EXHIBIT 10.1
XXXXXX AND XXXXX DRAFT: 7/29/09
SENIOR SECURED BRIDGE LOAN
BY AND AMONG
MAINLAND RESOURCES, INC.,
AS BORROWER,
GUGGENHEIM CORPORATE FUNDING, LLC,
AS ADMINISTRATIVE AGENT,
AND
THE LENDERS SIGNATORY HERETO
DATED AS OF AUGUST [ ], 2009
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS............................1
1.1 DEFINED TERMS...............................................1
1.2 ACCOUNTING TERMS...........................................11
1.3 NUMBER AND GENDER OF WORDS.................................11
ARTICLE 2 TERMS OF CREDIT............................................12
2.1 TERM LOAN..................................................12
2.2 LOANS......................................................12
2.3 LOAN PROCEDURES AND PROVISIONS............................12
2.4 REPAYMENT PROVISIONS.......................................14
2.5 INTEREST RATES, PAYMENT....................................14
2.6 GENERAL PROVISIONS RELATING TO INTEREST....................14
2.7 FEES.......................................................15
2.8 METHOD OF PAYMENT; PRO RATA TREATMENT......................15
2.9 INCREASED COSTS............................................15
2.10 TAXES......................................................16
ARTICLE 3 CONDITIONS PRECEDENT.......................................17
3.1 CONDITIONS TO EXECUTION AND MAKING OF ADVANCES.............17
3.2 FURTHER CONDITIONS TO BUENA VISTA ADVANCE..................19
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.............................19
4.1 EXISTENCE AND GOOD STANDING................................20
4.2 DUE AUTHORIZATION..........................................20
4.3 VALID AND BINDING OBLIGATIONS..............................20
4.4 SCOPE AND ACCURACY OF FINANCIAL STATEMENTS.................20
4.5 LIABILITIES AND LITIGATION.................................20
4.6 TITLE TO ASSETS............................................20
4.7 [RESERVED].................................................20
4.8 [RESERVED].................................................20
4.9 GAS IMBALANCES.............................................20
4.10 AUTHORIZATIONS AND CONSENTS................................21
4.11 COMPLIANCE WITH LAWS.......................................21
4.12 PROPER FILING OF TAX RETURNS AND PAYMENT OF TAXES DUE......21
4.13 ERISA COMPLIANCE...........................................21
4.14 INVESTMENT COMPANY ACT COMPLIANCE..........................21
4.15 LIEN PRIORITY..............................................21
4.16 USE OF PROCEEDS............................................21
4.17 FULL DISCLOSURE............................................21
4.18 PLACES OF BUSINESS.........................................22
4.19 IDENTIFICATION NUMBERS.....................................22
4.20 SUBSIDIARIES...............................................22
4.21 NO DEFAULT.................................................22
ARTICLE 5 AFFIRMATIVE COVENANTS......................................22
5.1 MAINTENANCE AND ACCESS TO RECORDS..........................22
5.2 QUARTERLY FINANCIAL STATEMENTS.............................22
5.3 ANNUAL FINANCIAL STATEMENTS................................22
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5.4 COMPLIANCE CERTIFICATES....................................23
5.5 [RESERVED].................................................23
5.6 [RESERVED].................................................23
5.7 SALES, PRODUCTION AND OPERATIONS REPORTS...................23
5.8 LIENS ON NEWLY ACQUIRED OIL AND GAS PROPERTIES.............23
5.9 TITLE OPINIONS.............................................23
5.10 STATEMENT OF MATERIAL ADVERSE EFFECT.......................23
5.11 TITLE DEFECTS..............................................24
5.12 ADDITIONAL INFORMATION.....................................24
5.13 COMPLIANCE WITH LAWS AND PAYMENT OF TAXES..................24
5.14 MAINTENANCE OF EXISTENCE AND GOOD STANDING.................24
5.15 FURTHER ASSURANCES.........................................24
5.16 [RESERVED].................................................24
5.17 MAINTENANCE OF TANGIBLE PROPERTY...........................24
5.18 MAINTENANCE OF INSURANCE...................................24
5.19 RIGHT OF INSPECTION........................................25
5.20 NOTICE.....................................................25
5.21 COLLATERAL PROTECTION......................................25
5.22 ERISA INFORMATION AND COMPLIANCE...........................25
5.23 USE OF PROCEEDS............................................26
5.24 RIGHT OF LAST OFFER........................................26
ARTICLE 6 NEGATIVE COVENANTS.........................................26
6.1 OTHER DEBT OF BORROWER.....................................26
6.2 DERIVATIVE CONTRACTS.......................................27
6.3 GUARANTY OF PAYMENT OR PERFORMANCE.........................27
6.4 LOANS, ADVANCES OR INVESTMENTS.............................27
6.5 MORTGAGES OR PLEDGES OF ASSETS.............................27
6.6 CANCELLATION OF INSURANCE..................................27
6.7 SALES OF PROPERTY..........................................27
6.8 DIVIDENDS AND DISTRIBUTIONS................................28
6.9 CHANGES IN STRUCTURE.......................................28
6.10 PAYMENT OF ACCOUNTS PAYABLE................................28
6.11 TRANSACTIONS WITH AFFILIATES...............................28
6.12 NATURE OF BUSINESS.........................................28
6.13 NO SUBSIDIARIES............................................28
6.14 ERISA COMPLIANCE...........................................28
6.15 NEGATIVE PLEDGE AGREEMENTS.................................28
6.16 GAS IMBALANCES, TAKE-OR-PAY OR OTHER PREPAYMENTS...........28
ARTICLE 7 EVENTS OF DEFAULT..........................................29
7.1 EVENTS OF DEFAULT..........................................29
7.2 RIGHTS UPON OCCURRENCE OF AN EVENT OF DEFAULT..............30
ARTICLE 8 THE ADMINISTRATIVE AGENT...................................31
8.1 APPOINTMENT; POWERS........................................31
8.2 DUTIES AND OBLIGATIONS OF ADMINISTRATIVE AGENT.............32
8.3 ACTIONS BY ADMINISTRATIVE AGENT............................32
8.4 RELIANCE BY ADMINISTRATIVE AGENT...........................33
8.5 SUBAGENTS..................................................33
8.6 RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT.............33
8.7 ADMINISTRATIVE AGENT AS A LENDER...........................33
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8.8 NO RELIANCE................................................34
8.9 AUTHORITY OF ADMINISTRATIVE AGENT TO RELEASE COLLATERAL
AND LIENS..................................................34
8.10 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM..............34
8.11 DELIVERY BY ADMINISTRATIVE AGENT...........................35
ARTICLE 9 MISCELLANEOUS..............................................35
9.1 NOTICES....................................................35
9.2 AMENDMENTS AND WAIVERS.....................................36
9.3 EXPENSES, INDEMNITY, DAMAGE WAIVER.........................37
9.4 SURVIVAL OF AGREEMENTS.....................................39
9.5 SUCCESSORS AND ASSIGNS.....................................39
9.6 INVALIDITY.................................................42
9.7 [RESERVED].................................................42
9.8 WAIVERS....................................................42
9.9 CUMULATIVE RIGHTS..........................................42
9.10 EXHIBITS; CONFLICTS........................................42
9.11 TITLES OF ARTICLES, SECTIONS AND SUBSECTIONS...............42
9.12 JURISDICTION...............................................43
9.13 COUNTERPARTS...............................................43
9.14 EFFECTIVENESS..............................................43
9.15 DOCUMENTS..................................................43
9.16 RIGHTS OF THIRD PERSON.....................................43
9.17 ANNOUNCEMENTS..............................................43
9.18 SURVIVAL OF CERTAIN COVENANTS..............................43
9.19 JURY TRIAL WAIVED..........................................43
9.20 GOVERNING LAW..............................................44
9.21 ARBITRATION................................................44
9.22 ENTIRE AGREEMENT...........................................45
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SCHEDULES
SCHEDULE I Area of Mutual Interest
SCHEDULE 2.1 Lenders' Pro Rata Percentages
SCHEDULE 4.6 Mortgaged Properties
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Borrowing Request
EXHIBIT C Form of Compliance Certificate
EXHIBIT D Form of Assignment and Acceptance Agreement
EXHIBIT E Form of Letter in Lieu
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This SENIOR SECURED BRIDGE LOAN AGREEMENT, dated as of August [ ], 2009 is
by and among MAINLAND RESOURCES, INC., a Nevada corporation (the "BORROWER"),
each of the lenders which is or which may from time to time become a signatory
hereto (individually, a "LENDER" and collectively, the "LENDERS") and GUGGENHEIM
CORPORATE FUNDING, LLC, a Delaware limited liability company, as administrative
agent for the Lenders (in such capacity, together with its successors in such
capacity, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H T H A T:
WHEREAS, Borrower has requested the Lenders extend to Borrower up to
$3,500,000.00 on a short term basis subject to the terms and conditions hereof;
and
WHEREAS, Borrower acknowledges that Administrative Agent is arranging this
facility in anticipation of arranging a Senior Secured Advancing Line of Credit
Facility, more particularly described in a separate Arrangement Letter between
Administrative Agent and Borrower of even date herewith according to the terms
outlined in EXHIBIT A attached thereto (the "ARRANGEMENT LETTER") and Borrower
intends to close the Senior Secured Advancing Line of Credit Facility as
expeditiously as possible;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and of the loans and commitment hereinafter referred to, the
Borrower, the Lenders, and the Administrative Agent agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINED TERMS. As used in this Agreement, the following terms have the
following meanings:
"ADMINISTRATIVE AGENT" has the meaning indicated in the opening
paragraph hereof.
"ADMINISTRATIVE AGENT'S PAYMENT OFFICE" means the address for payments
as Administrative Agent may from time to time specify.
"ADVANCE LIMIT" means $3,500,000.00.
"AFE" means an authorization for expenditures representing an estimate
of work to be performed. AFE's shall not include XXXXX overhead or other
similar expenses related to Borrower's direct overhead expense.
"AFFILIATE" means any Person controlling, controlled by, or under
common control with, any other Person. For purposes of this definition,
"control" (including "controlled by" and "under common control with") means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities or otherwise.
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"AGREEMENT" means this Senior Secured Bridge Loan Agreement and all
exhibits and schedules hereto, as the same may be amended from time to time
according to the terms hereof.
"AREA OF MUTUAL INTEREST" or "AMI" means the area of mutual interest
more particularly described on SCHEDULE I hereto.
"ARRANGEMENT LETTER" has the meaning set forth in the Recitals.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance, in
substantially the form attached hereto as EXHIBIT D with appropriate
completions.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. ss. 101, et seq.), as amended, and regulations promulgated
thereunder.
"BASE RATE" means, for any day, the fluctuating rate of interest in
effect for such day which rate per annum shall be equal to the prime rate
published in The Wall Street Journal's "Money Rates" or similar table. If
multiple prime rates are quoted in the table, then the highest prime rate
will be the Base Rate. In the event that the prime rate is no longer
published by The Wall Street Journal in the "Money Rates" or similar table,
then Administrative Agent may select an alternative published index based
upon comparable information as a substitute Base Rate. Upon the selection
of a substitute Base Rate, the applicable interest rate shall thereafter
vary in relation to the substitute index
"BORROWER" has the meaning indicated in the opening paragraph hereof.
"BORROWING REQUEST" means the request by the Borrower for the Loans in
accordance with SECTION 2.3 duly executed by an Authorized Officer of a
Borrower substantially in the form attached hereto as EXHIBIT B.
"BUENA VISTA ADVANCE" has the meaning assigned such term in SECTION
2.1(B).
"BUENA VISTA PROSPECT" means the Oil and Gas Properties to be acquired
by Borrower in the properties known as the Buena Vista Prospect, located in
[ ] County, Mississippi, more particularly described in SCHEDULE I hereto.
"BUSINESS DAY" means a day other than a Saturday, Sunday or legal
holiday for commercial banks in the State of Texas.
"CHANGE IN LAW" means (a) the adoption of any Law after the date of
this Agreement, (b) any change in any Law or in the interpretation or
application thereof by any Tribunal after the date of this Agreement or (c)
compliance by any Lender, by any lending office of such Lender or by such
Lender's holding company with any request, guideline or directive (whether
or not having the force of law) of any Tribunal made or issued after the
date of this Agreement.
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"CLO" means any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in the ordinary
course of its business and is administered or managed by a Lender or an
Affiliate of such Lender.
"CLOSING DATE" means the date when all the conditions precedent set
forth in SECTION 3.1 of this Agreement have been satisfied or waived by the
Lenders.
"CODE" means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
"COLLATERAL" means all assets and property of the Borrower now owned
or hereafter acquired, including, without limitation, the Mortgaged
Properties.
"COMMITMENT" means, with respect to each Lender, the commitment of
such Lender to fund its pro-rata share of the Initial Advance and the Buena
Vista Advance, and "Commitments" means the aggregate of the Lenders'
Commitments which amount shall be equal to the Commitment Amount.
"COMMITMENT AMOUNT" means $3,500,000.
"COMMITMENT TERMINATION DATE" means the earlier of (i) the Maturity
Date or (ii) the date on which the Lenders' Commitment otherwise terminates
in accordance with the provisions of this Agreement.
"COMPLIANCE CERTIFICATES" means the certificates of a Responsible
Officer submitted to the Administrative Agent and the Lenders from time to
time pursuant to this Agreement, which certificates shall be substantially
in the form attached hereto as EXHIBIT C.
"CONTESTED IN GOOD FAITH" means contested in good faith by appropriate
and lawful proceedings diligently conducted, reasonably satisfactory to the
Administrative Agent (a) in which foreclosure, distraint, sale, forfeiture,
levy, execution or other similar proceedings have not been initiated or
have been stayed and continue to be stayed, (b) in which a good faith
contest will not reasonably be expected to have a Material Adverse Effect,
and (c) for which matter a reserve or other appropriate provision has been
established in accordance with the requirements of GAAP.
"DEBT" of any Person means, to the extent of such Person's liability,
(a) all items of indebtedness for borrowed money, obligations, and
liabilities (whether matured or unmatured, liquidated or unliquidated,
direct or indirect, joint or several, contingent or otherwise), which in
accordance with GAAP should be classified upon such Person's balance sheet
as liabilities, but in any event including liabilities secured by any Lien
existing on Property of such Person or a Subsidiary of such Person, (b) the
deferred purchase price of Property or services and direct and contingent
obligations incurred in connection with letters of credit and similar
agreements, (c) all obligations as a lessee under leases which have been,
or which in accordance with GAAP should be, capitalized for financial
reporting purposes, (d) all obligations under operating leases which
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require such Person or its Affiliate to make payments over the term of such
lease, including payments at termination, based on the purchase price or
appraisal value of the Property subject to such lease plus a marginal
interest rate, and used primarily as a financing vehicle for, or to
monetize, such Property; (e) all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business), and other
contingent obligations of such Person with respect to obligations of other
Persons of the types described in clauses (a), (b) and/or (c) preceding,
(f) liabilities of unfunded vested benefits under any Plan, (g) all net
obligations with respect to Derivative Contracts, (h) all obligations to
supply funds to, invest in or maintain working capital or equity capital of
any other Person, or otherwise to maintain the net worth or solvency or any
balance sheet condition of any other Person, (i) the undischarged balance
of any production payment created by such Person or for the creation of
which such Person directly or indirectly received payment.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code and all other
applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor
relief Laws or general equitable principles from time to time in effect
affecting the Rights of creditors generally.
"DEFAULT RATE" shall mean the lesser of the Base Rate PLUS twelve
percent (12.0%) or the Highest Lawful Rate.
"DERIVATIVE CONTRACT" means all future contracts, forward contracts,
swap, cap or collar contracts, option contracts, hedging contracts or other
derivative contracts or similar agreements covering oil and gas commodities
or prices or financial, monetary or interest rate instruments.
"DOLLARS" or "$" refers to lawful money of the United States of
America.
"DRILLING AND COMPLETION COSTS" means amounts owed to third Persons
that are not an Affiliate of the Borrower incurred by the Borrower, or to
the extent such contracts are with Affiliates of Borrower, amounts owed
under such contracts to the extent on an arm's-length basis with terms and
costs approved by Administrative Agent, in its sole discretion, in
drilling, completing and equipping for production a Well.
"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 regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
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"ERISA EVENT" means (a) a Reportable Event with respect to a Plan; (b)
a withdrawal by the Borrower or any ERISA Affiliate from a Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to
terminate (other than pursuant to Section 4041(b) of ERISA), the treatment
of a Plan amendment as a termination under Section 4041(c) or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Plan
or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV
of ERISA, other than PBGC premiums due but not delinquent under Section
4007 of ERISA, upon the Borrower or any ERISA Affiliate.
"EVENT OF DEFAULT" means any of the events specified in SECTION 7.1,
provided that the requirements, if any, for the giving of notice, the lapse
of time, or both, or any other condition specified in SECTION 7.1 have been
satisfied.
"EXCLUDED TAXES" means, with respect to the Administrative Agent, any
Lender, or any other recipient of any payment to be made by or on account
of any obligation of the Borrower hereunder or under any other Loan
Document, (a) income or franchise taxes imposed on (or measured by) its net
income by the United States of America or such other jurisdiction under the
laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending
office is located, (b) windfall profit or other excess profits taxes that
are imposed on Administrative Agent or any Lender, and (c) any branch
profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located.
"FACILITY" means the $3,500,000 Senior Secured Bridge Loan evidenced
by this Agreement.
"FACILITY RATE" means on any day a varying rate of interest per annum
equal to the Base Rate, from time to time in effect, plus seven percent
(7.00%), but in no event to exceed the Highest Lawful Rate.
"FINANCIAL STATEMENTS" means statements of financial condition, as at
the point in time and for the period indicated, and consisting of at least
a balance sheet and related statements of operations, changes in
shareholder's equity and cash flow.
"GAAP" means, generally accepted accounting principles established by
the Financial Accounting Standards Board and in effect in the United States
from time to time during the term of this Agreement and applied on a basis
consistent with that adopted in the Financial Statements of the Borrower to
be delivered to the Administrative Agent and to the Lenders.
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"HAZARDOUS SUBSTANCES" means any flammables, explosives, radioactive
materials, hazardous wastes, asbestos or any material containing asbestos,
polychlorinated biphenyls (PCB's), toxic substances or related materials,
and associated oil or natural gas exploration, production and development
wastes or any substances defined as "hazardous substances," "hazardous
materials," "hazardous wastes" or "toxic substance" under the Oil Pollution
Act, as amended; Comprehensive Environmental Response, Compensation and
Liability Act, as amended; the Superfund Amendments and Reauthorization
Act, as amended; the Hazardous Materials Transportation Act, as amended;
the Resource Conservation and Recovery Act, as amended; the Toxic
Substances Control Act, as amended; or any other law, statute, ordinance,
rule, regulation or order now or hereafter enacted or promulgated by any
governmental authority with jurisdiction and relating to the protection of
the environment.
"HIGHEST LAWFUL RATE" means the maximum rate (or, if the context so
permits or requires, an amount calculated at such rate) of interest (if
any) that, at the time in question, would not cause the interest charged on
the Obligations owed to the Lenders to exceed the maximum amount that the
Lenders would be allowed to contract for, charge, take, reserve or receive
under applicable Law after taking into account, to the extent required by
applicable Law, all relevant payments and charges under the Loan Documents.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INITIAL ADVANCE" has the meaning assigned such term in SECTION
2.1(B).
"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) or any capital contribution to any other Person; (b) the making
of any deposit with, or advance, loan or other extension of credit to, any
other Person (including the purchase of Property from another Person)
subject to an understanding or agreement, contingent or otherwise, to
resell such Property to such Person; or (c) the entering into of any
guarantee of, or other contingent obligation (including the deposit of any
Equity Interests to be sold) with respect to, Debt or other liability of
any other Person and (without duplication) any amount committed to be
advanced, lent or extended to such Person.
"LAWS" means all applicable statutes, laws, ordinances, rules,
rulings, interpretations, regulations, judgments, requirements,
governmental authorizations (including licenses, permits, franchises and
other governmental consents necessary for the ownership or operation of
Property), orders, writs, injunctions or decrees of any Tribunal (or
interpretations of any of the foregoing by any Tribunal).
"LENDER" and "LENDERS" have the respective meanings indicated in the
opening paragraph hereof.
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"LETTERS IN LIEU" means the letters in lieu of transfer orders
described in SECTION 3.1(a)(4)(iii).
"LIEN" means any lien, charge, claim, restriction, mortgage,
mechanic's lien, materialmen's lien, pledge, hypothecation, inchoate lien,
assignment, deposit arrangement, conditional sale or other title retention
agreement, financing lease, security interest, security agreement or other
encumbrance, whether arising by contract or under Law, and includes
conditions, leases and other title exceptions and the filing of any
financing statement under the Uniform Commercial Code of the State of Texas
or comparable Law of any jurisdiction perfecting any such Lien.
"LITIGATION" means any proceeding, claim, lawsuit, and/or
investigation conducted, or threatened and known to the Person in question,
by or before any Tribunal.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents, all agreements, documents and instruments governing or related
to Derivative Contracts entered into between the Borrower and any Lender or
the Administrative Agent or any Affiliate of any Lender or the
Administrative Agent and all other notes, mortgages, deeds of trust,
restatements, ratifications and amendments of mortgages, deeds of trust,
financing statements, guarantees, security agreements, pledge agreements,
documents, instruments and other agreements now or hereafter delivered
pursuant to the terms of, or in connection with, this Agreement, the
Obligations and/or the Collateral, and all renewals, extensions and
restatements of, and amendments and supplements to any or all of the
foregoing.
"LOANS" means the loans and other extensions of credit by the
Administrative Agent on behalf of the Lenders to or for the account of the
Borrower pursuant to this Agreement.
"MAJORITY LENDERS" means Lenders holding at least fifty (50%) of the
outstanding aggregate principal amount of the Loans (without regard to any
sale by a Lender of a participation in any Loan under SECTION 9.5).
"MARKETABLE TITLE" means title free of all liens and encumbrances
other than the Permitted Liens, that entitles Borrower (i) to receive not
less than the percentage set forth on SCHEDULE 4.6 as "Net Revenue
Interest" and (ii) to bear not more than the percentages set forth on
SCHEDULE 4.6 as "Working Interests" without a corresponding increase in the
Net Revenue Interest as such percentages relate to each Well as described
in SCHEDULE 4.6 and is otherwise free and clear from reasonable doubt as to
matters of law and fact such that a prudent operator of Oil and Gas
Properties, advised of the facts and their legal significance, would
willingly accept.
"MATERIAL ADVERSE EFFECT" means any material and adverse effect on (a)
the business, assets, liabilities, financial condition, business or
operations of the Borrower, (b) the ability of the Borrower to meet its
Obligations under any of the Loan Documents on a timely basis as provided
herein or therein or (c) the legality, validity, binding effect or
enforceability against the Borrower of any Loan Document to which it is a
party.
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"MATURITY DATE" means December 1, 2009.
"MORTGAGED PROPERTIES" means those Oil and Gas Properties covered by
the Mortgages, including, without limitation, the Oil and Gas Properties
described on SCHEDULE 4.6 as same may be amended from time to time.
"MORTGAGES" means the mortgages described in SECTIONS 3.1(A)(4)(I).
"MULTIEMPLOYER PLAN" means a "MULTIEMPLOYER PLAN," within the meaning
of Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three (3) calendar years, has made, or been obligated
to make, contributions.
"NOTES" means the promissory notes of the Borrower payable to the
order of the respective Lender, in substantially the form attached hereto
as EXHIBIT A with appropriate completions, and all extensions, renewals,
replacements, modifications, supplements or rearrangements thereof from
time to time, and "NOTE" means any one of the Notes.
"OBLIGATIONS" means all present and future loans, advances,
indebtedness, obligations, covenants, duties and liabilities, and all
renewals for any period, increases and extensions thereof, or any part
thereof, now or hereafter owing to the Lenders or the Administrative Agent
by the Borrower arising from or pursuant to any of the Loan Documents
including, without limitation, obligations under Derivative Contracts with
any Lender or Lender Affiliate entered into at the time such counterparty
was a Lender or an Affiliate of a Lender, together with all interest
accruing thereon, and costs, expenses, and attorneys' fees incurred in the
enforcement or collection thereof, whether such indebtedness, obligations,
and liabilities are direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several.
"OIL AND GAS PROPERTIES" means fee, leasehold or other interests in or
under mineral estates, or oil, gas and other liquid or gaseous hydrocarbon
leases with respect to properties situated in the United States, including,
without limitation, overriding royalty and royalty interests, leasehold
estate interests, net profits interests, production payment interests and
mineral fee interests, together with contracts executed in connection
therewith and all tenements, hereditaments, appurtenances and properties,
real or personal, appertaining, belonging, affixed or incidental thereto.
"ORGANIZATIONAL DOCUMENTS" shall mean, as applicable, for any entity,
such entity's articles or certificate of incorporation, by-laws, memorandum
and articles of association, partnership agreement, trust agreement,
certificate of limited partnership, articles of organization, certificate
of formation, shareholder agreement, voting trust agreement, operating
agreement, subscription agreement, limited liability company agreement
and/or analogous documents, as amended, modified or supplemented from time
to time.
8
"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.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
governmental entity succeeding to any of its principal functions under
ERISA.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA, other than a Multiemployer Plan, which
the Borrower sponsors, maintains, or to which the Borrower makes, is
making, or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan
years.
"PERMITTED LIENS" means, to the extent same are valid and enforceable:
(a) Liens for Taxes, not yet due or which are being Contested in Good
Faith; (b) Liens in connection with workers' compensation, unemployment
insurance or other social security (other than Liens created by Section
4068 of ERISA), old age pension or public liability obligations which are
not yet due or which are being Contested in Good Faith; (c) vendors',
carriers', warehousemen's, repairmen's, mechanics', workmen's,
materialmen's, construction or other similar Liens arising by operation of
Law in the ordinary course of business or incident to the drilling,
construction or improvement of any Property in respect of obligations which
are not yet due or which are being Contested in Good Faith; (d) Liens
existing prior to the filing of the Mortgages in favor of operators and
non-operators under joint operating agreements arising in the ordinary
course of business to secure amounts owing, which amounts are not yet due
or are being Contested in Good Faith; (e) Liens under division orders and
other agreements customary in the oil and gas business for processing,
producing and selling hydrocarbons and statutory Liens in favor of royalty
owners; (f) Liens created in favor of the Administrative Agent or any
Lender securing Obligations hereunder and other Liens expressly permitted
under the Security Documents; (g) easements, rights-of-way, restrictions
and other similar encumbrances, and minor defects in the chain of title
which are customarily accepted in the oil and gas industry, none of which
interfere with the ordinary conduct of the business of the owner of the
Property or materially detract from the value or use of the Property to
which they apply; (h) Liens of record under terms and provisions of the
leases, unit agreements, assignments and other transfer of title documents
in the chain of title under which the owner of the relevant Property
acquired such Property; (i) Liens securing the purchase price or existing
under conditional sale for title retention contracts for equipment
purchased or leased in the normal course of business of the Borrower,
provided that such Lien shall not extend to or cover any other Property of
the Borrower; and (j) Lessor's Liens under oil and gas leases securing
payment of royalties.
"PERSON" means any individual, sole proprietorship, firm, corporation,
trust, association, institution, partnership, joint venture, limited
liability company, Tribunal or other entity.
9
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which is subject to ERISA, other than a Multiemployer Plan, and
which the Borrower sponsors, maintains or to which the Borrower makes, is
making or is obligated to make contributions and includes any Pension Plan.
"PRO RATA PERCENTAGE" means, with respect to each Lender, at any time,
a fraction (expressed as a percentage carried out to the ninth decimal
place), the numerator of which is the amount of the Commitment of such
Lender at such time and the denominator of which is the aggregate amount of
the Commitments at such time. The initial Pro Rata Percentage of each
Lender is set forth opposite the name of such Lender on SCHEDULE 2.1 or in
the Assignment and Assumption Agreement pursuant to which such Lender
becomes a party hereto, as applicable.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System (or any successor).
"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.
"REPORTABLE EVENT" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"RESPONSIBLE OFFICERS" means Xxxxxxx X. Newport and Xxxxxxx Xxxxxx,
and other executive officers of Borrower as designated in written notice to
Administrative Agent.
"RIGHTS" means rights, remedies, powers and privileges.
"SECTION" means a section or subsection in this Agreement unless
specified otherwise.
"SECURITY DOCUMENTS" means the documents described in SECTION
3.1(A)(4) of this Agreement and all other documents now or hereafter
existing which provide the Administrative Agent and/or the Lenders with
Collateral, as the same may be amended or restated from time to time.
"SUBSIDIARY" of any Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50%
of the voting stock or other equity interests (in the case of Persons other
than corporations), is owned or controlled directly or indirectly by the
Person, or one or more of the Subsidiaries of the Person, or a combination
thereof.
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"TAXES" means all taxes, assessments, filing or other fees, levies,
imposts, duties, deductions, withholdings, stamp taxes, interest
equalization taxes, capital transaction taxes, foreign exchange taxes or
charges, or other charges of any nature whatsoever from time to time or at
any time imposed by any Law or Tribunal.
"TRIBUNAL" means any court, governmental department or authority,
commission, board, bureau, agency, arbitrator or instrumentality of any
state, political subdivision, commonwealth, nation, territory, county,
parish or municipality, whether now or hereafter existing, having
jurisdiction over the Administrative Agent, any Lender, the Borrower or any
of their respective Property.
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities under Section 4001(a) (16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable Plan year.
"UNMATURED EVENT OF DEFAULT" means any event or occurrence which
solely with the lapse of time or the giving of notice or both will ripen
into an Event of Default.
"WELL" means any oil and gas well which the Borrower drills on the
Mortgaged Properties with the proceeds, in whole or in part, of Advances
hereunder.
1.2 ACCOUNTING TERMS. All accounting and financial terms used in any of the
Loan Documents and the compliance with each covenant contained in the Loan
Documents that relates to financial matters shall be determined in accordance
with GAAP, except to the extent that a deviation therefrom is expressly stated
in such Loan Documents.
1.3 NUMBER AND GENDER OF WORDS. Whenever the singular number is used in any
Loan Document, the same shall include the plural where appropriate, and VICE
VERSA; words of any gender in any Loan Document shall include each other gender
where appropriate; and the words "herein," "hereof," "hereunder" and other words
of similar import refer to the relevant Loan Document as a whole and not to any
particular part, section or subdivision thereof.
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ARTICLE 2
TERMS OF CREDIT
2.1 TERM LOAN. Subject to the terms and conditions set forth herein
(including, without limitation, the right of the Lenders to terminate the
Commitment hereunder upon an Event of Default) and relying on the
representations and warranties contained in this Agreement and the other Loan
Documents, until the Commitment Termination Date, each Lender severally (and not
jointly) agrees to make the following advances equal to its Pro Rata Percentage,
provided, however, no advance shall be made which will cause the sum of all
advances pursuant to this SECTION 2.1 to exceed, either singularly or
cumulatively, the Advance Limit:
(a) The first advance shall be made on the Closing Date (the "INITIAL
ADVANCE") in the amount of $2,500,000.00 to (i) fund cash calls related to
the Xxxxx 15-1 Well, in an amount not to exceed $1,500,000.00, (ii) fund
cash calls related to the Xxxxxxxxx-Xxxxxxx 16-1 Well and general and
administrative expenses, in an aggregate amount not to exceed $900,000, and
(iii) to pay Borrower's out of pocket legal expenses and closing fees
related to this Facility, in an amount not to exceed $100,000.00.
(b) The second advance (the "BUENA VISTA ADVANCE") shall be made
subject to the conditions set forth in SECTION 3.2 in the amount of
$1,000,000.00 to fund expenses related to the acquisition of acreage in the
Buena Vista Prospect.
(c) The Commitments are not revolving and amounts repaid or prepaid
may not be re-borrowed under any circumstance.
2.2 LOANS.
(a) SEVERAL OBLIGATIONS. Each Loan shall be made by the Lenders
ratably in accordance with their respective Commitments. The failure of any
Lender to fund its Loan shall not relieve any other Lender of its
obligations hereunder; provided, however, that the Commitments are several
and no Lender shall be responsible for any other Lender's failure to fund
its Loan as required.
(b) NOTES. The Loan 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 Closing Date,
or (ii) any Lender that becomes a party hereto pursuant to a Lender
Assignment Agreement, as of the effective date of the Lender Assignment
Agreement, payable to the order of such Lender in a principal amount equal
to such Lender's funded Loan as in effect on such date, and otherwise duly
completed.
2.3 LOAN PROCEDURES AND PROVISIONS.
(a) BORROWING REQUEST.
(1) INITIAL ADVANCE. Not later than 11:00 a.m., Houston time, one
(1) Business Day before the Closing Date, the Borrower shall request
the Initial Advance by notifying the Administrative Agent by
telephone, fax (or electronic communication, if arrangements for doing
so have been approved by the Administrative Agent), and shall confirm
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such request by delivering to the Administrative Agent and the Lenders
a written Borrowing Request in substantially the form of EXHIBIT B and
signed by the Borrower. Promptly following receipt of the Borrowing
Request in accordance with this SECTION 2.3(A)(1), the Administrative
Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made.
(2) BUENA VISTA ADVANCE. Upon satisfaction of the conditions
under SECTION 3.2, the Borrower shall request the Buena Vista Advance
by notifying the Administrative Agent by telephone, fax (or electronic
communication, if arrangements for doing so have been approved by the
Administrative Agent), and shall confirm such request by delivering to
the Administrative Agent and the Lenders a written Borrowing Request
in substantially the form of EXHIBIT B and signed by the Borrower.
Promptly following receipt of the Borrowing Request in accordance with
this SECTION 2.3(A)(2), the Administrative Agent shall advise each
Lender of the details thereof and of the amount of such Lender's Loan
to be made.
(b) FUNDING.
(1) FUNDING BY LENDERS. Each Lender shall make its Loan on the
Closing Date and the date specified for the Buena Vista Advance by
wire transfer of immediately available funds by noon, Houston, Texas
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
Borrower's account designated by the Borrower in the Borrowing
Request.
(2) PRESUMPTION OF FUNDING BY THE LENDERS. Unless the
Administrative Agent shall have received notice from a Lender prior to
the Closing Date that such Lender will not make available to the
Administrative Agent such Lender's Loan, the Administrative Agent may
assume that such Lender has made its Loan available on such date in
accordance with SECTION 2.3(B)(1) 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 Loan available to the
Administrative Agent, then the applicable Lender and the Borrower
agrees 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 Rate and
a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation or (ii) in the case
of the Borrower, the Facility Rate. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such
Lender's Loan.
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2.4 REPAYMENT PROVISIONS. All outstanding principal Debt evidenced by the
Notes, accrued but unpaid interest thereon and expenses due and payable
hereunder, if not sooner paid, shall be repayable upon the Maturity Date.
2.5 INTEREST RATES, PAYMENT. Principal amounts of Loans outstanding under
the Notes shall bear interest at the lesser of (a) the Facility Rate, calculated
on the basis of a year of three hundred sixty (360) days, or (b) the Highest
Lawful Rate, calculated on the basis of a year of three hundred sixty-five (365)
or three hundred sixty-six (366) days, as the case may be, and if no Highest
Lawful Rate exists, all outstanding Loans under the Notes shall bear interest at
the Facility Rate, calculated on the basis of a year of three hundred sixty
(360) days. Interest payable hereunder shall be due and payable, in arrears, on
the last day of each month during the term hereof commencing August 31, 2009.
If an Event of Default shall exist, principal amounts outstanding under
the Notes and, to the extent permitted by applicable Law, any interest payment
on the Loans or any fees or other amounts owed hereunder, shall bear interest
(including post-petition interest in any proceeding under the Bankruptcy Code or
other applicable Bankruptcy Laws) from the date of such Event of Default (if
such Event of Default is not cured on or prior to the expiration of any right to
cure provided under the Loan Documents) at the lesser of (a) the Default Rate,
calculated on the basis of a year of three hundred sixty (360) days, or (b) the
Highest Lawful Rate, calculated on the basis of a year of three hundred
sixty-five (365) or three hundred sixty-six (366) days, as the case may be, and
if no Highest Lawful Rate exists, principal amounts outstanding under the Notes
shall bear interest at the Default Rate, calculated on the basis of a year of
three hundred sixty (360) days.
2.6 GENERAL PROVISIONS RELATING TO INTEREST. It is the intention of the
parties hereto to comply strictly with the applicable usury Laws as in effect
from time to time; and in this connection, there shall never be taken, reserved,
contracted for, collected, charged or received on any Loan or any other
Obligation interest in excess of that which would accrue at the Highest Lawful
Rate. To the extent that the interest rate Laws of the State of Texas are
applicable to the Loans, for purposes of Chapter 303 of the Texas Finance Code,
as amended, the Borrower agrees that the Highest Lawful Rate shall be the
"weekly rate ceiling" as defined in such chapter, provided that the Lender may
also rely, to the extent permitted by applicable Laws, on alternative maximum
rates of interest under such other applicable Laws, if greater.
If under any circumstances the aggregate amount paid on the Obligations
includes amounts that are by Law deemed to be interest which exceed the Highest
Lawful Rate (the "excess interest"), the Borrower stipulates that such payment
and collection will have been and will be deemed to have been, to the fullest
extent permitted by applicable Laws, the result of mathematical error on the
part of the Borrower, the Administrative Agent and the Lenders, and the
Administrative Agent and the Lenders shall promptly credit the amount of such
excess interest on the principal amount of the outstanding Obligations, or if
the principal amount of the Obligations shall have been paid in full, refund the
excess interest to the Borrower. In the event that the maturity of the Notes is
accelerated by reason of an election of the Lenders resulting from any Event of
Default or by reason of operation of SECTION 7.2(A), or in the event of any
prepayment, then such consideration that constitutes interest under Laws
applicable to the Administrative Agent or the Lenders may never exceed the
Highest Lawful Rate, and excess interest, if any, provided for in the Notes,
this Agreement or otherwise shall be cancelled automatically by the
Administrative Agent or the Lenders as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by the Administrative
14
Agent or the Lenders on the principal amount of the Obligations, or if the
principal amount of the Obligations shall have been paid in full, refunded by
the Administrative Agent or the Lenders to the Borrower.
All sums paid, or agreed to be paid, to the Administrative Agent or the
Lenders for the use, forbearance, and detention of the proceeds of the Loans
shall, to the extent permitted by applicable Law, be amortized, prorated,
allocated, and spread throughout the full term of the Obligations until paid in
full so that the actual rate of interest is uniform, but does not exceed the
Highest Lawful Rate, throughout the full term hereof.
2.7 FEES.
(a) FACILITY FEE. The Borrower agrees to pay to the Administrative
Agent a fee equal to 3% of the Commitment Amount; such fee shall be fully
earned and payable on the Closing Date.
(b) TERMINATION FEE. The Borrower agrees to pay to the Administrative
Agent a fee equal to 3% of the Commitment Amount; such fee shall be payable
upon repayment of the Facility in full and shall be credited against any
facility fees owing to the Lenders incurred under the Senior Secured
Advancing Term Loan.
2.8 METHOD OF PAYMENT; PRO RATA TREATMENT. All payments of principal,
interest, and other amounts to be made by the Borrower under this Agreement and
the other Loan Documents shall be made to the Administrative Agent at the
Administrative Agent's Payment Office for the account of the Lenders in dollars
and in immediately available funds, without setoff, deduction, or counterclaim,
not later than 1:00 P.M. New York, New York time on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day). Each
payment received by the Administrative Agent under this Agreement or any other
Loan Document for the account of a Lender shall be paid promptly to such Lender
in immediately available funds. Whenever any payment under this Agreement or any
other Loan Document shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of the
payment of interest.
Each payment and prepayment of principal or interest under the Notes
shall be made to the Administrative Agent for the account of the Lenders pro
rata in accordance with the respective unpaid principal amounts evidenced by the
Notes.
2.9 INCREASED COSTS.
(a) If any Lender determines that any Change in Law regarding capital
requirements has the effect of reducing the rate of return on such Lender's
capital or on the capital of such Lender's holding company, if any, as a
consequence of this Agreement or the Loan made by such Lender to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such
Lender's policies and the policies of such Lender's holding company with
respect to capital adequacy), then from time to time the Borrower will pay
to such Lender such additional amount or amounts as will compensate such
Lender or such Lender's holding company for any such reduction suffered.
15
(b) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may
be, as specified in SECTION 2.9(A) and reasonably detailed calculations
therefor 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 30 days after receipt thereof.
(c) Failure or delay on the part of any Lender to demand compensation
pursuant to this SECTION 2.9 shall not constitute a waiver of such Lender's
right to demand such compensation.
2.10 TAXES
(a) Any and all payments by or on account of any obligation of the
Borrower under any Loan Document shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that
if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this SECTION 2.10),
the Administrative Agent or Lender (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Tribunal in accordance with
applicable law.
(b) The Borrower shall pay any Other Taxes to the relevant Tribunal in
accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and each
Lender, within ten (10) days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative
Agent or such Lender as the case may be, on or with respect to any payment
by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this SECTION 2.10) 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 Tribunal. A certificate of the Administrative
Agent or a Lender as to the amount of such payment or liability under this
SECTION 2.10 and reasonably detailed calculations therefor shall be
delivered to the Borrower and shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Tribunal, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt
issued by such Tribunal evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
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ARTICLE 3
CONDITIONS
3.1 CONDITIONS PRECEDENT TO EXECUTION AND MAKING OF INITIAL ADVANCE. The
execution and delivery of this Agreement by the Lenders and the Administrative
Agent and the making of the Initial Advance pursuant to SECTION 2.1 is subject
to the fulfillment of the following conditions precedent, with all documents to
be delivered to the Administrative Agent (with sufficient copies for each
Lender) to be in form and substance satisfactory to the Administrative Agent:
(a) The Administrative Agent shall have received the following
documents, appropriately executed and acknowledged by all appropriate
parties and in multiple counterparts as requested by the Administrative
Agent:
(1) this Agreement executed by each party hereto;
(2) Note executed by the Borrower payable to each Lender in the
principal amount of their respective Commitments;
(3) a certificate of the Secretary of Borrower certifying as of
the Closing Date: (i) resolutions of the board of directors of
Borrower, authorizing the transactions contemplated hereby; (ii) the
names and genuine signatures of the officers of Borrower authorized to
execute, deliver and perform, as applicable, this Note, the Security
Documents and all other Loan Documents; (iii) the Organizational
Documents of Borrower as in effect on the Closing Date; (iv) the good
standing and existence certificates for Borrower, from Borrower's
state of incorporation, formation or organization, as applicable,
evidencing Borrower's qualification to do business in such state as of
a date satisfactory to Administrative Agent; and (v) as applicable,
certificate(s) of authority for Borrower from foreign states wherein
Borrower conducts business, evidencing Borrower's qualifications to do
business in such state as of a date satisfactory to Administrative
Agent;
(4) the following documents creating, evidencing and perfecting
Liens in favor of the Administrative Agent to secure the Obligations:
(i) a First Lien Act of Mortgage, Assignment of Production,
Security Agreement, Fixture Filing and Financing Statement from
Borrower in favor of Administrative Agent, as agent for the
Lenders, covering the Mortgaged Properties located in the State
of Louisiana;
(ii) a Financing Statement from the Borrower covering
accounts from the sale of oil and gas produced from such Oil and
17
Gas Properties and equipment and other personal Property
associated therewith;
(iii) Letters in Lieu of transfer orders, in the form of
EXHIBIT E hereto, directed to each party remitting proceeds from
the sale of production from such Oil and Gas Properties;
(5) the Arrangement Letter;
and
(6) Such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Administrative
Agent or the Lenders may reasonably request in compliance with or to
accomplish the terms and provisions of any of the Loan Documents;
(b) The representations and warranties contained in ARTICLE 4 shall be
true and correct in all material respects on the date of execution of this
Agreement;
(c) No Event of Default or Unmatured Event of Default shall have
occurred and be continuing;
(d) The Administrative Agent shall have received copies of the
Borrower's most recent Financial Statements, in form and substance
acceptable to the Administrative Agent in its sole discretion;
(e) The Administrative Agent shall have received an insurance
certificate as set forth in SECTION 5.18;
(f) The Administrative Agent shall be satisfied with the Borrower's
hedging program for Derivative Contracts;
(g) Administrative Agent shall have received (i) the fees due on the
Closing Date under SECTION 2.7, (ii) any such costs, fees and expenses due
under SECTION 9.3 and (iii) estimated fees and expenses associated with the
filing of the Security Documents;
(h) The Administrative Agent shall have received an opinion of counsel
and an opinion of Louisiana local counsel to the Borrower in form and
substance acceptable to the Administrative Agent at its sole discretion;
(i) The Administrative Agent shall be satisfied with the environmental
condition, material contracts related to, and Borrower's title to its Oil
and Gas Properties;
(j) The Administrative Agent shall be satisfied with background and
credit checks on the Borrower and its executive officers;
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[(k) The Administrative Agent shall have received copies of current
AFE's for the Xxxxx 15-1 Well and Xxxxxxxxx-Xxxxxxxx 16-1 Well;] and
(l) All legal matters incident to the execution of this Agreement
shall be satisfactory to Xxxxxx and Xxxxx, LLP, special counsel for the
Administrative Agent.
3.2 CONDITIONS TO BUENA VISTA ADVANCE. The obligation of the Lenders to
make the Buena Vista Advance pursuant to SECTION 2.1 is subject to fulfillment
of the following further conditions precedent:
(a) The representations and warranties contained in ARTICLE 4 shall be
true and correct in all material respects as of the date of the Buena Vista
Advance;
(b) No Event of Default or Unmatured Event of Default shall have
occurred and be continuing or will have occurred at the completion of
making the Buena Vista Advance;
(c) No Material Adverse Effect shall have occurred since the Closing
Date;
(d) The Administrative Agent shall have received a Borrowing Request
as required under SECTION 2.3(A)(2);
(e) The Administrative Agent shall have received, in form and
substance satisfactory to the Administrative Agent evidence of Borrower's
Marketable Title to the Buena Vista Prospect;
(f) The Administrative Agent shall have received Security Documents
covering Borrower's interest in the Buena Vista Prospect and opinion of
Mississippi counsel as to the enforceability of the Security Documents
under Mississippi law;
[(g) The Administrative Agent shall have received evidence of
Borrower's authority to do business in the state of Mississippi;]
[(h) The Administrative Agent shall have received AFE's for the Buena
Vista Prospect xxxxx;]
(i) All legal matters incident to the consummation of the Buena Vista
Advance shall be satisfactory to Xxxxxx and Xxxxx, LLP or special counsel
for the Administrative Agent.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the Loans
pursuant to SECTION 2.1, the Borrower represents and warrants to the
Administrative Agent and the Lenders (which representations and warranties shall
survive the delivery of the Notes and the making of the Loans) that:
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4.1 EXISTENCE AND GOOD STANDING. The Borrower is a corporation, duly
formed, legally existing and in good standing under the Laws of the jurisdiction
of its formation and is duly qualified and in good standing as a foreign
corporation in all jurisdictions where the failure to be so qualified could
reasonably be expected to result in a Material Adverse Effect.
4.2 DUE AUTHORIZATION. The execution and delivery by the Borrower of this
Agreement and the borrowings hereunder, the execution and delivery by the
Borrower of the Notes and the other Loan Documents, the repayment of the Loans
and interest and fees provided in the Notes and this Agreement and the
performance of all Obligations of the Borrower under this Agreement and the
other Loan Documents, are within the power of the Borrower, have been duly
authorized by all necessary company action on behalf of the Borrower and do not
(a) require the consent of any Tribunal or other Person which has not been
obtained, (b) contravene or conflict with any provision of applicable Law or the
certificate of formation or company agreement of the Borrower, (c) contravene,
conflict with or result in a default under any indenture, instrument, contract
or other agreement to which the Borrower is a party or by which its Properties
may be presently bound or encumbered, or (d) result in or require the creation
or imposition of any Lien upon any of the Property of the Borrower, other than
Permitted Liens.
4.3 VALID AND BINDING OBLIGATIONS. This Agreement and the other Loan
Documents to which it is a party constitute valid and binding obligations of the
Borrower, enforceable in accordance with their respective terms, except as
limited by Debtor Relief Laws and general principles of equity.
4.4 SCOPE AND ACCURACY OF FINANCIAL STATEMENTS. The Financial Statements of
the Borrower, which have been delivered to the Lender, have been prepared in
accordance with GAAP and fairly and accurately present the financial condition
and the results of the operations thereof in all material respects, as of the
dates and for the periods stated therein.
4.5 LIABILITIES AND LITIGATION. Except as set forth on the Financial
Statements of the Borrower submitted to Administrative Agent prior to Closing,
the Borrower does not have any material liabilities of any nature, direct or
contingent; and the Borrower is not in default with respect to any such material
liabilities or any material agreements by which it is bound. There is no
judgment against the Borrower, nor is there any Litigation or other action of
any nature pending before any Tribunal or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of its Property.
4.6 TITLE TO ASSETS. The Borrower has Marketable Title to all of the
Mortgaged Properties set forth on SCHEDULE 4.6.
4.7 RESERVED.
4.8 RESERVED.
4.9 GAS IMBALANCES. There are no gas imbalances, take or pay or other
prepayments with respect to the Mortgaged Properties which would require the
Borrower to deliver oil and gas produced from such Mortgaged Properties at some
future time without then or thereafter receiving full payment therefor.
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4.10 AUTHORIZATIONS AND CONSENTS. No authorization, consent, approval,
exemption, franchise, permit or license of, or filing (except for filings
required to perfect and maintain perfection of the Liens created by the Security
Documents) with, any Tribunal or any third Person is required to authorize, or
is otherwise required in connection with, the valid execution, delivery and
performance by the Borrower of this Agreement, the other Loan Documents to which
it is a party or any other agreement contemplated hereby or the repayment by the
Borrower of the Obligations.
4.11 COMPLIANCE WITH LAWS. Neither the business nor any of the activities
of the Borrower as presently conducted violates any applicable Law, the result
of which violation would have a Material Adverse Effect. The Borrower, and to
the extent the Borrower is not the operator of any of its Oil and Gas
Properties, the operator, has confirmed that it or the operator possesses all
licenses, approvals, registrations, permits and other authorizations necessary
to enable it to carry on its business in all material respects as now conducted.
All such licenses, approvals, registrations, permits and other authorizations
are in full force and effect. Furthermore, the Borrower does not have any reason
to believe that it will be unable to obtain the renewal of any such licenses,
approvals, registrations, permits and other authorizations in due course.
4.12 PROPER FILING OF TAX RETURNS AND PAYMENT OF TAXES DUE. The Borrower
has duly and properly filed all Tax returns which are required to be filed and
has paid all Taxes due pursuant to such returns or pursuant to any assessment
received, except such Taxes, if any, as are being Contested in Good Faith. The
charges and reserves on the books of the Borrower with respect to any Taxes are
adequate, and the Borrower does not owe any deficiency or additional assessment
in a material amount in connection with Taxes.
4.13 ERISA COMPLIANCE. The Borrower does not sponsor or maintain a Plan or
Pension Plan as defined under the provisions of ERISA, the Code and any other
Federal or state law.
4.14 INVESTMENT COMPANY ACT COMPLIANCE. The Borrower is not an "investment
company" or directly or indirectly controlled by or acting on behalf of any
Person which is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
4.15 LIEN PRIORITY. The Liens created in favor of the Administrative Agent
under the Security Documents constitute and, until released or otherwise
terminated in accordance with the Loan Documents, shall remain first priority
Liens covering the Collateral securing the Obligations, subject only to
Permitted Liens.
4.16 USE OF PROCEEDS. The proceeds of any Loan are not and will not be used
directly or indirectly for the purpose of purchasing or carrying, or for the
purpose of extending credit to others for the purpose of purchasing or carrying,
any "margin stock" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System, as amended, and in violation of
Regulations T, U or X.
4.17 FULL DISCLOSURE. All of the Loan Documents and all written statements
furnished by or on behalf of the Borrower in connection with the consummation of
the transactions contemplated by this Agreement, when taken together, do not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained herein or therein not misleading as
of the date made or deemed made.
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4.18 PLACES OF BUSINESS. The chief executive office and principal place of
business of the Borrower is 00000 XX 000, Xxxxx 000, Xxxxxxx, XX 00000. All
records of the Borrower are maintained at such office.
4.19 IDENTIFICATION NUMBERS. The Borrower's Federal employer identification
number is 00-0000000 and its organizational identification number issued by the
State of Nevada is E0358282006-3.
4.20 SUBSIDIARIES. The Borrower currently has no Subsidiaries.
4.21 NO DEFAULT. No Event of Default exists or would be reasonably expected
to result from the incurring of any Obligations by the Borrower.
ARTICLE 5
AFFIRMATIVE COVENANTS
So long as any Debt evidenced by the Notes remains unpaid or the Lenders
remain obligated to make Advances, and in the absence of written consent of the
Administrative Agent to the contrary:
5.1 MAINTENANCE AND ACCESS TO RECORDS. The Borrower will keep adequate
records, in accordance with GAAP, of all of its transactions so that at any
time, and from time to time, its true and complete financial condition may be
readily determined. At any Lender's or the Administrative Agent's reasonable
request, the Borrower will make all such records available during normal
business hours for inspection and permit any Lender or the Administrative Agent
to make and take away copies thereof.
5.2 QUARTERLY FINANCIAL STATEMENTS. The Borrower will deliver to the
Administrative Agent with sufficient copies for the Lenders, as soon as
available but in no event later than sixty (60) days after the end of each
fiscal quarter of each fiscal year of the Borrower, quarterly unaudited
Financial Statements of the Borrower reflecting the financial condition and
results of operations of the Borrower as at the end of such period and from the
beginning of such year to the end of such quarter, as applicable. Such Financial
Statements shall be certified by a Responsible Officer as having been prepared
in accordance with GAAP and presenting the financial condition and the results
of the operations of the Borrower subject to changes resulting from year-end
audit adjustments. Such Financial Statements shall also be accompanied by a
certificate of a Responsible Officer showing, in reasonable detail, the
Borrower's Derivative Contract position.
5.3 ANNUAL FINANCIAL STATEMENTS. The Borrower will deliver to the
Administrative Agent with sufficient copies for the Lenders, as soon as
available but in no event later than one hundred twenty (120) days after the
close of each fiscal year of the Borrower, annual audited Financial Statements
of the Borrower reflecting the financial condition of the Borrower, together
with a report and opinion issued by a nationally recognized firm of independent
certified public accountants or another firm of independent certified public
accountants reasonably satisfactory to the Administrative Agent, that such
Financial Statements fairly present the financial position and results of
operations of the Borrower for the periods indicated in accordance with GAAP.
Such Financial Statements shall also be accompanied by a certificate of a
Responsible Officer showing, in reasonable detail, the Borrower's Derivative
Contract position.
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5.4 COMPLIANCE CERTIFICATES. The Borrower will deliver to the
Administrative Agent with sufficient copies for the Lenders, with each Financial
Statement delivered pursuant to SECTION 5.2 or 5.3 a duly executed Compliance
Certificate.
5.5 RESERVED.
5.6 RESERVED
5.7 SALES, PRODUCTION AND OPERATIONS REPORTS. The Borrower will deliver to
the Administrative Agent with sufficient copies for the Lenders, as soon as
available and in any event within thirty (30) days after the end of each
calendar month, commencing with the month ending July 2009, a report
summarizing, as requested by the Administrative Agent, (a) the gross volume of
sales and actual production during such month from all of the Borrower's Oil and
Gas Properties and current prices being received for such production, (b) the
related severance, gross production, occupation, excise, sales, recording, ad
valorem, gathering and other similar Taxes, if any, deducted from gross proceeds
during such month, (c) production imbalances, (d) leasehold operating expenses
and (e) Drilling and Completion Costs expenditures attributable thereto and
incurred during such month.
During any period in which the Borrower is participating in a Well being
drilled in the AMI, the Borrower will promptly deliver to the Administrative
Agent by e-mail daily drilling reports. Upon the request of the Administrative
Agent, the Borrower will promptly deliver to the Administrative Agent a report,
in form reasonably acceptable to the Administrative Agent, summarizing
operations conducted on the Mortgaged Properties for the time period requested
by the Administrative Agent.
5.8 LIENS ON NEWLY ACQUIRED OIL AND GAS PROPERTIES. As new Oil and Gas
Properties are acquired by the Borrower within the AMI, from time to time, the
Borrower shall execute and deliver, as security for the payment of the Notes and
the performance of the Obligations of the Borrower under this Agreement, such
Security Documents (each substantially in the form of the similar instruments
given pursuant to SECTIONS 3.1(A)(4)(I) in connection with the Mortgaged
Properties) as necessary to create a first priority Lien (subject to Permitted
Liens) on all of Borrower's Oil and Gas Mortgaged Properties not already
encumbered by the Security Documents.
5.9 TITLE OPINIONS. Upon the request of the Administrative Agent, the
Borrower shall have prepared, with sufficient copies delivered to the
Administrative Agent (i) with respect to each drillsite, division order title
opinions, drill site title opinions, or other title information, and (ii) with
respect to each offsite acreage site, such title information as is in the
Borrower's possession, each in form reasonably satisfactory to the
Administrative Agent, evidencing the Borrower's Marketable Title to any of the
Mortgaged Properties.
5.10 STATEMENT OF MATERIAL ADVERSE EFFECT. The Borrower will deliver to the
Administrative Agent with sufficient copies for the Lenders, promptly upon any
Responsible Officer having knowledge of any Unmatured Event of Default, Event of
Default or event or condition (except for events or conditions as to the economy
of the United States as a whole or the energy industry in the United States
generally) causing, or that could reasonably be expected to cause, a Material
Adverse Effect, a statement of a Responsible Officer, setting forth the
Unmatured Event of Default, Event of Default or such event or condition causing,
or that could reasonably be expected to cause, a Material Adverse Effect and the
steps being taken with respect thereto.
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5.11 TITLE DEFECTS. Other than Permitted Liens, the Borrower will clear any
title defects to the Mortgaged Properties as requested by the Administrative
Agent, and, in the event any such title defects are not cured in a timely
manner, pay all related costs and fees incurred by the Administrative Agent to
do so.
5.12 ADDITIONAL INFORMATION. The Borrower will furnish to the
Administrative Agent with sufficient copies for the Lenders, promptly upon the
Administrative Agent's request from time to time, such additional financial or
other information concerning the assets, liabilities, operations and
transactions of the Borrower as the Administrative Agent may reasonably request.
5.13 COMPLIANCE WITH LAWS AND PAYMENT OF TAXES. The Borrower will comply in
all material respects with all Laws and pay all Taxes, claims for labor,
supplies, rent and other obligations which, if unpaid, might become a Lien
against any of its Property, except any of the foregoing being Contested in Good
Faith.
5.14 MAINTENANCE OF EXISTENCE AND GOOD STANDING. The Borrower will maintain
its corporate existence or qualification and good standing in its jurisdiction
of formation and in all jurisdictions wherein the Property owned or business
conducted makes such qualification necessary, except where the failure to so
qualify could not reasonably to be expected to have a Material Adverse Effect.
5.15 FURTHER ASSURANCES. The Borrower will promptly cure any defects,
errors or omissions in the execution and delivery of the Loan Documents and,
upon notice, take such other action and immediately execute and deliver to the
Administrative Agent all such other and further instruments as may be reasonably
required or desired by the Administrative Agent from time to time in compliance
with the covenants and agreements made in this Agreement and the other Loan
Documents, including, without limitation, to create, perfect and maintain Liens
on the Collateral and all other Property intended as security for the
Obligations.
5.16 RESERVED
5.17 MAINTENANCE OF TANGIBLE PROPERTY. The Borrower will maintain, or to
the extent that the right of operating is vested in others, will exercise
commercially reasonable efforts to require the operator to maintain, the
Mortgaged Properties in good repair and working order and make all necessary
replacements thereof and operate the Mortgaged Properties in a good and
workmanlike manner.
5.18 MAINTENANCE OF INSURANCE. The Borrower will maintain insurance with
respect to its Oil and Gas Properties and business against such liabilities,
casualties, risks and contingencies and in such amounts as are customarily
maintained in the industry in the same or similar locations and reasonably
satisfactory to the Administrative Agent. Such insurance shall name "Guggenheim
Corporate Funding, LLC, as Administrative Agent for the Lenders" as an
additional insured and loss payee with respect to the Mortgaged Properties and
the insurer will give at least 30 days prior notice of any cancellation to the
Administrative Agent. The Borrower will furnish to the Administrative Agent, on
the Closing Date and annually thereafter, certificates evidencing such
insurance. As any new Mortgaged Properties are added by the Borrower hereunder,
the Borrower shall cause its insurance carrier to issue such amendment or
supplemental certificate evidencing compliance with the terms hereof.
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5.19 RIGHT OF INSPECTION. The Borrower will permit any authorized
representative of the Administrative Agent or any Lender, upon prior written
notice to the Borrower, to visit and inspect any Collateral at such reasonable
times during normal business hours and as often as the Administrative Agent or
any Lender may request; provided however, that such inspection shall be at the
sole risk of the Administrative Agent and the Administrative Agent and the
Lenders shall indemnify, defend and hold the Borrower harmless from any claims
against or losses suffered by the Borrower arising from any injury suffered by
such authorized representative except to the extent such losses are caused by
the gross negligence or willful misconduct of the Borrower or its Affiliates.
5.20 NOTICE. The Borrower will, upon obtaining knowledge of any of the
following, immediately notify the Administrative Agent of: (a) the receipt of
any notice from, or the taking of any action by, the holder of any promissory
note or other evidence of Debt of the Borrower with respect to a claimed
default, together with a statement specifying the notice given or other action
taken by such holder and what action the Borrower is taking or proposes to take
with respect thereto; (b) any legal, judicial or regulatory proceedings
affecting the Borrower in which the amount involved is material and is not
covered by insurance or that could, if adversely determined, reasonably be
expected to cause a Material Adverse Effect; (c) any dispute between the
Borrower and any Tribunal or any Person that could, if adversely determined,
reasonably be expected to cause a Material Adverse Effect; (d) information that
in any way relates to or affects the filing of any financing statement or other
security instrument for the purpose of perfecting or continuing a Lien on the
Collateral; and (e) any event that materially and adversely affects the
Collateral or the Rights of the Administrative Agent or the Lenders with respect
to such Collateral.
5.21 COLLATERAL PROTECTION. The Borrower will purchase and maintain in
effect hydrocarbon Derivative Contract hedging contracts satisfactory to the
Administrative Agent to include during the term of this Agreement Derivative
Contracts covering at least eighty percent (80%) of the estimated production
from Borrower's proved producing Oil and Gas Properties on a rolling two (2)
year basis at prices and with counterparties satisfactory to Administrative
Agent.
5.22 ERISA INFORMATION AND COMPLIANCE. The Borrower will furnish to the
Lender (i) promptly after the filing thereof with the United States Secretary of
Labor, the Internal Revenue Service or the PBGC, copies of each annual and other
report with respect to each Plan or any trust created thereunder, (ii)
immediately upon becoming aware of the occurrence of any ERISA Event or of any
"PROHIBITED TRANSACTION," as described in section 406 of ERISA or in section
4975 of the Code, in connection with any Plan or any trust created thereunder, a
written notice signed by a Responsible Officer of the Borrower specifying the
nature thereof, what action the Borrower 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
(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.
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5.23 USE OF PROCEEDS. Proceeds from the Loans shall be used solely to fund
the obligations described under SECTION 2.1.
5.24 RIGHT OF LAST OFFER.
(a) If Borrower or any of its Affiliates requires a new loan, credit
arrangement or third party financing, in order to enter into a
participation agreement, joint venture, or other contract to develop or
acquire any interest or rights with respect to lands and minerals located
within the AMI (a "New Project") within one (1) year from the Closing Date
of this Facility, Borrower shall or shall cause such Affiliate seeking any
financing arrangements from any third parties, to make a written
presentation ("Presentation", and the date when presented being the
"Presentation Date") detailing the particulars of the New Project to the
Lenders, including such information as it set forth in SECTION 5.24(B)
below, in order for the Lenders to evaluate the New Project.
(b) The Presentation shall include technical data and commercial terms
including, by way of example but not of limitation, third party reserve
reports and actual costs, expenses and obligations incurred, or to be
incurred, in connection with the New Project and the terms of any third
party proposed financing arrangements, with respect thereto.
(c) The Lenders shall thereafter have the right to match the terms of
the proposed third-party financing for the New Project, which such terms
shall be no less favorable than the terms set forth in the third party
financing. The right of the Lenders to propose financing shall last for a
period of thirty (30) days following the Presentation Date (the "Exclusive
Period"), during which time the parties agree to use commercially
reasonable efforts to negotiate the terms and conditions for financing the
New Project. During the Exclusive Period, Borrower shall not and shall not
permit any such Affiliate to solicit, discuss, or negotiate any financing
arrangement with any third party. Assuming the Lenders determine that the
terms of the new financing are satisfactory, and assuming that such terms
are no less favorable to a Borrower than the terms set forth in the third
party financing then Borrower shall, or Borrower shall cause such Affiliate
to enter into the new financing with the Lenders on or prior to the end of
the Exclusive Period.
(d) If the Lenders shall have failed to propose financing terms equal
to or more favorable than the terms set forth in the third party financing
to Borrower, or shall have rescinded or rejected the terms for financing
the New Project within the Exclusive Period, then the rights of the Lenders
with respect to proposing financing for such New Project shall terminate
provided this right of last offer shall remain in effect and shall be
binding for any other New Projects.
ARTICLE 6
NEGATIVE COVENANTS
So long as any Debt evidenced by the Notes remains unpaid or the Lenders
remain obligated to make Advances, and in absence of written consent of the
Lenders to the contrary:
6.1 OTHER DEBT. The Borrower will not incur, create, assume or suffer to
exist any Debt except: (a) Loans or other Obligations hereunder, (b) unsecured
current accounts payable incurred in the ordinary course of business, provided
such accounts are paid within sixty (60) days of the due date or are being
Contested in Good Faith, and (c) pursuant to Derivative Contracts required or
permitted by this Agreement.
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6.2 DERIVATIVE CONTRACTS. The Borrower shall not enter into or in any
manner be liable under any Derivative Contract except:
(a) Derivative Contracts as required under SECTION 5.21; and
(b) Derivative Contracts entered into with the purpose and effect of
fixing prices on hydrocarbons attributable to the Mortgaged Properties and
expected to be produced by the Borrower provided that at all times: (i) the
aggregate of all such Derivative Contracts limits or reduces such market
price risk for a term approved by Administrative Agent; (ii) no such
contract, when aggregated with all Derivative Contracts permitted under
this SECTION 6.2 and/or required under SECTION 5.21 requires such Person to
deliver more than 85% of total estimated hydrocarbons to be produced during
any calendar month from the Mortgaged Properties and (iii) each such
contract shall be with any of the Lenders, any Affiliates of the Lenders or
with a counter-party or have a guarantor of the obligation of the
counter-party who, at the time the contract is made, has long-term
obligations rated AA or Aa2 or better, respectively, by Standard & Poor's
Rating Group or Xxxxx'x Investors Service, Inc. (or a successor credit
rating agency).
Any Debt to any Lenders or any Affiliate of the Lenders incurred under any
Derivative Contract shall be treated as an Obligation PARI PASSU and secured pro
rata under the Security Documents with all Obligations otherwise incurred
hereunder or under the other Loan Documents. Borrower covenants and agrees that
the payment on each and all of such Derivative Contracts with any of the Lenders
or their Affiliates is and shall be secured by Liens on the Collateral under the
Security Documents.
6.3 GUARANTY OF PAYMENT OR PERFORMANCE. The Borrower will not guarantee any
contract or otherwise be or become liable in connection with any obligation of
any Person, except that the foregoing restriction shall not apply to performance
guaranties, performance surety or other bonds or endorsements of instruments for
collection, in each case in the ordinary course of business.
6.4 LOANS, ADVANCES OR INVESTMENTS. The Borrower will not make or agree to
make or allow to remain outstanding any Investment, including, without
limitation, any loans or advances or the purchase (for cash or securities) of
all or a substantial part of the Property or capital stock of any Person, except
advances or extensions of credit in the form of accounts receivable incurred in
the ordinary course of business and upon terms common in the industry for such
accounts receivable.
6.5 MORTGAGES OR PLEDGES OF ASSETS. The Borrower will not create, incur,
assume or permit to exist any Lien on any of the Mortgaged Property or Property
within the AMI (now owned or hereafter acquired), except Permitted Liens.
6.6 CANCELLATION OF INSURANCE. The Borrower will not allow any insurance
policy required to be carried hereunder to be terminated or lapse or expire
without provision for adequate renewal or replacement thereof.
6.7 SALES OF PROPERTY. The Borrower will not sell, transfer or otherwise
dispose of, in one or any series of transactions, any of the Mortgaged
Properties except:
(a) for production inventory in the ordinary course of business; and
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(b) for used, surplus, obsolete or worn-out equipment in the ordinary
course of business; and
(c) sales made with the consent of the Administrative Agent and
subject to any conditions with respect thereto.
6.8 DIVIDENDS AND DISTRIBUTIONS. The Borrower will not declare, pay or
make, whether in cash or other Property, any dividend, distribution or return of
capital on, or purchase, redeem or otherwise acquire for value, any of its
shareholders' interests.
6.9 CHANGES IN STRUCTURE. The Borrower will not enter into any transaction
of consolidation, merger or amalgamation; liquidate, wind up or dissolve (or
suffer any liquidation or dissolution); or convey, sell, lease, assign, transfer
or otherwise dispose of all or substantially all (measured in value) of its
Property or business.
6.10 PAYMENT OF ACCOUNTS PAYABLE. The Borrower will not allow any account
payable to be in excess of sixty (60) days past due, except such as are being
Contested in Good Faith.
6.11 TRANSACTIONS WITH AFFILIATES. The Borrower will not directly or
indirectly, enter into any transaction (including the sale, lease or exchange of
Property or the rendering of service) with any of its Affiliates, other than
upon fair and reasonable terms no less favorable than could be obtained in an
arm's length transaction with a Person which was not an Affiliate.
6.12 NATURE OF BUSINESS. The Borrower will not make any material change in
the character of its business as carried on at the date hereof.
6.13 NO SUBSIDIARIES. [The Borrower will not own any Subsidiaries.]
6.14 ERISA COMPLIANCE. To the extent Borrower maintains a Plan, now or in
the future, such Person shall: (a) maintain each Plan in the future in
compliance in all material respects with the applicable provisons of ERISA, the
Code and other Federal or state law; (b) cause each Plan that is qualified under
Section 401(a) of the Code to maintain such qualification; and (c) make all
required contributions to any Plan subject to Section 412 of the Code.
6.15 NEGATIVE PLEDGE AGREEMENTS. The Borrower will not create, incur,
assume or permit to exist any contract, agreement or understanding (other than
this Agreement or the Security Documents) which in any way prohibits or
restricts the granting, conveying, creation or imposition of any Lien on any of
its Property, or which requires the consent of or notice to other Persons in
connection therewith.
6.16 GAS IMBALANCES, TAKE-OR-PAY OR OTHER PREPAYMENTS. The Borrower will
not allow gas imbalances in excess of two percent (2%) of the Borrower's
projected hydrocarbon production from the Mortgaged Properties nor enter into
any, take-or-pay or other prepayments with respect to the Oil and Gas Properties
of the Borrower which would require the Borrower to deliver hydrocarbons
produced on Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor.
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ARTICLE 7
EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an Event of Default:
(a) The Borrower shall fail to pay when due any installment of
principal or interest on the Notes;
(b) Default shall occur in the due observance or performance under
ARTICLE 5 of this Agreement (except for SECTION 5.10), and such default
shall remain unremedied for in excess of fifteen (15) days after the
earlier of (i) notice given by the Administrative Agent or any Lender
(through the Administrative Agent), or (ii) actual knowledge thereof by the
Borrower;
(c) Default shall occur in the due observance or performance of
SECTION 5.10 or ARTICLE 6 of this Agreement;
(d) Any Financial Statement, representation, warranty or certificate
made or furnished by or on behalf of the Borrower to the Administrative
Agent or any Lender in connection with this Agreement or other Loan
Document, or as an inducement to the Lenders to enter into this Agreement,
or in any instrument furnished in compliance with or in reference to this
Agreement or any other Loan Document, shall be materially false, incorrect,
or misleading at or as of the time made;
(e) Default shall be made by the Borrower (as principal or guarantor
or other surety) in payment or performance of any bond, debenture, note or
other evidence of Debt for borrowed money having an outstanding principal
amount in excess of $25,000, or under any credit agreement, loan agreement,
indenture, promissory note, third party Derivative Contract or similar
agreement or instrument executed in connection with any of the foregoing,
and such default shall remain unremedied for in excess of the period of
grace, if any, with respect thereto, with the effect of accelerating the
maturity of any such Debt or establishing a right to accelerate the
maturity of such Debt;
(f) The Borrower shall file a petition seeking relief for itself under
Debtor Relief Laws, or file an answer consenting to, admitting the material
allegations of or otherwise not controverting, or fail timely to controvert
a petition filed against it seeking relief under Debtor Relief Laws;
(g) An order for relief shall be entered against the Borrower under
any Debtor Relief Laws, which order is not stayed, or upon the entry of an
order, judgment or decree by operation of Law or by a court of competent
jurisdiction which is not stayed, ordering relief against the Borrower
under, or approving as properly filed, a petition seeking relief against
the Borrower under the provisions of any Debtor Relief Laws, or appointing
a receiver, liquidator, assignee, sequestrator, trustee or custodian of the
Borrower or of any substantial part of its Property, or ordering the
reorganization, winding up or liquidation of any the Borrower's affairs, or
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upon the expiration of sixty (60) days after the filing of any involuntary
petition against the Borrower seeking any of the relief specified in the
preceding Section or this Section without the petition being dismissed
prior to that time;
(h) The Borrower (i) makes a general assignment for the benefit of its
creditors, (ii) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, sequestrator, trustee or custodian of the
Borrower or any substantial part of its Property, (iii) admits insolvency
or inability to pay its debts generally as such debts become due, (iv)
fails generally to pay its debts as such debts become due, or (v) takes any
action (or an action shall be taken by its managers or the holders of a
majority in interest of its membership interests) looking to the
dissolution or liquidation of the Borrower;
(i) Final judgment for the payment of money in excess of $25,000 shall
be rendered against the Borrower and such judgment shall remain
undischarged for a period of thirty (30) days during which execution shall
not be effectively stayed;
(j) The Security Documents 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, cease to
create a valid Lien of the priority required thereby on any of the
Collateral purported to be covered thereby, or, upon perfection, cease to
be a perfected Lien on any of the Collateral purported to be covered
thereby, or the Borrower or any other Person who may have granted or
purported to grant such Lien shall so state in writing;
(k) A judgment creditor of any Person who is the owner of any of the
Collateral shall obtain possession of any of the Collateral by any means,
including, without limitation, levy, attachment or self help;
(l) The validity or enforceability of any of the Loan Documents shall
be contested by the Borrower or the Borrower shall deny that it has any or
further liability or Obligation under any of the Loan Documents or allege
that any of the Loan Documents shall be construed or enforced other than in
accordance with their terms;
(m) The Borrower shall have concealed, removed, or permitted to be
concealed or removed, any part of its Property with the intent to hinder,
delay or defraud its creditors or any of them, or made or suffered a
transfer of any of its Property which is fraudulent under any Debtor Relief
Laws (except for such transfers in favor of the Lender); or shall have made
any transfer (other than in the ordinary course of business) of its
Property to or for the benefit of a creditor at a time when other creditors
similarly situated have not been paid; or
(n) Xxxxxxx X. Newport or Xxxxxxx Xxxxxx shall cease or fail for any
reason to serve and function in their current capacities as officers of the
Borrower and shall not be succeeded in such position by a person reasonably
acceptable to the Administrative Agent.
7.2 RIGHTS UPON OCCURRENCE OF AN EVENT OF DEFAULT.
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(a) Upon the occurrence of any Event of Default specified in SECTIONS
(F), (G), or (H) of SECTION 7.1, immediately and without notice, (i) all
Obligations evidenced by the Notes shall immediately become due and payable
without presentment, demand, protest, notice of protest or dishonor, notice
of intent to accelerate, notice of acceleration or other notice of any
kind, all of which are expressly waived by the Borrower and (ii) all
obligations of the Lenders to make further advances, under this Agreement,
including, without limitation, the Buena Vista Advance, shall immediately
and automatically cease and terminate unless and until the Lenders shall
reinstate any such obligation in writing.
(b) Upon the occurrence and at any time during the continuance of any
other Event of Default, the Administrative Agent, upon request of the
Majority Lenders, may by notice to the Borrower take either or both of the
following actions: (i) terminate all obligations of the Lenders to make
further Advances, if any, under this Agreement and thereupon all such
obligations shall immediately and automatically cease and terminate unless
and until the Lenders shall reinstate any such obligation in writing and
(ii) declare all Obligations evidenced by the Notes to be immediately due
and payable without presentment, demand, protest, notice of protest or
dishonor, notice of intention to accelerate, notice of acceleration or
other notice of any kind, all of which are expressly waived by the
Borrower.
(c) THE BORROWER ACKNOWLEDGES AND UNDERSTANDS THAT UNDER THE LAWS OF
THE STATE OF TEXAS, UNLESS WAIVED, THE BORROWER HAS THE RIGHT TO NOTICE OF
THE LENDERS' INTENT TO ACCELERATE THE OBLIGATIONS EVIDENCED BY THE NOTES,
THE RIGHT TO NOTICE OF THE ACTUAL ACCELERATION OF THE OBLIGATIONS EVIDENCED
BY THE NOTES, AND THE RIGHT TO PRESENTMENT OF THE NOTES BY THE LENDERS'
DEMAND FOR PAYMENT. THE BORROWER ACKNOWLEDGES THAT IT UNDERSTANDS THAT IT
CAN WAIVE THESE RIGHTS AND BY THE BORROWER'S EXECUTION OF THIS AGREEMENT IT
AGREES TO WAIVE ITS RIGHT TO NOTICE OF INTENT TO ACCELERATE, ITS RIGHT TO
NOTICE OF ACCELERATION, AND ITS RIGHT TO PRESENTMENT OR OTHER DEMAND FOR
PAYMENT.
(d) In addition to the foregoing, upon the occurrence of any Event of
Default, the Administrative Agent and the Lenders may exercise any or all
of the Rights provided in any or all of the Loan Documents.
ARTICLE 8
THE ADMINISTRATIVE AGENT
8.1 APPOINTMENT; POWERS. Each of the Lenders hereby irrevocably (subject to
SECTION 8.6) 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.
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8.2 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, the
Administrative Agent (a) shall not be subject to any fiduciary or other implied
duties, regardless of whether an Unmatured Event of Default or Event of Default
has occurred and is continuing, (b) shall not have any duty to take any
discretionary action or exercise any discretionary powers, except as provided in
SECTION 8.3, and (c) except as expressly set forth herein, shall not have any
duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower that is communicated to or obtained by the
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall be deemed not to have knowledge of any Unmatured
Event of Default or Event of Default unless and until written notice thereof is
given to it by the Borrower or a Lender, and shall not be responsible for or
have any duty to ascertain or inquire into (a) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (b) the contents of any certificate, report or other document
delivered hereunder or under any other Loan Document or in connection herewith
or therewith, (c) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan
Document, (d) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or
document, (e) the satisfaction of any condition set forth in ARTICLE 3 or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to it or as to those conditions precedent specifically required to
be to its satisfaction, (f) the existence, value, perfection or priority of any
collateral security or the financial or other condition of the Borrower or any
other obligor or guarantor, or (g) 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.
8.3 ACTION BY ADMINISTRATIVE AGENT. The Administrative Agent shall not have
any duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated hereby that it 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 9.2) and in all cases it shall be fully
justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Majority
Lenders or the Lenders, as applicable, (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in SECTION
9.2) specifying the action to be taken and (b) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The
instructions as aforesaid and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders. If an Unmatured Event of Default
or Event of Default has occurred and is continuing, then the Administrative
Agent shall take such action with respect to such Unmatured Event of Default or
Event of Default as shall be directed by the requisite Lenders in the written
instructions (with indemnities) described in this SECTION 8.3, 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 Unmatured Event of
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders. In no event, however, shall the Administrative Agent be required to
take any action which exposes the Administrative Agent to personal liability or
which is contrary to this Agreement, the Loan Documents or applicable law. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Majority Lenders or the Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in SECTION 9.2), and otherwise the Administrative
Agent shall not be liable for any action taken or not taken by it hereunder or
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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.
8.4 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 Lenders
hereby waives the right to dispute the Administrative Agent's record of such
statement, except in the case of gross negligence or willful misconduct by the
Administrative Agent. The Administrative Agent may consult with legal counsel,
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.
8.5 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 it. 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 8 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.
8.6 RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT. Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this SECTION 8.6, the Administrative Agent may resign at any time by notifying
the Lenders, and the Borrower, and Administrative Agent may be removed at any
time with or without cause by the Majority Lenders. Upon any such resignation or
removal, the Majority Lenders shall have the right, in consultation with and
upon the approval of the Borrower (so long as no Event of Default has occurred
and is continuing), which approval shall not be unreasonably withheld, to
appoint a successor. If no successor shall have been so appointed by the
Majority Lenders or shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation or removal of
the retiring Administrative Agent, then the retiring Administrative Agent may,
on behalf of the Lenders, appoint a successor Administrative Agent which shall
be a bank with an office in New York, New York, or an Affiliate of any such
bank. Upon the acceptance of its appointment as Administrative Agent hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this ARTICLE 8
and SECTION 9.3 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
8.7 ADMINISTRATIVE AGENT AS A LENDER. Each Person serving as an
Administrative Agent hereunder shall have the same rights and powers in its
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capacity as a Lender as any other Lender and may exercise the same as though it
were not an Administrative Agent, and such Person and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Affiliate thereof as if it were not an Administrative Agent
hereunder.
8.8 NO RELIANCE. Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and each other Loan Document
to which it is a party. Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any other Loan Document, any related
agreement or any document furnished hereunder or thereunder. The Administrative
Agent is not required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Loan Documents or any other
document referred to or provided for herein or to inspect the Property or books
of the Borrower. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower (or any of its Affiliates) which
may come into the possession of the Administrative Agent or any of its
Affiliates. In this regard, each Lender acknowledges that Xxxxxx and Xxxxx, LLP
is acting in this transaction as special counsel to the Administrative Agent
only, except to the extent otherwise expressly stated in any legal opinion or
any Loan Document. Each other party hereto will consult with its own legal
counsel to the extent that it deems necessary in connection with the Loan
Documents and the matters contemplated therein.
8.9 AUTHORITY OF ADMINISTRATIVE AGENT TO RELEASE COLLATERAL AND LIENS. Each
Lender hereby authorizes the Administrative Agent to release any collateral that
is permitted to be sold or released pursuant to the terms of the Loan Documents.
Each Lender hereby authorizes the Administrative Agent to execute and deliver to
the Borrower, at the Borrower's sole cost and expense, any and all releases of
Liens, termination statements, assignments or other documents reasonably
requested by the Borrower in connection with any sale or other disposition of
Property to the extent such sale or other disposition is permitted by the terms
of SECTION 6.7 or is otherwise authorized by the terms of the Loan Documents.
8.10 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of any
Unmatured Event of Default or Event of Default under SECTIONS 7.1(F), (G), or
(H), the Administrative Agent (regardless of whether the principal of any Loan
shall then be due and payable and regardless of whether the Administrative Agent
has made any demand on the Borrower or any guarantor) shall be entitled and
empowered, by intervention in such proceeding or otherwise:
(a) to (i) 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 Debt that is owing and unpaid and (ii) 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, the
Administrative Agent, and its respective agents and counsel and all other
amounts due the Lenders and the Administrative Agent under SECTION 9.3)
allowed in such judicial proceeding; and
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(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same.
Each Lender hereby authorizes any custodian, receiver, assignee, trustee,
conservator, sequestrator or other similar official in any such judicial
proceeding: (a) to make such payments to the Administrative Agent; and (b) if
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 9.3. 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 Debt 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. Each Lender retains its right to file and prove a claim
separately.
8.11 DELIVERY BY ADMINISTRATIVE AGENT. The Administrative Agent shall
promptly provide each Lender copies of all written information, certificates and
notices delivered to the Administrative Agent by or on behalf of the Borrower
pursuant to the terms of this Agreement or any other Loan Document.
ARTICLE 9
MISCELLANEOUS
9.1 NOTICES. Any notice required or permitted to be given under or in
connection with this Agreement or any of the other Loan Documents (except as may
otherwise be expressly required therein) shall be in writing and shall be mailed
by certified mail, return receipt requested, postage prepaid, or sent by telex,
telegram, telecopy, facsimile, electronically by e-mail or other similar form of
rapid transmission confirmed by mailing (by certified mail, return receipt
requested, postage prepaid) written confirmation at substantially the same time
as such rapid transmission, or personally delivered to an officer of the
receiving party. All such communications shall be mailed, sent, delivered, faxed
or e-mailed,
(a) if to the Borrower to:
Mainland Resources, Inc.
00000 XX 000, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Newport
Telephone: (000) 000-0000
Fax: (000) 000-0000
Email: xxxxxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
or to such other address or to such individual's or department's attention as
the Borrower may have furnished the Administrative Agent and the Lenders in
writing.
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(b) if to the Administrative Agent to:
Guggenheim Corporate Funding, LLC
000 X. 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Fund Controller
Telephone: (000) 000-0000
Fax: (000) 000-0000
e-mail: xxxxxxx.xxxxx@xxxxxxxxxxxxxxxxxx.xxx
and
Guggenheim Corporate Funding, LLC
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
e-mail: xxxx.xxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
or to such other address or to such individual's or department's attention as
the Administrative Agent may have furnished the Borrower and the Lenders in
writing;
(c) if to a Lender to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof or to such
other address or to such individual's or department's attention as such
Lender may have furnished the Borrower, the Administrative Agent and the
other Lenders in writing
Any communication so addressed and mailed shall be deemed to be given when
so mailed, and any notice so sent by rapid transmission is acknowledged, and any
communication so delivered in person shall be deemed to be given when receipted
for or actually received by an authorized officer of the Borrower, the
Administrative Agent or a Lender, as the case may be.
9.2 AMENDMENTS AND WAIVERS.
(a) No failure on the part of the Administrative Agent or any Lender
to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege, or any abandonment or
discontinuance of steps to enforce such right, power or privilege, under
any of the Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under any of
the Loan Documents preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies of
the Administrative Agent and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this
Agreement or any other Loan Document or consent to any departure by any
party therefrom shall in any event be effective unless the same shall be
permitted by SECTION 9.2 (B), and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a
Loan shall not be construed as a waiver of any Event of Default, regardless
of whether the Administrative Agent or any Lender may have had notice or
knowledge of such Event of Default at the time.
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(b) Neither this Agreement nor any provision hereof nor any Loan
Document nor any provision thereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by
the Borrower and the Majority Lenders or by the Borrower and the
Administrative Agent with the consent of the Majority Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or reduce the rate of interest thereon, or reduce any
fees payable hereunder, or reduce any other Debt hereunder or under any
other Loan Document, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal
amount of any Loan or any interest thereon, or any fees payable hereunder,
or any other Debt hereunder or under any other Loan Document, or reduce the
amount of, waive or excuse any such payment, or postpone or extend the
Maturity Date without the written consent of each Lender affected thereby,
(iv) change SECTION 2.8 in a manner that would alter the pro rata sharing
of payments required thereby without the written consent of each Lender,
(v) or release any of the collateral (other than as provided in SECTION
8.9), without the written consent of each Lender, or (vi) change any of the
provisions of this SECTION 9.2(B) 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 under any other Loan Documents, without the written consent of
each Lender, provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent hereunder
or under any other Loan Document without the prior written consent of such
Administrative Agent.
9.3 EXPENSES, INDEMNITY; DAMAGE WAIVER.
(a) In connection with the closing of the transactions contemplated by
this Agreement, the Borrower shall pay all reasonable out-of-pocket
expenses incurred by the Administrative Agent, including, without
limitation, the reasonable fees, charges and disbursements of counsel and
other outside consultants for the Administrative Agent in connection with
the preparation, negotiation, execution, and delivery of this Agreement and
the other Loan Documents. On and after the Closing Date, the Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent in the administration of this Agreement and the other
Loan Documents (including without limitation, but for purposes of
illustration only: preparation of amendments, modifications, waivers,
consents related to the provisions hereof, negotiation, documentation and
recordation of supplemental Security Documents and other Loan Documents in
connection with the pledge of Mortgaged Properties as additional Xxxxx are
proposed and drilled with Advances hereunder, review of title information
related thereto, and advice of counsel to the Administrative Agent as to
the rights and duties of the Administrative Agent and the Lenders with
respect thereto) whether or not the transactions contemplated hereby or
thereby shall be consummated and (ii) all costs, expenses, Taxes,
assessments and other charges incurred by the Administrative Agent or any
Lender in connection with any filing, registration, recording or perfection
of any security interest contemplated by this Agreement or any Security
Document or any other document referred to therein. In addition to the
foregoing, the Borrower shall pay, upon the occurrence and continuation of
an Unmatured Event of Default or Event of Default, all out-of-pocket
expenses incurred by the Administrative Agent or any Lender, including the
fees, charges and disbursements of any counsel for the Administrative Agent
or any Lender, in connection with the enforcement or protection of its
rights in connection with this Agreement or any other Loan Document,
including its rights under this SECTION 9.3, or in connection with the
Loans made hereunder, including, without limitation, all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in
respect of such Loans.
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(b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT AND EACH
LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH
PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH INDEMNITEE
HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED
EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR
ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT
OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR
THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE
BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT,
INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii) ANY
INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT
OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR
ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION
THEREWITH, (iv) ANY LOAN OR THE USE OF THE PROCEEDS THEREFROM, (v) ANY
OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF
THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES,
(vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE
PROCEEDS RECEIVED PURSUANT TO THE SECURITY DOCUMENTS, (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
38
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR
PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT
LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT
(SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT
LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNITEES;
PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE
TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED
EXPENSES ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND
NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE, WILFUL
MISCONDUCT OR VIOLATION OF LAW OF SUCH INDEMNITEE.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent under SECTIONS 9.3 (A) or (B),
each Lender severally agrees to pay to the Administrative Agent , as the
case may be, a percentage which is equal the percentage of the outstanding
principal Debt evidenced by the Note executed in favor of such Lender to
the outstanding principal Debt evidenced by all of the Notes (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 the Administrative Agent 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 contemplated
hereby or thereby, any Loan or the use of the proceeds thereof.
(e) All amounts due under this SECTION 9.3 shall be payable promptly
after written demand therefor.
9.4 SURVIVAL OF AGREEMENTS. All representations and warranties of the
Borrower herein or in the other Loan Documents and all covenants and agreements
not fully performed before the effective date or dates of this Agreement or the
other Loan Documents shall survive such date or dates.
9.5 SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that (i) the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this SECTION 9.5. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants (to the extent provided in SECTION
9.5 (C)) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
39
(b) (i)Subject to the conditions set forth in SECTION 9.5(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 or delayed) of the
Borrower, provided that no consent of the Borrower shall be required for an
assignment to a Lender, an Affiliate of a Lender, or, if an Event of
Default has occurred and is continuing, any other assignee.
(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, the amount of the
Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $500,000.00, and the
Commitments of any assigning Lender remaining a party hereto
after giving effect to the assignment shall be at least
$500,000.00, unless, in each case, 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 Acceptance,
together with a processing and recordation fee of $5,000.00
payable by the assigning Lender; and
(D) in the case of an assignment to a CLO, the assigning
Lender shall retain the sole right to approve any amendment,
modification or waiver of any provision of this Agreement,
provided that the Assignment and Acceptance between such Lender
and such CLO may provide that such Lender will not, without the
consent of such CLO, agree to any amendment, modification or
waiver described in the first proviso to SECTION 9.2 that affects
such CLO.
(iii) Subject to SECTION 9.5(B)(IV) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment
and Acceptance, 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 Acceptance, be released
from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease
40
to be a party hereto but shall continue to be entitled to the benefits
of SECTIONS 2.8 and 9.3). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with
this SECTION 9.5 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 9.5 (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 Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name
is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the
processing and recordation fee referred to in SECTION 9.5(B) and any
written consent to such assignment required by SECTION 9.5(B), the
Administrative Agent shall accept such Assignment and Acceptance 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 9.5(B).
(c) (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender's
obligations under this Agreement shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under
this Agreement. Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the
sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or
waiver described in the proviso to SECTION 9.2 that affects such
Participant. In addition such agreement must provide that the Participant
be bound by the provisions of SECTION 9.3. Subject to SECTION 9.5(C)(II),
the Borrower agrees that each Participant shall be entitled to the benefits
41
of SECTIONS 2.8 and 2.10 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to SECTION 9.5(B).
(ii) A Participant shall not be entitled to receive any greater
payment under SECTION 2.8 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 and disclosure to
the Borrower of all facts relevant to such greater payment.
(d) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to
a Federal Reserve Bank, and this SECTION 9.5(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.
9.6 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or any of the other Loan Documents shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other Loan Document and all other terms and provisions
of the Loan Document shall nevertheless remain effective and shall be enforced
to the fullest extent permitted by applicable Law.
9.7 RESERVED.
9.8 WAIVERS. No waiver by the Administrative Agent or any Lender of any of
its Rights under this Agreement, the other Loan Documents or otherwise shall be
considered a waiver of any other or subsequent Right. No course of dealing on
the part of the Administrative Agent or any Lender, its officers, employees,
consultants or agents, nor any failure or delay by the Administrative Agent or
any Lender with respect to exercising any Right under any of the Loan Documents
shall operate as a waiver thereof.
9.9 CUMULATIVE RIGHTS. The Rights of the Administrative Agent and the
Lenders under the Note, this Agreement and each other Loan Document shall be
cumulative, and the exercise or enforcement of any such Right shall not preclude
the exercise or enforcement of any other Right.
9.10 EXHIBITS; CONFLICTS. The exhibits attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for the
purposes stated herein. In the event of any direct conflict between any of the
provisions of such exhibits or any of the other Loan Documents and the
provisions of this Agreement, the provisions of this Agreement shall prevail.
9.11 TITLES OF ARTICLES, SECTIONS AND SUBSECTIONS. All titles or heading to
articles, sections, subsections or other divisions of this Agreement or the
exhibits hereto are only for the convenience of the parties and shall not be
construed to have any effect or meaning with respect to the other content of
such articles, sections, subsections or other divisions, such other content
being controlling as to the agreement between the parties hereto.
42
9.12 JURISDICTION. To the extent any matter with respect to the Notes, this
Agreement or any of the other Loan Documents is not resolved by Arbitration
under SECTION 9.21 below, all actions or proceedings may be instituted in the
courts of the State of Texas, County of Xxxxxx, the United States District Court
for the Southern District of Texas, or elsewhere to the extent that jurisdiction
shall exist apart from the provisions of this SECTION 9.12, as the Majority
Lenders may elect. By execution and delivery of this Agreement, the Borrower
irrevocably and unconditionally submits to the non-exclusive jurisdiction (both
subject matter and personal) of each such court, and irrevocably and
unconditionally waives (a) any objection it may now or hereafter have to the
laying of venue in any of such courts and (b) any claim that any action or
proceeding brought in any of such courts has been brought in an inconvenient
forum. The choice of forum and laying of venue as set forth in this SECTION 9.12
was negotiated in good faith by the Borrower and the Lenders and is a
significant term of the bargain between the Borrower and the Lenders governed by
this Agreement. The Borrower and the Lenders further agree that service of
process, summons, notice of document by U.S. registered mail to the address of
each set forth above shall be effective service of process for any action, suit
or proceeding brought against the other in any such court.
9.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and multiple originals of such counterparts, and it shall not be
necessary that the signatures of all parties hereto be contained on any one
counterpart hereof. Any executed Agreement or any counterpart thereof shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
9.14 EFFECTIVENESS. This Agreement shall not be effective until delivered
to, accepted and executed by the Lenders, the Administrative Agent and the
Borrower.
9.15 DOCUMENTS. Except as expressly provided otherwise herein, all Loan
Documents and any other certificate, agreement or other document provided or to
be provided under the terms hereof shall be in form and substance reasonably
satisfactory to the Lender.
9.16 RIGHTS OF THIRD PERSON. All provisions of this Agreement are imposed
solely and exclusively for the benefit of the Lenders, the Administrative Agent
and the Borrower. No other Person shall have standing to require satisfaction
for such provisions in accordance with their terms or be entitled to assume that
the Lenders or the Administrative Agent will refuse to perform their obligations
hereunder in the absence of strict compliance with any or all thereof, and any
or all of such provisions may be freely waived in whole or in part by the
Lenders or the Administrative Agent at any time if in their sole discretion they
deem it advisable to do so.
9.17 ANNOUNCEMENTS. Each party covenants and agrees with the other that,
subject to applicable law, each party shall promptly advise and consult with the
other and obtain the other's written consent before issuing any press release
with respect to this Agreement or the transactions described herein.
9.18 SURVIVAL OF CERTAIN COVENANTS. The covenants of the Borrower set forth
in SECTION 9.3 shall survive repayment of the Debt for a period of two (2)
years.
9.19 JURY TRIAL WAIVED. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY AGREE THAT THEY SHALL AND HEREBY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM,
43
WHETHER AT LAW OR IN EQUITY, BROUGHT BY ANY OF THEM OR IN ANY MATTER WHATSOEVER
WHICH ARISES OUT OF OR IS IN CONNECTION IN ANY ANYWAY WITH THIS AGREEMENT.
9.20 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES OF
AMERICA AND THE STATE OF TEXAS (EXCEPT TO THE EXTENT THE LOCATION OR NATURE OF
THE COLLATERAL REQUIRES THE APPLICATION OF THE LAWS OF OTHER JURISDICTIONS TO BE
APPLIED AS TO MATTERS OF CREATION, PERFECTION AND PRIORITY OF LIENS AND THE
RIGHTS OF THE LENDER UPON DEFAULT).
9.21 ARBITRATION.
(a) ARBITRATION. Upon the demand of any party, any dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in
accordance with the terms of this Agreement. A "DISPUTE" shall mean any
action, dispute, claim or controversy of any kind, whether in contract or
tort, statutory or common law, legal or equitable, now existing or
hereafter arising under or in connection with, or in any way pertaining to,
any of the Loan Documents, or any past, present or future extensions of
credit and other activities, transactions or obligations of any kind
related directly or indirectly to any of the Loan Documents, including
without limitation, any of the foregoing arising in connection with the
exercise of any self-help, ancillary or other remedies pursuant to any of
the Loan Documents. Any party may by summary proceedings bring an action in
court to compel arbitration of a dispute. Any party who fails or refuses to
submit to arbitration following a lawful demand by any other party shall
bear all costs and expenses incurred by such other party in compelling
arbitration of any dispute.
(b) GOVERNING RULES. Arbitration proceedings shall be administered by
the American Arbitration Association ("AAA") or such other administrator as
the parties shall mutually agree upon in accordance with the AAA commercial
arbitration rules. All disputes submitted to arbitration shall be resolved
in accordance with the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in
any of the Loan Documents. The arbitration shall be conducted at a location
in Texas selected by the AAA or other administrator. If there is any
inconsistency between the terms hereof and any such rules, the terms and
procedures set forth herein shall control. All statutes of limitation
applicable to any dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters directly
relevant to the dispute being arbitrated. Judgment upon any award rendered
in an arbitration may be entered in any court having jurisdiction; provided
however, that nothing contained herein shall be deemed to be a waiver by
any party that is a Lender of the protections afforded to it under 12
U.S.C. 91 or any similar applicable state law.
(c) NO WAIVER; PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as set-off, foreclosure against or sale of any real or
personal property collateral or security, or to obtain provisional or
ancillary remedies, including without limitation injunctive relief,
sequestration, attachment, garnishment or the appointment of a receiver,
from a court of competent jurisdiction before, after or during the tendency
of any arbitration or other proceeding. The exercise of any such remedy
shall not waive the right of any party to compel arbitration hereunder.
(d) ARBITRATOR QUALIFICATIONS AND POWERS; AWARDS. Arbitrators must be
active members of the Texas State Bar with expertise in the substantive
laws applicable to the subject matter of the dispute. Arbitrators are
44
empowered to resolve disputes by summary rulings in response to motions
filed prior to the final arbitration hearing. Arbitrators (i) shall resolve
all disputes in accordance with the substantive law of the state of Texas,
(ii) may grant any remedy or relief that a court of the state of Texas
could order or grant within the scope hereof and such ancillary relief as
is necessary to make effective any award, and (iii) shall have the power to
award recovery of all costs and fees, to impose sanctions and to take such
other actions as they deem necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the Texas Rules of Civil
Procedure or other applicable law. Any dispute in which the amount in
controversy is $5,000,000 or less shall be decided by a single arbitrator
who shall not render an award of greater than $5,000,000 (including
damages, costs, fees and expenses). By submission to a single arbitrator,
each party expressly waives any right or claim to recover more than
$5,000,000. Any dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations.
(e) MISCELLANEOUS. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with
the AAA. No arbitrator or other party to an arbitration proceeding may
disclose the existence, content or results thereof, except for disclosures
of information by a party required in the ordinary course of its business,
by applicable law or regulation, or to the extent necessary to exercise any
judicial review rights set forth herein. If more than one agreement for
arbitration by or between the parties potentially applies to a dispute, the
arbitration provision most directly related to the Loan Documents or the
subject matter of the dispute shall control. This arbitration provision
shall survive termination, amendment or expiration of any of the Loan
Documents or any relationship between the parties.
9.22 ENTIRE AGREEMENT. This Agreement and the other Loan Documents contain
the entire agreement between the parties relating to the transactions
contemplated hereby. All prior or contemporaneous understandings,
representations, statements and agreements, whether written or oral, are merged
herein and superseded by this Agreement. THIS WRITTEN AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURE PAGES FOLLOW]
45
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed effective as of the date first above written.
BORROWER:
MAINLAND RESOURCES, INC.,
a Nevada corporation
By: _____________________________________
Xxxxxxx X. Newport
President
LENDERS:
[NAME],
a [ ] [ ]
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
MAXIMUM COMMITMENT: $[ ]
[ ]
[ ]
[ ]
Attn: [ ]
Telephone: [ ]
Fax: [ ]
e-mail: [ ]
[NAME],
a [ ] [ ]
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
MAXIMUM COMMITMENT: $[ ]
[ ]
[ ]
[ ]
Attn: [ ]
Telephone: [ ]
Fax: [ ]
e-mail: [ ]
ADMINISTRATIVE AGENT:
GUGGENHEIM CORPORATE FUNDING, LLC,
a Delaware limited liability company
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
SCHEDULE 1
SCHEDULE I
AREA OF MUTUAL INTEREST
The Area of Mutual Interest shall consist of (a) those lands covered by the oil
and gas leases or oil, gas and mineral leases more particularly described in
Exhibit "A" to the Act of Mortgage, Assignment of Production, Security
Agreement, Fixture Filing and Financing Statement, which is being executed
contemporaneously with the execution of this Agreement by Borrower and Lender,
counterparts of which are to be filed of record in [ ] Parishes, Louisiana, as
such description of leases may be amended as supplemented from time to time
under amendments and supplements to such mortgages, together with (b) those
lands within an area surrounding and extending one (1) mile outward from the
boundaries of the lands covered by said oil and gas leases as more particularly
demarcated on the attached prospect maps for:
[RANDY'S INSERT]
[These prospects are in the process of being acquired]
[Add AMI for Buena Vista Prospect, Mississippi]
SCHEDULE 2.1
LENDERS' PRO RATA PERCENTAGES
________________________________________________________________________________
LENDER COMMITMENT
[ ] $[ ]
[ ] $[ ]
$3,500,000
SCHEDULE 4.6
MORTGAGED PROPERTIES
________________________________________________________________________________
See Exhibit A of Mortgage documents
EXHIBIT A
FORM OF PROMISSORY NOTE
________________________________________________________________________________
PROMISSORY NOTE
$________________ ____________, 200__
FOR VALUE RECEIVED and WITHOUT GRACE, in the installments hereinafter
provided, the undersigned ("MAKER") promises to pay to the order of [ ]
("PAYEE") the sum of ___________________ ($_________), or so much thereof as may
be advanced to or for the benefit of Maker by Payee pursuant to that certain
Senior Secured Bridge Loan dated of even date herewith between Maker, Guggenheim
Corporate Funding, LLC, as Administrative Agent (the "ADMINISTRATIVE AGENT") for
the parties designated as lenders thereto ("LENDERS") and the Lenders (as may be
amended, modified, supplemented or restated from time to time, the "CREDIT
AGREEMENT"), together with interest as set forth in the Credit Agreement;
provided, however, that it is the intention of Maker and Payee to comply
strictly with all applicable usury laws as in effect from time to time; and
there is no intention to contract for, nor shall there ever be collected,
charged or received on this Promissory Note (this "NOTE"), interest in excess of
that which would accrue and be payable on the basis of the Highest Lawful Rate.
For purposes of Chapter 303 of the Texas Finance Code, as amended, Maker agrees
that the maximum rate to be charged shall be the "weekly rate ceiling" as
defined in said Chapter 303; provided that Payee may also rely on alternative
maximum rates of interest under other applicable laws, if greater.
All payments of principal and interest are payable in lawful money of
the United States of America to Administrative Agent as set forth in the Credit
Agreement.
Each advance by Payee to Maker and each payment of principal hereunder
by Maker shall be reflected by a notation made by Payee on its records or on a
ledger appended to this Note and the aggregate unpaid amount of advances
reflected by said notations shall be deemed rebuttably presumptive evidence of
the principal amount owing under this Note.
This Note is issued pursuant to the Credit Agreement, and reference is
made to the Credit Agreement for matters governed thereby, including, without
limitation, certain events which will entitle the holder hereof to accelerate
the maturity of all amounts due hereon. Capitalized terms used but not defined
herein shall have the same meanings as in the Credit Agreement.
If under any circumstances the aggregate amounts paid on this Note
include amounts which by Law are deemed interest and which would exceed the
maximum non-usurious amount of interest which could lawfully have been collected
on this Note, Maker stipulates that such payment and collection will have been
and will be deemed to have been the result of mathematical error on the part of
both Maker and Payee or the holder of this Note, and the party receiving such
excess payments shall promptly refund the amount of such excess (to the extent
only of such interest payments above the maximum non-usurious amount which could
lawfully have been collected and retained) upon discovery of such error by the
party receiving such payment or notice thereof from the party making such
payment.
The principal indebtedness evidenced by this Note and all interest
accrued thereon shall be payable pursuant to the terms of the Credit Agreement,
with the last payment thereof due on or before Maturity Date. If any installment
provided for in the Credit Agreement, either of principal or interest, is not
paid when due, then the Administrative Agent may or at the request or direction
of Payee or the owner or holder hereof may, at their option, without notice
(including, without limitation, notice of intention to accelerate maturity
and/or notice of acceleration of maturity) or demand, declare this Note at once
matured, due and payable in full, and in such case the entire amount of unpaid
principal hereunder and accrued interest thereon shall immediately become due
and payable.
If default is made in the payment of this Note and it is placed in the
hands of an attorney for collection, or collected through probate or bankruptcy
proceedings, or if suit is brought on the same, Maker agrees to pay reasonable
attorneys' fees and other costs of collection.
Maker and any and all endorsers, guarantors and sureties severally
waive notice (including, without limitation, notice of intention to accelerate
maturity and/or notice of acceleration of maturity), demand, presentment for
payment, protest and the filing of suit hereon for the purpose of fixing
liability and consent that the time of payment hereof may be extended and
re-extended from time to time without notice to them or any of them. Maker
acknowledges and understands that under the Laws of the State of Texas, unless
waived, Maker has the right to notice of intent to accelerate the indebtedness
evidenced by this Note, the right to notice of the actual acceleration of the
indebtedness evidenced by this Note, and the right to presentment of this Note
by demand for payment. Maker acknowledges that it understands that it can waive
these rights and by Maker's execution of this Note it agrees to waive its right
to notice of intent to accelerate, its right to notice of acceleration, and its
right to presentment or other demand for payment.
Maker may at any time pay the full amount or any part of this Note
without the payment of any premium or fee.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE
STATE OF TEXAS.
Without being limited thereto or thereby, this Note is secured by the
Security Documents more particularly described in the Credit Agreement.
MAKER:
MAINLAND RESOURCES, INC.,
a Nevada corporation
By: _____________________________________
Xxxxxxx X. Newport
President
EXHIBIT B
FORM OF BORROWING REQUEST
________________________________________________________________________________
BORROWING REQUEST
This Borrowing Request is submitted to Guggenheim Corporate Funding, as
agent for the Lenders ("ADMINISTRATIVE AGENT"), by MAINLAND RESOURCES, INC.
("BORROWER"), pursuant to that certain Senior Secured Bridge Loan dated as of
August [ ], 2009 (as amended, modified, supplement or restated from time to
time, the "CREDIT AGREEMENT"), among Administrative Agent, the lenders party
thereto (the "LENDERS"), and Borrower. Capitalized terms used but not otherwise
defined herein shall have the same meaning given them in the Credit Agreement.
Borrower hereby requests an Advance under the Credit Agreement in the amount set
forth below:
A. ADVANCE REQUEST
1. Amount of Advance requested $_______
2. Total principal amount currently outstanding
(excluding this Advance Request) $_______
3. Maximum Commitment $_______
4. Availability remaining (excluding this Advance Request) $_______
5. Date of requested Advance: _______
B. REPRESENTATIONS AND WARRANTIES
1. Borrower hereby represents and warrants to Administrative Agent and
the Lenders that the following statements are true and correct as of
the date of this Borrowing Request.
a. Each Loan Document previously delivered to Administrative Agent
pursuant to SECTIONS 3.1 and 3.2 of the Credit Agreement, as
applicable, are in full force and effect and have not been
terminated, amended or modified.
b. All representations and warranties of Borrowers in the Credit
Agreement and the other Loan Documents including, but not limited
to, those made in ARTICLE IV of the Credit Agreement, are true,
complete and correct, 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
Advance, such representations and warranties shall continue to be
true and correct as of such specified earlier date.
c. After giving effect to the requested Advance, there will be no
Unmatured Event of Default or Event of Default under the Credit
Agreement or any of the Loan Documents.
d. All conditions precedent to the making of this Advance set
forth in ARTICLE III of the Credit Agreement and the
applicable conditions set forth in ARTICLE II of the Credit
Agreement have been satisfied.
e. All proceeds of the requested Advance shall only be used for the
purposes permitted in SECTION 5.23 of the Credit Agreement.
f. With respect to any Advance that relates to an acquisition, such
acquisition has been approved by the Lenders in writing.
The undersigned certifies that he is a duly elected, qualified and acting
President of Borrower, and that as such he is authorized to execute this Advance
Request on behalf of Borrower. The undersigned further certifies, represents and
warrants on behalf of Borrower that Borrower is entitled to receive the
requested borrowing under the terms and conditions of the Credit Agreement.
EXECUTED this ____ day of ____________, 20__ .
MAINLAND RESOURCES, INC.,
a Nevada corporation
By: _____________________________________
Xxxxxxx X. Newport
President
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
________________________________________________________________________________
COMPLIANCE CERTIFICATE
Financial Statement Date:______________,
To: Guggenheim Corporate Funding, LLC, as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Senior Secured Bridge Loan, dated as of
August [ ], 2009, (as amended, modified, supplement or restated from time to
time, the "AGREEMENT;" the terms defined therein being used herein as therein
defined), among Mainland Resources, Inc.. ("BORROWER"), the lenders from time to
time party thereto (the "LENDERS"), and Guggenheim Corporate Funding, LLC, as
Administrative Agent (the "ADMINISTRATIVE AGENT").
The undersigned Responsible Officer hereby certifies as of the date hereof
that he/she is the _____________________________________________of the Borrower,
and that, as such, he/she is authorized to execute and deliver this Certificate
to the Administrative Agent on the behalf of the Borrower, and that:
[USE FOLLOWING PARAGRAPH 1 FOR FISCAL YEAR-END FINANCIAL STATEMENTS]
1. Attached hereto are the year-end audited financial statements required by
SECTION 5.3 of the Agreement for the fiscal year of the Borrower ended as
of the above date, together with the report and opinion of an independent
certified public accountant required by such section.
[USE FOLLOWING PARAGRAPH 1 FOR FISCAL QUARTER-END FINANCIAL STATEMENTS]
1. Attached hereto are the unaudited financial statements required by SECTION
5.2 of the Agreement for the fiscal quarter of the Borrower ended as of the
above date. Such financial statements fairly present the financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP as at such date and for such period,
subject only to normal year-end audit adjustments and the absence of
footnotes.
2. The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his/her supervision,
a detailed review of the transactions and condition (financial or
otherwise) of the Borrower during the accounting period covered by the
attached financial statements.
3. A review of the activities of the Borrower during such fiscal period has
been made under the supervision of the undersigned with a view to
determining whether during such fiscal period the Borrower performed and
observed all its Obligations under the Loan Documents, and to the best
knowledge of the undersigned during such fiscal period, the Borrower
performed and observed each covenant and condition of the Loan Documents
applicable to it, and no Unmatured Event of Default or Event of Default has
occurred and is continuing.
4. The representations and warranties of the Borrower contained in ARTICLE IV
of the Agreement, and any representations and warranties of the Borrower
that are contained in any document furnished at any time under or in
connection with the Loan Documents, are true and correct on and as of the
date hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and
correct as of such earlier date, and except that for purposes of this
Compliance Certificate, the representations and warranties contained in
SECTION 4.4 of the Agreement shall be deemed to refer to the most recent
statements furnished pursuant to SECTION 4.4 of the Agreement, including
the statements in connection with which this Compliance Certificate is
delivered.
5. The financial covenant analyses and information set forth and attached
hereto are true and accurate on and as of the date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________________, __________.
MAINLAND RESOURCES, INC.,
a Nevada corporation
By: ____________________________________
Xxxxxxx X. Newport
President
EXHIBIT D
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "AGREEMENT") dated as of
_______________________, 200__, is made between
_____________________________________ (the "ASSIGNOR") and (the "ASSIGNEE").
R E C I T A L S
WHEREAS, Assignor is party to that certain Senior Secured Bridge Loan,
dated as of August [ ], 2009, (as the same may be amended, modified,
supplemented or restated from time to time, the "CREDIT AGREEMENT"), among
MAINLAND RESOURCES, INC. ("BORROWER"), the several financial institutions from
time to time party thereto (the "LENDERS"), and GUGGENHEIM CORPORATE FUNDING,
LLC, as Administrative Agents (the " ADMINISTRATIVE AGENT") for the Lenders
(terms defined in the Credit Agreement are used herein with the same meaning);
WHEREAS, as provided in the Credit Agreement, the Lenders have committed to
extend credit to Borrower in an aggregate amount not to exceed ___________
Dollars ($________); and
WHEREAS, Assignor wishes to assign to Assignee part of the rights and
obligations of Assignor under the Credit Agreement in respect of its Commitment,
together with a corresponding portion of each of its outstanding Loans in a
total amount equal to Dollars (U.S. $_______) (the "ASSIGNED AMOUNT") on the
terms listed on ANNEX I hereto and subject to the conditions set forth herein
and in the Credit Agreement, and Assignee wishes to accept assignment of such
rights and to assume such obligations from Assignor on such terms and subject to
such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. ASSIGNMENT AND ASSUMPTION.
(a) Before giving effect to this Agreement, Assignor's (a) Commitment
is $_______________, (b) aggregate principal amount of its outstanding
Loans is $_________________, (c) and (c) Pro Rata Percentage is ______%.
With effect on and after the Effective Date (as defined in Section 4
hereof), Assignor hereby sells and assigns to Assignee, and Assignee hereby
purchases and assumes from Assignor, the Assigned Amount, which shall be
equal to percent ( %) (the "ASSIGNEE'S PERCENTAGE SHARE") of all of
Assignor's rights and obligations under the Credit Agreement, including,
without limitation, Assignee's Percentage Share of Assignor's (i)
Commitment, and (ii) outstanding Loans. After giving effect to this
Agreement on the Effective Date (defined herein), the Commitment,
outstanding Loans and Pro Rata Percentage of Assignor and Assignee,
respectively, are set forth as follows:
Outstanding Pro Rata
Loans Share Commitment
Assignor $__________ ________% $__________
Assignee $__________ ________% $__________
The assignment set forth in this SECTION 1(A) shall be without recourse
to, or representation or warranty (except as expressly provided in this
Agreement) by, Assignor.
(b) With effect on and after the Effective Date (defined herein),
Assignee shall be a party to the Credit Agreement, shall become a "Lender"
for all purposes as therein defined and contemplated, and shall succeed to
all of the rights and be obligated to perform all of the obligations of a
Lender under the Credit Agreement with a Commitment in the amount and with
the Pro Rata Percentage set forth above for Assignee. Assignee agrees that
it is bound by the terms and conditions set forth in the Credit Agreement
as if it were an original signatory thereto, and that it will perform in
accordance with their terms all of the obligations which by the terms of
the Credit Agreement are required to be performed by it as a Lender. It is
the intent of the parties hereto that (i) the Commitment of Assignor shall,
as of the Effective Date (defined herein), be reduced by Assignee's
Percentage Share and (ii) Assignor shall relinquish its rights and be
released from its obligations under the Credit Agreement to the extent such
obligations have been assumed by Assignee.
2. PAYMENTS.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date (defined herein) in immediately available funds an amount
equal to Dollars ($_____), representing Assignee's Percentage Share of the
principal amount of all Loans previously made, and currently owned, by
Assignor under the Credit Agreement and outstanding on the Effective Date
(defined herein).
(b) Assignee further agrees to pay to Administrative Agent a
processing or transfer fee in the amount of $_________.
(c) To the extent payment to be made by Assignee pursuant to Section
2(a) hereof is not made when due, Assignor shall be entitled to recover
such amount together with interest thereon at the Federal Funds Rate per
annum accruing from the date such amounts were due.
3. REALLOCATION OF PAYMENTS. Any interest, commissions, fees and other
payments accrued to but excluding the Effective Date (defined herein)
with respect to Assignor's Commitment Percentage of the Loans shall be
for the account of Assignor. Any interest, fees and other payments
accrued on and after the Effective Date (defined herein) with respect
to the Assigned Amount shall be for the account of Assignee. Each of
Assignor and Assignee agree that it will hold in trust for the other
party any interest, commissions, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding
sentence and pay to the other party any such amounts which it may
receive promptly upon receipt. Assignor's and Assignee's obligations
to make the payments referred to in this Section 3 are non-assignable.
4. EFFECTIVE DATE; NOTICES.
(a) The effective date for this Agreement shall be ________
_______________ (the "EFFECTIVE DATE"); PROVIDED that the following
conditions precedent have been satisfied on or before the Effective Date:
(i) this Agreement shall be executed and delivered by Assignor and
Assignee;
(ii) the consent of Borrower and Administrative Agent shall have been
duly obtained in the form set forth on ANNEX II hereof, and shall
be in full force and effect as of the Effective Date;
(iii) Assignee shall pay to Assignor all amounts due to Assignor under
this Agreement; and
(iv) the processing or transfer fee referred to in SECTION 2(B) shall
have been paid to Administrative Agent.
(b) Promptly following the execution of this Agreement, Assignor shall
deliver to Administrative Agent for acceptance by Administrative Agent, the
notices, agreements or other documents as may be required under the Credit
Agreement.
(c) Promptly following payment by Assignee of the consideration as
provided in SECTION 2 hereof, Assignor shall deliver its promissory note(s)
to Administrative Agent and shall request that new notes be issued to
Assignor and Assignee dated the Effective Date to properly reflect the
respective amounts of the Loans held by each party.
5. ADMINISTRATIVE AGENT
(a) Assignee hereby appoints and authorizes Assignor to take such
action as Administrative Agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to Administrative Agent by the
Lenders pursuant to the terms of the Credit Agreement.
(b) Assignee shall assume no duties or obligations held by Assignor in
its capacity as Administrative Agent under the Credit Agreement.
6. REPRESENTATIONS AND WARRANTIES.
(a) Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any lien, security interest or other
adverse claim; (ii) it is duly organized and existing and it has the full
power and authority to take, and has taken, all action necessary to execute
and deliver this Agreement and any other documents required or permitted to
be executed or delivered by it in connection with this Agreement and to
fulfill its obligations hereunder; (iii) no notices to, or consents,
authorizations or approvals of, any person are required (other than any
already given or obtained) for its due execution, delivery and performance
of this Agreement, and apart from any agreements or undertaking or filings
required by the Credit Agreement, no further action by, or notice to, or
filing with, any person is required of it for such execution, delivery or
performance; and (iv) this Agreement has been duly executed and delivered
by it and constitutes the legal, valid and binding obligations of Assignor,
enforceable against Assignor in accordance with the terms hereof, except
subject, as to enforcement, to Bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or
affecting creditors' rights and to general equitable principles.
(b) Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto. Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the
solvency, financial condition or statements of Borrower or any guarantor or
the performance or observance by Borrower or any guarantor of any of its
respective obligations under the Credit Agreement or any other instrument
or document furnished in connection therewith.
(c) Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all
action necessary to execute and deliver this Agreement and any other
documents required or permitted to be executed or delivered by it in
connection with this Agreement, and to fulfill its obligations hereunder;
(ii) no notices to, or consents, authorizations or approvals of, any person
are required (other than any already given or obtained) for its due
execution, delivery and performance of this Agreement; and apart from any
agreements or undertaking or filings required by the Credit Agreement, no
further action by, or notice to, or filing with, any person is required of
it for such execution, delivery or performance; (iii) this Agreement has
been duly executed and delivered by it and constitutes the legal, valid and
binding obligations of Assignee, enforceable against Assignee in accordance
with the terms hereof, except subject, as to enforcement, to Bankruptcy,
insolvency, moratorium, reorganization and other laws of general
application relating to or affecting creditors' rights and to general
equitable principles; (iv) it is eligible under the Credit Agreement to be
an assignee in accordance with the terms hereof; and (v) that it has
received a copy of the Credit Agreement and the exhibits and schedules
thereto, and has received (or waived the requirement that it receive)
copies of each of the documents which were required to be delivered under
the Credit Agreement as a condition to the making of the Loans thereunder.
7. FURTHER ASSURANCES. Assignor and Assignee each hereby agree to execute
and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the
transactions contemplated by this Agreement, including, without
limitation, the delivery of any notices or other documents or
instruments to Borrower, Administrative Agent or any guarantor which
may be required in connection with the assignment and assumption
contemplated hereby.
8. INDEMNITY. Assignee agrees to indemnify and hold harmless Assignor
against any and all losses, costs, expenses (including, without
limitation, reasonable attorneys' fees and the allocated costs and
expenses for in-house counsel) and liabilities incurred by Assignor in
connection with or arising in any manner from the non-performance by
Assignee of any obligation assumed by Assignee under this Agreement.
9. MISCELLANEOUS.
(a) Any amendment or waiver of any provision of this Agreement shall
be in writing signed by the parties hereto. No failure or delay by either
party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof and any waiver of any breach of the provisions
of this Agreement shall be without prejudice to any rights with respect to
any other or further breach hereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) All communications among the parties or notices in connection
herewith shall be in writing and mailed, hand-delivered or transmitted by
facsimile as follows: (i) if to Assignor or Assignee, at their respective
addresses or facsimile numbers set forth on the signature pages hereof and
(ii) if to Borrower, Administrative Agent or any guarantor, at their
respective addresses or facsimile numbers set forth in the Credit Agreement
or to such other address or facsimile number as shall be designated in a
written notice given in accordance with the Credit Agreement. All such
communications and notices shall be effective upon receipt. Assignee
specifies as Lending Office(s) the office(s) set forth beneath its name on
the signature pages hereof.
(d) Assignor and Assignee shall each pay its own costs and expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Agreement.
(e) The representations and warranties made herein shall survive the
consummation of the transactions contemplated hereby.
(f) Subject to the terms of the Credit Agreement, this Agreement shall
be binding upon and inure to the benefit of Assignor and Assignee and their
respective successors and assigns; PROVIDED, HOWEVER, that no party shall
assign its rights hereunder without the prior written consent of the other
party, Administrative Agent and Borrower and any purported assignment,
absent such consents, shall be void. The preceding sentence shall not limit
or enhance the right of Assignee to assign or participate all or part of
Assignee's Percentage Share and the Assigned Amount and any outstanding
Loans attributable thereto in accordance with the Credit Agreement.
(g) This Agreement may be executed in any number of counterparts and
all of such counterparts taken together shall be deemed to constitute one
and the same instrument.
(h) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas (without regard to principles of
conflicts of law). Assignor and Assignee each irrevocably submits to the
non-exclusive jurisdiction of any Texas state or federal court sitting in
the Southern District of Texas over any suit, action or proceeding arising
out of or relating to this Agreement or the Credit Agreement and
irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined in such New York state or federal court. Each
party to this Agreement hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
(i) This Agreement and any agreement, document or instrument attached
hereto or referred to herein integrate all the terms and conditions
mentioned herein or incidental hereto, and together with the Credit
Agreement constitutes the entire agreement and understanding between the
parties hereto and supersedes any and all prior agreements and
understandings related to the subject matter hereof. In the event of any
conflict between the terms, conditions and provisions of this Agreement and
the Credit Agreement, the terms, conditions and provisions of the Credit
Agreement shall prevail.
(j) In the event of any inconsistency between the provisions of this
Agreement and Annex I hereto, this Agreement shall control. Headings are
for reference only and are to be ignored in interpreting this Agreement.
10. The illegality or unenforceability of any provision of this Agreement
or any instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required
hereunder.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
ASSIGNOR:
[________________________]
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Address for Notices:
_________________________
_________________________
Facsimile No.:____________________________________
ASSIGNEE:
[________________________]
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Address for Notices:
_________________________
_________________________
Facsimile No.:____________________________________
Lending Office:
_________________________
_________________________
Facsimile No.:____________________________________
ANNEX I
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT
1. COMPANY:
2. DATE OF CREDIT AGREEMENT:
3. ASSIGNOR:
4. ASSIGNEE:
5. DATE OF ASSIGNMENT AGREEMENT:
6. EFFECTIVE DATE:
7. FEES PAID BY ASSIGNEE TO ASSIGNOR:
8. INTEREST PAID BY ASSIGNEE TO ASSIGNOR:
9. PAYMENT INSTRUCTIONS:
Assignor:
Assignee:
10. ASSIGNEE'S NOTICE:
Instructions:
11. OTHER INFORMATION:
ANNEX II
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT
_______________, 2008
ADMINISTRATIVE AGENT
Gentlemen:
We refer to the Senior Secured Bridge Loan Agreement dated as of August
[ ], 2009 (the "CREDIT AGREEMENT") among MAINLAND RESOURCES, INC. ("BORROWER"),
the several financial institutions from time to time party thereto (the
"LENDERS"), and GUGGENHEIM CORPORATE FUNDING, LLC, as Administrative Agent (the
"ADMINISTRATIVE AGENT") for the Lenders from time to time party to the Credit
Agreement. Terms defined in the Credit Agreement are used herein as therein
defined.
1. We hereby give you notice of, and request the consent of Borrower
and Administrative Agent to, the assignment by (the "ASSIGNOR") to
_______________________ (the "ASSIGNEE") of % of the right, title and interest
of Assignor in and to the Credit Agreement (including without limitation the
right, title and interest of Assignor in and to the Commitment of Assignor and
all outstanding Loans made by Assignor). Before giving effect to such assignment
Assignor's (a) Commitment is $__________, (b) Pro Rata Percentage is _________%
and (c) aggregate principal amount of its outstanding Loans is $ . After giving
effect to such assignment, Assignor's and Assignee's respective Loans,
Commitment and Pro Rata Percentage are as follows:
Outstanding Pro Rata
Loans Percentage Commitment
ASSIGNOR $___________ ___________% $___________
ASSIGNEE $___________ ___________% $___________
2. Assignee agrees that upon receiving the consent of Borrower and
Administrative Agent to such assignment and from and after the effective date of
the Assignment, Assignee will be bound by the terms of the Credit Agreement,
with respect to the interest in the Credit Agreement assigned to it as specified
above, as fully and to the same extent as if Assignee were the Lender originally
holding such interest in the Credit Agreement.
3. The following administrative details apply to Assignee:
4. Lending Office:
Assignee:______________________________________________________
Address:_______________________________________________________
Attention:_____________________________________________________
Telephone: ( )_____________________________________
Facsimile: ( )_____________________________________
5. Notice Address:
Assignee:______________________________________________________
Address:_______________________________________________________
Attention:_____________________________________________________
Telephone: ( )_____________________________________
Facsimile: ( )_____________________________________
6. Payment Instructions:
Account No.: 7236272410
At:____________________________________________________________
____________________________________________________________
____________________________________________________________
Reference:_____________________________________________________
Attention:_____________________________________________________
7. Without limiting the generality of PARAGRAPH 2 hereinabove, the tax
forms to be delivered by Assignee pursuant to SECTION 2.13 of the Credit
Agreement, if any, will be promptly provided in compliance therewith.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and
Acceptance to be executed by their respective duly authorized officials,
officers or agents as of the date first above mentioned.
Very truly yours,
[Name of Assignor]
By:________________________________________
Name:______________________________________
Title:_____________________________________
[Name of Assignee]
By:________________________________________
Name:______________________________________
Title:_____________________________________
GUGGENHEIM CORPORATE FUNDING, LLC,
as Administrative Agent, hereby grants its
consent to the foregoing assignment:
By:__________________________________
Name:________________________________
Title:_______________________________
EXHIBIT E
FORM OF LETTER IN LIEU
________________________________________________________________________________
Attn: Division Order Department
Re: Letter in Lieu of Transfer Order
Ladies and Gentlemen:
MAINLAND RESOURCES, INC., a Nevada corporation ("MORTGAGOR"), has
executed the documents described on EXHIBIT A attached hereto (collectively, the
"MORTGAGES") for the benefit of GUGGENHEIM CORPORATE FUNDING, LLC, as
administrative agent ("AGENT"), assigning, transferring and conveying certain
properties (the "MORTGAGED PROPERTY") described therein. Enclosed is a copy of
the Mortgages covering the Mortgaged Property.
Attached hereto is a list of the properties which are subject to the
Mortgage for which you are accounting to Mortgagor and the decimal interest in
production heretofore paid to Mortgagor with respect to its interest in each
given property.
Pursuant to the Mortgages, Mortgagor transferred and assigned all of
its interests in the Assigned Mortgaged Property to Agent. Therefore, Mortgagor
hereby authorizes and instructs you that all future payments attributable to the
Mortgaged Property, which would otherwise be paid to Mortgagor, should be made
by check payable to:
GUGGENHEIM CORPORATE FUNDING, LLC
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
until notified in writing by Agent to discontinue such payments. Also, Mortgagor
hereby requests that you change your records to reflect that Agent is entitled
to the proceeds of production attributable to the Mortgaged Property.
In consideration of your acceptance of this Letter-in-Lieu of Transfer
Order, Agent and Mortgagor agree as follows:
1. Mortgagor has heretofore executed Transfer or Division Orders to you covering
each of the properties referred to in this letter. This letter is being executed
by the undersigned in lieu of execution of separate Transfer or Division Orders.
With respect to proceeds from the sale of oil, gas and other hydrocarbons as to
which you account hereunder, Agent agrees that it will be bound by the terms,
conditions, warranties and covenants of all such Transfer or Division Orders
heretofore executed by Mortgagor now in force, with the same effect as though it
had executed the originals thereof; provided, however, the aggregate liability
of Agent with respect to any warranty, representation, covenant or
indemnification contained therein or in this letter shall be limited to an
amount equal to the amounts disbursed by you to Agent hereunder.
2. Mortgagor hereby agrees that you are relieved of any responsibility in
connection with the application of the proceeds paid by you to Agent as
hereinabove specified and payment made by you to Agent shall be binding and
conclusive as between you and Mortgagor.
In the absence of a question about the enclosed schedule, you are
respectfully requested to make disbursement to Agent as instructed herein and
NOT TO SUSPEND OR DELAY any payments by virtue of the assignment of production
from Mortgagor to Agent. Should you require additional documentation prior to
implementing the manner of disbursement requested herein, notwithstanding the
warranties and indemnifications contained hereinabove, please suspend
disbursements to Mortgagor, pending execution of such additional documentation
as you may reasonably require.
In order that we may have a record evidencing your acceptance of this
Letter-in-Lieu of Transfer Order, we request that you execute one copy of this
letter in the space provided below and return the same to Agent in the enclosed
self-addressed envelope.
Very truly yours,
MAINLAND RESOURCES, INC.,
a Nevada corporation
By: _____________________________________
Xxxxxxx X. Newport
President
GUGGENHEIM CORPORATE FUNDING, LLC,
a Delaware limited liability company
By:_______________________________________
Name:____________________________________
Title:_____________________________________
ACCEPTED this _____ day of ___________, 20___.
_______________________________________ , Purchaser of Production
By:_______________________________________
Name:____________________________________
Title:_____________________________________