(a) ABR
Loans. The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.
(b) Eurodollar
Loans. The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Margin, but in no event to exceed the Highest
Lawful Rate.
(c) Post-Default
Rate and Borrowing Base Deficiency Rate. Notwithstanding the
foregoing, (i) if an Event of Default has occurred and is continuing, or if
any principal of or interest on any Loan or any fee payable by the Borrower
pursuant to Section 3.05 or any Guarantor hereunder or under any other Loan
Document is not paid when due, whether at stated maturity, upon acceleration
or
otherwise, and including any payments in respect of a Borrowing Base Deficiency
under Section 3.04(c), then all Loans outstanding, in the case of an Event
of
Default, including such overdue amount, in the case of a failure to pay amounts
when due, shall bear interest, after as well as before judgment, at a rate
per
annum equal to two percent (2%) plus the respective rates then in effect, but
in
no event to exceed the Highest Lawful Rate, until such Event of Default has
been
cured or such amount is fully paid, as the case may be, and (ii) if a Borrowing
Base Deficiency has occurred and has continued unremedied for 45 days, then
all
Loans outstanding at such time shall bear interest, after as well as before
judgment, at a rate per annum equal to two percent (2%) plus the respective
rates then in effect, but in no event to exceed the Highest Lawful
Rate, until such Borrowing Base Deficiency has been cured, provided that such
Borrowing Base Deficiency rate shall not apply while any default interest rate
is in effect pursuant to Section 3.02(c)(i).
(d) Interest
Payment Dates. Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and on the Termination
Date;
provided that (i) interest accrued pursuant to Section 3.02(c) shall be payable
on demand, (ii) in the event of any repayment or prepayment of any Loan (other
than an optional prepayment of an ABR Loan prior to the Termination Date),
accrued interest on the principal amount repaid or prepaid shall be payable
on
the date of such repayment or prepayment, and (iii) in the event of any
conversion
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of
any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(e) Interest
Rate Computations. All interest hereunder shall be computed on
the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis
of a
year of 365 days (or 366 days in a leap year), except that interest computed
by
reference to the Alternate Base Rate at times when the Alternate Base Rate
is
based on the Prime Rate shall be computed on the basis of a year of 365 days
(or
366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last
day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO
Rate shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error, and be binding upon the parties
hereto.
Section
3.03 Alternate Rate of
Interest. If
prior to the commencement of any Interest Period for a Eurodollar
Borrowing:
(a) the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining
the Adjusted LIBO Rate or the LIBO Rate for such Interest Period;
or
(b) the
Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO
Rate or LIBO Rate, as applicable, for such Interest Period will not adequately
and fairly reflect the cost to such Lenders of making or maintaining their
Loans
included in such Borrowing for such Interest Period;
then
the
Administrative Agent shall give notice thereof to the Borrower and the Lenders
by telephone or telecopy as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing for an Interest Period
having the duration of such Interest Period shall be ineffective, and (ii)
if
any Borrowing Request requests a Eurodollar Borrowing for an Interest Period
having the duration of such Interest Period, such Borrowing shall be made as
an
ABR Borrowing.
Section
3.04 Prepayments.
(a) Optional
Prepayments. The Borrower shall have the right at any time and
from time to time to prepay any Borrowing in whole or in part, subject to prior
notice in accordance with Section 3.04(b).
(b) Notice
and Terms of Optional Prepayment. The Borrower shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 12:00 noon, New York City time, three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later
than 12:00 noon, New York City time, one Business Day before the date of
prepayment. Each such notice shall be irrevocable and shall specify
the prepayment date and the principal amount of each Borrowing or portion
thereof to be prepaid. Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall
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advise
the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section
2.02. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section
3.02.
(c) Mandatory
Prepayments.
(i)
If, after giving effect to any termination or reduction of the Aggregate Maximum
Credit Amounts pursuant to Section 2.06(b), the total Revolving Credit Exposures
exceeds the total Commitments, then the Borrower shall, on the same Business
Day, (a) prepay the Borrowings on the date of such termination or reduction
in
an aggregate principal amount equal to such excess, and (b) if any excess
remains after prepaying all of the Borrowings as a result of an LC Exposure,
pay
to the Administrative Agent on behalf of the Lenders an amount equal to such
excess to be held as cash collateral as provided in Section
2.08(j).
(ii) Upon
any redetermination of or adjustment to the amount of the Borrowing Base in
accordance with Section 2.07 or Section 8.13(c), if the total Revolving Credit
Exposure exceeds the redetermined or adjusted Borrowing Base, then the Borrower
shall (c) prepay the Borrowings in an aggregate principal amount equal to such
excess, and (d) if any excess remains after prepaying all of the Borrowings
as a
result of an LC Exposure, pay to the Administrative Agent on behalf of the
Lenders an amount equal to such excess to be held as cash collateral as provided
in Section 2.08(j). The Borrower shall be obligated to make the full
payment and/or deposit of cash collateral within ninety (90) days following
its
receipt of the New Borrowing Base Notice in accordance with Section 2.07(d)
or
the date the adjustment occurs; provided that all payments required to be made
pursuant to this Section 3.04(c)(ii) must be made on or prior to the Termination
Date.
(iii) Upon
any adjustments to the Borrowing Base pursuant to 0, if the total Revolving
Credit Exposures exceeds the Borrowing Base as adjusted, then the Borrower
shall
(e) prepay the Borrowings in an aggregate principal amount equal to such excess,
and (f) if any excess remains after prepaying all of the Borrowings as a result
of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders
an
amount equal to such excess to be held as cash collateral as provided in Section
2.08(j). The Borrower shall be obligated to make such prepayment
and/or deposit of cash collateral on the date it or any Subsidiary receives
proceeds as a result of such disposition; provided that all payments required
to
be made pursuant to this Section 3.04(c)(iii) must be made on or prior to the
Termination Date.
(iv) Each
prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied,
first, ratably to any ABR Borrowings then outstanding, and, second, to any
Eurodollar Borrowings then outstanding, and if more than one Eurodollar
Borrowing is then outstanding, to each such Eurodollar Borrowing in order of
priority beginning with the Eurodollar Borrowing with the least number of days
remaining in the Interest
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Period
applicable thereto and ending with the Eurodollar Borrowing with the most number
of days remaining in the Interest Period applicable thereto.
(v) Each
prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied
ratably to the Loans included in the prepaid Borrowings. Prepayments
pursuant to this Section 3.04(c) shall be accompanied by accrued interest to
the
extent required by Section 3.02.
(d) No
Premium or Penalty. Prepayments permitted or required under this
Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.
Section
3.05 Fees.
(a) Commitment
Fees. The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a commitment fee, which shall accrue at the
applicable Commitment Fee Rate on the average daily amount of the unused amount
of the Commitment of such Lender during the period from and including the date
of this Agreement to but excluding the Termination Date. Accrued
commitment fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the Termination Date, commencing
on
the first such date to occur after the date hereof. All commitment
fees shall be computed on the basis of a year of 360 days, unless such
computation would exceed the Highest Lawful Rate, in which case interest shall
be computed on the basis of a year of 365 days (or 366 days in a leap year),
and
shall be payable for the actual number of days elapsed (including the first
day
but excluding the last day).
(b) Letter
of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender’s Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank
a
fronting fee, which shall accrue at the rate of 0.125% per annum on the average
daily amount of the LC Exposure (excluding any portion thereof attributable
to
unreimbursed LC Disbursements) during the period from and including the date
of
this Agreement to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC Exposure, provided
that in no event shall such fee be less than $500 during any quarter, and (iii)
to the Issuing Bank, for its own account, its standard fees with respect to
the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued
through and including the last day of March, June, September and December of
each year shall be payable on the later of (i) the third Business Day following
such last day or (ii) three Business Days after the Borrower’s receipt of a
notice therefore from the Administrative Agent, commencing on the first such
date to occur after the date of this Agreement; provided that all such fees
shall be payable on the Termination Date and any such fees accruing after the
Termination Date shall be payable on demand. Any other fees payable
to the Issuing Bank pursuant to this Section 3.05(b) shall be payable within
10
days after demand.
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All
participation fees and fronting fees shall be computed on the basis of a year
of
360 days, unless, if such fees are deemed interest, such computation would
exceed the Highest Lawful Rate, in which case such fees shall be computed on
the
basis of a year of 365 days (or 366 days in a leap year), and shall be payable
for the actual number of days elapsed (including the first day but excluding
the
last day).
(c) Administrative
Agent Fees. The Borrower agrees to pay to the Administrative
Agent, for its own account, fees payable in the amounts and at the times
separately agreed upon between the Borrower and the Administrative Agent in
the
Fee Letter between the Borrower and the Administrative Agent dated June 8,
2007.
ARTICLE
IV
Payments;
Pro Rata Treatment; Sharing of Set-offs
Section
4.01 Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Payments
by the Borrower. The Borrower shall make each payment required to
be made by it hereunder (whether of principal, interest, fees or reimbursement
of LC Disbursements, or of amounts payable under Section 5.01, Section 5.02,
Section 5.03 or otherwise) prior to 12:00 noon, New York City time, on the
date
when due, in immediately available funds, without defense, deduction,
recoupment, set-off or counterclaim. Fees, once paid, shall be fully
earned and shall not be refundable under any circumstances. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such
payments shall be made to the Administrative Agent at its offices specified
in
Section 12.01, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Section 5.01,
Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the
Persons entitled thereto. The Administrative Agent shall distribute
any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any
payment hereunder shall be due on a day that is not a Business Day, the date
for
payment shall be extended to the next succeeding Business Day, and, in the
case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in
dollars.
(b) Application
of Insufficient Payments. If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts
of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties,
and
(ii) second, towards payment of principal and unreimbursed LC Disbursements
then
due hereunder, ratably among the parties entitled thereto in accordance with
the
amounts of principal and unreimbursed LC Disbursements then due to such
parties.
(c) Sharing
of Payments by Lenders. If any Lender shall, by exercising any
right of set-off or counterclaim or otherwise, obtain payment in respect of
any
principal of or interest on any of its Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Loans and participations in LC Disbursements
and
accrued interest thereon than the proportion received by any other
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Lender,
then the Lender receiving such greater proportion shall purchase (for cash
at
face value) participations in the Loans and participations in LC Disbursements
of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Loans and
participations in LC Disbursements; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration
for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than
to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this Section 4.01(c) shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender
were
a direct creditor of the Borrower in the amount of such
participation.
Section
4.02 Presumption of
Payment by the Borrower. Unless
the Administrative Agent shall have received notice from the Borrower prior
to
the date on which any payment is due to the Administrative Agent for the account
of the Lenders or the Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment
on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders or the Issuing Bank, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or Issuing Bank with interest thereon,
for
each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of
the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank
compensation.
Section
4.03 Certain Deductions
by the Administrative Agent. If
any Lender shall fail to make any payment required to be made by it pursuant
to
Section 2.05(a), Section 2.08(d), Section 2.08(e) or Section 4.02 then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender’s obligations under
such Sections until all such unsatisfied obligations are fully
paid.
Section
4.04 Disposition of
Proceeds. The
Security Instruments contain a collateral assignment by the Borrower and/or
the
Guarantors unto and in favor of the Administrative Agent for the benefit of
the
Lenders of all of the Borrower’s or each Guarantor’s interest in and to
production and all proceeds attributable thereto which may be produced from
or
allocated to the Mortgaged Property. The Security Instruments further
provide in general for the application of such proceeds to the satisfaction
of
the Indebtedness and other obligations described therein and secured
thereby. Notwithstanding such assignment contained in such Security
Instruments, unless an Event of Default has occurred and is continuing, 1.
the
Administrative Agent and the
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Lenders
agree that they will neither notify the purchaser or purchasers of such
production nor take any other action to cause such proceeds to be remitted
to
the Administrative Agent or the Lenders, but the Lenders will instead permit
such proceeds to be paid to the Borrower and its Subsidiaries and 2. the Lenders
hereby authorize the Administrative Agent to take such actions as may be
necessary to cause such proceeds to be paid to the Borrower and/or such
Subsidiaries.
ARTICLE
V
Increased
Costs; Break Funding Payments; Taxes; Illegality
Section
5.01 Increased
Costs.
(a) Eurodollar
Changes in Law. If any Change in Law shall:
(i) impose,
modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits
with
or for the account of, or credit extended by, any Lender (except any
such reserve requirement reflected in the Adjusted LIBO Rate);
or
(ii) impose
on any Lender or the London interbank market any other condition affecting
this
Agreement or Eurodollar Loans made by such Lender;
and
the
result of any of the foregoing shall be to increase the cost to such Lender
of
making or maintaining any Eurodollar Loan (or of maintaining its obligation
to
make any such Loan) or to reduce the amount of any sum received or receivable
by
such Lender in connection with any such Loan (whether of principal, interest
or
otherwise), then the Borrower will pay to such Lender such additional amount
or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.
(b) Capital
Requirements. If any Lender or
the
Issuing Bank determines that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender’s or
the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing
Bank’s holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender, or the
Letters of Credit issued by the Issuing Bank, to a level below that which such
Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the Issuing Bank’s policies and the policies of
such Lender’s or the Issuing Bank’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company for any such reduction suffered.
(c) Certificates. A
certificate of a Lender or the Issuing Bank setting forth in reasonable detail
the computation of the amount or amounts (as determined reasonably and in good
faith) necessary to compensate such Lender or the Issuing Bank or its holding
company, as the case may be, as specified in Section 5.01(a) or (b) shall be
delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof. Each such certificate shall contain the
representation and warranty of the Person sending it that the Borrower is being
treated no less favorably with respect to amounts being
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charged
under Section 5.01(a) and (b) than are other similarly situated customers of
such Lenders or Issuing Bank.
(d) Effect
of Failure or Delay in Requesting Compensation. Failure or delay
on the part of any Lender or the Issuing Bank to demand compensation pursuant
to
this Section 5.01 shall not constitute a waiver of such Lender’s or the Issuing
Bank’s right to demand such compensation; provided that the Borrower shall not
be required to compensate a Lender or the Issuing Bank pursuant to this Section
5.01 for any increased costs or reductions incurred more than 180 days prior
to
the date that such Lender or the Issuing Bank, as the case may be, notifies
the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender’s or the Issuing Bank’s intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 180-day period referred
to above shall be extended to include the period of retroactive effect
thereof.
Section
5.02 Break Funding
Payments . In
the event of (a) the payment of any principal of any Eurodollar Loan other
than
on the last day of an Interest Period applicable thereto (including as a result
of an Event of Default), (b) the conversion of any Eurodollar Loan into an
ABR
Loan other than on the last day of the Interest Period applicable thereto,
or
(c) the failure to borrow, convert, continue or prepay any Eurodollar Loan
on
the date specified in any notice delivered pursuant hereto, then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had
such
event not occurred, at the Adjusted LIBO Rate that would have been applicable
to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits
of a
comparable amount and period from other banks in the eurodollar
market.
A
certificate of any Lender setting forth in reasonable detail the computation
thereof any amount or amounts (determined reasonably and in good faith) that
such Lender is entitled to receive pursuant to this Section 5.02 shall be
delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
Section
5.03 Taxes
(a) Payments
Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower or any Guarantor under any Loan Document shall be
made free and clear of and without deduction or withholding for any Indemnified
Taxes or Other Taxes; provided that if the Borrower or any Guarantor shall
be
required to deduct or withhold any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions or withholdings (including deductions
applicable to additional sums payable under this Section 5.03(a)), the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an
amount equal to the sum it
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would
have received had no such deductions been made, (ii) the Borrower or such
Guarantor shall make such deductions or withholdings and (iii) the Borrower
or such Guarantor shall pay the full amount deducted or withheld to the relevant
Governmental Authority in accordance with applicable law.
(b) Payment
of Other Taxes by the Borrower. The Borrower shall pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable
law.
(c) Indemnification
by the
Borrower. The Borrower shall
indemnify the Administrative Agent, each Lender and the Issuing Bank, within
10
days after written demand therefor, for the full amount of any Indemnified
Taxes
or Other Taxes paid by the Administrative Agent, such Lender or the Issuing
Bank, as the case may be, on or with respect to any payment by or on account
of
any obligation of the Borrower hereunder (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section 5.03)
and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate of the
Administrative Agent, a Lender or the Issuing Bank as to the amount of such
payment or liability under this Section 5.03
shall be delivered to the Borrower and
shall be conclusive absent manifest error.
(d) Evidence
of Payments. As soon as practicable
after any payment of Indemnified Taxes or Other Taxes by the Borrower or a
Guarantor to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Status
of Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement or any other Loan Document shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at
a
reduced rate. In addition, any Lender, if requested by the Borrower
or the Administrative Agent, shall deliver such properly completed and executed
documentation prescribed by applicable law as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Without
limiting the generality of the foregoing, any Foreign Lender shall deliver
to
the Borrower and the Administrative Agent (is such reasonable amount of copies
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender, whichever of the following is applicable:
(i) duly
completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States is a
party;
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(ii) duly
completed copies of Internal Revenue Service Form W-8ECI;
(iii)
in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (A) a certificate to the
effect that such Foreign Lender is not (I) a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, (II) a “10 percent shareholder” of the
Borrower within the meaning of Section 881(c)(3(B) of the Code, or (III) a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code
and (B) duly completed copies of Internal Revenue Service Form W-8BEN,
or
(iv) any
other form prescribed by applicable law as a basis for claiming exemption from
or reduction in United States Federal withholding tax duly completed together
with such supplementary documentation as may be prescribed by applicable law
to
permit the Borrower to determine the withholding or deduction required to be
made.
(f) Tax
Refunds. If the Administrative Agent or a Lender determines, in
its sole discretion, that it has received a refund of any Taxes or Other Taxes
as to which it has been indemnified by the Borrower or with respect to which
the
Borrower has paid additional amounts pursuant to this Section 5.03, it shall
pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 5.03 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided, that the Borrower, upon the request
of
the Administrative Agent or such Lender, agrees to repay the amount paid over
to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender
in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This Section 5.03 shall not be
construed to require the Administrative Agent or any Lender to make available
its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.
Section
5.04 Mitigation
Obligations; Replacement of Lenders.
(a) Designation
of Different Lending Office. If any Lender requests compensation
under Section 5.01, or if the Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 5.03, or any Lender gives a notice pursuant to Section
5.05,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if,
in
the judgment of such Lender, such designation or assignment (i) would (A)
eliminate or reduce amounts payable pursuant to Section 5.01 or Section 5.03,
as
the case may be, in the future or (B) eliminate the need for the notice pursuant
to Section 5.05, and (ii) would not subject such Lender to any unreimbursed
cost
or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or
assignment.
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(b) Replacement
of Lenders. If (i) any Lender or the Issuing Bank requests
compensation under Section 5.01 or gives a notice pursuant to Section 5.05,
(ii)
the Borrower is required to pay any additional amount to any Lender, the Issuing
Bank or any Governmental Authority for the account of any Lender or the Issuing
Bank pursuant to Section 5.03, (iii) any Lender or the Issuing Bank defaults
in
its obligation to fund Loans hereunder or (iv) pursuant to Section 2.07(c)(iii),
any Lender votes against an increase in the Borrowing Base when such increase
has been approved by at least the Majority Lenders, then the Borrower may,
at
its sole expense and effort, upon notice to such Lender (or the Issuing Bank)
and the Administrative Agent, require such Lender or the Issuing Bank to assign
and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 12.04(b)), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in
LC
Disbursements, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from
a claim for compensation under Section 5.01 or payments required to be made
pursuant to Section 5.03, such assignment will result in a reduction in such
compensation or payments.
Section
5.05 Illegality. Notwithstanding
any other provision of this Agreement, in the event that it becomes unlawful
for
any Lender or its applicable lending office to honor its obligation to make
or
maintain Eurodollar Loans either generally or having a particular Interest
Period hereunder, then iii) such Lender shall promptly notify the Borrower
and
the Administrative Agent thereof and such Lender’s obligation to make such
Eurodollar Loans shall be suspended (the “Affected Loans”) until such
time as such Lender may again make and maintain such Eurodollar Loans and iv)
all Affected Loans which would otherwise be made by such Lender shall be made
instead as ABR Loans (and, if such Lender so requests by notice to the Borrower
and the Administrative Agent, all Affected Loans of such Lender then outstanding
shall be automatically converted into ABR Loans on the date specified by such
Lender in such notice) and, to the extent that Affected Loans are so made as
(or
converted into) ABR Loans, all payments of principal which would otherwise
be
applied to such Lender’s Affected Loans shall be applied instead to its ABR
Loans.
ARTICLE
VI
Conditions
Precedent
Section
6.01 Effective
Date. The
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective until the date on which
each of the following conditions is satisfied (or waived in accordance with
Section 12.02):
(a) The
Administrative Agent, the Arranger and the Lenders shall have received all
commitment, facility and agency fees and all other fees and amounts due and
payable on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower
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hereunder
(including, without limitation, the fees and expenses of Xxxxxx & Xxxxxx
L.L.P., counsel to the Administrative Agent).
(b) The
Borrower shall have deposited $7,500 with Xxxxxx & Xxxxxx L.L.P., counsel
for the Administrative Agent, to be held by such counsel and applied toward
payment of costs and expenses for recordation of the Mortgaged Property, as
provided pursuant to Section 12.03(a). If such deposit exceeds the
amount of such costs and expenses, the excess shall be returned to the
Borrower. If such deposit is less than such costs and expenses, the
deficit shall be paid by Borrower pursuant to Section 12.03(a).
(c) The
Administrative Agent shall have received a certificate of the Secretary or
an
Assistant Secretary of the Borrower and each Guarantor setting forth (i)
resolutions of its board of directors or other appropriate governing body with
respect to the authorization of the Borrower or such Guarantor to execute and
deliver the Loan Documents to which it is a party and to enter into the
transactions contemplated in those documents, (ii) the officers of the Borrower
or such Guarantor (y) who are authorized to sign the Loan Documents to which
the
Borrower or such Guarantor is a party and (z) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of such authorized officers,
and
(iv) the Organizational Documents of the Borrower and such Guarantor, certified
as being true and complete. The Administrative Agent and the Lenders
may conclusively rely on such certificate until the Administrative Agent
receives notice in writing from the Borrower to the contrary.
(d) The
Administrative Agent shall have received certificates of the appropriate State
agencies with respect to the existence, qualification and good standing of
the
Borrower and each Guarantor.
(e) The
Administrative Agent shall have received a compliance certificate which shall
be
substantially in the form of Exhibit D-1, duly and properly executed by a
Responsible Officer and dated as of the date of Effective Date.
(f) The
Administrative Agent shall have received from each party hereto counterparts
(in
such number as may be requested by the Administrative Agent) of this Agreement
signed on behalf of such party.
(g) The
Administrative Agent shall have received duly executed Notes payable to the
order of each Lender in a principal amount equal to its Maximum Credit Amount
dated as of the date hereof.
(h) The
Administrative Agent shall have received from each party thereto duly executed
counterparts (in such number as may be requested by the Administrative Agent)
of
the Security Instruments, including the Guaranty Agreement and the other
Security Instruments described on Exhibit E. In connection with the
execution and delivery of the Security Instruments, the Administrative Agent
shall:
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(i)
be reasonably satisfied that the Security Instruments create first priority,
perfected Liens (subject only to Excepted Liens identified in clauses (a)
to (d)
and (f) of the definition thereof, but subject to the provisos at the end
of
such definition) on at least 80% of the
total
value of the Oil and Gas Properties evaluated in the Initial Reserve Report,
including Liens on the Oil and Gas Properties mortgaged pursuant to the Existing
Credit Agreement;
(ii) to
the extent such Equity Interests are certificated, have received certificates,
together with undated, blank stock powers for each such certificate,
representing all of the issued and outstanding Equity Interests of each of
the
Guarantors; and
(iii)
be reasonably satisfied that it has a Lien on all Property of the Borrower
and
the Guarantors, as contemplated by the parties hereto.
(i) The
Administrative Agent shall have received an opinion of (i) Fulbright &
Xxxxxxxx L.L.P., special counsel to the Borrower, in form and substance
satisfactory to the Administrative Agent, and (ii) local counsel in each state
in which a mortgage or deed of trust is filed naming the Administrative Agent
as
the secured party and any other jurisdictions reasonably requested by the
Administrative Agent, substantially in form and substance satisfactory to the
Administrative Agent.
(j) The
Administrative Agent shall have received a certificate of insurance coverage
of
the Borrower evidencing that the Borrower is carrying insurance in accordance
with Section 7.12.
(k) The
Administrative Agent shall have received title information as the Administrative
Agent may reasonably require satisfactory to the Administrative Agent setting
forth the status of title to the Oil and Gas Properties evaluated in the Initial
Reserve Report.
(l) The
Administrative Agent shall be reasonably satisfied with the environmental
condition of the Oil and Gas Properties of the Borrower and its
Subsidiaries.
(m) The
Administrative Agent shall have received a certificate of a Responsible Officer
of the Borrower certifying that the Borrower has received all consents and
approvals required by Section 7.03.
(n) The
Administrative Agent shall have received the financial statements referred
to in
Section 7.04(a) and the Initial Reserve Report accompanied by a certificate
covering the matters described in Section 8.12(c).
(o) The
Administrative Agent shall be reasonably satisfied that the Borrower’s Existing
Credit Agreement is being terminated and the liens securing such facilities
are
being released, contemporaneously with the proceeds of the initial funding
under
this Agreement.
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(p) The
Administrative Agent shall have received appropriate UCC search certificates
reflecting no prior Liens encumbering the Properties of the Borrower and
the
Guarantors for each of the following jurisdictions: Illinois, Indiana,
Texas and any other jurisdiction reasonably requested by the
Administrative Agent; other than those being assigned or released on or prior
to
the Effective Date or Liens permitted by Section 9.03.
(q) The
Administrative Agent shall have received evidence that the Borrower has
purchased one or more commodity price floors or collars (i) with one or more
Approved Counterparties, (ii) which have aggregate notional volumes of not
more
than 75% of the
reasonably estimated projected crude oil production and not more than 75% of
the
reasonably estimated projected natural gas production, in each case, from its
proved developed, producing Oil and Gas Properties as determined by reference
to
the Initial Reserve Report for each year during the period commencing with
the
Effective Date and ending on the Maturity Date, provided however,
that if
the Borrower’s current commodity price floors and collars exceed such
percentage, the Borrower will not be required to terminate any existing price
floors or collars.
(r) The
Borrower shall have completed its initial public offering and its capital
structure shall be as described in the Borrower’s prospectus filed with the SEC
on July 26, 2007, pursuant to Rule 424(b)(4) under the Securities Act
of 1933, as amended.
(s) The
Administrative Agent shall have received such other documents as the
Administrative Agent or special counsel to the Administrative Agent may
reasonably request.
The
Administrative Agent shall notify the Borrower and the Lenders of the Effective
Date, and such notice shall be conclusive and
binding. Notwithstanding the foregoing, the obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
hereunder shall not become effective unless each of the foregoing conditions
is
satisfied (or waived pursuant to Section 12.02) at or prior to 2:00 p.m.,
Houston, Texas time, on September 17, 2007 (and, in
the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).
Without
limiting the generality of the provisions of Section 11.04, for purposes of
determining compliance with the conditions specified in this Section 6.01,
each Lender that has signed this Agreement shall be deemed to have consented
to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
written notice from such Lender prior to the proposed Effective Date specifying
its objection thereto.
Section
6.02 Each Credit Event
. The
obligation of each Lender to make a Loan on the occasion of any Borrowing
(including the initial funding), and of the Issuing Bank to issue, amend, renew
or extend any Letter of Credit, is subject to the satisfaction of the following
conditions:
(a) At
the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.
(b) At
the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no event,
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development
or circumstance has occurred or shall then exist that has resulted in, or could
reasonably be expected to have, a Material Adverse Effect.
(c) The
representations and warranties of the Borrower and the Guarantors set forth
in
this Agreement and in the other Loan Documents shall be true and correct
on and
as of the date of such Borrowing or the date of issuance, amendment, renewal
or
extension of such Letter of Credit, as applicable, except to the extent
any such
representations and warranties are expressly limited to an earlier date,
in
which case, on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable,
such
representations and warranties shall continue to be true and correct as
of such
specified earlier date and except for purposes of this Section 6.02, the
representations and warranties contained in Section 7.04(b) shall be deemed
to
refer to the fiscal year end date of the most recent financial statement
delivered pursuant to Section 8.01(a).
(d) The
receipt by the Administrative Agent of a Borrowing Request in accordance with
Section 2.03 or a request for a Letter of Credit in accordance with Section
2.08(b), as applicable.
Each
request for a Borrowing and each request for the issuance, amendment, renewal
or
extension of any Letter of Credit shall be deemed to constitute a representation
and warranty by the Borrower on the date thereof as to the matters specified
in
Section 6.02(a) through (d).
ARTICLE
VII
Representations
and Warranties
The
Borrower represents and warrants to the Lenders that:
Section
7.01
Organization; Powers. Each
of the Borrower and the Subsidiaries is duly organized, validly existing and
in
good standing under the laws of the jurisdiction of its organization, has all
corporate or equivalent requisite power and authority, and has all material
governmental licenses, authorizations, consents and approvals necessary, to
own
its assets and to carry on its business as now conducted, and is qualified
to do
business in, and is in good standing in, every jurisdiction where such
qualification is required, except where failure to have such power, authority,
licenses, authorizations, consents, approvals and qualifications could not
reasonably be expected to have a Material Adverse Effect.
Section
7.02 Authority;
Enforceability. The
Transactions are within the Borrower’s and each Guarantor’s corporate or
equivalent powers and have been duly authorized by all necessary corporate
or
equivalent action including, without limitation, any action required to be
taken
by any other Person, whether interested or disinterested, in order to ensure
the
due authorization of the Transactions. Each Loan Document to which
the Borrower and each Guarantor is a party has been duly executed and delivered
by the Borrower and such Guarantor and constitutes a legal, valid and binding
obligation of the Borrower and such Guarantor, as applicable, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered
in
a proceeding in equity or at law.
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Section
7.03 Approvals;
No Conflicts. The
Transactions (a) do not require, as a condition thereto, any consent or approval
of, registration or filing with, or any other action by, any Governmental
Authority or any other third Person (including members, shareholders or any
class of directors or managers, whether interested or disinterested, of the
Borrower or any other Person) to be obtained or made by the Borrower or any
Subsidiary pursuant to any statutory law or regulation applicable
to it, nor is any such consent, approval, registration, filing or other action
necessary for the validity or enforceability of any Loan Document against
the
Borrower or any Guarantor as herein provided or the consummation of the
transactions contemplated thereby, except such as have been obtained or made
and
are in full force and effect other than (i) the recording and filing of the
Security Instruments as required by this Agreement and (ii) those third party
approvals or consents which, if not made or obtained, would not cause a Default
hereunder, could not reasonably be expected to have a Material Adverse Effect
or
do not have an adverse effect on the enforceability of the Loan Documents,
(b)
will not violate any applicable law or regulation or the Organizational
Documents of the Borrower or any Subsidiary or any order of any Governmental
Authority applicable to the Borrower or any Subsidiary, (c) will not violate
or
result in a default under any indenture or other material instrument binding
upon the Borrower or any Subsidiary or its Properties, or give rise to a
right
thereunder to require any payment to be made by the Borrower or such Subsidiary
and (d) will not result in the creation or imposition of any consentual Lien
by
the Borrower or any Subsidiary on any Property of the Borrower or any Subsidiary
(other than the Liens created by the Loan Documents).
Section
7.04 Financial
Condition; No Material Adverse Change.
(a) The
Borrower has heretofore furnished to the Lenders (i) its consolidated balance
sheet and statements of income, stockholders equity and cash flows as of and
for
the fiscal year ended December 31, 2006,
reported on by Malin,
Xxxxxxxx & Company, LLP or other independent public accountants, (ii)
its consolidated balance sheet and statements of income, stockholders equity
and
cash flows as of and for the fiscal quarter ending March 30, 2007, certified
by
its chief financial officer and (iii) a pro forma consolidated balance sheet
as
of the Effective Date. The financial statements described in
clause (i), (ii) and (iii) of the preceding sentence present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its Consolidated Subsidiaries as of such dates and
for
such periods in accordance with GAAP, except as therein provided, subject to
year-end audit adjustments and the absence of footnotes in the case of such
unaudited quarterly financial statements.
(b) Since
December 31,
2006, (i) there has been no event, development or circumstance that has
had or could reasonably be expected to have a Material Adverse Effect and (ii)
the business of the Borrower and its Subsidiaries has been conducted only in
the
ordinary course consistent with past business practices.
(c) Neither
the Borrower nor any Subsidiary has on the date hereof any material Debt
(including Disqualified Capital Stock) or any contingent liabilities,
off-balance sheet liabilities or partnerships, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for
in
the Financial Statements or disclosed in any Schedules provided for herein
prior
to the Effective Date.
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Section
7.05 Litigation.
(a) Except
as set forth on Schedule 7.05, there are no actions, suits, investigations
or proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any Subsidiary (i) not fully covered by insurance (except
for
normal deductibles) as to which there is a
reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually or in the aggregate,
to
result in a Material Adverse Effect, or (ii) that involve any Loan Document
or
the Transactions.
(b) Since
the date of this Agreement, there has been no change in the status of the
matters disclosed in Schedule 7.05 that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
Section
7.06 Environmental
Matters. Except
for such matters as set forth on Schedule 7.06 or that, individually or in
the
aggregate, could not reasonably be expected to have a Material Adverse Effect
on
the Borrower:
(a) the
Borrower and its Subsidiaries and each of their respective Properties and
operations thereon are, and within all applicable statute of limitation periods
have been, in compliance with all applicable Environmental Laws;
(b) the
Borrower and its Subsidiaries have obtained all Environmental Permits required
for their respective operations and each of their Properties, with all such
Environmental Permits being currently in full force and effect, and none of
Borrower or its Subsidiaries has received any written notice or otherwise has
knowledge that any such existing Environmental Permit will be revoked or that
any application for any new Environmental Permit or renewal of any existing
Environmental Permit will be protested or denied;
(c) there
are no claims, demands, suits, orders, inquiries, or proceedings concerning
any
violation of, or any liability (including as a potentially responsible party)
under, any applicable Environmental Laws that is pending or to the knowledge
of
a Responsible Officer of the Borrower threatened against the Borrower or its
Subsidiaries or any of their respective Properties or as a result of any
operations at the Properties;
(d) none
of the Properties contain or have contained any: (i) underground
storage tanks; (ii) asbestos-containing materials; or (iii) landfills or dumps;
(iv) hazardous waste management units as defined pursuant to RCRA or any
comparable state law; or (v) sites on or nominated for the National Priority
List promulgated pursuant to CERCLA or any state remedial priority list
promulgated or published pursuant to any comparable state law;
(e) there
has been no Release or threatened Release, of Hazardous Materials at, on, under
or from any of Borrower’s or its Subsidiaries’ Properties, there are no
investigations, remediations, abatements, removals, or monitorings of Hazardous
Materials required under applicable Environmental Laws at such Properties and
none of such Properties are adversely affected by any Release or threatened
Release of a Hazardous Material originating or emanating from any other real
property,
(f) neither
the Borrower nor its Subsidiaries has received any written notice asserting
an
alleged liability or obligation under any applicable Environmental Laws with
respect
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to
the
investigation, remediation, abatement, removal, or monitoring of any Hazardous
Materials at, under, or Released or threatened to be Released from any real
properties offsite the Borrower’s or its Subsidiaries’ Properties and there are
no conditions or circumstances that would reasonably be expected to result
in
the receipt of such written notice.
(g) there
has been no exposure of any Person or property to any Hazardous Materials as
a
result of or in connection with the operations and businesses of any of the
Borrower’s or its Subsidiaries’ Properties that would reasonably be expected to
form the basis for a claim for damages or compensation and there are no
conditions or circumstances that would reasonably be expected to result in
the
receipt of notice regarding such exposure; and
(h) the
Borrower and its Subsidiaries have provided to Lenders complete and correct
copies of all environmental site assessment reports, investigations, studies,
analyses, and correspondence on environmental matters (including matters
relating to any alleged non-compliance with or liability under Environmental
Laws) that are in any of the Borrower’s or its Subsidiaries’ possession or
control and relating to their respective Properties or operations
thereon.
Section
7.07 Compliance with
the Laws and Agreements; No Defaults.
(a) Each
of the Borrower and each Subsidiary (i) is in compliance with all Governmental
Requirements applicable to it or its Property and all agreements and other
instruments binding upon it or its Property, and (ii) possesses all licenses,
permits, franchises, exemptions, approvals and other authorizations granted
by
Governmental Authorities necessary for the ownership of its Property and the
conduct of its business, except in either case where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result
in
a Material Adverse Effect.
(b) Neither
the Borrower nor any Subsidiary is in default nor has any event or circumstance
occurred which, but for the expiration of any applicable grace period or the
giving of notice, or both, would constitute a default or would require the
Borrower or a Subsidiary to Redeem or make any offer to Redeem under any
indenture, note, credit agreement or instrument pursuant to which any Material
Indebtedness is outstanding or by which the Borrower or any Subsidiary or any
of
their Properties is bound.
(c) No
Default has occurred and is continuing.
Section
7.08 Investment Company
Act. Neither
the Borrower nor any Subsidiary is an “investment company” or a company
“controlled” by an “investment company,” within the meaning of, or subject to
regulation under, the Investment Company Act of 1940, as amended.
Section
7.09 Taxes. Each
of the Borrower and its Subsidiaries has timely filed or caused to be filed
all
Tax returns and reports required to have been filed and has paid or caused
to be
paid all Taxes required to have been paid by it, except (a) Taxes that are
being
contested in good faith by appropriate proceedings and for which the Borrower
or
such Subsidiary, as applicable, has set aside on its books adequate reserves
in
accordance with GAAP or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect. The
charges, accruals and reserves on the books of the Borrower and its Subsidiaries
in respect of Taxes and other governmental charges are, in the reasonable
opinion of the Borrower,
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adequate. No
Tax Lien (other than an Excepted Lien of the type in (a) of the definition
thereof) has been filed and, to the knowledge of the Borrower, no claim is
being
asserted with respect to any such Tax or other such governmental
charge.
Section 7.10
ERISA.
(a) Except
for such noncompliance as could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, the Borrower, the Subsidiaries
and each ERISA Affiliate have complied with ERISA and, where applicable, the
Code regarding each Plan.
(b) Except
as could not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect, each Plan is, and has been, maintained in
substantial compliance with ERISA and, where applicable, the
Code.
(c) Except
as could not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect, no act, omission or transaction has occurred which
could result in imposition on the Borrower, any Subsidiary or any ERISA
Affiliate (whether directly or indirectly) of (i) either a civil penalty
assessed pursuant to subsections (c), (i) or (l) of section 502 of ERISA or
a
tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach
of fiduciary duty liability damages under section 409 of ERISA.
(d) No
Plan (other than a defined contribution plan) or any trust created under any
such Plan has been terminated in a distress termination under Section 4041(c)
of
ERISA since January 1, 2000. Except as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
no liability to the PBGC (other than for the payment of current premiums which
are not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has
been incurred with respect to any Plan. Except as could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, no ERISA Event with respect to any Plan has
occurred.
(e) Except
as could not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect, full payment when due has been made of all amounts
which the Borrower, the Subsidiaries or any ERISA Affiliate is required under
the terms of each Plan or applicable law to have paid as contributions to
such Plan as of the date hereof, and no accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan.
(f)
Except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, the actuarial present value of the benefit
liabilities under each Plan which is subject to Title IV of ERISA does not,
as of the end of the Borrower’s most recently ended fiscal year, exceed the
current value of the assets (computed on a plan termination basis in accordance
with Title IV of ERISA) of such Plan allocable to such benefit
liabilities. The term “actuarial present value of the benefit
liabilities” shall have the meaning specified in section 4041 of
ERISA.
(g) Except
as could not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect, neither the Borrower, the Subsidiaries nor any ERISA
Affiliate sponsors, maintains, or contributes to an employee welfare benefit
plan, as defined in
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section
3(1) of ERISA, including, without limitation, any such plan maintained to
provide benefits to former employees of such entities, that may not be
terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its sole
discretion at any time.
(h) Except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains or contributes to, or has at any time in the six-year period preceding the date hereof sponsored, maintained or contributed to, any Multiemployer Plan.
(i)
Except for amounts less than $100,000, neither the Borrower, the Subsidiaries
nor any ERISA Affiliate is required to provide security under section 401(a)(29)
of the Code due to a Plan amendment that results in an increase in current
liability for the Plan.
Section
7.11 Disclosure; No
Material Misstatements. The
Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or
any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could, if breached or violated by, enforced
against, or adversely determined in relation to, the Borrower or any of its
Subsidiaries, reasonably be expected to result in a Material Adverse
Effect. No reports, financial statements, certificates or other
information furnished by or on behalf of the Borrower or any Subsidiary to
the
Administrative Agent or any Lender or any of their Affiliates in connection
with
the negotiation of this Agreement or any other Loan Document or delivered
hereunder or under any other Loan Document (as modified or supplemented by
other
information so furnished) contains any material misstatement of fact or omits
to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time. There are no statements or conclusions
in any Reserve Report prepared by the chief engineer of the Borrower (and with
respect to a Reserve Report prepared by an Approved Petroleum Engineer, to
the
knowledge of a Responsible Officer of the Borrower), which are based upon or
include misleading information or fail to take into account material information
regarding the matters reported therein.
Section
7.12
Insurance. The
Borrower maintains, and has caused to be maintained for each of its
Subsidiaries, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same
or
similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans are
endorsed in favor of and made payable to the Administrative Agent as its
interests may appear, and such policies name the Administrative Agent and the
Lenders as “additional insureds” and provide that the insurer will endeavor to
give at least 30 days prior notice of any cancellation to the Administrative
Agent.
Section
7.13 Restriction on
Liens. Neither
the Borrower nor any of the Subsidiaries is a party to any material agreement
or
arrangement (other than Capital Leases creating Liens permitted by Section
9.03(c), but then only on the Property subject of such Capital Lease), or
subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its
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ability
to grant Liens to the Administrative Agent and the Lenders on or in respect
of
their Properties to secure the Indebtedness and the Loan Documents, except,
in
each case, as provided in Section 9.16.
Section 7.14 Subsidiaries. Except
as set forth on Schedule 7.14 or as disclosed in writing to the Administrative
Agent (which shall promptly furnish a copy to the Lenders), which shall be
a
supplement to Schedule 7.14, the Borrower has no Subsidiaries and the Borrower
has no Foreign Subsidiaries. Each Subsidiary on such schedule is a
Wholly-Owned Subsidiary.
Section
7.15 Location of
Business and Offices. The
Borrower’s jurisdiction of organization is Delaware; the name
of
the Borrower as listed in the public records of its jurisdiction of organization
is Xxx Energy
Corporation; and the organizational identification number of the Borrower
in its jurisdiction of organization is 4313846 (or, in each
case, as
set forth in a notice delivered to the Administrative Agent pursuant to
Section
8.01(n) in
accordance with Section 12.01). The
Borrower’s principal place of business and chief executive offices are located
at the address specified in Section 12.01 (or as set forth in a notice delivered
pursuant to Section 8.01(n) and Section 12.01(c)). Each Subsidiary’s
jurisdiction of organization, name as listed in the public records of its
jurisdiction of organization, organizational identification number in its
jurisdiction of organization, and the location of its principal place of
business and chief executive office is stated on Schedule 7.14 (or as set forth
in a notice delivered pursuant to Section 8.01(n)).
Section
7.16 Properties;
Titles, Etc.
(a) Each
of the Borrower and the Subsidiaries has good and defensible title to the Oil
and Gas Properties evaluated in the most recently delivered Reserve Report
and
to all its personal Properties, in each case, free and clear of all Liens except
Liens permitted by Section 9.03 and such defects in title as could not,
individually or in the aggregate, reasonably be expected to materially distract
from the value thereof to, or the use thereof in, the business of the Borrower
and its Subsidiaries. After giving full effect to the Excepted Liens,
the Borrower or the Subsidiary specified as the owner owns the net interests
in
production attributable to the Hydrocarbon Interests as reflected in the most
recently delivered Reserve Report, and the ownership of such Properties shall
not in any material respect obligate the Borrower or such Subsidiary to bear
the
costs and expenses relating to the maintenance, development and operations
of
each such Property in an amount in excess of the working interest of each
Property set forth in the most recently delivered Reserve Report that is not
offset by a corresponding proportionate increase in the Borrower’s or such
Subsidiary’s net revenue interest in such Property.
(b) All
material leases and agreements necessary for the conduct of the business of
the
Borrower and the Subsidiaries in all material respects are valid and subsisting,
in full force and effect, and there exists no default or event or circumstance
which with the giving of notice or the passage of time or both would give rise
to a default under any such lease or leases, which could reasonably be expected
to have a Material Adverse Effect.
(c) The
rights and Properties presently owned, leased or licensed by the Borrower and
the Subsidiaries including, without limitation, all easements and rights of
way,
include all rights and Properties necessary to permit the Borrower and the
Subsidiaries to
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conduct
their business in all material respects in the same manner as its business
has
been conducted prior to the date hereof.
(d) All
of the personal Properties of the Borrower and the Subsidiaries which are
reasonably necessary for the operation of their businesses in all material
respects are in good working condition and are maintained in accordance with
prudent business standards, except for such Properties as could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
(e) The
Borrower and each Subsidiary owns, or possesses the right to use, all
trademarks, tradenames, copyrights, patents and other intellectual Property
material to its business, and the use thereof by the Borrower and such
Subsidiary does not infringe upon the rights of any other Person, except for
any
such infringements that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. The Borrower and
its Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, seismic data,
maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons,
with
such exceptions as could not reasonably be expected to have a Material Adverse
Effect.
Section
7.17 Maintenance of
Properties. Except
for such acts or failures to act as could not be reasonably expected to have
a
Material Adverse Effect, the Oil and Gas Properties (and Properties unitized
therewith) of the Borrower and its Subsidiaries have been maintained, operated
and developed by the Borrower or its Subsidiaries in a good and workmanlike
manner and in conformity in all material respects with all applicable
Governmental Requirements and in conformity in all material respects with the
provisions of all leases, subleases or other contracts comprising a part of
the
Hydrocarbon Interests and other contracts and agreements forming a part of
the
Oil and Gas Properties of the Borrower and its Subsidiaries, in each case to
which the Borrower or its Subsidiaries are a party. Specifically in
connection with the foregoing, except for those as could not be reasonably
expected to have a Material Adverse Effect, (i) no Oil and Gas Property of
the
Borrower or any Subsidiary is subject to having allowable production reduced
below the full and regular allowable (including the maximum permissible
tolerance) because of any overproduction (whether or not the same was
permissible at the time) and (ii) none of the xxxxx comprising a part of the
Oil
and Gas Properties (or Properties unitized therewith) of the Borrower or any
Subsidiary is deviated from the vertical more than the maximum permitted by
Governmental Requirements, and such xxxxx are, in fact, bottomed under and
are
producing from, and the well bores are wholly within, the Oil and Gas Properties
(or in the case of xxxxx located on Properties unitized therewith, such unitized
Properties) of the Borrower or such Subsidiary. All pipelines, xxxxx,
gas processing plants, platforms and other material improvements, fixtures
and
equipment owned in whole or in part by the Borrower or any of its Subsidiaries
that are necessary to conduct normal operations in all material respects are
being maintained in a condition reasonably adequate to conduct normal
operations, and with respect to such of the foregoing which are operated by
the
Borrower or any of its Subsidiaries, in a manner consistent with the Borrower’s
or its Subsidiaries’ past practices (other than those the
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failure
of which to maintain in accordance with this Section 7.17 could not reasonably
be expected to have a Material Adverse Effect.
Section
7.18 Gas Imbalances,
Prepayments. Except
as set forth on Schedule 7.18 or on the most recent certificate delivered
pursuant to Section 8.12(c), on a net basis there are no gas imbalances, take
or
pay or other prepayments which would require the Borrower or any of its
Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties
at
some future time without then or thereafter receiving full payment therefor
exceeding one-half bcf of gas (on an mcf equivalent basis) in the
aggregate.
Section
7.19 Marketing of
Production. Except
for contracts listed and in effect on the date hereof on Schedule 7.19, and
thereafter either disclosed in writing to the Administrative Agent or included
in the most recently delivered Reserve Report (with respect to all of which
contracts the Borrower represents that it or its Subsidiaries are receiving
a
price for all production sold thereunder which is computed substantially in
accordance with the terms of the relevant contract and are not having deliveries
curtailed substantially below the subject Property’s delivery capacity), no
material agreements exist which are not cancelable on 60 days notice or less
without penalty or detriment for the sale of production from the Borrower’s or
its Subsidiaries’ Hydrocarbons (including, without limitation, calls on or other
rights to purchase, production, whether or not the same are currently being
exercised) that ix) pertain to the sale of production at a fixed price and
x)
have a maturity or expiry date of longer than six (6) months from the date
hereof.
Section
7.20 Swap
Agreements. Schedule
7.20, as of the date hereof, and after the date hereof, each report required
to
be delivered by the Borrower pursuant to Section 8.01(f), sets forth a true
and
complete list of all Swap Agreements of the Borrower and each Subsidiary, the
material terms thereof (including the type, term, effective date, termination
date and notional amounts or volumes), the net xxxx to market value thereof,
all
credit support agreements relating thereto (including any margin required or
supplied) and the counterparty to each such agreement.
Section
7.21 Use of Loans and
Letters of Credit. The
proceeds of the Loans and the Letters of Credit shall be used to provide working
capital for exploration and production operations, to refinance Debt under
the
Existing Credit Agreement and other Debt of the Borrower, its Subsidiaries
and
other entities managed or operated by the Borrower and for general corporate
purposes. The Borrower and its Subsidiaries are not engaged
principally, or as one of its or their important activities, in the business
of
extending credit for the purpose, whether immediate, incidental or ultimate,
of
buying or carrying margin stock (within the meaning of Regulation T, U or X
of
the Board). No part of the proceeds of any Loan or Letter of Credit
will be used for any purpose which violates the provisions of Regulations T,
U
or X of the Board.
Section
7.22 Solvency. After
giving effect to the transactions contemplated hereby, (a) the aggregate assets
(after giving effect to amounts that could reasonably be received by reason
of
indemnity, offset, insurance or any similar arrangement), at a fair valuation,
of the Borrower and the Guarantors, taken as a whole, will exceed the aggregate
Debt of the Borrower and the Guarantors on a consolidated basis, as the Debt
becomes absolute and matures, (b) each of the Borrower and the Guarantors will
not have incurred or intended to incur, and will not believe
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that
it
will incur, Debt beyond its ability to pay such Debt (after taking into account
the timing and amounts of cash to be received by each of the Borrower and the
Guarantors and the amounts to be payable on or in respect of its liabilities,
and giving effect to amounts that could reasonably be received by reason of
indemnity, offset, insurance or any similar arrangement) as such Debt becomes
absolute and matures and (c) each of the Borrower and the Guarantors will not
have (and will have no reason to believe that it will have thereafter)
unreasonably small capital for the conduct of its business.
ARTICLE
VIII
Affirmative
Covenants
Until
the
Commitments have expired or been terminated and the principal of and interest
on
each Loan and all fees payable hereunder and all other amounts payable under
the
Loan Documents shall have been paid in full and all Letters of Credit shall
have
expired or terminated and all LC Disbursements shall have been reimbursed,
the
Borrower covenants and agrees with the Lenders that:
Section
8.01 Financial
Statements; Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) Annual
Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than 90 days after the end
of
each fiscal year of the Borrower, its audited consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by Malin, Xxxxxxxx &
Company, LLP or other
independent public accountants of recognized
national standing (without a “going concern” or like qualification or exception
and without any qualification or exception as to the scope of such audit) to
the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied.
(b) Quarterly
Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than 45 days after the end
of
each of the first three fiscal quarters of each fiscal year of the Borrower,
its
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such fiscal quarter and the
then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case
of
the balance sheet, as of the end of) the previous fiscal year, all certified
by
one of its Financial Officers as presenting fairly in all material respects
the
financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.
(c) Certificate
of Financial Officer -- Compliance. Concurrently with any
delivery of financial statements under Section 8.01(a) or Section 8.01(b),
a
certificate of a Financial Officer in substantially the form of Exhibit D-2
hereto (i) certifying as to whether a
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Default
has occurred and, if a Default has occurred, specifying the details thereof
and
any action taken or proposed to be taken with respect thereto, (ii) setting
forth reasonably detailed calculations demonstrating compliance with Section
8.13(b) and Section 9.01 and (iii) stating whether any change in GAAP or in
the
application thereof has occurred since the date of the audited financial
statements referred to in Section 7.03(a) that would affect the preparation
of
the financial statements most-recently required to be delivered in accordance
with Section 8.01(a) and (b) or the computation of any financial ratio in
Section 9.01 and, if any such change has occurred, specifying the effect of
such change on the financial statements accompanying such
certificate.
(d) Certificate
of Accounting Firm -- Defaults. Concurrently with any delivery of
financial statements under Section 8.01(a), a certificate of the independent
accounting firm that reported on such financial statements stating whether
they
obtained knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the extent
required by accounting rules or guidelines).
(e) Certificate
of Financial Officer -- Consolidating Information. If, at any
time, all of the Subsidiaries of the Borrower are not Consolidated Subsidiaries,
then concurrently with any delivery of financial statements under Section
8.01(a) or Section 8.01(b), a certificate of a Financial Officer setting forth
consolidating spreadsheets that show all Subsidiaries and the eliminating
entries, in such form as would be presentable to the independent accountants
of
the Borrower.
(f) Certificate
of Financial Officer – Swap Agreements. Concurrently with any
delivery of financial statements under Section 8.01(a) and Section 8.01(b),
a
certificate of a Financial Officer, in form and substance satisfactory to the
Administrative Agent, setting forth as of the last Business Day of such fiscal
quarter or fiscal year, a true and complete list of all Swap Agreements of
the
Borrower and each Subsidiary, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the
net
xxxx-to-market value therefor, any new credit support agreements relating
thereto not listed on Schedule 7.19, any margin required or supplied under
any
credit support document, and the counterparty to each such
agreement.
(g) Certificate
of Insurer -- Insurance Coverage. Concurrently with any delivery
of financial statements under Section 8.01(a), a certificate of insurance
coverage from each insurer or one or more insurance agencies with respect to
the
insurance required by Section 8.07, in form and substance satisfactory to the
Administrative Agent, and, if requested by the Administrative Agent or any
Lender, copies of the applicable policies.
(h) Other
Accounting Reports. Promptly upon receipt thereof, a copy of each
other report or letter submitted to the Borrower or any of its Subsidiaries
by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Borrower or any such Subsidiary, and a copy
of
any response by the Borrower or any such Subsidiary, or the board of directors
or other appropriate governing body of the Borrower or any such Subsidiary,
to
such letter or report.
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(i) SEC
and Other Filings; Reports to Shareholders. Promptly after the
same become publicly available, copies of all periodic and other reports,
proxy
statements and other materials filed by the Borrower or any Subsidiary with
the
SEC, or with any national securities exchange, or distributed by the Borrower
to
its security holders generally, as the case may be.
(j) Notices
Under Material Instruments. Promptly after the furnishing
thereof, copies of any financial statement, report or notice furnished by the
Borrower to any holder of debt securities of the Borrower or any Subsidiary
pursuant to the terms of any preferred stock designation, indenture, loan or
credit or other similar agreement, other than this Agreement and not otherwise
required to be furnished to the Lenders pursuant to any other provision of
this
Section 8.01.
(k) Lists
of Purchasers. Promptly following the written request of the
Administrative Agent, a list of all Persons, as of a specified date, purchasing
Hydrocarbons from the Borrower or any Subsidiary.
(l) Notice
of Sales of Oil and Gas Properties. In the event the Borrower or
any Subsidiary intends to sell, transfer, assign or otherwise dispose of any
Oil
or Gas Properties or any Equity Interests in any Subsidiary in accordance with
Section 9.12, prior written notice of such disposition, the price thereof and
the anticipated date of closing and any other details thereof reasonably
requested by the Administrative Agent or any Lender.
(m)
Notice of Casualty Events. Prompt written notice, and in any
event within three Business Days following the knowledge thereof by, or the
services of process on, (as the case may be) a Responsible Officer of the
Borrower, of the occurrence of any Casualty Event or the commencement of any
action or proceeding that could reasonably be expected to result in a Casualty
Event.
(n) Information
Regarding Borrower and Guarantors. Prompt written notice (and in
any event within ten (10) Business Days thereafter) of any change (i) in
the Borrower’s or any Guarantor’s company or corporate name or in any trade name
used to identify such Person in the conduct of its business or in the ownership
of its Properties, (ii) in the location of the Borrower’s or any
Guarantor’s chief executive office or principal place of business, (iii) in
the Borrower’s or any Guarantor’s identity or company or corporate structure or
in the jurisdiction in which such Person is incorporated, organized or formed,
(iv) in the Borrower’s or any Guarantor’s organizational identification number
in its jurisdiction of organization, and (v) in the Borrower’s or any
Guarantor’s federal taxpayer identification number.
(o) Production
Report and Lease Operating Statements. Within 60 days after the
end of each fiscal quarter, a report setting forth, for each calendar month
during the then elapsed portion of the fiscal year, the volume of production
and
sales attributable to production (and the prices at which such sales were made
and the revenues derived from such sales) for each such calendar month from
the
Oil and Gas Properties, and setting forth the related ad valorem, severance
and
production taxes and lease operating expenses attributable thereto and incurred
for each such calendar month.
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(p) Notices
of Certain Changes. Promptly, but in any event within five (5)
Business Days after the execution thereof, copies of any amendment, modification
or supplement to the Organizational Documents, any preferred stock designation
or any other organic document of the Borrower or any Subsidiary.
(q) Ratings
Change. Promptly after Xxxxx’x or S&P shall have announced a
change in the rating established or deemed to have been established for the
Index Debt or any other Material Indebtedness, written notice of such rating
change.
(r) Other
Requested Information. Promptly following any request therefor,
such other information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary (including, without limitation,
any
Plan or Multiemployer Plan and any reports or other information required to
be
filed under ERISA), or compliance with the terms of this Agreement or any other
Loan Document, as the Administrative Agent or any Lender may reasonably
request.
Documents
required to be delivered pursuant to Section 8.01(a), (b), (h), (i) or (j),
to
the extent any such documents are included in materials otherwise filed with
the
SEC, may be delivered electronically and if so delivered, shall be deemed to
have been delivered to the Administrative Agent and each Lender on the date
on
which the Borrower notifies the Agent such documents (i) have been posted,
or on
which the Borrower provides a link thereto on the Borrower’s website on the
Internet at the website address listed in Section 12.01; or (ii) are posted
on the Borrower’s behalf on an Internet or intranet website, if any, to which
Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided
the Borrower shall notify the Administrative Agent (by telecopier or electronic
mail) of the posting by the Borrower of its Annual Reports on form 10-K,
Quarterly Reports on Form 10-Q and current Reports on Form 8-K.
Section
8.02 Notices of
Material Events. The
Borrower will furnish to the Administrative Agent and each Lender prompt written
notice of the following:
(a)
the occurrence of any Default;
(b)
the filing or commencement of, or the threat in writing of, any action,
suit, proceeding, investigation or arbitration by or before any arbitrator
or
Governmental Authority against or affecting the Borrower or any Subsidiary
not
previously disclosed in writing to the Administrative Agent or any material
adverse development in any action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Administrative Agent)
that, in either case, if adversely determined (and with respect to any threat,
reasonably sustainable in the Borrower’s good faith determination), could
reasonably be expected to result in a Material Adverse Effect;
(c)
the occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding $5,000,000;
(d) the
occurrence of any of the events described in Sections 10.01(h), (i) or (j)
with
respect to any Subsidiary that is not a Guarantor; and
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(e) any
other development that results in, or could reasonably be expected to result
in,
a Material Adverse Effect.
Each
notice delivered under this Section 8.02 shall be accompanied by a statement
of
a Responsible Officer setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.
Section
8.03 Existence; Conduct
of Business. The
Borrower will, and will cause each Subsidiary to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business and maintain, if necessary, its qualification
to
do business in each other jurisdiction in which its Oil and Gas Properties
is
located or the ownership of its Properties requires such qualification, except
where the failure to so qualify could not reasonably be expected to have a
Material Adverse Effect; provided that the foregoing shall not prohibit any
merger, conversion, consolidation, liquidation or dissolution permitted under
Section 9.11.
Section
8.04 Payment of
Obligations. The
Borrower will, and will cause each Subsidiary to, pay its obligations, including
Tax liabilities of the Borrower and all of its Subsidiaries before the same
shall become delinquent or in default, except where (i) the validity or amount
thereof is being contested in good faith by appropriate actions, (ii) the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (iii) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect or result in the seizure or levy of any material Property of
the
Borrower or any Subsidiary.
Section
8.05 Performance of
Obligations under Loan Documents. The
Borrower will pay the Notes in accordance with the terms thereof, and the
Borrower will, and will cause each Subsidiary to, do and perform every act
and
discharge all of the obligations to be performed and discharged by them under
the Loan Documents, including, without limitation, this Agreement, at the time
or times and in the manner specified.
Section
8.06 Operation and
Maintenance of Properties. The
Borrower will, and will cause each Subsidiary to:
(a) operate
its Oil and Gas Properties and other material Properties or cause such Oil
and
Gas Properties and other material Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance with
all applicable Governmental Requirements, including, without limitation,
applicable pro ration requirements and Environmental Laws, and all applicable
laws, rules and regulations of every other Governmental Authority from time
to
time constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
(b) keep
and maintain all Property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted, and preserve,
maintain and keep in good repair, working order and efficiency (ordinary wear
and tear excepted) all of its
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material
Oil and Gas Properties and other material Properties, including, without
limitation, all equipment, machinery and facilities.
(c) promptly
pay and discharge, or make reasonable and customary efforts to cause to be
paid
and discharged, all delay rentals, royalties, expenses and indebtedness accruing
under the leases or other agreements affecting or pertaining to its Oil and
Gas
Properties and will do all other things necessary to keep unimpaired their
rights with respect thereto and prevent any forfeiture thereof or default
thereunder, except where (i) the validity or amount thereof is being
contested in good faith by appropriate actions, (ii) it has set aside
adequate reserves with respect thereto in accordance with GAAP and
(iii) the failure to so act could not reasonably be expected to result in a
Material Adverse Effect or result in the forfeiture of any of its material
Property.
(d) promptly
perform or make reasonable and customary efforts to cause to be performed,
in
accordance with industry standards, the obligations required by each and all
of
the assignments, deeds, leases, sub-leases, contracts and agreements affecting
its interests in its Oil and Gas Properties and other material Properties,
except where (i) the validity or amount thereof is being contested in good
faith by appropriate actions, (ii) it has set aside adequate reserves with
respect thereto in accordance with GAAP and (iii) the failure to so act
could not reasonably be expected to result in a Material Adverse Effect or
result in the forfeiture of any of its material Property.
(e) to
the extent the Borrower is not the operator of any Property, the Borrower shall
use reasonable efforts to cause the operator to comply with this Section 8.06;
provided, however, in no event shall it be required to expend any amounts,
incur
any obligations or expose itself to any economic consequences as a requirement
to comply with this Section 8.06(e).
Section
8.07 Insurance. The
Borrower will, and will cause each Subsidiary to, maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations. The
loss payable clauses or provisions in said insurance policy or policies insuring
any of the collateral for the Loans shall be endorsed in favor of and made
payable to the Administrative Agent as its interests may appear and such
policies shall name the Administrative Agent and the Lenders as “additional
insureds” and provide that the insurer will endeavor to give at least 30 days
prior notice of any cancellation to the Administrative Agent.
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Section
8.08 Books and Records;
Inspection Rights. The
Borrower will, and will cause each Subsidiary to, keep proper books of record
and account in which full, true and correct entries are made of all dealings
and
transactions in relation to its business and activities. The Borrower
will, and will cause each Subsidiary to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice and
during normal business hours, to visit and inspect its Properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all
at
such reasonable times and as often as reasonably requested, in each case,
subject to applicable safety standards, applicable privilege and confidentiality
restrictions, and restrictions of owners of such records or properties who
are
neither the Borrower nor any Subsidiary.
Section
8.09 Compliance with
Laws. The
Borrower will, and will cause each Subsidiary to, comply in all material
respects with all laws, rules, regulations and orders of any Governmental
Authority applicable
to it or its Property, except where (i) such law, rule, regulation or order
is being contested in good faith by appropriate actions diligently conducted
or
(ii) the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse
Effect.
Section
8.10 Environmental
Matters.
(a) The
Borrower shall: (i) comply, and shall cause its Properties and operations and
each Subsidiary and each Subsidiary’s Properties and operations to comply, with
all applicable Environmental Laws, the breach of which could be reasonably
expected to have a Material Adverse Effect; (ii) not dispose of or otherwise
release, and shall cause each Subsidiary not to dispose of or otherwise release,
any oil, oil and gas waste, hazardous substance, or solid waste on, under,
about
or from any of the Borrower’s or its Subsidiaries’ Properties or any other
Property to the extent caused by the Borrower’s or any of its Subsidiaries’
operations except in compliance with applicable Environmental Laws, the disposal
or release of which could reasonably be expected to have a Material Adverse
Effect; (iii) timely obtain or file, and shall cause each Subsidiary to timely
obtain or file, all notices, permits, licenses, exemptions, approvals,
registrations or other authorizations, if any, required under applicable
Environmental Laws to be obtained or filed in connection with the operation
or
use of the Borrower’s or its Subsidiaries’ Properties, which failure to obtain
or file could reasonably be expected to have a Material Adverse Effect; (iv)
promptly commence and diligently prosecute to completion, and shall cause each
Subsidiary to promptly commence and diligently prosecute to completion, any
assessment, evaluation, investigation, monitoring, containment, cleanup,
removal, repair, restoration, remediation or other remedial obligations
(collectively, the “Remedial Work”) in the event any Remedial Work is
required or reasonably necessary under applicable Environmental Laws because
of
or in connection with the actual or suspected past, present or future disposal
or other release of any oil, oil and gas waste, hazardous substance or solid
waste on, under, about or from any of the Borrower’s or its Subsidiaries’
Properties, which failure to commence and diligently prosecute to completion
could reasonably be expected to have a Material Adverse Effect; and
(v) establish and implement, and shall cause each Subsidiary to establish
and implement, such policies of environmental audit and compliance as may be
necessary to continuously determine and assure that the Borrower’s and its
Subsidiaries’ obligations under
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this
Section 8.10(a) are timely and fully satisfied, which failure to establish
and
implement could reasonably be expected to have a Material Adverse Effect.
(b) The
Borrower will promptly, but in no event later than five days of the occurrence
of a triggering event, notify the Administrative Agent and the Lenders in
writing of any threatened action, investigation or inquiry by any Governmental
Authority or any threatened demand or lawsuit by any landowner or other third
party against the Borrower or its Subsidiaries or their Properties of which
the
Borrower has knowledge in connection with any Environmental Laws (excluding
routine testing and corrective action) if the Borrower reasonably anticipates
that such action will result in liability (whether individually or in the
aggregate) in excess of $1,000,000, not fully covered by insurance, subject
to
normal deductibles.
(c) The
Borrower will, and will cause each Subsidiary to, provide environmental audits
and tests in accordance with American Society of Testing Materials standards
upon request by the Administrative Agent and the Lenders and no more than
once
per year in the absence of any Event of Default (or as otherwise required
to be
obtained by the Administrative Agent or the Lenders by any Governmental
Authority), in connection with any future acquisitions of Oil and Gas Properties
or other Properties.
Section
8.11 Further Assurances.
(a) The
Borrower at its sole expense will, and will cause each Subsidiary to, promptly
execute and deliver to the Administrative Agent all such other documents,
agreements and instruments reasonably requested by the Administrative Agent
to
comply with, cure any defects or accomplish the conditions precedent, covenants
and agreements of the Borrower or any Subsidiary, as the case may be, in the
Loan Documents, including the Notes, or to further evidence and more fully
describe the collateral intended as security for the Indebtedness, or to correct
any omissions in this Agreement or the Security Instruments, or to state more
fully the obligations secured therein, or to perfect, protect or preserve any
Liens created pursuant to this Agreement or any of the Security Instruments
or
the priority thereof, or to make any recordings, file any notices or obtain
any
consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.
(b) The
Borrower hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all
or
any part of the Mortgaged Property without the signature of the Borrower or
any
other Guarantor where permitted by law. A carbon, photographic or
other reproduction of the Security Instruments or any financing statement
covering the Mortgaged Property or any part thereof shall be sufficient as
a
financing statement where permitted by law.
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Section
8.12 Reserve
Reports.
(a) On
or before March 1st and September 1st of each year, commencing September 1, 2007,
the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report evaluating
the Oil and Gas Properties of the Borrower and its Subsidiaries as of the
immediately preceding January 1st and July 1st. The Reserve Report as
of January 1 of each year shall be prepared by one or more Approved Petroleum
Engineers, and the July 1 Reserve Report of each year shall be prepared by
or
under the supervision of the chief engineer of the Borrower who shall certify
such Reserve Report to be true and accurate in all material respects and
to have
been prepared in accordance with the procedures used in the immediately
preceding January 1 Reserve Report.
(b) In
the event of an Interim Redetermination, the Borrower shall furnish to the
Administrative Agent and the Lenders a Reserve Report prepared by or under
the
supervision of the chief engineer of the Borrower who shall certify such
Reserve
Report to be true and accurate in all material respects and, except as therein
disclosed, to have been prepared in accordance with the procedures used in
the
immediately preceding January 1 Reserve Report. For any Interim
Redetermination requested by the Administrative Agent or the Borrower pursuant
to Section 2.07(b), the Borrower shall provide such Reserve Report with an
“as
of” date as required by the Administrative Agent as soon as possible, but in
any
event no later than thirty (30) days following the receipt of such
request.
(c) With
the delivery of each Reserve Report, the Borrower shall provide to the
Administrative Agent and the Lenders a certificate from a Responsible Officer
certifying that in all material respects: (i) the factual information contained
in the Reserve Report and any other information delivered in connection
therewith is true and correct, (ii) the Borrower or its Subsidiaries owns good
and defensible title to the Oil and Gas Properties evaluated in such Reserve
Report and such Properties are free of all Liens except for Liens permitted
by
Section 9.03, (iii) except as set forth on an exhibit to the certificate, on
a
net basis there are no gas imbalances, take or pay or other prepayments in
excess of the volume specified in Section 7.18 with respect to its Oil and
Gas
Properties evaluated in such Reserve Report which would require the Borrower
or
any Subsidiary to deliver Hydrocarbons either generally or produced from such
Oil and Gas Properties at some future time without then or thereafter receiving
full payment therefor, (iv) none of their Oil and Gas Properties have been
sold
since the date of the last Borrowing Base determination except as set forth
on
an exhibit to the certificate, which certificate shall list all of its Oil
and
Gas Properties sold and in such detail as reasonably required by the
Administrative Agent, (v) attached to the certificate is a list of all marketing
agreements entered into subsequent to the later of the date hereof or the most
recently delivered Reserve Report which the Borrower could reasonably be
expected to have been obligated to list on Schedule 7.19 had such agreement
been
in effect on the date hereof and (vi) attached thereto is a schedule of the
Oil
and Gas Properties evaluated by such Reserve Report that are Mortgaged
Properties and demonstrating the percentage of the total value of the Oil and
Gas Properties that the value of such Mortgaged Properties
represent.
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Section
8.13 Title
Information.
(a) On
or before the delivery to the Administrative Agent and the Lenders of each
Reserve Report required by Section 8.12(a), the Borrower will deliver title
information in form and substance acceptable to the Administrative Agent
covering enough of the Oil and Gas Properties evaluated by such Reserve Report
that were not included in the immediately preceding Reserve Report, so that
the
Administrative Agent shall have received together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 80% of the total value of the Oil and Gas Properties evaluated
by
such Reserve Report.
(b) If
the Borrower has provided title information for additional Properties under
Section 8.13(a), the Borrower shall, within 60 days of notice from the
Administrative Agent that title defects or exceptions (other than, of a
(y) nature or type that constitutes a permitted Lien pursuant to
Section 9.03 or (z) economically insignificant nature) exist with
respect to such additional Properties, either (i) cure any such title defects
or
exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute acceptable
Mortgaged Properties with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of
such
definition and other than, of a (y) nature or type that constitutes a
permitted Lien pursuant to Section 9.03 or (z) economically
insignificant nature) having an equivalent value or (iii) deliver title
information in form and substance acceptable to the Administrative Agent
so that
the Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 80% of the value of the Oil and Gas Properties evaluated by such
Reserve Report.
(c) If
the Borrower is unable to cure any title defect requested by the Administrative
Agent or the Lenders to be cured pursuant to Section 8.13(c) within such 60-day
period or the Borrower does not comply with the requirements to provide
acceptable title information covering 80% of the value of the Oil and Gas
Properties evaluated in the most recent Reserve Report, such default shall
not
be a Default, but instead the Administrative Agent and/or the Majority Lenders
shall have the right to exercise the following remedy in their sole discretion
from time to time, and any failure to so exercise this remedy at any time shall
not be a waiver as to future exercise of the remedy by the Administrative Agent
or the Lenders. To the extent that the Administrative Agent or the
Majority Lenders are not satisfied with title to any Mortgaged Property after
the 60-day period has elapsed, such unacceptable Mortgaged Property shall not
count towards the 80% requirement, and the Administrative Agent may send a
notice to the Borrower and the Lenders that the then outstanding Borrowing
Base
shall be reduced by an amount as determined by the Majority Lenders to cause
the
Borrower to be in compliance with the requirement to provide acceptable title
information on 80% of the value of the Oil and Gas Properties. This
new Borrowing Base shall become effective immediately after the Borrower’s
receipt of such notice.
Section
8.14 Additional
Collateral; Additional Guarantors.
(a) In
connection with each redetermination of the Borrowing Base, the Borrower shall
review the Reserve Report and the list of current Mortgaged Properties (as
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described
in Section 8.12(c)(vi)) to ascertain whether the Mortgaged Properties represent
at least 80% of the total value of the Oil and Gas Properties evaluated in
the
most recently completed Reserve Report after giving effect to exploration and
production activities, acquisitions, dispositions and production. In
the event that the Mortgaged Properties do not represent at least 80% of such
total value, then the Borrower shall, and shall cause its Subsidiaries to,
grant
(from its available unencumbered Property), within thirty (30) days of delivery
of the certificate required under Section 8.12(c), to the Administrative Agent
as security for the Indebtedness a first-priority Lien interest (provided that
Excepted Liens of the type described in clauses (a) to (d) and (f) of the
definition thereof may exist, but subject to the provisos at the end of such
definition) on additional Oil and Gas Properties not already subject to a Lien
of the Security Instruments such that after giving effect thereto, the Mortgaged
Properties will represent at least 80% of such total value. All such
Liens will be created and perfected by and in accordance with the provisions
of
deeds of trust, security agreements and financing statements or other Security
Instruments, all in form and substance reasonably satisfactory to the
Administrative Agent and the Borrower and in sufficient executed (and
acknowledged where necessary or appropriate) counterparts for recording
purposes. In order to comply with the foregoing, if any Subsidiary
places a Lien on its Oil and Gas Properties and such Subsidiary is not a
Guarantor, then it shall become a Guarantor and comply with Section 8.14(b).
(b) In
the event that (i) the Borrower determines that any Subsidiary is a Material
Domestic Subsidiary or (ii) any Domestic Subsidiary incurs or guarantees
any
Debt (other than Debt of the nature described at clause (c) of the
definition of the defined term “Debt”), the Borrower shall promptly cause such
Subsidiary to guarantee the Indebtedness pursuant to the Guaranty
Agreement. In connection with any such guaranty, the Borrower shall,
or shall cause such Subsidiary to, (a) execute and deliver a supplement to
the
Guaranty Agreement executed by such Subsidiary, (b) pledge all of the Equity
Interests of such new Subsidiary (including, without limitation, delivery
(if
applicable) of original certificates evidencing the Equity Interests of such
Subsidiary, together with an appropriate undated stock powers for each
certificate duly executed in blank by the registered owner thereof) and (c)
execute and deliver such other additional closing documents, certificates
and
legal opinions as shall reasonably be requested by the Administrative
Agent.
Section
8.15 ERISA
Compliance. The
Borrower will promptly furnish and will cause the Subsidiaries and any ERISA
Affiliate to promptly furnish to the Administrative Agent (i) promptly after
receipt of a written request by the Administrative Agent, copies of each annual
and other report with respect to each Plan or any trust created thereunder,
filed with the United States Secretary of Labor, the Internal Revenue Service
or
the PBGC, (ii) immediately upon becoming aware of the occurrence of any ERISA
Event or of any “prohibited transaction,” as described in section 406 of ERISA
or in section 4975 of the Code, in connection with any Plan or any trust created
thereunder, a written notice signed by the Chief Executive Officer or the
principal Financial Officer, the Subsidiary or the ERISA Affiliate, as the
case
may be, specifying the nature thereof, what action the Borrower, the Subsidiary
or the ERISA Affiliate is taking or proposes to take with respect thereto,
and,
when known, any action taken or proposed by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto, and (iii) immediately
upon
receipt thereof, copies of any notice of the PBGC’s intention to terminate or to
have a trustee appointed to administer any Plan. With respect to each
Plan (other than a Multiemployer Plan), the Borrower will, and will cause each
Subsidiary and ERISA Affiliate to,
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(i)
satisfy in full and in a timely manner, without incurring any late payment
or
underpayment charge or penalty and without giving rise to any lien, all of
the
contribution and funding requirements of section 412 of the Code (determined
without regard to subsections (d), (e), (f) and (k) thereof) and of section
302
of ERISA (determined without regard to sections 303, 304 and 306 of ERISA),
and
(ii) pay, or cause to be paid, to the PBGC in a timely manner, without incurring
any late payment or underpayment charge or penalty, all premiums required
pursuant to sections 4006 and 4007 of ERISA.
Section
8.16 Swap
Agreements. The
Borrower shall maintain the hedge position established by the Swap Agreements
required under Section 6.01(q) during the period specified therein and shall
neither assign, terminate or unwind any such Swap Agreements nor sell any
Swap
Agreements if the effect of such action (when taken together with any other
Swap
Agreements executed contemporaneously with the taking of such action) would
have
the effect of canceling its positions under such Swap Agreements required
hereby, unless, in each event, an event of default has occurred thereunder,
and
it is the non-defaulting party, or a termination event has occurred thereunder,
and it is not the affected party, and it has notified the Administrative
Agent
of any such occurrence.
Section
8.17 Marketing
Activities. The
Borrower will not, and will not permit any of its Subsidiaries to, engage
in
marketing activities for any Hydrocarbons or enter into any contracts related
thereto other than (a) contracts for the sale of Hydrocarbons scheduled or
reasonably estimated to be produced from their proved Oil and Gas Properties
during the period of such contract, (b) contracts for the sale of Hydrocarbons
scheduled or reasonably estimated to be produced from proved Oil and Gas
Properties of third parties during the period of such contract associated
with
the Oil and Gas Properties of the Borrower and its Subsidiaries that the
Borrower or one of its Subsidiaries has the right to market pursuant to joint
operating agreements, unitization agreements
or other similar contracts that are usual and customary in the oil and gas
business and (c) other contracts for the purchase and/or sale of Hydrocarbons
of
third parties (i) which have generally offsetting provisions (i.e. corresponding
pricing mechanics, delivery dates and points and volumes) such that no
“position” is taken and (ii) for which appropriate credit support has been taken
to alleviate the material credit risks of the counterparty
thereto.
ARTICLE
IX
Negative
Covenants
Until
the
Commitments have expired or terminated and the principal of and interest on
each
Loan and all fees payable hereunder and all other amounts payable under the
Loan
Documents have been paid in full and all Letters of Credit have expired or
terminated and all LC Disbursements shall have been reimbursed, the Borrower
covenants and agrees with the Lenders that:
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Section
9.01 Financial
Covenants.
(a) Interest
Coverage Ratio. The Borrower will not, as of the last day of any
fiscal quarter, permit its ratio of EBITDAX for the period of the four fiscal
quarters ending on such day to Interest Expense for such period to be less
than
3.0 to 1.0.
(b) Ratio
of Total Debt to EBITDAX. The Borrower will not, as of the last
day of any fiscal quarter, permit its ratio of Total Debt as of such date to
EBITDAX for the period of the four fiscal quarters ending on such day to be
greater than 4.00 to 1.00.
(c) Current
Ratio. The Borrower will not permit, as of the last day of any
fiscal quarter, its ratio of (3) consolidated current assets (including the
unused amount of the total Commitments, but excluding non-cash assets under
FAS
133) as of such day to (4) consolidated current liabilities (excluding non-cash
obligations under FAS 133 and unused availability under this Agreement) as
of
such day to be less than 1.0 to 1.0.
Section
9.02
Debt. The
Borrower will not, and will not permit any Subsidiary to, incur, create, assume
or suffer to exist any Debt, except:
(a) the
Notes or other Indebtedness or any guaranty of or suretyship arrangement for
the
Notes or other Indebtedness.
(b) Debt
of the Borrower and its Subsidiaries existing on the date hereof and listed
in
Schedule 9.02, and any refinancings, refundings, renewals or extensions thereof;
provided that (i) the amount of each such Debt has not increased at the
time of such refinancing, funding, renewal or extension except by an amount
equal to a reasonable premium or other reasonable amount paid, and fees and
expenses reasonably incurred, in connection with such refinancing, refunding,
renewal or extension, (ii) the terms related to principal amount,
amortization, maturity, collateral (if any), and other material terms taken
as a
whole, of any such refinancing, refunding, renewal or extending Debt, and of
any
agreement entered into or of any instrument issued in connection therewith,
are
no more restrictive in any material respect to the Borrower or any Subsidiary
then the terms of any agreement or instrument governing the Debt being
refinanced, refunded, renewed or extended and the interest rate applicable
to
any such refinancing, refunding, renewing or extending Debt does not exceed
the
range of the market interest rates then available to the obligor thereunder
for
comparable transactions, and (iii) if such
Debt
is subordinated to the Indebtedness, the terms relating to subordination of
any
such refinancing, refunding, renewal or extending Debt are no less favorable
to
the Lenders and the terms of any agreement or instrument governing the Debt
being refinanced, refunded, renewed or extended.
(c) accounts
payable and accrued expenses, liabilities or other obligations to pay the
deferred purchase price of Property or services, from time to time incurred
in
the ordinary course of business which are not greater than sixty (60) days
past
the date of invoice or which are being contested in good faith by appropriate
action and for which adequate reserves have been maintained in accordance with
GAAP.
(d) Debt
under Capital Leases not to exceed $5,000,000 in the aggregate at any one
time.
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(e) Debt
associated with bonds or surety obligations required by Governmental
Requirements in connection with the operation of the Oil and Gas
Properties.
(f)
intercompany Debt between the Borrower and any Subsidiary or between
Subsidiaries to the extent permitted by Section 9.05(e); provided that (i)
such
Debt is not held, assigned, transferred, negotiated or pledged to any Person
other than the Borrower or one of its Wholly-Owned Subsidiaries, (ii) any such
Debt owed by either the Borrower or a Guarantor shall be subordinated to the
Indebtedness on terms set forth in the Guaranty Agreement and (iii) any such
Debt shall not have any scheduled amortization prior to March 1,
2013.
(g) endorsements
of negotiable instruments for collection in the ordinary course of
business.
(h) guarantees
of the Borrower and any Guarantor in respect of Debt otherwise permitted
hereunder.
(i)
other Debt not to exceed $10,000,000 in the aggregate at any one time
outstanding.
Section
9.03
Liens. The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Lien on any of its Properties (now owned or hereafter
acquired), except:
(a) Liens
securing the payment of any Indebtedness.
(b) Excepted
Liens.
(c) Liens
securing Capital Leases permitted by Section 9.02(d) but only on the Property
under lease.
(d) Liens
existing on the date hereof and listed in Schedule 9.03 and any renewals or
extensions thereof, provided that (i) neither the property nor the description
of the property covered thereby is changed other than as a result of maintenance
capital expenditures, (ii) the amount secured or benefited thereby is not
increased other than as contemplated by
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Section 9.02(b),
(iii) the direct or any contingent obligor with respect thereto is not changed
other than in a transaction that is not prohibited by Section 9.11, and (iv)
any
renewal or extension of the obligations secured or benefited thereby is
permitted by Section 9.02(b).
(e)
Liens on Property not constituting collateral for the Indebtedness and not
otherwise permitted by the foregoing clauses of this Section 9.03; provided
that
the aggregate principal or face amount of all Debt secured under this Section
9.03(e) shall not exceed $5,000,000 at any time.
(f)
Liens on the Property of a Person which becomes a Subsidiary, or Property
acquired after the date hereof securing Debt permitted by Section 9.02; provided
that (i) such Liens existed at the time such Person becomes a Subsidiary or
such
Property is acquired, as the case may be, and were not created in anticipation
thereof, (ii) no such Lien covers any other
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Property
of the Borrower or a Guarantor, and (iii) the amount of Debt secured thereby
is
not increased.
Section
9.04 Dividends,
Distributions and Redemptions.
(a) Restricted
Payments. The Borrower will not, and will not permit any of its
Subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, return any capital to its stockholders
or
make any distribution of its Property to its Equity Interest holders, except
(a)
the Borrower may declare and pay dividends with respect to its Equity Interests
payable solely in additional shares of its Equity Interests (other than
Disqualified Capital Stock), (b) Subsidiaries may declare and pay dividends
ratably with respect to their Equity Interests and (c) the Borrower may make
Restricted Payments pursuant to and in accordance with stock option plans or
other benefit plans for management or employees of the Borrower and its
Subsidiaries.
(b) Redemption
or Repayment of Subordinated Debt. The Borrower will not, and
will not permit any Subsidiary to: (i) call, make or offer to make any
Redemption of or otherwise Redeem (whether optional or mandatory and whether
in
whole or in part) or repay any subordinated Debt permitted to be incurred
hereunder except for a payment of interest or principal at its scheduled payment
date and otherwise in accordance with the terms of such Debt or at any time
with
proceeds from a sale or issuance of Equity Interests; (ii) amend, modify, waive
or otherwise change, consent or agree to any amendment, modification, waiver
or
other change to, any of the terms of any notes evidencing any subordinated
Debt
permitted hereunder or any indenture, agreement, instrument, certificate or
other document relating to any subordinated Debt permitted hereunder if (A)
the
effect of such amendment, modification or waiver is to shorten the final
maturity, create amortization of principal thereof, or increase the amount
of
any payment of principal thereof or increase the interest rate or shorten any
period for payment of interest thereon or modify the method of calculating
the
interest rate, (B) such action requires the payment of a consent,
amendment, waiver or other similar fee on the stated principal amount thereof,
(C) such action adds covenants, events of default or other agreements to the
extent more restrictive than those contained in this Agreement, or (D) such
action adds collateral unless the Loan Documents are being amended at the same
time to reflect such new collateral or the addition of guarantors if required
by
the terms thereof; or (iii) designate any Debt (other than any
Indebtedness) as “Specified Senior Indebtedness” or “Specified Guarantor Senior
Indebtedness” or give any such other Debt any other similar designation for the
purposes of any indentures or other documents relating to any subordinated
Debt
permitted hereunder.
Section 9.05 Investments,
Loans and Advances. The
Borrower will not, and will not permit any Subsidiary to, make or permit to
remain outstanding any Investments in or to any Person, except that the
foregoing restriction shall not apply to:
(a) Investments
reflected in the Financial Statements or which are disclosed to the Lenders
in
Schedule 9.05.
(b) accounts
receivable arising in the ordinary course of business.
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(c) direct
obligations of the United States or any agency thereof, or obligations
guaranteed or insured by the United States or any agency thereof, in each case
maturing within one year from the date of acquisition thereof.
(d)
commercial paper maturing within one year from the date of acquisition thereof
rated in the highest grade by S&P or Xxxxx’x.
(e) deposits
maturing within one year from the date of acquisition thereof with, including
certificates of deposit issued by, any Lender or any office located in the
United States of any other bank or trust company which is organized under the
laws of the United States or any state thereof, has capital, surplus and
undivided profits aggregating at least $100,000,000 (as of the date of such
bank
or trust company’s most recent financial reports) and has a short term deposit
rating of no lower than A2 or P2, as such rating is set forth from time to
time,
by S&P or Xxxxx’x, respectively.
(f)
repurchase obligations with a term of not more than 30 days from the date of
acquisition thereof for underlying securities of the type described in Sections
9.05(c) and (e).
(g)
deposits in money market funds investing exclusively in Investments described
in
Section 9.05(c), Section 9.05(c), Section 9.05(d) or Section
9.05(f).
(h)
Investments a. made by the Borrower in or to the Guarantors, b. made by any
Subsidiary in or to the Borrower or any Guarantor and c. made by the Borrower
or
any Subsidiary in or to all other Domestic Subsidiaries which are not Guarantors
in an aggregate amount at any one time outstanding not to exceed $2,000,000.
(i)
subject to the limits in Section 9.06, Investments (including, without
limitation, capital contributions) in general or limited partnerships or other
types of entities (each a “venture”) entered into by the Borrower or a
Subsidiary with others in the ordinary course of business; provided that d.
any
such venture is engaged exclusively in oil and gas exploration, development,
production, processing and related activities, including transportation, e.
the
interest in such venture is acquired in the ordinary course of business and
on
fair and reasonable terms and f. such venture interests acquired and capital
contributions made (valued as of the date such interest was acquired or the
contribution made) do not exceed, in the aggregate at any time outstanding
an
amount equal to $5,000,000.
(j)
subject to the limits in Section 9.06, Investments in direct ownership interests
in additional Oil and Gas Properties and gas gathering systems related thereto
or related to farm-out, farm-in, joint operating, joint venture or area of
mutual interest agreements, gathering systems, pipelines or other similar
arrangements which are usual and customary in the oil and gas exploration and
production business located within the geographic boundaries of the United
States of America.
(k) loans
or advances to employees, officers or directors in the ordinary course of
business of the Borrower or any of its Subsidiaries, in each case only as
permitted by applicable law, including Section 402 of the Sarbanes Oxley Act
of
2002, but in any event not to exceed $2,000,000 in the
aggregate at any time outstanding.
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(l)
Investments in stock, obligations or securities received in settlement of debts
arising from Investments permitted under this Section 9.04(b) owing to the
Borrower or any Subsidiary as a result of a bankruptcy or other insolvency
proceeding of the obligor in respect of such debts or upon the enforcement
of
any Lien in favor of the Borrower or any of its Subsidiaries; provided that
the
Borrower shall give the Administrative Agent prompt written notice in the event
that the aggregate amount of all Investments held at any one time under this
Section 9.05(l) exceeds $5,000,000.
(m) Investments
existing on the date hereof and listed in Schedule 9.05.
(n) (i)
guarantees permitted by Section 9.02, and (ii) guarantees by the Borrower or
any
Subsidiary for the performance or payment obligations of the Borrower or any
Wholly Owned Subsidiary, which obligations were incurred in the ordinary course
of business and do not constitute Indebtedness.
(o) Investments
in any Person to the extent such Investment represents the non-cash portion
of
consideration received for a disposition of any property that was made pursuant
to and in compliance with Section 9.12.
(p) any
Investments received solely in exchange for Equity Interests consisting of
common stock of the Borrower.
(q) other
Investments not to exceed $2,000,000 in the
aggregate at any time.
Section
9.06 Nature of
Business. The
Borrower will not, and will not permit any Subsidiary to, allow any material
change to be made in the character of its business as an independent oil and
gas
exploration and production company.
Section
9.07 Limitation on
Leases. The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or suffer to exist any obligation for the payment of rent or hire of Property
of
any kind whatsoever (real or personal but excluding Capital Leases and leases
of
Oil and Gas Properties), under leases or lease agreements which would cause
the
aggregate amount of all net payments made by the Borrower and the Subsidiaries
pursuant to all such leases or lease agreements, including, without limitation,
any residual payments at the end of any lease, to exceed $5,000,000 in
any
period of twelve consecutive calendar months during the life of such
leases.
Section 9.08 Proceeds of
Loans. The
Borrower will not permit the proceeds of the Loans to be used for any purpose
other than those permitted by Section 7.21. Neither the Borrower nor
any Person acting on behalf of the Borrower has taken or will take any action
which might cause any of the Loan Documents to violate Regulations T, U or
X or
any other regulation of the Board or to violate Section 7 of the Securities
Exchange Act of 1934 or any rule or regulation thereunder, in each case as
now
in effect or as the same may hereinafter be in effect. If requested
by the Administrative Agent, the Borrower will furnish to the Administrative
Agent and each Lender a statement to the foregoing effect in conformity with
the
requirements of FR Form U-1 or such other form referred to in Regulation U,
Regulation T or Regulation X of the Board, as the case may be.
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Section
9.09 ERISA
Compliance. The
Borrower will not, and will not permit any Subsidiary to, at any
time:
(a) engage
in, or permit any ERISA Affiliate to engage in, any transaction in connection
with which the Borrower, a Subsidiary or any ERISA Affiliate could be subjected
to either a civil penalty assessed pursuant to subsections (c), (i) or (l)
of
section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of
the Code.
(b) terminate,
or permit any ERISA Affiliate to terminate, any Plan in a manner, or take any
other action with respect to any Plan, which could result in any liability
of
the Borrower, a Subsidiary or any ERISA Affiliate to the PBGC.
(c) fail
to make, or permit any ERISA Affiliate to fail to make, full payment when due
of
all amounts which, under the provisions of any Plan, agreement relating thereto
or applicable law, the Borrower, a Subsidiary or any ERISA Affiliate is required
to pay as contributions thereto.
(d) permit
to exist, or allow any ERISA Affiliate to permit to exist, any accumulated
funding deficiency within the meaning of section 302 of ERISA or section 412
of
the Code, whether or not waived, with respect to any Plan.
(e) except
as could not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect, permit, or allow any ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any Plan maintained
by
the Borrower, a Subsidiary or any ERISA Affiliate which is regulated under
Title IV of ERISA to exceed the current value of the assets (computed on a
plan termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities. The term “actuarial present
value of the benefit liabilities” shall have the meaning specified in section
4041 of ERISA.
(f)
except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, contribute to or assume an obligation
to
contribute to, or permit any ERISA Affiliate to contribute to or assume an
obligation to contribute to, any Multiemployer Plan.
(g) except
as could not reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect, acquire, or permit any ERISA Affiliate to acquire,
an
interest in any Person that causes such Person to become an ERISA Affiliate
with
respect to the Borrower or a Subsidiary or with respect to any ERISA Affiliate
of the Borrower or a Subsidiary if
such
Person sponsors, maintains or contributes to, or at any time in the six-year
period preceding such acquisition has sponsored, maintained, or contributed
to,
(ii) any Multiemployer Plan, or (iii) any other Plan that is subject to
Title IV of ERISA under which the actuarial present value of the benefit
liabilities under such Plan exceeds the current value of the assets (computed
on
a plan termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities.
(h) incur,
or permit any ERISA Affiliate to incur, a liability to or on account of a Plan
under sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA.
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(i)
amend, or permit any ERISA Affiliate to amend, a Plan resulting in an increase
in current liability such that the Borrower, a Subsidiary or any ERISA Affiliate
is required to provide security to such Plan under section 401(a)(29) of the
Code.
Section
9.10 Sale or Discount
of Receivables. Except
for receivables obtained by the Borrower or any Subsidiary out of the ordinary
course of business or the settlement of joint interest billing accounts in
the
ordinary course of business or discounts granted to settle collection of
accounts receivable or the sale of defaulted accounts arising in the ordinary
course of business in connection with the compromise or collection thereof
and
not in connection with any financing transaction, the Borrower will not, and
will not permit any Subsidiary to, discount or sell (with or without recourse)
any of its notes receivable or accounts receivable.
Section
9.11 Mergers,
Etc. Other
than (i) a merger of the Borrower or a Domestic Subsidiary to effectuate a
reincorporation or statutory conversion in another state of the United States
or
(ii) a statutory conversion in any state of the United States, in either case
upon at least 30 days' prior written notice to the Administrative Agent, the
Borrower will not, and will not permit any Subsidiary to, merge into or with
or
consolidate with any other Person, or permit any other Person to merge into
or
consolidate with it, or sell, transfer, lease or otherwise dispose of (whether
in one transaction or in a series of transactions) all or substantially all
of
its Property to any other Person (whether now owned or hereafter acquired)
(any
such transaction, a “consolidation”), or liquidate or dissolve; except that
(i) any Subsidiary may merge with or dissolve into any other Subsidiary,
(ii) that the Borrower may merge with any Subsidiary (or such Subsidiary
may be dissolved into the Borrower) so long as the Borrower is the survivor,
(iii) any Subsidiary may dispose of all or substantially all of its assets
(upon
voluntary liquidation or otherwise) to the Borrower or to another Subsidiary,
and may thereafter liquidate or dissolve if applicable; provided that if the
transferor in such a transaction is a Guarantor, then the transferee must either
be the Borrower or a Guarantor and (iv) the Borrower or any Subsidiary may
dispose of all of the Equity Interests of any Subsidiary in accordance with
Section 9.12.
Section
9.12 Sale of
Properties. The
Borrower will not, and will not permit any Subsidiary to, sell, assign,
farm-out, convey or otherwise transfer any Property except for (a) the sale
of
Hydrocarbons in the ordinary course of business; (b) farmouts in the ordinary
course of business of non-proven acreage and assignments in connection with
such
farmouts, or the abandonment, farm-out, exchange, lease or sublease of Oil
and
Gas Properties not containing such reserves; (c) the sale or transfer of
equipment that is no longer useful or necessary for the business of the Borrower
or such Subsidiary or is replaced by equipment of at least comparable
value
or
use; (d) the sale or other disposition of any Oil and Gas Property or any
interest therein or any Subsidiary owning Oil and Gas Properties; provided
that
(i) 100% of the consideration received in respect of such sale or other
disposition shall be cash, (ii) the consideration received in respect of such
sale or other disposition shall be equal to or greater than the fair market
value of the Oil and Gas Property, interest therein or Subsidiary subject of
such sale or other disposition (if such consideration exceeds $5,000,000, as
reasonably determined by the board of directors or other governing body of
the
Borrower and, if requested by the Administrative Agent, the Borrower shall
deliver a certificate of a Responsible Officer of the Borrower certifying to
that effect), (iii) if such sale or other disposition of Oil and Gas Property
or
Subsidiary owning Oil and Gas Properties included in the most recently delivered
Reserve Report during any period
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between
two successive Scheduled Redetermination Dates has a fair market value in excess
of $2,000,000 (as determined by the Administrative Agent, individually or in
the
aggregate, the Borrowing Base shall be reduced, effective immediately upon
such
sale or disposition, by an amount equal to the value, if any, assigned such
Property in the most recently delivered Reserve Report and (iv) if any such
sale
or other disposition is of a Subsidiary owning Oil and Gas Properties, such
sale
or other disposition shall include all the Equity Interests of such Subsidiary;
(e) dispositions permitted by Section 9.11; (f) the trade or exchange of Oil
and
Gas Properties for Oil and Gas Properties of equivalent value (including any
cash or Investments of the nature described in any of Sections 9.05 (c), (d),
(e) and (f) necessary in order to achieve an exchange of equivalent value);
provided that (i) the Administrative Agent shall determine, in its sole
discretion, whether the such value is equivalent and (ii) any Oil and Gas
Properties to which any proved reserves are attributed in the most recent
Reserve Report delivered hereunder may be traded or exchanged hereunder only
for
Oil and Gas Properties to which comparable quantities of proved reserves are
attributable; (g) dispositions of assets received pursuant to Section 9.05(l);
(h) the grant in the ordinary course of business of any non-exclusive license
of
patents, trademarks, registrations therefor and other similar intellectual
property; (i) the granting of any Lien permitted hereunder and dispositions
of
property subject to any such Lien that is transferred to the lienholder or
its
designee in satisfaction or settlement of such lienholder’s claim; (j) any
disposition of assets pursuant to (i) a condemnation, appropriation, seizure
or
similar taking or proceeding by a Governmental Authority, (ii) the requirement
of, or at the direction of, a Governmental Authority or (iii) a Casualty Event;
(k) dispositions of assets, other than collateral for the Indebtedness,
constituting non-cash contributions to a joint venture to the extent such
Investment is permitted pursuant to Section 9.02(i) (for the purpose of
determining compliance with the limitations of such Section, the assets shall
be
valued at the value attributable thereto in the joint venture agreement, or,
if
greater, fair market value); (l) dispositions of Property to the Borrower or
any
Guarantor; and (m) sales and other dispositions of Properties not regulated
by
Section 9.12(a) to (d) having a fair market value not to exceed $5,000,000 during any
12-month period.
Section
9.13 Environmental
Matters. The
Borrower will not, and will not permit any Subsidiary to, cause or permit any
of
its Property to be in violation of, or perform any action or permit any action
which will subject any such Property to any Remedial Work under any
Environmental Laws, assuming disclosure to the applicable Governmental Authority
of all relevant facts, conditions and circumstances, if any, pertaining to
such
Property where such violations or remedial obligations could reasonably be
expected to have a Material Adverse Effect.
Section 9.14
Transactions with Affiliates. The
Borrower will not, and will not permit any Subsidiary to, enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate (other
than the Guarantors and Wholly-Owned Subsidiaries of the Borrower, as the case
may be) unless such transactions are upon fair and reasonable terms no less
favorable to it than it would obtain in a comparable arm’s length transaction
with a Person not an Affiliate provided that the foregoing restriction shall
not
apply to transactions as follows: (i) transactions between or among
the Borrower and any Guarantor or Wholly-Owned Subsidiary of the Borrower or
between and among any Guarantors and Wholly-Owned Subsidiaries of the Borrower;
(ii) any Restricted Payment permitted by Section 9.04(a); (iii) Investments
permitted under Section 9.05(h), 9.05(i)
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or
9.05(j); (iv) loans and advances permitted under Section 9.05(k) and
Guarantees permitted under Section 9.05(n); (v) the performance of employment,
equity award, equity option or equity appreciation agreements, plans or other
similar compensation or benefit plans or arrangements (including vacation plans,
health and insurance plans, deferred compensation plans and retirement or
savings plans) entered into by the Borrower or any Subsidiary in the ordinary
course of its business with its employees, officers and directors; (vi) the
performance of any agreement set forth under Schedule 9.14 and existing on
the
date hereof or as otherwise in a form as provided on such Schedule, together
with each extension, renewal, amendment or modification to the extent it does
not expand the scope of undertakings provided thereby on more restrictive or
onerous terms than as in effect on the date hereof; and (vii) fees and
compensation to, and indemnity provided on behalf of, officers, directors,
and
employees of the Borrower or any Subsidiary in their capacity as such, to the
extent such fees and compensation are customary.
Section
9.15 Subsidiaries. The
Borrower will not, and will not permit any Subsidiary to, create or acquire
any
additional Subsidiary unless the Borrower gives written notice to the
Administrative Agent of such creation or acquisition and complies with Section
8.14(b). The Borrower shall not, and shall not permit any Subsidiary
to, sell, assign or otherwise dispose of any Equity Interests in any Subsidiary
except in compliance with Section 9.12. Neither the Borrower nor any
Subsidiary shall have any Foreign Subsidiaries.
Section
9.16 Negative Pledge
Agreements; Dividend Restrictions. Except
for restrictions and conditions (i) imposed by law, (ii) existing on the date
hereof and set forth in Schedule 9.16, together with each extension,
renewal, amendment or modification to the extent it does not expand the scope
of
any such restriction or condition or otherwise make the same more restrictive,
(iii) of a customary nature contained in agreements relating to the disposition
of a Subsidiary otherwise permitted under this Agreement pending such
disposition, provided such restrictions and conditions apply only to the
Subsidiary that is to be Disposed of or (iv) contained in joint venture
agreements or other similar agreements entered into in the ordinary course
of
business in respect to the disposition or distribution of assets of such joint
venture, the Borrower will not, and will not permit any Subsidiary to, create,
incur, assume or suffer to exist any contract, agreement or understanding (other
than this Agreement, the Security Instruments or Capital Leases creating Liens
permitted by Section 9.03(c)) which in any way prohibits or restricts the
granting, conveying, creation or imposition of any Lien on any of its Property
in favor of the Administrative Agent and the Lenders or restricts any Subsidiary
from paying dividends or making distributions to the Borrower or any Guarantor,
or which requires the consent of or notice to other Persons in connection
therewith; provided, however, this Section 9.16 shall not (a) prohibit any
negative pledge incurred or provided in favor of any holder of a Lien
permitted by clause (g) in the defined term “Excepted Liens” and by Section
9.03(f) solely to the extent such negative pledge relates to the property the
subject of such Indebtedness, and (b) apply to customary provisions in leases,
licenses and similar contracts restricting the assignment, encumbrance,
sub-letting or transfer thereof.
Section
9.17 Gas Imbalances,
Take-or-Pay or Other Prepayments. The
Borrower will not, and will not permit any Subsidiary to, allow gas imbalances,
take-or-pay or other prepayments with respect to the Oil and Gas Properties
of
the Borrower or any Subsidiary that would require the Borrower or such
Subsidiary to deliver Hydrocarbons at some future time
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without
then or thereafter receiving full payment therefor to exceed one bcf of gas (on
an
mcf equivalent basis) in the aggregate.
Section
9.18 Swap
Agreements. The
Borrower will not, and will not permit any Subsidiary to, enter into any Swap
Agreements with any Person other than (a) Swap Agreements in respect of
commodities (i) with an Approved Counterparty and (ii) the notional volumes
for
which (when aggregated with other commodity Swap Agreements then in effect
other
than basis differential swaps on volumes already hedged pursuant to other Swap
Agreements) do not exceed, as of the date such Swap Agreement is executed,
75%
of the reasonably anticipated projected production from Proved Developed
Producing Reserves, for each of crude oil and natural gas for each month during
the period during which such Swap Agreement is in effect for each of crude
oil
and natural gas, calculated separately, and (b) Swap Agreements in respect
of
interest rates with an Approved Counterparty, as follows: (i) Swap Agreements
effectively converting interest rates from fixed to floating, the notional
amounts of which (when aggregated with all other Swap Agreements of the Borrower
and its Subsidiaries then in effect effectively converting interest rates from
fixed to floating) do not exceed 50% of the then outstanding principal amount
of
the Borrower’s Debt for borrowed money which bears interest at a fixed rate and
(ii) Swap Agreements effectively converting interest rates from floating to
fixed, the notional amounts of which (when aggregated with all other Swap
Agreements of the Borrower and its Subsidiaries then in effect effectively
converting interest rates from floating to fixed) do not exceed 75% of the
then
outstanding principal amount of the Borrower’s Debt for borrowed money which
bears interest at a floating rate, and (c) Swap Agreements required under
Section 6.01(q) In no event shall any Swap Agreement contain any
requirement, agreement or covenant for the Borrower or any Subsidiary to post
collateral or margin to secure their obligations under such Swap Agreement
or to
cover market exposures other than collateral provided for in, and upon the
terms
and conditions set forth in, this Agreement and the relevant Security
Instruments.
ARTICLE
X
Events
of Default; Remedies
Section
10.01 Events of
Default. The
occurrence of any one or more of the following events shall constitute an “Event
of Default”:
(a) the
Borrower shall fail to pay any principal of any Loan or any reimbursement
obligation in respect of any LC Disbursement when and as the same shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof, by acceleration or otherwise.
(b) the
Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in Section 10.01(a)) payable under
any
Loan Document, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of three Business
Days.
(c) any
representation or warranty made or deemed made by or on behalf of the Borrower
or any Subsidiary in or in connection with any Loan Document or any amendment
or
modification of any Loan Document or waiver under such Loan Document, or in
any
report, certificate, financial statement or other document furnished by or
on
behalf of the Borrower or
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any
Subsidiary pursuant to or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, shall prove to have been incorrect
when made or deemed made.
(d) the
Borrower or any Subsidiary shall fail to observe or perform any covenant,
condition or agreement contained in Section 3.04(c), Section 8.01(j), Section
8.01(n), Section 8.01(q), Section 8.02, Section 8.03, Section 8.14, Section
8.15
or in ARTICLE IX.
(e) the
Borrower or any Subsidiary shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or any other Loan
Document, and such failure shall continue unremedied for a period of 30 days
after the earlier to occur of (a) notice thereof from the Administrative Agent
to the Borrower (which notice will be given at the request of any Lender) or
(b)
a Responsible Officer of the Borrower or such Subsidiary otherwise becoming
aware of such default.
(f) the
Borrower or any Subsidiary shall fail to make any payment (whether of principal
or interest and regardless of amount) in respect of any Material Indebtedness,
when and as the same shall become due and payable.
(g) any
event or condition occurs that results in any Material Indebtedness becoming
due
prior to its scheduled maturity or that enables or permits (with or without
the
giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the Redemption thereof
or
any offer to Redeem to be made in respect thereof, prior to its scheduled
maturity or require the Borrower or any Subsidiary to make an offer in respect
thereof.
(h) an
involuntary proceeding shall be commenced or an involuntary petition shall
be
filed seeking (i) liquidation, reorganization or other relief in respect of
the
Borrower or any Guarantor or its debts, or of a substantial part of its assets,
under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Guarantor or for a substantial part of its assets,
and,
in any such case, such proceeding or petition shall continue undismissed for
sixty (60) days or an order or decree approving or ordering any of the foregoing
shall be entered.
(i) the
Borrower or any Guarantor shall (i) voluntarily commence any proceeding or
file
any petition seeking liquidation, reorganization or other relief under any
Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to contest
in a
timely and appropriate manner, any proceeding or petition described in Section
10.01(h), (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or
any
Guarantor or for a substantial part of its assets, (iv) file an answer admitting
the material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing.
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(j) the
Borrower or any Guarantor shall become unable, admit in writing its inability
or
fail generally to pay its debts as they become due.
(k) (i)
one or more judgments for the payment of money in an aggregate amount in excess
of $2,000,000
(to the extent
not covered by independent third party insurance provided
by financially sound and reputable insurers as to which the insurer does not
dispute coverage and is not subject to an insolvency proceeding) or (ii) any
one
or more non-monetary judgments that have, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, shall be
rendered against the Borrower, any Subsidiary or any combination thereof and
the
same shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or
any
Subsidiary to enforce any such judgment.
(l) any
material provision of any Loan Document after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in
full
force and effect and valid, binding and enforceable in accordance with their
terms against the Borrower or a Guarantor party thereto as represented and
warranted pursuant to Section 7.02 or shall be repudiated by any of them,
or cease to create a valid and perfected Lien of the priority required thereby
on any of the collateral purported to be covered thereby, except to the extent
permitted by the terms of this Agreement, or the Borrower or any Guarantor
shall
so state in writing.
(m) an
ERISA Event shall have occurred that, when taken together with all other ERISA
Events that have occurred, could reasonably be expected to result in a Material
Adverse Effect.
(n) a
Change in Control shall occur.
Section
10.02
Remedies.
(a) In
the case of an Event of Default other than one described in Section 10.01(h),
Section 10.01(i) or Section 10.01(j), at any time thereafter during the
continuance of such Event of Default, the Administrative Agent may, and at
the
request of the Majority Lenders, shall, by notice to the Borrower, take either
or both of the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the principal amount of the Notes and the Loans
then outstanding, and accrued interest, fees and other similar amounts thereon,
to be due and payable in whole (or in part, in which case any principal not
so
declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans so declared
to
be due and payable, together with accrued interest thereon and all fees and
other obligations of the Borrower and the Guarantors accrued hereunder and
under
the Notes and the other Loan Documents (including, without limitation, the
payment of cash collateral to secure the LC Exposure as provided in Section
2.08(j)), shall become due and payable immediately, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other notice
of any kind, all of which are hereby waived by the Borrower and each Guarantor;
and in case of an Event of Default described in Section 10.01(h), Section
10.01(i) or Section 10.01(j), the Commitments shall automatically
terminate and the principal amount of the Notes and the
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principal of the Loans then outstanding, together with accrued interest thereon and all fees and the other obligations of the Borrower and the Guarantors accrued hereunder and under the Notes and the other Loan Documents (including, without limitation, the payment of cash collateral to secure the LC Exposure as provided in Section 2.08(j)), shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower and each Guarantor.
(b) In
the case of the occurrence of an Event of Default, the Administrative Agent
and
the Lenders will have all other rights and remedies available at law and
equity.
(c) All
proceeds realized from the liquidation or other disposition of collateral or
otherwise received after maturity of the Notes, whether by acceleration or
otherwise, shall be applied:
(i) first,
to payment or reimbursement of that portion of the Indebtedness constituting
fees, expenses and indemnities payable to the Administrative Agent in its
capacity as such;
(ii) second,
pro rata to payment or reimbursement of that portion of the Indebtedness
constituting fees, expenses and indemnities payable to the Lenders;
(iii) third,
pro rata to payment of accrued interest on the Loans;
(iv) fourth,
pro rata to payment of principal outstanding on the Loans and Indebtedness
referred to in Clause (b) of the definition of Indebtedness owing to a Lender
or
an Affiliate of a Lender;
(v) fifth,
pro rata to any other Indebtedness;
(vi) sixth,
to serve as cash collateral to be held by the Administrative Agent to secure
the
LC Exposure; and
(vii) seventh,
any excess, after all of the Indebtedness shall have been indefeasibly paid
in
full in cash, shall be paid to the Borrower or as otherwise required by any
Governmental Requirement.
ARTICLE
XI
The Agents
The Agents
Section
11.01 Appointment;
Powers. Each
of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated
to
the Administrative Agent by the terms hereof and the other Loan Documents,
together with such actions and powers as are reasonably incidental
thereto.
Section
11.02 Duties and Obligations
of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall
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not
be
subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing (the use of the term “agent” herein and
in the other Loan Documents with reference to the Administrative Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law; rather, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties), xxv)
the Administrative Agent shall have no duty to take any discretionary action
or
exercise any discretionary powers, except as provided in Section 11.03, and
xxvi) except as expressly set forth herein, the Administrative Agent shall
not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or
any
of its Affiliates in any capacity. The Administrative Agent shall be
deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent by the Borrower or a Lender, and
shall not be responsible for or have any duty to ascertain or inquire into
(i)
any statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or under any other Loan Document
or
in connection herewith or therewith, (iii) the performance or observance of
any
of the covenants, agreements or other terms or conditions set forth herein
or in
any other Loan Document, (iv) the validity, enforceability, or effectiveness
of
this Agreement, any other Loan Document or any other agreement, instrument
or
document, (v) theatisfaction of any condition set forth in ARTICLE VI or
elsewhere herein, other than to confirm receipt of items expressly required
to
be delivered to the Administrative Agent or as to those conditions precedent
expressly required to be to the Administrative Agent’s satisfaction, (vi) the
existence, value, perfection or priority of any collateral security or the
financial or other condition of the Borrower and its Subsidiaries or any other
obligor or guarantor, or (vii) any failure by the Borrower or any other Person
(other than itself) to perform any of its obligations hereunder or under any
other Loan Document or the performance or observance of any covenants,
agreements or other terms or conditions set forth herein or
therein. For purposes of determining compliance with the conditions
specified in ARTICLE VI, each Lender shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
written notice from such Lender prior to the proposed closing date specifying
its objection thereto.
Section
11.03 Action by
Administrative Agent. The
Administrative Agent shall have no duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise in writing as directed by the
Majority Lenders (or such other number or percentage of the Lenders as shall
be
necessary under the circumstances as provided in Section 12.02) and in all
cases
the Administrative Agent shall be fully justified in failing or refusing to
act
hereunder or under any other Loan Documents unless it shall (i) receive written
instructions from the Majority Lenders or the Lenders, as applicable, (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02) specifying the action to be taken
and (ii) be indemnified to its satisfaction by the Lenders against any and
all
liability and expenses which may be incurred by it by reason of taking or
continuing to take any such action. The instructions as aforesaid and
any action taken or failure to act pursuant thereto by the Administrative Agent
shall be binding on all of the
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Lenders. If
a Default has occurred and is continuing, then the Administrative Agent shall
take such action with respect to such Default as shall be directed by the
requisite Lenders in the written instructions (with indemnities) described
in
this Section 11.03, provided that, unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall
not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable in the best interests of
the
Lenders. In no event, however, shall the Administrative Agent be
required to take any action which exposes the Administrative Agent to personal
liability or which is contrary to this Agreement, the Loan Documents or
applicable law. If a Default has occurred and is continuing, neither
the Syndication Agent nor the Documentation Agent shall have any obligation
to
perform any act in respect thereof. The Administrative Agent shall
not be liable for any action taken or not taken by it with the consent or at
the
request of the Majority Lenders or the Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02), and otherwise the Administrative Agent shall not
be
liable for any action taken or not taken by it hereunder or under any other
Loan
Document or under any other document or instrument referred to or provided
for
herein or therein or in connection herewith or therewith INCLUDING ITS OWN
ORDINARY NEGLIGENCE, except for its own gross negligence or willful
misconduct.
Section
11.04 Reliance by Administrative
Agent. The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or
by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon and each of the Borrower, the Lenders
and the Issuing Bank hereby waives the right to dispute the Administrative
Agent’s record of such statement, except in the case of gross negligence or
willful misconduct by the Administrative Agent. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice
of
any such counsel, accountants or experts. The Administrative Agent
may deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Administrative
Agent.
Section
11.05 Subagents. The
Administrative Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent
may perform any and all its duties and exercise its rights and powers through
their respective Related Parties. The exculpatory provisions of the
preceding Sections of this ARTICLE XI shall apply to any such sub-agent and
to
the Related Parties of the Administrative Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication
of
the credit facilities provided for herein as well as activities as
Administrative Agent.
Section
11.06 Resignation or Removal of
Administrative Agent. Subject
to the appointment and acceptance of a successor Administrative Agent as
provided in this Section 11.06, the Administrative Agent may resign at any
time
by notifying the Lenders, the Issuing
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Bank
and
the Borrower, and the Administrative Agent may be removed at any time with
or
without cause by the Majority Lenders, with the consent of the Borrower (if
no
Event of Default has occurred and is not then continuing), such consent not
to
be unreasonably withheld, delayed or conditioned. Upon any such
resignation or removal, the Majority Lenders shall have the right, in
consultation with the Borrower in any event, and with the consent of the
Borrower if no Event of Default has occurred and is then continuing, to appoint
a successor. If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation or removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Agent which shall be a bank with an office in New
York, New York, or an Affiliate of any such bank. Upon the acceptance
of its appointment as Agent hereunder by a successor, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. The fees payable by the Borrower to
a successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrower and such successor. After the
Agent’s resignation hereunder, the provisions of this ARTICLE XI and Section
12.03 shall continue in effect for the benefit of such retiring Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Agent.
Section
11.07 Agents as
Lenders. Each
bank serving as an Agent hereunder shall have the same rights and powers in
its
capacity as a Lender as any other Lender and may exercise the same as though
it
were not an Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrower
or
any Subsidiary or other Affiliate thereof as if it were not an Agent
hereunder.
Section
11.08 No Reliance. Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and each other Loan Document
to which it is a party. Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions
in
taking
or
not taking action under or based upon this Agreement, any other Loan Document,
any related agreement or any document furnished hereunder or
thereunder. The Agents shall not be required to keep themselves
informed as to the performance or observance by the Borrower or any of its
Subsidiaries of this Agreement, the Loan Documents or any other document
referred to or provided for herein or to inspect the Properties or books of
the
Borrower or its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders
by
the Administrative Agent hereunder, no Agent or the Arranger shall have any
duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or
any
of its Affiliates) which may come into the possession of such Agent or any
of
its Affiliates. In this regard, each Lender acknowledges that Xxxxxx
& Xxxxxx L.L.P. is acting in this transaction as special counsel to the
Administrative Agent only, except to the extent otherwise expressly stated
in
any legal opinion or any Loan Document. Each other party hereto will
consult with its own legal counsel
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to
the
extent that it deems necessary in connection with the Loan Documents and the
matters contemplated therein.
Section
11.09 Administrative Agent May File Proofs of
Claim. In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise
and
irrespective of whether the Administrative Agent shall have made any demand
on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(a) to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans and all other Indebtedness that are owing
and
unpaid and to file such other documents as may be necessary or advisable in
order to have the claims of the Lenders and the Administrative Agent (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Lenders and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders and the Administrative Agent
under
Section 12.03) allowed in such judicial proceeding; and
(b) to
collect and receive any monies or other property payable or deliverable on
any
such claims and to distribute the same;
and
any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event
that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due
the
Administrative Agent under Section 12.03.
Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan
of
reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such
proceeding.
Section 11.10 Authority of Administrative Agent to Release
Collateral, Liens and Guarantors. Each
Lender and the Issuing Bank hereby authorizes the Administrative Agent to
release any collateral that is permitted to be sold or released and release
any
Guarantor that is permitted to be released from its obligations under the Loan
Documents, in each case pursuant to the applicable terms of the Loan
Documents. Each Lender and the Issuing Bank hereby authorizes the
Administrative Agent to execute and deliver to the Borrower, at the Borrower’s
sole cost and expense, any and all releases of Liens, termination statements,
assignments, release of guarantees or Guarantors (as the case may be) or other
documents reasonably requested by the Borrower in connection with any sale
or
other disposition of Property or any one or more Guarantors to the extent such
sale or other disposition is permitted by the terms of Section 9.12 or is
otherwise authorized by the terms of the Loan Documents.
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Section
11.11 The Arranger, the Syndication Agent
and the Documentation Agent. The
Arranger, the Syndication Agent and the Documentation Agent shall have no
duties, responsibilities or liabilities under this Agreement and the other
Loan
Documents other than their duties, responsibilities and liabilities in their
capacity as Lenders hereunder.
ARTICLE
XII
Miscellaneous
Section
12.01 Notices.
(a) Except in
the case of notices and other communications expressly permitted to be given
by
telephone (and subject to Section 12.01(b)), all notices and other
communications provided for herein shall be in writing and shall be delivered
by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
(i) if
to the Borrower, to it at 0000 Xxxxxx Xxxx, Xxxxx Xxxxxxx, XX 00000, Attention
of Xxxxxx X. Xxxxxxx, Chief Financial Officer (Telecopy No.
814.278.7286, and regarding the Borrower’s website for electronic delivery of
documents as referred to in the concluding paragraph of Section 8.02, such
website is xxx.xxxxxxxxxxxxx.xxx);
(ii) if
such notice is not a payment, to the Administrative Agent or the Issuing Bank,
to it at 0000 Xxxxxxx
Xxxx, Xxxxx 000, Xxxxxx, XX 00000, Attention of Xxxxxx Xxxxx (Telecopy
No. 214-414-2610), with a copy to 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000,
Attention of Xxxxxx Xxxxx-Xxxxx (Facsimile: (000)
000-0000);
(iii)
if such notice is a payment, to the Administrative Agent or
the Issuing Bank, to it at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attention
of Xxxxxx Xxxxx-Xxxxx (Facsimile: (000)000-0000, email:
Xxxxxx_Xxxxx-Xxxxx@XxxXxxx.xxx) or to such wire transfer number as the
Administrative Agent may provide; and
(iv) the
Administrative Agent will forward all relevant notices from the Borrower to
the
Lenders.
(b) Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V unless otherwise
agreed by the Administrative
Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
(c) Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the
date
of receipt.
Section
12.02 Waivers;
Amendments.
(a) No
failure on the part of the Administrative Agent, any other Agent, the Issuing
Bank or any Lender to exercise and no delay in exercising,
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and
no
course of dealing with respect to, any right, power or privilege, or any
abandonment or discontinuance of steps to enforce such right, power or
privilege, under any of the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any of the Loan Documents preclude any other or further exercise thereof or
the
exercise of any other right, power or privilege. The rights and
remedies of the Administrative Agent, any other Agent, the Issuing Bank and
the
Lenders hereunder and under the other Loan Documents are cumulative and are
not
exclusive of any rights or remedies that they would otherwise
have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by Section 12.02(b),
and
then such waiver or consent shall be effective only in the specific instance
and
for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall
not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any other Agent, any Lender or the Issuing Bank may have
had notice or knowledge of such Default at the time.
(b) Any
provision of this Agreement or any Security Instrument may be waived, amended
or
modified pursuant to an agreement or agreements in writing entered into by
the
Borrower and the Majority Lenders, or with the Majority Lenders’ prior written
consent provided that no amendment, modification or waiver shall (i) increase
the Commitment or the Maximum Credit Amount of any Lender without the written
consent of such Lender, (ii) increase the Borrowing Base without the written
consent of each Lender, or modify Section 2.07 in any manner without the consent
of each Lender, (iii) reduce the principal amount of any Loan or LC Disbursement
or reduce the rate of interest thereon, or reduce any fees payable hereunder,
or
reduce any other Indebtedness hereunder or under any other Loan Document,
without the written consent of each Lender affected thereby, provided, however,
that only the consent of the Majority Lenders shall be necessary (A) to
amend the meaning of "default rate" or to waive any obligation of the Borrower
to pay interest or Letter of Credit fees at such default rate or (B) to
amend any financial covenant hereunder (or any defined term used therein) even
if the effect of such amendment would be to reduce the rate of interest on
any
Loan or LC Disbursement or to reduce any fee payable hereunder, (iv) postpone
the scheduled date of payment or prepayment of the principal amount of any
Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder,
or
any other Indebtedness hereunder or under any other Loan Document, or reduce
the
amount of, waive or excuse any such payment, or postpone or extend the
Termination Date without the written consent of each Lender affected thereby,
(v) change Section 4.01(b) or Section 4.01(c)
in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (vi) waive or amend Section 3.04(c),
Section 6.01, Section 8.14, Section 10.02(c) or Section 12.15 or change the
definition of the terms “Domestic Subsidiary”, “Foreign Subsidiary”, or
“Subsidiary”, other than of a ministerial nature, without the written consent of
each Lender affected thereby, (vii) release any Guarantor (except as set forth
in the Guaranty Agreement or in any other Loan Document), release all or
substantially all of the collateral (other than as provided in Section 11.10),
or reduce the percentage set forth in Section 8.14(a) to less than 80%, without
the written consent of each Lender, or (viii) change any of the provisions
of
this Section 12.02(b) or Section 12.04(a)(i) or the definition of “Majority
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or under any
other Loan Documents or make any determination or grant any consent hereunder
or
any other Loan Documents, without the
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written
consent of each Lender; provided further that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent,
any
other Agent, or the Issuing Bank hereunder or under any other Loan Document
without the prior written consent of the Administrative Agent, such other Agent
or the Issuing Bank, as applicable. Notwithstanding the foregoing,
any supplement to Schedule 7.14 (Subsidiaries) shall be effective upon delivery
by the Borrower to the Administrative Agent a supplemental schedule clearly
marked as such and, upon receipt, the Administrative Agent will promptly deliver
a copy thereof to the Lenders.
Section
12.03 Expenses,
Indemnity; Damage Waiver.
(a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including, without limitation, the
reasonable fees, charges and disbursements of counsel and other outside
consultants for the Administrative Agent, the reasonable travel, photocopy,
mailing, courier, telephone and other similar expenses, and the cost of
environmental audits and surveys and appraisals, in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after
the
execution hereof and including advice of counsel to the Administrative Agent
as
to the rights and duties of the Administrative Agent and the Lenders with
respect thereto) of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments
and
other charges incurred by any Agent or any Lender in connection with any filing,
registration, recording or perfection of any security interest contemplated
by
this Agreement or any Security Instrument or any other document referred to
therein, (iii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder, (iv) all out-of-pocket
expenses incurred by any Agent, the Issuing Bank or any Lender, including the
fees, charges and disbursements of any counsel for any Agent, the Issuing Bank
or any Lender, in connection with the enforcement or protection of its rights
in
connection with this Agreement or any other Loan Document, including its rights
under this Section 12.03, or in connection with the Loans made or Letters of
Credit issued hereunder, including, without limitation, all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit.
(b) THE
BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGER, THE ISSUING BANK AND EACH
LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON
BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS
FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES,
INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE,
INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION
WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS AGREEMENT OR
ANY
OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR
THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER
LOAN
DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
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BY
ANY
OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO
COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH
ANY GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR
ANY
BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH
IN
ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS
DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE
USE
OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY
THE
ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE
DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH
THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT OF A DRAWING UNDER ANY
LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER
IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v)
ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS
OF
THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii)
ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS
RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW
APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES,
INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE, RELEASE,
THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR
TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES
ON
ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE BORROWER
OR
ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY
SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY
OF
THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH
LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY,
(xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION,
THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR
DISPOSAL
OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON OR AT ANY
OF
THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY SUBSIDIARY OR ANY ACTUAL
OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY
OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, (xii) ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS
SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION
IN
CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER
ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH
INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND
OR
CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN
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AFFIRMATIVE
ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE
OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE
GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF, OR VIOLATION OF LAW BY, SUCH
INDEMNITEE. NOTWITHSTANDING THE FOREGOING, NO INDEMNIFICATION SHALL
BE GIVEN TO THE EXTENT IT ARISES (y) BY REASON OF A CLAIM BY ONE OR MORE
INDEMNITEES AGAINST ONE OR MORE OTHER INDEMNITEES, OR (z) FROM A CLAIM
BROUGHT BY THE BORROWER AGAINST AN INDEMNITEE FOR (1) SUCH INDEMNITEE’S
BREACH OF ITS OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT OR
(2) BAD FAITH OF SUCH INDEMNITEE HEREUNDER OR UNDER ANY OTHER LOAN
DOCUMENT, IN EITHER CASE IF THE BORROWER HAS OBTAINED A FINAL NON NONAPPEALABLE
JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION. SO LONG AS NO DEFAULT IS CONTINUING AND THE BORROWER IS
FINANCIALLY SOLVENT, NO INDEMNITEE MAY SETTLE ANY CLAIM TO BE INDEMNIFIED
HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE BORROWER, WHICH CONSENT
WILL
NOT BE UNREASONABLY OR UNTIMELY WITHHELD.
(c) To
the extent that the Borrower fails to pay any amount required to be paid by
it
to any Agent, the Arranger or the Issuing Bank under Section 12.03(a) or (b)
(and provided that such failure is not due to such Agent’s, Arranger’s or
Issuing Bank’s gross negligence or willful misconduct), each Lender severally
agrees to pay to such Agent, the Arranger or the Issuing Bank, as the case
may
be, such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related
expense, as the case may be, was incurred by or asserted against such Agent,
the
Arranger or the Issuing Bank in its capacity as such.
(d) To
the extent permitted by applicable law, the Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability,
for
special, indirect, consequential or punitive damages (as opposed to direct
or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the Transactions, any Loan or Letter of Credit or the use
of
the proceeds thereof.
(e) All
amounts due under this Section 12.03 shall be payable within 30 days following
receipt by the Borrower of a reasonably detailed statement
therefor.
Section
12.04 Successors and
Assigns.
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(a) The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
except that (i) the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each Lender
(and any attempted assignment or transfer by the Borrower without such consent
shall be null and void) and (ii) no Lender may assign or otherwise transfer
its
rights or obligations hereunder except in accordance with this Section
12.03(e). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate
of
the Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in Section 12.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason
of
this Agreement.
(b) (i)
Subject to the conditions set forth in Section 12.04(b)(ii), any Lender may
assign to one or more assignees all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitment and the
Loans
at the time owing to it) with the prior written consent (such consent not to
be
unreasonably withheld) of:
(A) the
Borrower, provided that no consent of the Borrower shall be required if such
assignment is to a Lender, an Affiliate of a Lender, an Approved Fund or, if
an
Event of Default has occurred and is continuing, is to any other assignee;
and
(B) the
Administrative Agent, provided that no consent of the Administrative Agent
shall
be required for an assignment to an assignee that is a Lender immediately prior
to giving effect to such assignment.
(ii) Assignments
shall be subject to the following additional conditions:
(A) except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment
or Loans, the amount of the Commitment or Loans of the assigning Lender subject
to
each
such assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent) shall
not
be less than $10,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, provided that no such consent of the Borrower shall
be
required if an Event of Default has occurred and is continuing;
(B) each
partial assignment shall be made as an assignment of a proportionate part of
all
the assigning Lender’s rights and obligations under this Agreement;
(C) the
parties to each assignment shall execute and deliver to the Administrative
Agent
an Assignment and Assumption, together with a processing and recordation fee
of
$3,500; and
(D) the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent
an Administrative Questionnaire.
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(iii) Subject
to Section 12.04(b)(iv) and the acceptance and recording thereof, from and
after
the effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from
its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Section 5.01, Section 5.02, Section 5.03
and
Section 12.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 12.03(e)
shall be treated for purposes of this Agreement as a sale by such Lender of
a
participation in such rights and obligations in accordance with Section
12.04(c).
(iv) The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall
maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of
the Lenders, and the Maximum Credit Amount of, and principal amount of the
Loans
and LC Disbursements owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent, the Issuing
Bank and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes
of
this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrower, the Issuing Bank and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice. In connection with any changes to the Register, if necessary,
the Administrative Agent will reflect the revisions on Annex I and forward
a
copy of such revised Annex I to the Borrower, the Issuing Bank and each
Lender.
(v) Upon
its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the assignee’s completedAdministrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in Section 12.04(b) and any written
consent to such assignment required by Section 12.04(b), the Administrative
Agent shall accept such Assignment and Assumption and record the information
contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register
as
provided in this Section 12.04(b).
(c) (i) Any
Lender may, without the consent of
the Borrower, the Administrative Agent or the Issuing Bank, sell participations
to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of
its
Commitment and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (C) the Borrower, the Administrative Agent, the
Issuing Bank and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement. Any agreement or instrument pursuant to
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which
a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver
of
any provision of this Agreement; provided that such agreement or instrument
may
provide that such Lender will not, without the consent of the Participant,
agree
to any amendment, modification or waiver that affects such
Participant. In addition such agreement must provide that the
Participant be bound by the provisions of Section 12.03. Subject
to Section 12.04(c)(ii),
the Borrower agrees that each
Participant shall be entitled to the benefits of Section 5.01,
Section
5.02 and Section
5.03 to the same extent
as if it were a
Lender and had acquired its interest by assignment pursuant to Section 12.04(b). To
the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 12.08
as though it were a Lender, provided
such Participant agrees to be subject to Section 4.01(c)
as though it were a
Lender.
(ii) A
Participant shall not be entitled to receive any greater payment under Section
5.01 or Section 5.03 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless
the
sale of the participation to such Participant is made with the Borrower’s prior
written consent. A Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits of Section 5.03 unless
the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
5.03(e) as though it were a Lender.
(d) Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender,
including, without limitation, any pledge or assignment to secure obligations
to
a Federal Reserve Bank, and this Section 12.04(d) shall not apply to any such
pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
(e) Notwithstanding
any other provisions of this Section 12.03(e), no transfer or assignment of
the
interests or obligations of any Lender or any grant of participations therein
shall be permitted if such transfer, assignment or grant would require the
Borrower and the Guarantors to file a registration statement with the SEC or
to
qualify the Loans under the “Blue Sky” laws of any state.
Section
12.05 Survival; Revival;
Reinstatement.
(a) All
covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection
with
or pursuant to this Agreement or any other Loan Document shall be considered
to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of this Agreement and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by
any
such other party or on its behalf and notwithstanding that the Administrative
Agent, any other Agent, the Issuing Bank or any Lender may have had notice
or
knowledge of any Default or incorrect representation or warranty at the time
any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or
any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Section 5.01,
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Section
5.02, Section 5.03 and Section 12.03 and ARTICLE XI shall survive, on an
unsecured and non-guaranteed basis, and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement, any other Loan
Document or any provision hereof or thereof.
(b) To
the extent that any payments on the Indebtedness or proceeds of any collateral
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver
or
other Person under any bankruptcy law, common law or equitable cause, then
to
such extent, the Indebtedness so satisfied shall be revived and continue as
if
such payment or proceeds had not been received and the Administrative Agent’s
and the Lenders’ Liens, security interests, rights, powers and remedies under
this Agreement and each Loan Document shall continue in full force and
effect. In such event, each Loan Document shall be automatically
reinstated and the Borrower shall take such action as may be reasonably
requested by the Administrative Agent and the Lenders to effect such
reinstatement.
Section
12.06 Counterparts;
Integration; Effectiveness.
(a) This
Agreement may be executed in counterparts (and by different parties hereto
on
different counterparts), each of which shall constitute an original, but all
of
which when taken together shall constitute a single contract.
(b) This
Agreement, the other Loan Documents and any separate letter agreements with
respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and thereof
and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof and thereof. THIS AGREEMENT
AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO
AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
(c) Except
as provided in Section 6.01, this Agreement shall become effective when it
shall
have been executed by the Administrative Agent and when the Administrative
Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy or other electronic transmission
shall be effective as delivery of a manually executed counterpart of this
Agreement.
Section
12.07 Severability. Any
provision of this Agreement or any other Loan Document held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction,
be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof or thereof; and the invalidity of a particular provision
in a
particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
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Section
12.08 Right of
Setoff. If
an Event of Default shall have occurred and be continuing, each Lender and
each
of its Affiliates is hereby authorized at any time and from time to time, to
the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held
and
other obligations (of whatsoever kind, including, without limitation,
obligations under Swap Agreements) at any time owing by such Lender or Affiliate
to or for the credit or the account of the Borrower or any Subsidiary against
any of and all the obligations of the Borrower or any Subsidiary owed to such
Lender now or hereafter existing under this Agreement or any other Loan
Document, irrespective of whether or not such Lender shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured. The rights of each Lender under this Section 12.08
are in addition to other rights and remedies (including other rights of setoff)
which such Lender or its Affiliates may have.
Section
12.09 GOVERNING LAW;
JURISDICTION; SERVICE OF PROCESS.
(a) THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL
LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR TAKE
INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS
LOCATED (AND IN SUCH EVENT, SUCH FEDERAL LAWS SHALL PERTAIN SOLELY TO SUCH
LENDER). CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL
NOT APPLY TO THIS AGREEMENT OR THE NOTES.
(b) ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS MAY BE BROUGHT
IN
THE COURTS OF XXXXXX COUNTY IN THE STATE OF TEXAS OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY
OF
THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT
PERMITTED
BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS
NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER
ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.
(c) EACH
PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS
SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO
SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME
EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN
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SHALL
AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.
(d) EACH
PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN;
(ii)
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT
MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE,
OR
AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED
TO
ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS SECTION 12.09.
Section
12.10 Headings. Article
and Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this
Agreement.
Section
12.11
Confidentiality.
Each of
the Administrative Agent, the other Agents, the Arranger, the Issuing Bank,
the
Lenders and each other party hereto or to any other Loan Document, agrees to
maintain, and agrees to cause each of its Affiliates to maintain, the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it, (c) to
the
extent required by applicable laws or regulations or by any subpoena or similar
legal process (and in each such case, such Person shall, if permitted by law,
notify the Borrower of such occurrence as soon as reasonably practicable
following the service of any such process on such Person), (d) to any other
party to this Agreement or any other Loan Document, (e) in connection with
the
exercise of any remedies hereunder or under any other Loan Document or any
suit,
action or proceeding relating to this Agreement or any other Loan Document
or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 12.11,
to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any Swap Agreement
relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section 12.11 or (ii) becomes
available to the Administrative Agent, an other Agent, the Arranger, the Issuing
Bank, any Lender or other party hereto on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section 12.11,
“Information” means all information received from the Borrower or any Subsidiary
relating to the Borrower or any Subsidiary and their businesses, other than
any
such information that is available to the Administrative Agent, the other
Agents, the Arranger, the Issuing Bank, any Lender or any other party hereto
on
a nonconfidential basis prior to disclosure by the Borrower or a Subsidiary;
provided that, in the case of information received from the Borrower or any
Subsidiary after the date hereof, such information is clearly identified at
the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential
information.
Section
12.12 Interest
Rate Limitation. It
is the intention of the parties hereto that each Lender shall conform strictly
to usury laws applicable to it. Accordingly, if the transactions
contemplated hereby would be usurious as to any Lender under laws applicable
to
it (including the laws of the United States of America and the State of Texas
or
any other jurisdiction whose laws may be mandatorily applicable to such Lender
notwithstanding the other provisions of this Agreement), then, in that event,
notwithstanding anything to the contrary in any of the Loan Documents or any
agreement entered into in connection with or as security for the Notes, it
is
agreed as follows: (i) the aggregate of all consideration which
constitutes interest under law applicable to any Lender that is contracted
for,
taken, reserved, charged or received by such Lender under any of the Loan
Documents or agreements or otherwise in connection with the Notes shall under
no
circumstances exceed the maximum amount allowed by such applicable law, and
any
excess shall be canceled automatically and if theretofore paid shall be credited
by such Lender on the principal amount of the Indebtedness (or, to the extent
that the principal amount of the Indebtedness shall have been or would thereby
be paid in full, refunded by such Lender to the Borrower); and (ii) in the
event
that the maturity of the Notes or any other Indebtedness is accelerated by
reason of an election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such
consideration that constitutes interest under law applicable to any Lender
may
never include more than the maximum amount allowed by such applicable law,
and
excess interest, if any, provided for in this Agreement or otherwise shall
be
canceled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower). All sums paid or agreed to
be paid to any Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by law applicable to such Lender,
be
amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Notes until payment in full so that the rate or amount
of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time
(i) the amount of interest payable to any Lender on any date shall be computed
at the Highest Lawful Rate applicable to such Lender pursuant to this Section
12.12 and (ii) in respect of any subsequent interest computation period the
amount of interest otherwise payable to such Lender would be less than the
amount of interest payable to such Lender computed at the Highest Lawful Rate
applicable to such Lender, then the amount of interest payable to such Lender
in
respect of such subsequent interest computation
-98-
period
shall continue to be computed at the Highest Lawful Rate applicable to such
Lender until the total amount of interest payable to such Lender shall equal
the
total amount of interest which would have been payable to such Lender if the
total amount of interest had been computed without giving effect to this Section
12.12. To the extent that Chapter 303 of the Texas Finance Code is
relevant for the purpose of determining the Highest Lawful Rate applicable
to a
Lender, such Lender elects to determine the applicable rate ceiling under such
Chapter by the weekly ceiling from time to time in effect. Chapter
346 of the Texas Finance Code does not apply to the Borrower’s obligations
hereunder.
Section
12.13 EXCULPATION
PROVISIONS. EACH
OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE
AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS;
THAT
IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE
AND
KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS
BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE
NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN
OF
THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING
THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY
HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR
ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER
LOAN
DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH
PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”
Section
12.14 Existing Credit
Agreement. On
the date of the initial funding, the loans and other Debt of the Borrower under
the Existing Credit Agreement shall be paid in full with the proceeds of the
initial funding and the commitments of the lenders thereunder shall be
superseded by this Agreement and terminated.
Section
12.15 Collateral
Matters; Swap Agreements. The
benefit of the Security Instruments and of the provisions of this Agreement
relating to any collateral securing the Indebtedness shall also extend to and
be
available to those Lenders or their Affiliates which are counterparties to
any
Swap Agreement with the Borrower or any of its Subsidiaries on a pro
rata basis in respect of any obligations of the Borrower or any of its
Subsidiaries which arise under any such Swap Agreement while such Person or
its
Affiliate is a Lender, but only while such Person or its Affiliate is a Lender,
including any Swap Agreements between such Persons in existence prior to the
date hereof; provided, however, such benefits shall automatically cease to
extend, and shall automatically terminate in regard, to any such counterparties
on the date that all Letters of Credit are terminated, all Loans are discharged
and repaid and all Commitments are terminated, and from such date and then
and
thereafter, such benefits shall terminate and no longer be available to any
such
counterparties, irrespective if any Swap Agreement, to which
-99-
they
or
any of them and the Borrower or any Subsidiary are a party, remains in effect
on
and after such date, is about to be entered into or otherwise. No
Lender or any Affiliate of a Lender shall have any voting rights under any
Loan
Document as a result of the existence of obligations owed to it under any such
Swap Agreements.
Section
12.16 No Third Party
Beneficiaries. This
Agreement, the other Loan Documents, and the agreement of the Lenders to make
Loans and the Issuing Bank to issue, amend, renew or extend Letters of Credit
hereunder are solely for the benefit of the Borrower, and no other Person
(including, without limitation, any Subsidiary of the Borrower, any obligor,
contractor, subcontractor, supplier or materialsman) shall have any rights,
claims, remedies or privileges hereunder or under any other Loan Document
against the Administrative Agent, any other Agent, the Issuing Bank or any
Lender for any reason whatsoever. There are no third party
beneficiaries.
Section
12.17 USA Patriot Act
Notice. Each
Lender hereby notifies the Borrower that pursuant to the requirements of the
USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of
the
Borrower and other information that will allow such Lender to identify the
Borrower in accordance with the Act.
[SIGNATURES
BEGIN NEXT PAGE]
The
parties hereto have caused this Agreement to be duly executed as of the day
and
year first above written.
BORROWER: | XXX ENERGY CORPORATION | ||
By:
|
/s/
Xxxxxxxx X. Xxxxxxx
|
||
Xxxxxxxx
X. Xxxxxxx, Chief Executive Officer
|
ADMINISTRATIVE AGENT: | KEYBANK NATIONAL ASSOCIATION | ||
as Administrative Agent and a Lender | |||
By:
|
/s/
Xxxxxx Xxxxx
|
||
Xxxxxx
Xxxxx
|
|||
Director |
SYNDICATION AGENT: | BNP PARIBAS | ||
By:
|
/s/
Xxxxxxx X. Xxxxxxx
|
||
Name:
|
Xxxxxxx
X. Xxxxxxx
|
||
Title:
|
Managing
Director
|
By:
|
/s/
Xxxxx Xxxxxx
|
||
Name:
|
Xxxxx
Xxxxxx
|
||
Title:
|
Vice
President
|
DOCUMENTATION AGENT: | SOVEREIGN BANK | ||
By:
|
/s/
Xxxxxx X. Xxxxxxx
|
||
Name:
|
Xxxxxx
X. Xxxxxxx
|
||
Title:
|
Senior
Vice President
|
LENDERS: | KEYBANK NATIONAL ASSOCIATION | ||
as Administrative Agent and a Lender | |||
By:
|
/s/
Xxxxxx Xxxxx
|
||
Xxxxxx
Xxxxx
|
|||
Director |
BNP PARIBAS | |||
By:
|
/s/
Xxxxxxx X. Xxxxxxx
|
||
Name:
|
Xxxxxxx
X. Xxxxxxx
|
||
Title:
|
Managing
Director
|
By:
|
/s/
Xxxxx Xxxxxx
|
||
Name:
|
Xxxxx
Xxxxxx
|
||
Title:
|
Vice
President
|
SOVEREIGN BANK | |||
By:
|
/s/
Xxxxxx X. Xxxxxxx
|
||
Name:
|
Xxxxxx
X. Xxxxxxx
|
||
Title:
|
Senior
Vice President
|
ALLIED IRISH BANKS, P.L.C. | |||
By:
|
/s/
Xxxxxx Xxxx
|
||
Name:
|
Xxxxxx
Xxxx
|
||
Title:
|
Director
|
By:
|
/s/
Xxxxx Xxxxxxx
|
||
Name:
|
Xxxxx
Xxxxxxx
|
||
Title:
|
Vice
President
|
M&T BANK | |||
By:
|
/s/
Xxxxx Xxxxxx
|
||
Name:
|
Xxxxx
Xxxxxx
|
||
Title:
|
Assistant Vice
President
|
ANNEX
I
LIST
OF MAXIMUM CREDIT AMOUNTS
Aggregate
Maximum Credit Amounts
Name
of Lender
|
Maximum
Credit Amount
|
KeyBank
National Association
|
$20,000,000
|
BNP
Paribas
|
$15,000,000
|
Sovereign
Bank
|
$15,000,000
|
Allied
Irish Bank
|
$12,500,000
|
M&T
Bank
|
$12,500,000
|
TOTAL
|
$75,000,000
|
EXHIBIT
A
FORM
OF NOTE
$[ ][ ],
200[ ]
FOR
VALUE
RECEIVED, Xxx Energy
Corporation, a Delawarecorporation
(the
“Borrower”) hereby promises to pay to the order of [ ]
(the “Lender”), at the principal office of KeyBank National Association
(the “Administrative Agent”) designated in Section 4.01(a) of the Credit
Agreement, as hereinafter defined, the principal sum of [ ]
Dollars ($[ ])
(or such lesser amount as shall equal the aggregate unpaid principal amount
of
the Loans made by the Lender to the Borrower under the Credit Agreement), in
lawful money of the United States of America and in immediately available funds,
on the dates and in the principal amounts provided in the Credit Agreement,
and
to pay interest on the unpaid principal amount of each such Loan, at such
office, in like money and funds, for the period commencing on the date of such
Loan until such Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
The
date,
amount, Type, interest rate, Interest Period and maturity of each Loan made
by
the Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of this Note, may be endorsed by the Lender on the schedules attached hereto
or
any continuation thereof or on any separate record maintained by the
Lender. Failure to make any such notation or to attach a schedule
shall not affect any Lender’s or the Borrower’s rights or obligations in respect
of such Loans or affect the validity of such transfer by any Lender of this
Note.
This
Note
is one of the Notes referred to in the Credit Agreement dated as of September 28, 2007
among the Borrower, the Administrative Agent, and the other agents and
lenders signatory thereto (including the Lender), and evidences Loans made
by
the Lender thereunder (such Credit Agreement as the same may be amended,
supplemented or restated from time to time, the “Credit
Agreement”). Capitalized terms used in this Note have the
respective meanings assigned to them in the Credit Agreement.
This
Note
is issued pursuant to, and is subject to the terms and conditions set forth
in,
the Credit Agreement and is entitled to the benefits provided for in the Credit
Agreement and the other Loan Documents. The Credit Agreement provides
for the acceleration of the maturity of this Note upon the occurrence of certain
events, for prepayments of Loans upon the terms and conditions specified therein
and other provisions relevant to this Note.
THIS
NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF
TEXAS.
XXX
ENERGY
CORPORATION
By:
Name:
Title:
EXHIBIT
B
FORM
OF BORROWING REQUEST
[ ],
200[ ]
Xxx
Energy Corporation, a Delawarecorporation
(the
“Borrower”), pursuant to Section 2.03 of the Credit Agreement dated as of
September 28, 2007 (together with all amendments, restatements, supplements
or
other modifications thereto, the “Credit Agreement”) among the Borrower,
KeyBank National Association, as Administrative Agent and the other agents
and
lenders (the “Lenders”) which are or become parties thereto (unless
otherwise defined herein, each capitalized term used herein is defined in the
Credit Agreement), hereby requests a Borrowing as follows:
(i) Aggregate
amount of the requested Borrowing is
$[ ];
(ii) Date
of such Borrowing is
[ ],
200[ ];
(iii) Requested
Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing];
(iv) In
the case of a Eurodollar Borrowing, the initial Interest Period applicable
thereto is
[ ];
(v) Amount
of Borrowing Base in effect on the date hereof is
$[ ];
(vi) Total
Revolving Credit Exposures on the date hereof (i.e., outstanding principal
amount of Loans and total LC Exposure without regard to the Borrowing requested
hereby) is
$[ ];
and
(vii) Pro
forma total Revolving Credit Exposures (giving effect to the requested
Borrowing) is
$[ ];
and
(viii) Location
and number of the Borrower’s account to which funds are to be disbursed, which
shall comply with the requirements of Section 2.05 of the Credit Agreement,
is
as follows:
[ ]
[ ]
[ ]
[ ]
[ ]
The
undersigned certifies that he/she is the
[ ]
of the Borrower, and that as such he/she is authorized to execute this
certificate on behalf of the Borrower. The undersigned further
certifies, represents and warrants on behalf of the Borrower that the Borrower
is entitled to receive the requested Borrowing under the terms and conditions
of
the Credit Agreement.
XXX
ENERGY
CORPORATION
By:
Name:
Title:
EXHIBIT
C
FORM
OF INTEREST ELECTION REQUEST
[ ],
200[ ]
Xxx
Energy Corporation, a Delawarecorporation
(the
“Borrower”), pursuant to Section 2.04 of the Credit Agreement dated as of
September 28, 2007 (together with all amendments, restatements, supplements
or
other modifications thereto, the “Credit Agreement”) among the Borrower,
KeyBank National Association, as Administrative Agent and the other agents
and
lenders (the “Lenders”) which are or become parties thereto (unless
otherwise defined herein, each capitalized term used herein is defined in the
Credit Agreement), hereby makes an Interest Election Request as
follows:
(i) The
Borrowing
to which this Interest Election Request applies, and if different options are
being elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the information
specified pursuant to (iii) and (iv) below shall be specified for each resulting
Borrowing) is
[ ];
(ii) The
effective date
of the election made pursuant to this Interest Election Request is
[ ],
200[ ];[and]
(iii) The
resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing][;
and]
[(iv) [If
the resulting Borrowing is a Eurodollar Borrowing] The Interest Period
applicable to the resulting Borrowing after giving effect to such election
is
[ ]].
The
undersigned certifies that he/she is the
[ ]
of the Borrower, and that as such he/she is authorized to execute this
certificate on behalf of the Borrower. The undersigned further
certifies, represents and warrants on behalf of the Borrower that the Borrower
is entitled to receive the requested continuation or conversion under the terms
and conditions of the Credit Agreement.
XXX
ENERGY
CORPORATION
By:
Name:
Title:
EXHIBIT
D-1
FORM
OF
COMPLIANCE
CERTIFICATE
The
undersigned hereby certifies that he/she is the [ ]
of Xxx Energy
Corporation, a Delawarecorporation
(the
“Borrower”), and that as such he/she is authorized to execute this
certificate on behalf of the Borrower. With reference to the Credit
Agreement dated as of September 28, 2007 (together with all amendments,
restatements, supplements or other modifications thereto being the
“Agreement”) among the Borrower, KeyBank National
Association, as Administrative Agent, and the other agents and lenders
(the “Lenders”) which are or become a party thereto, and such Lenders,
the undersigned represents and warrants as follows (each capitalized term used
herein having the same meaning given to it in the Agreement unless otherwise
specified):
(a) The
representations and warranties of the Borrower contained in Article VII of
the
Agreement and in the Loan Documents and otherwise made in writing by or on
behalf of the Borrower pursuant to the Agreement and the Loan Documents were
true and correct when made, and are repeated at and as of the time of delivery
hereof and are true and correct in all material respects at and as of the time
of delivery hereof, except (i) to the extent such representations and warranties
are expressly limited to an earlier date, provided that, except for purposes
of
Section 6.02, the representations and warranties contained in Section 7.04(b)
shall be deemed to refer to the fiscal year end date of the most recent
financial statement delivered pursuant to Section 8.01(a) or (ii) as the
Borrower has disclosed pursuant to Section 8.02 in writing to the contrary
or
(iii) as the Lenders have expressly consented in writing to the
contrary.
(b) The
Borrower has performed and complied with all agreements and conditions contained
in the Agreement and in the Loan Documents required to be performed or complied
with by it prior to or at the time of delivery hereof [or specify default and
describe].
(c) Since
[same
date as audited financials in Section 7.04(a)], no change has occurred, either
in any case or in the aggregate, in the condition, financial or otherwise,
of
the Borrower or any Subsidiary which could reasonably be expected to have a
Material Adverse Effect [or specify event].
(d) There
exists no Default or Event of Default [or specify Default and
describe].
(e) Attached
hereto are the detailed computations necessary to determine whether the Borrower
is in compliance with Section 9.01 and Section 8.14 as of the end of the [fiscal
quarter][fiscal year] ending [ ].
EXECUTED
AND
DELIVERED this [ ]
day of [ ].
XXX
ENERGY
CORPORATION
By:
Name:
Title:
EXHIBIT
D-2
FORM
OF SECTION 8.01(c) CERTIFICATE
The
undersigned hereby certifies that he/she is the [ ]
of Xxx Energy
Corporation, a Delawarecorporation
(the
“Borrower”), and that as such he/she is authorized to execute this
certificate on behalf of the Borrower. With reference to the Credit
Agreement dated as of September 28, 2007 (together with all amendments,
restatements, supplements or other modifications thereto being the
“Agreement”) among the Borrower, KeyBank National
Association, as Administrative Agent, and the other agents and lenders
(the “Lenders”) which are or become a party thereto, and such Lenders,
the undersigned represents and warrants as follows (each capitalized term used
herein having the same meaning given to it in the Agreement unless otherwise
specified):
(a) The
representations and warranties of the Borrower contained in Article VII of
the
Agreement and in the Loan Documents and otherwise made in writing by or on
behalf of the Borrower pursuant to the Agreement and the Loan Documents were
true and correct when made, and are repeated at and as of the time of delivery
hereof and are true and correct in all material respects at and as of the time
of delivery hereof, except (i) to the extent such representations and warranties
are expressly limited to an earlier date, provided that, except for purposes
of
Section 6.02, the representations and warranties contained in Section 7.04(b)
shall be deemed to refer to the fiscal year end date of the most recent
financial statement delivered pursuant to Section 8.01(a) or (ii) as the
Borrower has disclosed pursuant to Section 8.02 in writing to the contrary
or
(iii) as the Lenders have expressly consented in writing to the
contrary.
(b) There
exists no Default or Event of Default [or specify Default and
describe].
(b) Attached
hereto are the detailed computations necessary to determine whether the Borrower
is in compliance with Section 9.01 and 8.14 as of the end of the [fiscal
quarter][fiscal year] ending [ ].
(c) [Select
one of the following as applicable:] [There has been no change
in GAAP or in the application thereof, in each case as GAAP was applied in
the
Financial Statements, (i) in the preparation of the Borrower’s financial
statements most-recently required to be delivered in accordance with Section
8.01(a) or (b), or (ii) that would affect the computation of any financial
ratio
in Section 9.01] or [There has been one or more changes in GAAP or in
the application thereof, in each case as GAAP was applied in the Financial
Statements, (i) in the preparation of the Borrower’s financial statements
most-recently required to be delivered in accordance with Section 8.01(a) or
(b), or (ii) that would affect the computation of any financial ratio in Section
9.01, as follows and with the following
effects: [specify].
EXECUTED AND
DELIVERED this [ ]
day of [ ].
XXX
ENERGY
CORPORATION
By:
Name:
Title:
EXHIBIT
E
SECURITY
INSTRUMENTS
1) Guaranty
and
Collateral Agreement dated as of September 28, 2007
by the Borrower
and Xxx Energy I, LLC, Xxx Energy Operating Corp., Penn Tex Energy, Inc.,
PennTex Resources, L.P., PennTex Resources Illinois, Inc. and Xxx Energy IV,
LLC, as the
Guarantors, in favor of the Administrative Agent and the
Lenders.
2) Financing
Statements in respect of item 1, by
a) the
Borrower
b) Xxx
Energy I, LLC
c) Xxx
Energy Operating Corp.
d) Penn
Tex Energy, Inc.
e) PennTex
Resources, L.P.
f) PennTex
Resources Illinois, Inc.
g) Xxx
Energy
IV, LLC
3) Stock
Powers delivered in respect of item 1.
a) Penn
Tex Energy, Inc., a Delaware corporation
b) PennTex
Resources Illinois, Inc., a Delaware corporation
c) Xxx
Energy Operating Corp., a Delaware corporation
4) Deed
of Trust, Mortgage, Assignment of As-Extracted Collateral, Security Agreement
and Financing Statement dated as of September 28, 2007 by
each of Xxx Energy I, LLC, PennTex Resources, L.P. and PennTex Resources
Illinois, Inc., as mortgagors, for the benefit the Administrative Agent, the
Lenders and others.
5) Financing
Statements in respect of item 4.
6) First
Amendment to Deed of Trust, Mortgage, Assignment of As-Extracted Collateral,
Security Agreement and Financing Statement dated as of September 28, 2007 by
Xxx Energy IV, LLC, as mortgagor, for the benefit the Administrative Agent,
the
Lenders and others.
EXHIBIT
F
FORM
OF ASSIGNMENT AND ASSUMPTION
This
Assignment and Assumption (the
“Assignment and Assumption”) is dated as of the Effective Date set forth
below and is entered into by and between [Insert name of Assignor] (the
“Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined
herein
shall have the meanings given to them in the Credit Agreement identified below
(as amended, the “Credit Agreement”), receipt of a copy of which is
hereby acknowledged by the Assignee. The Standard Terms and
Conditions set forth in Annex 1 attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.
For
an agreed consideration, the
Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee
hereby irrevocably purchases and assumes from the Assignor, subject to and
in
accordance with the Standard Terms and Conditions and the Credit Agreement,
as
of the Effective Date inserted by the Administrative Agent as contemplated
below
(i) all of the Assignor’s rights and obligations in its capacity as a Lender
under the Credit Agreement and any other documents or instruments delivered
pursuant thereto to the extent related to the amount and percentage interest
identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including any letters
of credit and guarantees included in such facilities) and (ii) to the extent
permitted to be assigned under applicable law, all claims, suits, causes of
action and any other right of the Assignor (in its capacity as a Lender) against
any Person, whether known or unknown, arising under or in connection with the
Credit Agreement, any other documents or instruments delivered pursuant thereto
or the loan transactions governed thereby or in any way based on or related
to
any of the foregoing, including contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related to
the
rights and obligations sold and assigned pursuant to clause (i) above (the
rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as the “Assigned
Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.
1. | Assignor | _______________________________________________________ | |
2. | Assignee | _______________________________________________________ | |
[and is an Affiliate/Approved Fund of [identify Lender]1] | |||
3. | Borrower | Xxx Energy Corporation | |
4. | Adminstrative Agent | KeyBank National Association, as the adminsitrative agent under the Credit Agreement | |
5. | Credit Agreement | The Credit Agreement dated as of September 28, 2007 among Xxx Energy Corporation, the Lenders parties thereto, KeyBank National Association, as Administrative Agent, and the other agents parties thereto | |
1
Select as
applicable.
|
6.
|
Assigned
Interest:
|
Commitment
Assigned
|
Aggregate
Amount of Commitment/Loans for all Lenders
|
Amount
of Commitment/Loans Assigned
|
Percentage
Assigned of Commitment/Loans2
|
$
|
$
|
%
|
|
$
|
$
|
%
|
|
$
|
$
|
%
|
Effective
Date: _____________ ___, 20___ [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]
The
terms
set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
|
[NAME
OF ASSIGNOR]
|
By:______________________________
Title:
ASSIGNEE
[NAME
OF ASSIGNEE]
By:______________________________
Title:
2
Set forth, to at
least 9 decimals, as a percentage of the Commitment/Loans of all Lenders
thereunder.
-
[Consented
to and]3 Accepted:
[NAME
OF
ADMINISTRATIVE AGENT], as
Administrative
Agent
By_________________________________
Title:
[Consented
to:]4
[NAME
OF
RELEVANT PARTY]
By________________________________
Title:
3
To be added only if
the consent of the Administrative Agent is required by the terms of the Credit
Agreement.
4
To be added only if
the consent of the Borrower and/or other parties (e.g. Issuing Bank) is required
by the terms of the Credit Agreement.
ANNEX
1
XXX
ENERGY CORPORATION CREDIT AGREEMENT
STANDARD
TERMS AND CONDITIONS FOR
ASSIGNMENT
AND ASSUMPTION
1. Representations
and
Warranties.
1.1 Assignor. The
Assignor (a) represents and warrants that (i) it is the legal and beneficial
owner of the Assigned Interest, (ii) the Assigned Interest is free and clear
of
any lien, encumbrance or other adverse claim and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated
hereby; and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with the Credit Agreement
or any other Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or
any
collateral thereunder, (iii) the financial condition of the Borrower, any of
its
Subsidiaries or Affiliates or any other Person obligated in respect of any
Loan
Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.
1.2. Assignee. The
Assignee (a) represents and warrants that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment
and
Assumption and to consummate the transactions contemplated hereby and to become
a Lender under the Credit Agreement, (ii) it satisfies the requirements, if
any,
specified in the Credit Agreement that are required to be satisfied by it in
order to acquire the Assigned Interest and become a Lender, (iii) from and
after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder, (iv) it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 8.01 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent
or
any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant
to
the terms of the Credit Agreement, duly completed and executed by the Assignee;
and (b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, 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 Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
2. Payments. From
and after the Effective Date, the Administrative Agent shall make all payments
in respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date.
3. General
Provisions. This Assignment and Assumption shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number
of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page
of this Assignment and Assumption by telecopy shall be effective as delivery
of
a manually executed counterpart of this Assignment and Assumption. This
Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of Texas.
EXHIBIT
G-1
FORM
OF MAXIMUM CREDIT AMOUNT INCREASE CERTIFICATE
[ ],
200[ ]
To: [ ],
as
Administrative Agent
The
Borrower, the Administrative Agent and the other Agents and certain Lenders
have
heretofore entered into a Credit Agreement, dated as of September 28, 2007, as
amended from time to time (the “Credit
Agreement”). Capitalized terms not otherwise defined herein shall
have the meaning given to such terms in the Credit Agreement.
This
Maximum Credit Amount Increase Certificate is being delivered pursuant to
Section 2.06(c) of the Credit Agreement.
Please
be
advised that the undersigned has agreed to increase its Maximum Credit Amount
under the Credit Agreement effective [ ],
200[ ]
from $[ ]
to $[ ]
and (b) that it shall continue to be a party in all respect to the Credit
Agreement and the other Loan Documents.
The
[Borrower/Lender] shall pay the fee payable to the Administrative Agent pursuant
to Section 2.06(c)(ii) of the Credit Agreement.
Very
truly yours,
[ ]
By:
Name:
Title:
Accepted
and Agreed:
[ ],
as
Administrative Agent
By:
Name:
Title:
Accepted
and Agreed:
[ ]
By:
Name:
Title:
EXHIBIT
G-2
FORM
OF ADDITIONAL LENDER CERTIFICATE
[ ],
200[ ]
To: [ ],
as
Administrative Agent
The
Borrower, the Administrative Agent and the other Agents and certain Lenders
have
heretofore entered into a Credit Agreement, dated as of September 28, 2007, as
amended from time to time (the “Credit
Agreement”). Capitalized terms not otherwise defined herein shall
have the meaning given to such terms in the Credit Agreement.
This
Additional Lender Certificate is being delivered pursuant to Section 2.06(c)
of
the Credit Agreement.
Please
be
advised that the undersigned has agreed (a) to become a Lender under the Credit
Agreement effective [ ],
200[ ]
with a Maximum Credit Amount of $[ ]
and (b) that it shall be a party in all respect to the Credit Agreement and
the
other Loan Documents.
This
Additional Lender Certificate is being delivered to the Administrative Agent
together with (i) if the Additional Lender is a Foreign Lender, any
documentation required to be delivered by such Additional Lender pursuant to
Section 5.03(e) of the Credit Agreement, duly completed and executed by the
Additional Lender, and (ii) an Administrative Questionnaire in the form supplied
by the Administrative Agent, duly completed by the Additional
Lender. The [Borrower/Additional Lender] shall pay the fee payable to
the Administrative Agent pursuant to Section 2.06(c)(ii) of the Credit
Agreement.
Very
truly yours,
[ ]
By:
Name:
Title:
Accepted
and Agreed:
[ ],
as
Administrative Agent
By:
Name:
Title:
Accepted
and Agreed:
[ ]
By:
Name:
Title:
SCHEDULE
7.05
LITIGATION
An
environmental enforcement action brought in the United States District Court
for
the Southern District of Illinois styled The United States of America and
the State of Illinois v. PennTex Resources Illinois, Inc. and Xxx Energy
Operating Corp., Case No. 3:07-cv-241-DRH, relating to alleged emissions of
hydrogen sulfide from xxxxx and facilities owned or operated by the defendants
near the towns of Bridgeport and Petrolia, Illinois.
A
putative class action lawsuit brought in the United States District Court for
the Southern District of Illinois styled Xxxxx Xxxx, et al. v. Rex Energy
Operating Corp. and PennTex Resources Illinois, Inc., Cause Number
3:06-cv-00802-JPG-CJP, relating to alleged emissions of hydrogen sulfide from
xxxxx and facilities owned or operated by the defendants near the towns of
Bridgeport and Petrolia, Illinois.
SCHEDULE
7.06
ENVIRONMENTAL
MATTERS
In
approximately 2002, predecessors of PennTex Resources Illinois, Inc. (“PennTex
Illinois”) received complaints from local residents of the cities of Bridgeport
and Petrolia, Illinois concerning odors alleged to be emanating from oil xxxxx,
emergency pits and facilities located in the company’s Xxxxxxxx field
operations. The complainants alleged that the odors were caused by hydrogen
sulfide (“H2S”)
gas. The complainants alleged that H2S gas emissions
from
the oil xxxxx and associated facilities also caused corrosion damages to HVAC
systems and other personal property at each of their residences. Each
complainant requested compensation for the repair or replacement of personal
items located at their residences. Predecessors of PennTex Illinois entered
into
settlement agreements with certain of these residents relating to their claims
of corrosion damages. On October 7, 2004, a predecessor of PennTex Illinois
(then known as ERG Illinois, Inc.) received a Violation Notice dated October
6,
2004, pursuant to Section 31(a)(1) of the Illinois Environmental Protection
Act
from the Illinois Environmental Protection Agency (“Illinois EPA”) regarding
odors allegedly emanating from its Xxxxxx Facility emergency pit or in the
general vicinity of the emergency pit. Thereafter, on December 16, 2004, the
company received a letter entitled “Request to Provide Information Pursuant to
the Clean Air Act” from the U.S. EPA. The U.S. EPA requested information
necessary to determine whether the operations surrounding the Xxxxxx Facility
were in compliance with the Illinois State Implementation Plan and the Clean
Air
Act. On December 27, 2004, ERG Illinois, Inc. submitted to the Illinois EPA
a
proposed Compliance Commitment Agreement (“CCA”) that responded to the October
6, 2004 Violation Notice with a denial of the alleged violations, but
accompanied by a proposal to periodically clean the emergency pit. On January
26, 2005, the Illinois EPA provided a letter to the company
indicating that the company’s previously submitted CCA had been accepted, thus
resolving the Violation Notice.
On
January 28, 2005, PennTex Illinois submitted a response to the U.S. EPA’s
December 16, 2004 information request. On February 9, 2005, the U.S. EPA
requested additional data from PennTex Illinois regarding the quantity of H2S emissions
from
various sources including the Xxxxxx Facility and the xxxxx in and around the
city of Bridgeport, Illinois. In March 2005, PennTex Illinois engaged a third
party environmental consulting firm to prepare a Preliminary Action Plan
designed to identify and analyze emissions from PennTex Illinois’ operations and
to propose recommendations to address any identified concerns. A report entitled
“PAP/Odor Investigation Results” with recommendations and a cover letter were
sent to the U.S. EPA on July 18, 2005 (the “PAP Report”). The PAP Report
concluded that, for all xxxxx monitored, PennTex Illinois was in compliance
with
all known federal, state and local rules and regulations in regard to H2S emissions
and
exposures. The PAP Report recommended that additional H2S controls,
such as
the installation of scavenger drums, be implemented with respect to some of
the
monitored xxxxx. The PAP Report described the results of high range and low
range H2S
instrument sampling in the vicinity of the Xxxxxx Facility and concluded that
no
additional operational controls or modifications appeared to be necessary or
feasible to further reduce H2S concentrations
in
the vicinity of the Xxxxxx Facility.
On
March
13, 2006, PennTex Illinois received a second information request from the U.S.
EPA requesting additional information relating to, among other matters, the
company’s installation of flares and scavenger drums to control H2S emissions
at its
oil well locations. On
March
27,
2006, PennTex Illinois submitted a response to the U.S. EPA’s second information
request. In September 2006, the U.S. DOJ and the U.S. EPA initiated an
enforcement action seeking mandatory injunctive relief and potential civil
penalties from PennTex Illinois and Xxx Energy Operating Corp. (“Xxx Operating”)
based on allegations that the companies were violating the Clean Air Act in
connection with the release of H2S and other
volatile
organic compounds (“VOCs”) in the course of PennTex Illinois’ oil operations in
the Xxxxxxxx Field near the towns of Bridgeport and Petrolia, Illinois. Senior
management of the companies met with representatives of the U.S. EPA, U.S.
DOJ,
Illinois EPA and the Agency for Toxic Substances and Disease Registry (“ATSDR”)
on September 7, 2006, to discuss matters relating to the enforcement action.
This meeting had been preceded by certain monitoring of air emissions in the
areas surrounding Bridgeport and Petrolia, Illinois that the U.S. EPA and ATSDR
had conducted in May 2006.
In
October 2006, PennTex Illinois and Xxx Operating entered into a non-binding
agreement in principle with the U.S. EPA to address matters that were the
subject of the pending enforcement action. Pursuant to this agreement, the
companies agreed to (i) develop and carry out a detailed and comprehensive
written response plan designed to further reduce possible emissions of H2S and VOCs
from
PennTex Illinois’ oil xxxxx and associated facilities in the Xxxxxxxx Field that
were closest to populated areas, (ii) operate and maintain the control measures
described in the response plan in accordance with a written operations and
maintenance plan to be approved by the U.S. EPA, (iii) evaluate the
effectiveness of the control measures in the Xxxxxxxx Field through a monitoring
program, and (iv) evaluate the need for additional control measures at other
facilities within the Xxxxxxxx Field within 60 days. In April 2007,
PennTex Illinois, Xxx Operating and the U.S. EPA and U.S. DOJ executed a
comprehensive consent decree in which PennTex Illinois and Xxx Operating,
without any admission of wrongdoing or liability and without any agreement
to
pay any civil fine or penalty, agreed to install certain control measures and
to
implement certain operating and maintenance procedures in the Xxxxxxxx Field.
Under the terms of the proposed consent decree, PennTex Illinois and Xxx
Operating agreed to establish a monitoring protocol that would be designed
to
facilitate the reduction of possible emissions of H2S and VOCs
from
PennTex Illinois’ operations near Bridgeport and Petrolia. On June 1, 2007, the
United States filed a motion for the approval and entry of the proposed consent
decree with the United States District Court for the Southern District of
Illinois. On June 6, 0000, xxx xxxxx xxxxxxx xxx Xxxxxx Xxxxxx’ motion for
approval and entry of the proposed consent decree.
PennTex
Illinois and Xxx Operating are defendants in a putative class action lawsuit
that has been filed in the United States District Court for the Southern
District of Illinois. This action was commenced on October 17, 2006, by
plaintiffs Xxxxx Xxxx and Xxxx Xxxxxxxx, individually and as putative class
representatives on behalf of all persons and non-governmental entities that
own
property or reside on property located in the towns of Bridgeport and Petrolia,
Illinois. The complaint asserts that the operation of oil xxxxx that are
controlled, owned or operated by PennTex Illinois and Xxx Operating has resulted
in “serious contamination” of the class area with H2S. The complaint
asserts several causes of action, including violation of the Illinois
Environmental Protection Act, negligence, private nuisance, trespass, and
willful and wanton misconduct. The complaint seeks, among other things,
injunctive relief under the Illinois Environmental Protection Act and Illinois
common law, compensatory and other damages, punitive damages, and attorneys’
fees and costs. In addition, the complaint seeks the creation of a
court-supervised,
defendant-financed fund to pay for medical monitoring for the plaintiffs and
others in the class area. On November 14, 2006, PennTex Illinois and Xxx
Operating filed a joint answer to the complaint specifically denying virtually
all of the allegations in the complaint and asserting affirmative defenses
thereto. On December 20, 2006, the plaintiffs filed a motion for class
certification requesting that the court certify the case as a class
action.
On
January 31, 2007, the plaintiffs filed a motion for leave seeking permission
to
file an amended complaint that would add a claim against the defendants for
alleged violation of Section 7002(a)(1) of the Resource Conservation And
Recovery Act. Plaintiffs’ proposed amended complaint makes factual allegations
similar to those previously asserted in the plaintiffs’ prior pleadings. On
February 6, 2007, the court set a final pretrial conference for this case for
August 7, 2008. The case is scheduled for jury trial on August 18, 2008, in
the
United States District Court for the Southern District of Illinois located
in
Benton, Illinois. The parties to this lawsuit have exchanged initial
pretrial disclosures as required under the applicable rules, each side has
served and responded to pre-deposition written discovery and one of the
plaintiffs’ expert witnesses on the issue of class certification has been
deposed by the defendants.
SCHEDULE
7.14
SUBSIDIARIES
AND PARTNERSHIPS
Borrower:
Legal
Name/Address
|
Trade
Names Used in Past 5 Years
|
Current
Jurisdiction of Organization
|
Jurisdiction
of Organizations in Past 5 Years
|
Organizational
No.
|
Taxpayer
Identification No.
|
Chief
Executive Office or Sole Place of Business over the last 5
years
|
Xxx
Energy Corporation
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
None
|
Delaware
|
Not
Applicable
|
4313846
|
00-0000000
|
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
Subsidiaries
and Partnerships:
Legal
Name/Address
|
Trade
Names Used in Past 5 Years
|
Current
Jurisdiction of Organization
|
Jurisdiction
of Organizations in Past 5 Years
|
Organizational
No.
|
Taxpayer
Identification No.
|
Chief
Executive Office or Sole Place of Business over the last 5
years
|
Xxx
Energy I, LLC
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
None
|
Delaware
|
Not
Applicable
|
4335969
|
00-0000000
|
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
Xxx
Energy Operating Corp.
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
None
|
Delaware
|
Not
Applicable
|
3865470
|
00-0000000
|
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX
00000
|
Xxx
Energy IV, LLC
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
None
|
Delaware
|
Not
Applicable
|
4219136
|
00-0000000
|
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
Xxxxx
0, Xxx 000, Xxxxxxxxxx, Xxxxxxxx 00000
Xxxxxxx
000, X.X. Xxx 000, Xxxxxxxxxx, Xxxxxxxx 00000
|
PennTex
Resources Illinois, Inc.
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
ERG
Illinois, Inc.
|
Delaware
|
Not
Applicable
|
3757111
|
00-0000000
|
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX
00000
0000
Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000
|
Penn
Tex Energy, Inc.
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
None
|
Delaware
|
Not
Applicable
|
2822522
|
00-0000000
|
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX
00000
|
PennTex
Resources, L.P.
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
None
|
Texas
|
Not
Applicable
|
10295910
|
00-0000000
|
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX
00000
|
Xxx
Energy Marketing, LLC
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
None
|
Delaware
|
Not
Applicable
|
4256285
|
00-0000000
|
0000
Xxxxxx Xxxx
Xxxxx
Xxxxxxx, XX 00000
|
SCHEDULE
7.18
GAS
IMBALANCES
None.
SCHEDULE
7.19
|
MARKETING
CONTRACTS
|
Long
Term Crude Oil Sales Agreements
None.
Long
Term Natural Gas Sales Agreements
None.
SCHEDULE
7.20
SWAP
AGREEMENTS
Derivative
Instrument
|
Counter-
party
|
Notional
Volume
(Mcf)
|
Notional
Volume
(Bls)
|
Period
|
Floor
Price
|
Ceiling
Price
|
Fixed
Price
|
Fair
Market
Value
|
Swap
Contracts
|
KeyBank
|
-
|
84,000
|
Sep.
07 - Dec. 07
|
$
65.00
|
$ (669,790)
|
||
Swap
Contracts
|
KeyBank
|
-
|
12,000
|
Sep.
07 - Dec. 07
|
$
64.75
|
(117,389)
|
||
Swap
Contracts
|
Shell
|
-
|
1,000
|
Sep.
07 - Sep. 07
|
$
59.75
|
(26,576)
|
||
Swap
Contracts
|
KeyBank
|
40,000
|
-
|
Sep.
07 - Dec. 07
|
$ 7.54
|
53,431
|
||
Collars
|
Shell
|
160,000
|
-
|
Sep.
07 - Dec. 07
|
$ 8.00
|
$
14.65
|
315,193
|
|
Collars
|
Shell
|
-
|
32,000
|
Sep.
07 - Dec. 07
|
$
40.00
|
$
42.55
|
(952,145)
|
|
Swap
Contracts
|
KeyBank
|
-
|
12,000
|
Sep.
07 - Dec. 07
|
$
68.24
|
(64,935)
|
||
Swap
Contracts
|
Shell
|
-
|
16,000
|
Sep.
07 - Dec. 07
|
$
68.25
|
(86,391)
|
||
Collars
|
Shell
|
-
|
16,000
|
Sep.
07 - Dec. 07
|
$
55.00
|
$
61.25
|
(228,969)
|
|
Collars
|
Shell
|
-
|
8,000
|
Sep.
07 - Dec. 07
|
$
70.00
|
$
82.60
|
10,816
|
|
Collars
|
Shell
|
80,000
|
-
|
Sep.
07 - Dec. 07
|
$ 6.67
|
$
12.95
|
58,652
|
|
Collars
|
Shell
|
-
|
28,000
|
Sep.
07 - Dec. 07
|
$
50.00
|
$
73.40
|
(66,843)
|
|
Collars
|
Shell
|
-
|
88,000
|
Sep.
07 - Jul. 08
|
$
65.00
|
$
76.00
|
(24,508)
|
|
Collars
|
KeyBank
|
-
|
136,000
|
Jan.
08 - Aug. 08
|
$
65.58
|
(520,169)
|
||
Collars
|
KeyBank
|
-
|
49,000
|
Jan.
08 - Jul. 08
|
$
62.00
|
$
70.00
|
(166,211)
|
|
Collars
|
KeyBank
|
400,000
|
-
|
Jan.
08 - Aug. 08
|
$ 7.00
|
$ 9.35
|
41,494
|
|
Collars
|
KeyBank
|
160,000
|
-
|
Jan.
08 - Aug. 08
|
$ 7.00
|
$ 8.80
|
(3,169)
|
|
Collars
|
Shell
|
-
|
96,000
|
Jan.
08 - Aug. 08
|
$
60.00
|
$
89.25
|
131,126
|
|
Collars
|
Shell
|
-
|
5,000
|
Aug.
08 - Aug 08
|
$
65.00
|
$
76.05
|
3,741
|
|
Collars
|
Shell
|
-
|
35,000
|
Feb.
08 - Aug. 08
|
$
65.00
|
$
80.20
|
|
$ 47,689
|
Total
Current Portion
|
840,000
|
618,000
|
$
(2,264,993)
|
|||||
Swap
Contracts
|
KeyBank
|
-
|
68,000
|
Sep.
08 - Dec. 08
|
$
65.58
|
(371,549)
|
||
Collars
|
KeyBank
|
200,000
|
-
|
Sep.
08 - Dec. 08
|
$ 7.00
|
$ 9.35
|
20,747
|
|
Collars
|
Shell
|
-
|
48,000
|
Sep.
08 - Dec. 08
|
$
60.00
|
$
89.25
|
65,563
|
|
Collars
|
Shell
|
-
|
20,000
|
Sep.
08 - Dec. 08
|
$
65.00
|
$
80.20
|
27,251
|
|
Collars
|
KeyBank
|
-
|
32,000
|
Sep.
08 - Dec. 08
|
$
62.00
|
$
69.10
|
(132,888)
|
|
Collars
|
Shell
|
-
|
55,000
|
Sep.
08 - Jul. 09
|
$
65.00
|
$
76.05
|
41,151
|
|
Collars
|
KeyBank
|
80,000
|
-
|
Sep.
08 - Dec. 08
|
$ 7.00
|
$ 8.80
|
(1,585)
|
|
Collars
|
KeyBank
|
-
|
175,000
|
Jan.
09 - Jul. 09
|
$
62.00
|
$
67.80
|
(611,233)
|
|
Collars
|
KeyBank
|
600,000
|
-
|
Jan.
09 - Dec. 09
|
$ 7.00
|
$ 9.00
|
(181,762)
|
|
Collars
|
KeyBank
|
-
|
140,000
|
Aug.
09 - Dec. 09
|
$
62.00
|
$
66.10
|
(802,572)
|
|
Swap
Contracts
|
KeyBank
|
-
|
192,000
|
Jan.
09 - Dec. 09
|
$
64.00
|
(893,168)
|
||
Swap
Contracts
|
KeyBank
|
-
|
180,000
|
Jan.
10 - Dec. 10
|
$
62.20
|
(971,154)
|
||
Collars
|
KeyBank
|
-
|
180,000
|
Jan.
10 - Dec. 10
|
$
60.00
|
$
77.20
|
47,562
|
|
Collars
|
KeyBank
|
-
|
108,000
|
Jan.
10 - Dec. 10
|
$
60.00
|
$
80.00
|
$ 31,391
|
|
Total
Long-Term Portion
|
880,000
|
1,198,000
|
$
(3,732,246)
|
|||||
Total
Derivative Instruments
|
1,720,000
|
1,816,000
|
$
(5,997,239)
|
SCHEDULE
9.02
EXISTING
DEBT
None.
SCHEDULE
9.03
EXISTING
LIENS
None.
SCHEDULE
9.05
INVESTMENTS
Xxx
Energy I, LLC owns all of the outstanding membership interest of Xxx Energy
Marketing, LLC, a Delaware limited liability company.
Xxx
Energy Operating Corp. owns a 24.75% limited partnership interest in Xxxxxxx
Xxxxx XX Limited Partnership, a Delaware limited partnership, and a 25%
membership interest in its general partner, L&B Air LLC, a Delaware limited
liability company.
SCHEDULE
9.14
EXISTING
AFFILIATE TRANSACTIONS
Clerical,
administrative and management services provided by Xxxxxx Hotel Group Limited
Partnership relating to the administration of Xxx Energy Operating Corp.’s
401(k) retirement plan pursuant to a Service Provider Agreement, dated April
1,
2007, between Xxxxxx Hotel Group Limited Partnership and Xxx Energy Operating
Corp.
Tax
planning and preparation services provided by Xxxxxx Hotel Group Limited
Partnership pursuant to a Tax Return Engagement Letter Agreement, dated April
13, 2007, between Xxxxxx Hotel Group Limited Partnership and Xxx Energy
Operating Corp.
The
leasing of the Borrower’s headquarters office building located at 0000 Xxxxxx
Xxxx, Xxxxx Xxxxxxx, Xxxxxxxxxxxx 00000 pursuant to a Lease Agreement, dated
September 1, 2006, between Xxxxxx Brothers, LLC and Xxx Energy Operating
Corp.
The
use
of two airplanes owned by Xxxxxxx Xxxxx Air Corp. pursuant to an oral
month-to-month agreement between Xxx Energy Operating Corp. and Xxxxxxx Xxxxx
Air Corp.
The
use
of an Eclipse 500 Airplane to be owned by Xxxxxxx Xxxxx XX Limited Partnership
pursuant to the terms of (i) the Amended and Restated Limited Liability Company
Agreement, dated June 21, 2007, of L&B Air LLC, (ii) the Amended and
Restated Limited Partnership Agreement, dated June 21, 2007, of Xxxxxxx
Xxxxx XX Limited Partnership and (iii) the First Amended and Restated Aircraft
Joint Ownership and Management Agreement, dated June 21, 2007, between Xxxxxxx
Xxxxx Air Corp. and Xxxxxxx Xxxxx XX Limited Partnership.
SCHEDULE
9.16
EXISTING
NEGATIVE PLEDGE AGREEMENTS; DIVIDEND RESTRICTIONS
None.