EXHIBIT 10.1
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF
AUGUST 3, 2004
AMONG
ENERGY PARTNERS, LTD.,
AS BORROWER,
JPMORGAN CHASE BANK,
AS ADMINISTRATIVE AGENT,
BNP PARIBAS,
AS SYNDICATION AGENT,
WACHOVIA BANK, NATIONAL ASSOCIATION AND
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
AS CO-DOCUMENTATION AGENTS,
AND
THE LENDERS PARTY HERETO
-----------------------------------------
▇.▇. ▇▇▇▇▇▇ SECURITIES INC. AND
BNP PARIBAS, AS CO-LEAD ARRANGERS AND
JOINT BOOK RUNNERS
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS................................................. 1
SECTION 1.01 TERMS DEFINED ABOVE............................................................ 1
SECTION 1.02 CERTAIN DEFINED TERMS.......................................................... 1
SECTION 1.03 TYPES OF LOANS AND BORROWINGS.................................................. 20
SECTION 1.04 TERMS GENERALLY................................................................ 20
SECTION 1.05 ACCOUNTING TERMS AND DETERMINATIONS; GAAP...................................... 21
ARTICLE II THE CREDITS....................................................................... 21
SECTION 2.01 COMMITMENTS.................................................................... 21
SECTION 2.02 LOANS AND BORROWINGS........................................................... 21
SECTION 2.03 REQUESTS FOR BORROWINGS........................................................ 22
SECTION 2.04 INTEREST ELECTIONS............................................................. 23
SECTION 2.05 FUNDING OF BORROWINGS.......................................................... 24
SECTION 2.06 TERMINATION, REDUCTION AND INCREASE OF AGGREGATE MAXIMUM CREDIT AMOUNTS........ 25
SECTION 2.07 BORROWING BASE................................................................. 27
SECTION 2.08 LETTERS OF CREDIT.............................................................. 29
ARTICLE III PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES............................ 34
SECTION 3.01 REPAYMENT OF LOANS............................................................. 34
SECTION 3.02 INTEREST....................................................................... 34
SECTION 3.03 ALTERNATE RATE OF INTEREST..................................................... 35
SECTION 3.04 PREPAYMENTS.................................................................... 35
SECTION 3.05 FEES........................................................................... 37
ARTICLE IV PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS................................. 38
SECTION 4.01 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS.................... 38
SECTION 4.02 PRESUMPTION OF PAYMENT BY BORROWER............................................. 39
SECTION 4.03 CERTAIN DEDUCTIONS BY ADMINISTRATIVE AGENT..................................... 39
SECTION 4.04 DISPOSITION OF PROCEEDS........................................................ 39
ARTICLE V INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY......................... 40
SECTION 5.01 INCREASED COSTS................................................................ 40
SECTION 5.02 BREAK FUNDING PAYMENTS......................................................... 41
SECTION 5.03 TAXES.......................................................................... 41
SECTION 5.04 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS................................. 43
SECTION 5.05 ILLEGALITY..................................................................... 43
ARTICLE VI CONDITIONS PRECEDENT.............................................................. 44
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SECTION 6.01 EFFECTIVE DATE................................................................. 44
SECTION 6.02 EACH CREDIT EVENT.............................................................. 46
ARTICLE VII REPRESENTATIONS AND WARRANTIES................................................... 47
SECTION 7.01 ORGANIZATION; POWERS........................................................... 47
SECTION 7.02 AUTHORITY; ENFORCEABILITY...................................................... 47
SECTION 7.03 APPROVALS; NO CONFLICTS........................................................ 47
SECTION 7.04 FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE................................ 48
SECTION 7.05 LITIGATION..................................................................... 48
SECTION 7.06 ENVIRONMENTAL MATTERS.......................................................... 48
SECTION 7.07 COMPLIANCE WITH THE LAWS AND AGREEMENTS; NO DEFAULTS........................... 49
SECTION 7.08 INVESTMENT COMPANY ACT......................................................... 50
SECTION 7.09 PUBLIC UTILITY HOLDING COMPANY ACT............................................. 50
SECTION 7.10 TAXES.......................................................................... 50
SECTION 7.11 ERISA.......................................................................... 50
SECTION 7.12 DISCLOSURE; NO MATERIAL MISSTATEMENTS.......................................... 51
SECTION 7.13 INSURANCE...................................................................... 52
SECTION 7.14 RESTRICTION ON LIENS........................................................... 52
SECTION 7.15 SUBSIDIARIES................................................................... 52
SECTION 7.16 LOCATION OF BUSINESS AND OFFICES............................................... 52
SECTION 7.17 PROPERTIES; TITLES, ETC........................................................ 52
SECTION 7.18 INTEREST IN THE OIL AND GAS PROPERTIES......................................... 54
SECTION 7.19 MAINTENANCE OF PROPERTIES...................................................... 54
SECTION 7.20 GAS IMBALANCES, PREPAYMENTS.................................................... 55
SECTION 7.21 MARKETING OF PRODUCTION........................................................ 55
SECTION 7.22 PURCHASERS OF PRODUCTION....................................................... 55
SECTION 7.23 EXISTING HEDGING AGREEMENTS.................................................... 55
SECTION 7.24 USE OF LOANS AND LETTERS OF CREDIT............................................. 56
SECTION 7.25 SOLVENCY....................................................................... 56
SECTION 7.26 SPECIFIED SENIOR INDEBTEDNESS.................................................. 56
ARTICLE VIII AFFIRMATIVE COVENANTS........................................................... 56
SECTION 8.01 FINANCIAL STATEMENTS; OTHER INFORMATION........................................ 56
SECTION 8.02 NOTICES OF MATERIAL EVENTS..................................................... 59
SECTION 8.03 EXISTENCE; CONDUCT OF BUSINESS................................................. 59
SECTION 8.04 PAYMENT OF OBLIGATIONS......................................................... 59
SECTION 8.05 PERFORMANCE OF OBLIGATIONS UNDER LOAN DOCUMENTS................................ 59
SECTION 8.06 OPERATION AND MAINTENANCE OF PROPERTIES........................................ 59
SECTION 8.07 INSURANCE...................................................................... 60
SECTION 8.08 BOOKS AND RECORDS; INSPECTION RIGHTS........................................... 60
SECTION 8.09 COMPLIANCE WITH LAWS........................................................... 61
SECTION 8.10 ENVIRONMENTAL MATTERS.......................................................... 61
SECTION 8.11 FURTHER ASSURANCES............................................................. 62
SECTION 8.12 RESERVE REPORTS................................................................ 62
SECTION 8.13 TITLE INFORMATION.............................................................. 63
SECTION 8.14 ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS................................... 64
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SECTION 8.15 ERISA COMPLIANCE............................................................... 64
SECTION 8.16 HAZARDOUS SUBSTANCES INDEMNIFICATION........................................... 65
SECTION 8.17 ASSIGNMENTS.................................................................... 65
SECTION 8.18 RESERVED....................................................................... 66
SECTION 8.19 RESERVED....................................................................... 66
ARTICLE IX NEGATIVE COVENANTS................................................................ 66
SECTION 9.01 FINANCIAL COVENANTS............................................................ 66
SECTION 9.02 DEBT........................................................................... 66
SECTION 9.03 LIENS.......................................................................... 67
SECTION 9.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS; REPAYMENT OF SENIOR NOTES............ 68
SECTION 9.05 INVESTMENTS, LOANS AND ADVANCES................................................ 69
SECTION 9.06 RESERVED....................................................................... 70
SECTION 9.07 NATURE OF BUSINESS............................................................. 70
SECTION 9.08 LIMITATION ON LEASES........................................................... 70
SECTION 9.09 PROCEEDS OF NOTES.............................................................. 71
SECTION 9.10 ERISA COMPLIANCE............................................................... 71
SECTION 9.11 SALE OR DISCOUNT OF RECEIVABLES................................................ 72
SECTION 9.12 MERGERS, ETC................................................................... 72
SECTION 9.13 SALE OF PROPERTIES............................................................. 73
SECTION 9.14 ENVIRONMENTAL MATTERS.......................................................... 73
SECTION 9.15 TRANSACTIONS WITH AFFILIATES................................................... 73
SECTION 9.16 SUBSIDIARIES................................................................... 73
SECTION 9.17 NEGATIVE PLEDGE AGREEMENTS; DIVIDEND RESTRICTIONS.............................. 73
SECTION 9.18 GAS IMBALANCES, TAKE-OR-PAY OR OTHER PREPAYMENTS............................... 74
SECTION 9.19 HEDGING AGREEMENTS............................................................. 74
SECTION 9.20 MARGIN STOCK................................................................... 74
SECTION 9.21 CANCELLATION OF INSURANCE...................................................... 74
ARTICLE X EVENTS OF DEFAULT; REMEDIES........................................................ 74
SECTION 10.01 EVENTS OF DEFAULT.............................................................. 74
SECTION 10.02 REMEDIES....................................................................... 76
ARTICLE XI THE AGENTS........................................................................ 77
SECTION 11.01 APPOINTMENT; POWERS............................................................ 77
SECTION 11.02 DUTIES AND OBLIGATIONS OF ADMINISTRATIVE AGENT................................. 77
SECTION 11.03 ACTION BY ADMINISTRATIVE AGENT................................................. 78
SECTION 11.04 RELIANCE BY ADMINISTRATIVE AGENT............................................... 78
SECTION 11.05 SUBAGENTS...................................................................... 79
SECTION 11.06 RESIGNATION OR REMOVAL OF AGENTS............................................... 79
SECTION 11.07 AGENTS AS LENDERS............................................................. 79
SECTION 11.08 NO RELIANCE.................................................................... 79
SECTION 11.09 AUTHORITY OF ADMINISTRATIVE AGENT TO RELEASE COLLATERAL AND LIENS.............. 80
SECTION 11.10 THE SYNDICATION AGENT AND CO-DOCUMENTATION AGENTS.............................. 80
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ARTICLE XII MISCELLANEOUS.................................................................... 80
SECTION 12.01 NOTICES........................................................................ 80
SECTION 12.02 WAIVERS; AMENDMENTS............................................................ 81
SECTION 12.03 EXPENSES, INDEMNITY; DAMAGE WAIVER............................................. 82
SECTION 12.04 SUCCESSORS AND ASSIGNS......................................................... 85
SECTION 12.05 SURVIVAL; REVIVAL; REINSTATEMENT............................................... 88
SECTION 12.06 COUNTERPARTS; INTEGRATION; EFFECTIVENESS....................................... 88
SECTION 12.07 SEVERABILITY................................................................... 89
SECTION 12.08 RIGHT OF SETOFF................................................................ 89
SECTION 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS..................... 89
SECTION 12.10 HEADINGS....................................................................... 91
SECTION 12.11 CONFIDENTIALITY................................................................ 91
SECTION 12.12 INTEREST RATE LIMITATION....................................................... 91
SECTION 12.13 EXCULPATION PROVISIONS......................................................... 92
SECTION 12.14 EXISTING CREDIT AGREEMENT...................................................... 93
SECTION 12.15 USA PATRIOT ACT NOTICE......................................................... 93
SECTION 12.16 SPECIFIED SENIOR INDEBTEDNESS.................................................. 93
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Annex I List of Maximum Credit Amounts
Exhibit A Form of Note
Exhibit B Form of Compliance Certificate
Exhibit C-1 Form of Legal Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P., special
counsel to the Borrower
Exhibit C-2 Form of Legal Opinion of Local Counsel
Exhibit D-1 Security Instruments
Exhibit D-2 Form of Guarantee and Collateral Agreement
Exhibit E Form of Assignment and Assumption
Exhibit F-1 Form of Maximum Credit Amount Increase Certificate
Exhibit F-2 Form of Additional Lender Certificate
Schedule 7.05 Litigation
Schedule 7.11 ERISA Disclosure
Schedule 7.15 Subsidiaries and Partnerships
Schedule 7.20 Gas Imbalances
Schedule 7.21 Marketing Contracts
Schedule 7.22 List of Purchasers of Production
Schedule 7.23 Hedging Agreements
Schedule 9.05 Investments
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THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 3,
2004, is among: ENERGY PARTNERS, LTD., a corporation duly formed and existing
under the laws of the State of Delaware (the "Borrower"); each of the Lenders
from time to time party hereto; JPMORGAN CHASE BANK (in its individual capacity,
"JPMorgan"), as administrative agent for the Lenders (in such capacity, together
with its successors in such capacity, the "Administrative Agent"); BNP PARIBAS,
as syndication agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Syndication Agent"); and WACHOVIA BANK,
NATIONAL ASSOCIATION and ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, as
co-documentation agents for the Lenders (in such capacity, together with their
respective successors in such capacity, the "Co-Documentation Agents").
R E C I T A L S
A. The Borrower and Bank One, NA ("Bank One") entered into that certain
Loan Agreement dated June 23, 1999, as amended, which was amended and restated
by that certain Reducing Revolving Credit Agreement dated March 30, 2000, which
was further amended and restated by that certain Amended and Restated Revolving
Credit Agreement dated August 1, 2001, among the Borrower, Bank One, as
administrative agent and issuer of letters of credit, and the lenders party
thereto, which was further amended and restated by that certain Second Amended
and Restated Revolving Credit Agreement dated effective January 15, 2002 among
the Borrower and ▇▇▇▇-▇▇▇▇▇▇▇ Oil Company, as borrowers, Bank One, as
administrative agent and issuer of letters of credit, and the lenders party
thereto, which was further amended and restated by that certain Third Amended
and Restated Reducing Revolving Credit Agreement dated as of November 1, 2002,
as amended, among the Borrower, EPL of Louisiana, L.L.C. and Delaware EPL of
Texas, LLC, as borrowers, Bank One, as administrative agent and issuer of
letters of credit, and the lenders party thereto (collectively, the "Existing
Credit Agreement").
B. The Borrower has requested that the Lenders amend and restate the Third
Amended Credit Agreement and the Lenders are willing to do so subject to the
terms and conditions of this Agreement.
C. In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows, in doing so amending and
restating in its entirety the Existing Credit Agreement:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above. As used in this Agreement, each term
defined above has the meaning indicated above.
Section 1.02 Certain Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Additional Lender" has the meaning assigned to such term in Section
2.06(c)(i).
"Additional Lender Certificate" has the meaning assigned to such term in
Section 2.06(c)(ii)(F).
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affected Loans" has the meaning assigned to such term in Section 5.05.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agents" means, collectively, the Administrative Agent, the Syndication
Agent and the Co-Documentation Agents; and "Agent" shall mean either the
Administrative Agent, the Syndication Agent or either of the Co-Documentation
Agents, as the context requires.
"Aggregate Maximum Credit Amounts" means at any time the sum of the
Maximum Credit Amounts, as the same may be increased, reduced or terminated
pursuant to Section 2.06.
"Agreement" means this Credit Agreement, as the same may from time to time
be amended, modified, supplemented or restated.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus -1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, for any day, with respect to any ABR Loan or
Eurodollar Loan, or with respect to any commitment fees payable hereunder, as
the case may be, the rate per annum set forth in the Borrowing Base Utilization
Grid below based upon the Borrowing Base Utilization Percentage then in effect:
BORROWING BASE UTILIZATION GRID
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Borrowing Base Utilization > 25% ,but > 50%, but > 75%, but > 90%, but
Percentage < or = 25% < or = 50% < or = 75% < or = 90% < or = 100%
Eurodollar Loans 1.250% 1.375% 1.500% 1.750% 2.000%
ABR Loans 0.000% 0.125% 0.250% 0.500% 0.750%
Commitment Fee Rate 0.375% 0.375% 0.375% 0.500% 0.500%
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Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change, provided,
however, that if at any time the Borrower fails to deliver a Reserve Report
pursuant to Section 8.12(a), then the "Applicable Margin" means the rate per
annum set forth on the grid when the Borrowing Base Utilization Percentage is at
its highest level.
"Applicable Percentage" means, with respect to any Lender, the percentage
of the Aggregate Maximum Credit Amounts represented by such Lender's Maximum
Credit Amount as such percentage is set forth on Annex I.
"Approved Counterparty" means (a) any Lender or any Affiliate of a Lender
and (b) any other Person whose long term senior unsecured debt rating is A-/A3
by S&P or ▇▇▇▇▇'▇ (or their equivalent) or higher.
"Approved Fund" means (a) a CLO and (b) with respect to any Lender that is
a fund which invests in bank loans and similar extensions of credit, any other
fund that invests in bank loans and similar extensions of credit and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Approved Petroleum Engineers" means (a) Netherland, ▇▇▇▇▇▇ & Associates,
Inc., (b) ▇▇▇▇▇ ▇▇▇▇▇ Company Petroleum Consultants, L.P. and (c) any other
independent petroleum engineers reasonably acceptable to the Administrative
Agent.
"Assessment Rate" means, for any day, the annual assessment rate in effect
on such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by the Federal Deposit Insurance Corporation of time deposits made in dollars at
the offices of such member in the United States; provided that if, as a result
of any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit E or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the Effective
Date to but excluding the Termination Date.
"Bank One" has the meaning assigned to such term in clause A of the
Recitals.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
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"Board" means the Board of Governors of the Federal Reserve System of the
United States of America or any successor Governmental Authority.
"Borrowing" means Loans of the same Type, made, converted or continued on
the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Base" means at any time an amount equal to the amount
determined in accordance with Section 2.07, as the same may be adjusted from
time to time pursuant to Section 8.13(c), Section 9.12 or Section 9.13(e).
"Borrowing Base Utilization Percentage" means, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of the Revolving
Credit Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day
on which commercial banks in New York City or Houston, Texas are authorized or
required by law to remain closed; and if such day relates to a Borrowing or
continuation of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice
by the Borrower with respect to any such Borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day on which
dealings in dollar deposits are carried out in the London interbank market.
"Capital Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.
"Casualty Event" means any loss, casualty or other insured damage in
excess of $5,000,000 to, or any nationalization, taking under power of eminent
domain or by condemnation or similar proceeding of, any Property of the Borrower
or any of its Subsidiaries.
"Change in Control" means any of the following events: (a) any "person" or
"group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) has become, directly or
indirectly, the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all such shares that any such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), by way of merger, consolidation or otherwise, of a majority or more of
the common stock of Borrower on a fully-diluted basis, after giving effect to
the conversion and exercise of all outstanding warrants, options and other
securities of the Borrower (whether or not such securities are then currently
convertible or exercisable) or (b) during any period of two consecutive calendar
years, individuals who at the beginning of such period constituted the board of
directors of the Borrower cease for any reason to constitute a majority of the
directors of the Borrower then in office unless (i) such new directors were
elected by a majority of the directors of the Borrower who constituted the board
of directors of the Borrower at the beginning of such period (or by
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directors so elected) or (ii) the reason for such directors failing to
constitute a majority is a result of retirement by directors due to age, death
or disability.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 5.01(b)), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"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 a Lender.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a)
modified from time to time pursuant to Section 2.06 and (b) modified from time
to time pursuant to assignments by or to such Lender pursuant to Section
12.04(b). The amount representing each Lender's Commitment shall at any time be
the lesser of such Lender's Maximum Credit Amount and such Lender's Applicable
Percentage of the then effective Borrowing Base.
"Commitment Fee Rate" has the meaning set forth in the definition of
"Applicable Margin".
"Consolidated Net Income" means with respect to the Borrower and the
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and the Consolidated Subsidiaries after allowances for
taxes for such period determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (a) the net income of any Person in
which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of the Borrower and the Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in cash during such period by such other Person to
the Borrower or to a Consolidated Subsidiary, as the case may be; (b) the net
income (but not loss) during such period of any Consolidated Subsidiary to the
extent that the declaration or payment of dividends or similar distributions or
transfers or loans by that Consolidated Subsidiary is not at the time permitted
by operation of the terms of its charter or any agreement, instrument or
Governmental Requirement applicable to such Consolidated Subsidiary or is
otherwise restricted or prohibited, in each case determined in accordance with
GAAP; (c) the net income (or loss) of any Person acquired in a
pooling-of-interests transaction for any period prior
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to the date of such transaction; (d) any extraordinary non-cash gains or losses
during such period and (e) any gains or losses attributable to writeups or
writedowns of assets, including ceiling test writedowns; and provided further
that if the Borrower or any Consolidated Subsidiary shall acquire or dispose of
any Property during such period, then Consolidated Net Income shall be
calculated after giving pro forma effect to such acquisition, disposition or
redesignation, as if such acquisition, disposition or redesignation had occurred
on the first day of such period.
"Consolidated Subsidiaries" means each Subsidiary of the Borrower (whether
now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Debt" means, for any Person, the sum of the following (without
duplication): (a) all obligations of such Person for borrowed money or evidenced
by bonds, bankers' acceptances, debentures, notes or other similar instruments;
(b) all obligations of such Person (whether contingent or otherwise) in respect
of letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable, accrued expenses, liabilities or other obligations of such
Person to pay the deferred purchase price of Property or services; (d) all
obligations under Capital Leases; (e) all obligations under Synthetic Leases;
(f) all Debt (as defined in the other clauses of this definition) of others
secured by a Lien on any Property of such Person, whether or not such Debt is
assumed by such Person; (g) all Debt (as defined in the other clauses of this
definition) of others guaranteed by such Person or in respect of which such
Person otherwise assures a creditor against loss of the Debt (howsoever such
assurance shall be made), but only to the extent of the lesser of the amount of
such Debt and the maximum stated amount of such guarantee or assurance against
loss; (h) all obligations or undertakings of such Person to maintain or cause to
be maintained the financial position or covenants of others or to purchase the
Debt or Property of others; (i) obligations to deliver commodities, goods or
services, including, without limitation, Hydrocarbons, in consideration of one
or more advance payments, other than gas balancing arrangements in the ordinary
course of business; (j) obligations to pay for goods or services whether or not
such goods or services are actually received or utilized by such Person; (k) any
Debt of a partnership for which such Person is liable either by agreement, by
operation of law or by a Governmental Requirement but only to the extent of such
liability; (l) Disqualified Capital Stock; (m) the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment and (n) past due accounts payable
greater than 90 days unless being disputed in good faith. The Debt of any Person
shall include all obligations of such Person of the character described above to
the extent such Person remains legally liable in respect thereof notwithstanding
that any such obligation is not included as a liability of such Person under
GAAP.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
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"Disqualified Capital Stock" means any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.
"dollars" or "$" refers to lawful money of the United States of America.
"EBITDAX" means, for any period, the sum of Consolidated Net Income for
such period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: Interest Expense, taxes, depreciation,
depletion, amortization, exploration expenditures and dry hole expenses and
other similar noncash charges and noncash compensation expenses, minus all
noncash income added to Consolidated Net Income.
"Earnout Agreement" means that certain Earnout Agreement dated January 15,
2002, by and between the Borrower and ▇▇▇▇-▇▇▇▇▇▇▇ Oil Company entered into in
connection with the acquisition by the Borrower of ▇▇▇▇-▇▇▇▇▇▇▇ Oil Company,
which was amended by that certain First Amendment to Earnout Agreement dated as
of July 1, 2002 and by a Second Amendment to Earnout Agreement dated as of
January 1, 2003.
"Effective Date" means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).
"Engineering Reports" has the meaning assigned such term in Section
2.07(c)(i).
"Environmental Laws" means any and all Governmental Requirements
pertaining in any way to health, safety, the environment or the preservation or
reclamation of natural resources, in effect in any and all jurisdictions in
which the Borrower or any Subsidiary is conducting or at any time has conducted
business, or where any Property of the Borrower or any Subsidiary is located,
including without limitation, the Oil Pollution Act of 1990 ("OPA"), as amended,
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection Governmental Requirements.
The term "oil" shall have the meaning specified in OPA, the terms "release" or
"threatened release" have the meanings specified in CERCLA, the terms "solid
waste" and "disposal" (or "disposed") have the meanings specified in RCRA and
the term "oil and gas waste" shall have the meaning specified in Section 91.1011
of the Texas Natural Resources Code ("Section 91.1011"); provided, however, that
(a) in the event either OPA, CERCLA, RCRA or Section 91.1011 is
7
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and (b)
to the extent the laws of the state or other jurisdiction in which any Property
of the Borrower or any Subsidiary is located establish a meaning for "oil,"
"release," "solid waste," "disposal" or "oil and gas waste" which is broader
than that specified in either OPA, CERCLA, RCRA or Section 91.1011, such broader
meaning shall apply.
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Borrower or a Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" means (a) a "Reportable Event" described in section 4043 of
ERISA and the regulations issued thereunder, (b) the withdrawal of the Borrower,
a Subsidiary or any ERISA Affiliate from a Plan during a plan year in which it
was a "substantial employer" as defined in section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC or (e) any other event or condition
which might constitute grounds under section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned such term in Section 10.01.
"Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) statutory landlord's
liens, operators', vendors', carriers', warehousemen's, repairmen's, mechanics',
suppliers', workers', materialmen's, construction or other like Liens arising by
operation of law in the ordinary course of business or incident to the
exploration, development, operation and maintenance of Oil and Gas Properties
each of which is in respect of obligations that are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in
8
accordance with GAAP; (d) Liens on cash or securities pledged to secure
performance of tenders, surety and appeal bonds, government contracts,
performance and return of money bonds, bids, trade contracts, leases, statutory
obligations, regulatory obligations and other obligations of a like nature
incurred in the ordinary course of business and (e) judgment and attachment
Liens not giving rise to an Event of Default, provided that any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which such
proceeding may be initiated shall not have expired and no action to enforce such
Lien has been commenced; provided, further that Liens described in clauses (a)
through (c) shall remain "Excepted Liens" only for so long as no action to
enforce such Lien has been commenced and no intention to subordinate the first
priority Lien granted in favor of the Administrative Agent and the Lenders is to
be hereby implied or expressed by the permitted existence of such Excepted
Liens.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America or such other jurisdiction
under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower or any Guarantor is located and (c) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Borrower under Section
5.04(b)), any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 5.03(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts with respect
to such withholding tax pursuant to Section 5.03(a) or Section 5.03(c).
"Existing Credit Agreement" has the meaning assigned to such term in
clause A of the Recitals.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"Financial Statements" means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).
9
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time subject to the terms and conditions
set forth in Section 1.05.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Borrower, any Subsidiary, any of their Properties, any
Agent, the Issuing Bank or any Lender.
"Governmental Requirement" means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
"Guarantors" means EPL of Louisiana, L.L.C., Delaware EPL of Texas LLC,
and each other Subsidiary that guarantees the Indebtedness.
"Guarantee and Collateral Agreement" means a Guarantee and Collateral
Agreement executed by the Guarantors in substantially the form of Exhibit D-2
unconditionally guarantying, on a joint and several basis, payment of the
Indebtedness, and pledging assets to secure the payment of the Indebtedness, as
the same may be amended, modified or supplemented from time to time.
"Hazardous Substances" means flammables, explosives, radioactive
materials, hazardous wastes, asbestos or any material containing asbestos,
polychlorinated biphenyls (PCBs), toxic substances or related materials,
petroleum and petroleum products and associated oil or natural gas exploration,
production and development wastes or any substances defined as "hazardous
substances", "hazardous materials", "hazardous wastes" or "toxic substances"
under CERCLA, the Superfund Amendments and Reauthorization Act, as amended, the
Hazardous Materials Transportation Act, as amended, RCRA, the Toxic Substances
Control Act, as amended, or any other Environmental Laws now or hereafter
enacted or promulgated by any Governmental Authority, but only to the extent any
such law is or becomes applicable to the Borrower or any of its property.
"Hedging Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement, whether
exchange traded, "over-the-counter" or otherwise, involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for
10
payments only on account of services provided by current or former directors,
officers, employees or consultants of the Borrower or the Subsidiaries shall be
a Hedging Agreement.
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.
"Hydrocarbon Interests" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests and production
payment interests, including any reserved or residual interests of whatever
nature.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
"Indebtedness" means any and all amounts owing or to be owing by the
Borrower or any Guarantor: (a) to the Administrative Agent, the Issuing Bank or
any Lender under any Loan Document; (b) to any Lender or any Affiliate of a
Lender under any Hedging Agreements entered into while such Person (or its
Affiliate) was a Lender hereunder and (c) all renewals, extensions and/or
rearrangements of any of the above.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Information Memorandum" means the Confidential Information Memorandum
dated July 2004 relating to the Borrower and the Transactions.
"Initial Reserve Report" means the reports of Netherland ▇▇▇▇▇▇ &
Associates, Inc. and ▇▇▇▇▇ ▇▇▇▇▇ Company Petroleum Consultants, L.P. dated as of
April 16, 2004, with respect to the value of the Oil and Gas Properties of the
Borrower and its Subsidiaries as of March 22, 2004.
"Interest Election Request" means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.
"Interest Expense" means, for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such period, including to the extent included in
interest expense under GAAP: (a) amortization of debt discount, (b) capitalized
interest and (c) the portion of any payments or accruals under Capital Leases
allocable to interest expense, plus the portion of any payments or accruals
under Synthetic Leases allocable to interest expense whether or not the same
constitutes interest expense under GAAP.
"Interest Payment Date" means (a) with respect to any ABR Loan, the last
day of each March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day
11
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of a Eurodollar Borrowing with an Interest Period of more than
three months' duration, each day prior to the last day of such Interest Period
that occurs at intervals of three months' duration after the first day of such
Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three, six or twelve
months thereafter, as the Borrower may elect; provided, that (a) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
"Interim Redetermination" has the meaning assigned such term in Section
2.07(b).
"Interim Redetermination Date" means the date on which a Borrowing Base
that has been redetermined pursuant to an Interim Redetermination becomes
effective as provided in Section 2.07(d).
"Investment" means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale); (b) the
making of any deposit with, or advance, loan or other extension of credit to,
any other Person (including the purchase of Property from another Person subject
to an understanding or agreement, contingent or otherwise, to resell such
Property to such Person, but excluding any such advance, loan or extension of
credit having a term not exceeding ninety (90) days representing the purchase
price of inventory or supplies sold by such Person in the ordinary course of
business) 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.
"Issuing Bank" means JPMorgan Chase Bank or any other Lender agreeing to
issue Letters of Credit, in its capacity as an issuer of Letters of Credit
hereunder, and its successors in such capacity as provided in Section 2.08(i).
The Issuing Bank may, in its discretion, arrange for one or more Letters of
Credit to be issued by Affiliates of the Issuing Bank, in which case the term
"Issuing Bank" shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.
"LC Commitment" at any time means Ten Million and No/100 Dollars
($10,000,000).
12
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Annex I, any Person that shall have
become a party hereto pursuant to an Assignment and Assumption, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption, and any Person that shall have become a party hereto pursuant to
Section 2.06(c).
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"Letter of Credit Agreements" means all letter of credit applications and
other agreements (including any amendments, modifications or supplements
thereto) submitted by the Borrower, or entered into by the Borrower, with the
Issuing Bank relating to any Letter of Credit.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Bridge Telerate Service
(formerly Dow ▇▇▇▇▇ Market Service) (or on any successor or substitute page of
such Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO Rate"
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties. The term "Lien" shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed to
be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.
13
"Loan Documents" means this Agreement, the Notes, the Letter of Credit
Agreements, the Letters of Credit and the Security Instruments.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Majority Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least fifty-one percent (51%) of the Aggregate
Maximum Credit Amounts; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding at least fifty-one percent (51%) of the outstanding
aggregate principal amount of the Loans or participation interests in Letters of
Credit (without regard to any sale by a Lender of a participation in any Loan
under Section 12.04(c)).
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower, any Subsidiary or any Guarantor to perform any of its obligations
under any Loan Document or (c) the rights and remedies of or benefits available
to the Administrative Agent, the Issuing Bank or any Lender under any Loan
Document.
"Material Indebtedness" means Debt (other than the Loans and Letters of
Credit), or amounts due and payable in respect of one or more Hedging
Agreements, of any one or more of the Borrower and its Subsidiaries in an
aggregate principal amount exceeding $5,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the Borrower
or any Subsidiary in respect of any Hedging Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that the
Borrower or such Subsidiary would be required to pay if such Hedging Agreement
were terminated at such time.
"Maturity Date" means August 3, 2008.
"Maximum Credit Amount" means, as to each Lender, the amount set forth
opposite such Lender's name on Annex I under the caption "Maximum Credit
Amounts", as the same may be (a) reduced or terminated from time to time in
connection with a reduction or termination of the Aggregate Maximum Credit
Amounts pursuant to Section 2.06(b), (b) increased from time to time pursuant to
Section 2.06(c) or (c) modified from time to time pursuant to any assignment
permitted by Section 12.04(b).
"Maximum Credit Amount Increase Certificate" has the meaning assigned to
such term in Section 2.06(c)(ii)(E).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor thereto
that is a nationally recognized rating agency.
"Mortgaged Property" means any Property owned by the Borrower or any
Guarantor which is subject to the Liens existing and to exist under the terms of
the Security Instruments.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in section 3(37) or 4001 (a)(3) of ERISA.
14
"New Borrowing Base Notice" has the meaning assigned such term in Section
2.07(d).
"Notes" means the promissory notes of the Borrower described in Section
2.02(d) and being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.
"Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c)
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, injection ▇▇▇▇▇
or other ▇▇▇▇▇, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.
"OPA" has the meaning assigned such term in the definition "Environmental
Laws".
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.
"Participant" has the meaning set forth in Section 12.04(c)(i).
"Patriot Act" has the meaning assigned to such term in Section 12.15.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Refinancing Debt" means Debt (for purposes of this definition,
"new Debt") incurred in exchange for, or proceeds of which are used to
refinance, all of any other Debt (the "Refinanced Debt"); provided that (a) such
new Debt is in an aggregate principal amount not in
15
excess of the sum of (i) the aggregate principal amount then outstanding of the
Refinanced Debt (or, if the Refinanced Debt is exchanged or acquired for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount) and (ii) an amount
necessary to pay any fees and expenses, including premiums, related to such
exchange or refinancing; (b) such new Debt has a stated maturity no earlier than
the stated maturity of the Refinanced Debt and an average life no shorter than
the average life of the Refinanced Debt; (c) such new Debt does not have a
stated interest rate in excess of the stated interest rate of the Refinanced
Debt; (d) such new Debt does not contain any covenants which are more onerous to
the Borrower and its Subsidiaries than those imposed by the Refinanced Debt and
(e) such new Debt (and any guarantees thereof) is subordinated in right of
payment to the Indebtedness (or, if applicable, the Guarantee and Collateral
Agreement) to at least the same extent as the Refinanced Debt and is otherwise
subordinated on terms substantially reasonably satisfactory to the
Administrative Agent.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan, as defined in section 3(2)
of ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at
any time during the six calendar years preceding the date hereof, sponsored,
maintained or contributed to by the Borrower or a Subsidiary or an ERISA
Affiliate.
"Preferred Stock" means (i) the shares of Series D Exchangeable
Convertible Preferred Stock issued by the Borrower pursuant to the Series D
Certificate of Designations that are issued and outstanding as of the date
hereof, and (ii) any Dividend Shares (as such term is defined in the Series D
Certificate of Designations) issued to holders of the shares described in clause
(i).
"Preferred Stock Restricted Payment" has the meaning set forth in Section
9.04(a)(v).
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by JPMorgan as its prime rate in effect at its principal office in
New York City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective. Such
rate is set by the Administrative Agent as a general reference rate of interest,
taking into account such factors as the Administrative Agent may deem
appropriate; it being understood that many of the Administrative Agent's
commercial or other loans are priced in relation to such rate, that it is not
necessarily the lowest or best rate actually charged to any customer and that
the Administrative Agent may make various commercial or other loans at rates of
interest having no relationship to such rate.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.
"Proposed Borrowing Base" has the meaning assigned to such term in Section
2.07(c)(i).
"Proposed Borrowing Base Notice" has the meaning assigned to such term in
Section 2.07(c)(ii).
16
"Redemption" means the repurchase, redemption, prepayment, repayment or
defeasance (or the segregation of funds with respect to any of the foregoing) of
the Senior Notes and Material Indebtedness, as the context requires. "Redeem"
has the correlative meaning thereto.
"Redetermination Date" means, with respect to any Scheduled
Redetermination or any Interim Redetermination, the date that the redetermined
Borrowing Base related thereto becomes effective pursuant to Section 2.07(d).
"Redfish Synthetic Lease" means (i) that certain Loan and Security
Agreement (equipment) (Loan Number: 1000111493) dated as of October 3, 2001 by
and between BANC ONE LEASING CORPORATION, as lender, and the Borrower, as
borrower, and (ii) that certain Business Purposes Promissory Note (fixed
rate/principal and interest) (Loan Number: 1000111493) dated as of October 3,
2001, issued by the Borrower and payable to BANC ONE LEASING CORPORATION in the
principal amount of $2,500,375.00.
"Refinanced Debt" has the meaning assigned such term in the definition of
"Permitted Refinancing Debt".
"Register" has the meaning assigned such term in Section 12.04(b)(iv).
"Regulation D" means Regulation D of the Board, as the same may be
amended, supplemented or replaced from time to time.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Remedial Work" has the meaning assigned such term in Section 8.10(a).
"Required Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least sixty-six and two-thirds percent (66-2/3%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure is outstanding, Lenders holding at least sixty-six and two-thirds
percent (66-2/3%) of the outstanding aggregate principal amount of the Loans or
participation interests in such Letters of Credit (without regard to any sale by
a Lender of a participation in any Loan under Section 12.04(c)).
"Reserve Report" means a report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, as of each January 1st
or July 1st (or such other date in the event of an Interim Redetermination) the
oil and gas reserves attributable to the Oil and Gas Properties of the Borrower
and the Subsidiaries, together with a projection of the rate of production and
future net income, taxes, operating expenses and capital expenditures with
respect thereto as of such date, based upon the pricing assumptions provided to
the Borrower by the Administrative Agent.
"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President, any Financial Officer or any Vice President of such
Person. Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of the Borrower.
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"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other Property) with respect to any Equity Interests in the
Borrower, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any option, warrant or other right to
acquire any such Equity Interests in the Borrower.
"Revolving Credit Exposure" means, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender's Loans and its LC
Exposure at such time.
"Scheduled Redetermination" has the meaning assigned such term in Section
2.07(b).
"Scheduled Redetermination Date" means the date on which a Borrowing Base
that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).
"SEC" means the Securities and Exchange Commission or any successor
Governmental Authority.
"Security Instruments" means the Guarantee and Collateral Agreement,
mortgages, deeds of trust and other agreements, instruments or certificates
described or referred to in Exhibit D-1, and any and all other agreements,
instruments or certificates now or hereafter executed and delivered by the
Borrower or any other Person (other than Hedging Agreements with the Lenders or
any Affiliate of a Lender or participation or similar agreements between any
Lender and any other lender or creditor with respect to any Indebtedness
pursuant to this Agreement) in connection with, or as security for the payment
or performance of the Indebtedness, the Notes, this Agreement, or reimbursement
obligations under the Letters of Credit, as such agreements may be amended,
modified, supplemented or restated from time to time.
"Senior Notes" means the Borrower's $150,000,000 of 8.75% Senior Notes due
2010 pursuant to the Senior Notes Indenture.
"Senior Notes Indenture" means (a) that certain Indenture dated as of
August 5, 2003 among the Borrower and EPL Pipeline, L.L.C., Nighthawk, L.L.C.,
EPL of Louisiana, L.L.C., Delaware EPL of Texas, LLC, and EPL Pioneer Houston,
Inc., as guarantors, and ▇▇▇▇▇ Fargo Bank, National Association, as trustee,
pursuant to which the Senior Notes are issued, and (b) any indenture, note
purchase agreement or other agreement pursuant to which any Permitted
Refinancing Debt is issued, in each case, as hereafter amended or supplemented
pursuant to Section 9.04(b).
"Series D Certificate of Designations" means that certain Certificate of
Designations of the Series D Exchangeable Convertible Preferred Stock dated
January 10, 2002.
"S&P" means Standard & Poor's Ratings Group, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of
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the maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board to which
the Administrative Agent is subject (a) with respect to the Base CD Rate, for
new negotiable nonpersonal time deposits in dollars of over $100,000 with
maturities approximately equal to three months and (b) with respect to the
Adjusted LIBO Rate, for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subsidiary" means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner. Unless otherwise indicated herein, each reference to the term
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Synthetic Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, treated as operating
leases on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Termination Date" means the earlier of the Maturity Date and the date of
termination of the Commitments.
"Three-Month Secondary CD Rate" means, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day is not a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day) or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding
19
Business Day) by the Administrative Agent from three negotiable certificate of
deposit dealers of recognized standing selected by it.
"Total Debt" means, at any date, all Debt of the Borrower and the
Consolidated Subsidiaries on a consolidated basis.
"Transactions" means, with respect to (a) the Borrower, the execution,
delivery and performance by the Borrower of this Agreement, and each other Loan
Document to which it is a party, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder, and the grant of Liens
by the Borrower on Mortgaged Properties and other Properties pursuant to the
Security Instruments and (b) each Guarantor, the execution, delivery and
performance by such Guarantor of each Loan Document to which it is a party, the
guaranteeing of the Indebtedness and the other obligations under the Guarantee
and Collateral Agreement by such Guarantor and such Guarantor's grant of the
security interests and provision of collateral thereunder, and the grant of
Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to
the Security Instruments.
"Transfer Order Letters" means the letters in lieu of division or transfer
orders, in form acceptable to the Administrative Agent.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.
"Wholly-Owned Subsidiary" means any Subsidiary of which all of the
outstanding Equity Interests (other than any directors' qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries or by the Borrower and one or
more of the Wholly-Owned Subsidiaries.
Section 1.03 Types of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings, respectively, may be classified and referred to
by Type (e.g., a "Eurodollar Loan" or a "Eurodollar Borrowing").
Section 1.04 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns (subject to the restrictions contained herein), (c) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof and (d) all
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references herein to Articles, Sections, Annexes, Exhibits and Schedules shall
be construed to refer to Articles and Sections of, and Annexes, Exhibits and
Schedules to, this Agreement.
Section 1.05 Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which Borrower's independent
certified public accountants concur and which are disclosed to Administrative
Agent on the next date on which financial statements are required to be
delivered to the Lenders pursuant to Section 8.01(a); provided that, unless the
Borrower and the Majority Banks shall otherwise agree in writing, no such change
shall modify or affect the manner in which compliance with the covenants
contained herein is computed such that all such computations shall be conducted
utilizing financial information presented consistently with prior periods.
ARTICLE II
THE CREDITS
Section 2.01 Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the
total Revolving Credit Exposures exceeding the total Commitments. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, repay and reborrow the Loans.
Section 2.02 Loans and Borrowings.
(a) Borrowings; Several Obligations. Each Loan shall be made as part
of a Borrowing consisting of Loans made by the Lenders ratably in accordance
with their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.
(b) Types of Loans. Subject to Section 3.03, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.
(c) Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total
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Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.08(e). Borrowings of more than one
Type may be outstanding at the same time; provided that there shall not at any
time be more than a total of five Eurodollar Borrowings outstanding.
Notwithstanding any other provision of this Agreement, the Borrower shall not be
entitled to request, or to elect to convert or continue, any Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.
(d) Notes. The Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A,
dated, in the case of (i) any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement, (ii) any Lender that becomes a
party hereto pursuant to an Assignment and Assumption, as of the effective date
of the assignment and assumption, or (iii) any Lender that becomes a party
hereto in connection with an increase in the Aggregate Maximum Credit Amounts
pursuant to Section 2.06(c), as of the effective date of such increase, payable
to the order of such Lender in a principal amount equal to its Maximum Credit
Amount as in effect on such date, and otherwise duly completed. In the event
that any Lender's Maximum Credit Amount increases or decreases for any reason
(whether pursuant to Section 2.06, Section 12.04(b) or otherwise), the Borrower
shall deliver or cause to be delivered on the effective date of such increase or
decrease, a new Note payable to the order of such Lender in a principal amount
equal to its Maximum Credit Amount after giving effect to such increase or
decrease, and otherwise duly completed and the original of each Note replaced by
such a new Note shall be returned to the Borrower by the payee thereof. The
date, amount, Type, interest rate and, if applicable, Interest Period of each
Loan made by each Lender, and all payments made on account of the principal
thereof, shall be recorded by such Lender on its books for its Note, and, prior
to any transfer, may be endorsed by such Lender on a schedule attached to such
Note or any continuation thereof or on any separate record maintained by such
Lender. Failure to make any such notation or to attach a schedule shall not
affect any Lender's or the Borrower's rights or obligations in respect of such
Loans or affect the validity of such transfer by any Lender of its Note.
Section 2.03 Requests for Borrowings To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 10:00 a.m., Houston, Texas time,
three Business Days before the date of the proposed Borrowing or (b) in the case
of a ABR Borrowing, not later than 10:00 a.m., Houston, Texas time, one Business
Day before the date of the proposed Borrowing; provided that any such notice of
an ABR Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.08(e) may be given not later than 9:00 a.m., Houston,
Texas time, on the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
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(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period";
(v) the amount of the then effective Borrowing Base, the
current total Revolving Credit Exposures (without regard to the requested
Borrowing) and the pro forma total Revolving Credit Exposures (giving effect to
the requested Borrowing); and
(vi) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the requirements of
Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Each Borrowing
Request shall constitute a representation that the amount of the requested
Borrowing shall not cause the total Revolving Credit Exposures to exceed the
total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and
the then effective Borrowing Base).
Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
Section 2.04 Interest Elections.
(a) Conversion and Continuance. Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.04. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) Interest Election Requests. To make an election pursuant to this
Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Interest Election Request in a form approved by the Administrative Agent
and signed by the Borrower.
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(c) Information in Interest Election Requests. Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to Section
2.04(c)(iii) and (iv) shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurodollar Borrowing but
does not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Notice to Lenders by the Administrative Agent. Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender's portion of
each resulting Borrowing.
(e) Effect of Failure to Deliver Timely Interest Election Request
and Events of Default on Interest Election. If the Borrower fails to deliver a
timely Interest Election Request with respect to a Eurodollar Borrowing prior to
the end of the Interest Period applicable thereto, then, unless such Borrowing
is repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing: (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
Section 2.05 Funding of Borrowings.
(a) Funding by Lenders. Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 11:00 a.m., 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 an
account of the Borrower maintained with the Administrative Agent in Houston,
Texas and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.08(e) shall be remitted by the Administrative Agent to
the Issuing Bank.
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(b) Presumption of Funding by the Lenders. Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
Section 2.05(a) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
Section 2.06 Termination, Reduction and Increase of Aggregate Maximum
Credit Amounts.
(a) Scheduled Termination of Commitments. Unless previously
terminated, the Commitments shall terminate on the Maturity Date. If at any time
the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or
reduced to zero, then the Commitments shall terminate on the effective date of
such termination or reduction.
(b) Optional Termination and Reduction of Aggregate Credit Amounts.
(i) The Borrower may at any time terminate, or from time to
time reduce, the Aggregate Maximum Credit Amounts; provided that (A) each
reduction of the Aggregate Maximum Credit Amounts shall be in an amount that is
an integral multiple of $1,000,000 and not less than $10,000,000 and (B) the
Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if,
after giving effect to any concurrent prepayment of the Loans in accordance with
Section 3.04(c), the total Revolving Credit Exposures would exceed the total
Commitments.
(ii) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.06(b)(i) at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable. Any
termination or reduction of the Aggregate Maximum Credit Amounts shall be
permanent and may not be reinstated except pursuant to Section 2.06(c). Each
reduction of the Aggregate Maximum Credit Amounts shall be made ratably among
the Lenders in accordance with each Lender's Applicable Percentage.
25
(c) Optional Increase in Aggregate Maximum Credit Amounts.
(i) Subject to the conditions set forth in Section
2.06(c)(ii), the Borrower may increase the Aggregate Maximum Credit Amounts then
in effect with the prior written consent of the Administrative Agent by
increasing the Maximum Credit Amount of a Lender or by causing one or more
Persons not at such time a Lender to become a Lender or Lenders (each an
"Additional Lender").
(ii) Any such increase in the Aggregate Maximum Credit Amounts
shall be subject to the following additional conditions:
(A) such increase shall not be less than $10,000,000 unless
the Administrative Agent otherwise consents, and the aggregate amount of all
such increases shall not exceed $100,000,000 and, following all such increases,
the aggregate amount of the Lenders' Commitments shall not exceed $300,000,000;
(B) no Default shall have occurred and be continuing at the
effective date of such increase;
(C) on the effective date of such increase, no Eurodollar
Borrowings shall be outstanding (or if any Eurodollar Borrowings are
outstanding, then the effective date of such increase shall be the last day of
the Interest Period in respect of such Eurodollar Borrowings);
(D) no Lender's Maximum Credit Amount may be increased
without the consent of such Lender;
(E) if the Borrower elects to increase the Aggregate Maximum
Credit Amounts by increasing the Maximum Credit Amount of one or more Lenders,
the Borrower and such Lenders shall execute and deliver to the Administrative
Agent a certificate substantially in the form of Exhibit F-1 (a "Maximum Credit
Amount Increase Certificate"), together with a processing and recordation fee of
$3,500 (in the aggregate even if more than one Lender is involved), and the
Borrower shall deliver a new Note payable to the order of such Lender in a
principal amount equal to its Maximum Credit Amount after giving effect to such
increase, and otherwise duly completed; and
(F) If the Borrower elects to increase the Aggregate Maximum
Credit Amounts by causing an Additional Lender to become a party to this
Agreement, then the Borrower and such Additional Lender shall execute and
deliver to the Administrative Agent a certificate substantially in the form of
Exhibit F-2 (an "Additional Lender Certificate"), together with an
Administrative Questionnaire and a processing and recordation fee of $3,500, and
the Borrower shall deliver a Note payable to the order of such Additional Lender
in a principal amount equal to its Maximum Credit Amount, and otherwise duly
completed.
(iii) Subject to acceptance and recording thereof pursuant to
Section 2.06(c)(iv), from and after the effective date specified in the Maximum
Credit Amount Increase Certificate or the Additional Lender Certificate (or if
any Eurodollar Borrowings are outstanding, then the last day of the Interest
Period in respect of such Eurodollar Borrowings): (A) the
26
amount of the Aggregate Maximum Credit Amounts shall be increased as set forth
therein, and (B) in the case of an Additional Lender Certificate, any Additional
Lender party thereto shall be a party to this Agreement and the other Loan
Documents and have the rights and obligations of a Lender under this Agreement
and the other Loan Documents. In addition, the Lender or the Additional Lender,
as applicable, shall purchase a pro rata portion of the outstanding Loans (and
participation interests in Letters of Credit) of each of the other Lenders (and
such Lenders hereby agree to sell and to take all such further action to
effectuate such sale) such that each Lender (including any Additional Lender, if
applicable) shall hold its Applicable Percentage of the outstanding Loans (and
participation interests) after giving effect to the increase in the Aggregate
Maximum Credit Amounts.
(iv) Upon its receipt of a duly completed Maximum Credit
Amount Increase Certificate or an Additional Lender Certificate, executed by the
Borrower and the Lender or the Borrower and the Additional Lender party thereto,
as applicable, the processing and recording fee referred to in Section
2.06(c)(ii), the Administrative Questionnaire referred to in Section
2.06(c)(ii), if applicable, and the written consent of the Administrative Agent
to such increase required by Section 2.06(c)(i), the Administrative Agent shall
accept such Maximum Credit Amount Increase Certificate or Additional Lender
Certificate and record the information contained therein in the Register
required to be maintained by the Administrative Agent pursuant to Section
12.04(b)(iv). No increase in the Aggregate Maximum Credit Amounts shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this Section 2.06(c)(iv).
Section 2.07 Borrowing Base.
(a) Initial Borrowing Base. For the period from and including the
Effective Date to but excluding the first Redetermination Date, the amount of
the Borrowing Base shall be $60,000,000. Notwithstanding the foregoing, the
Borrowing Base shall be subject to further adjustments from time to time
pursuant to Section 8.13(c), Section 9.12(a) or Section 9.13.
(b) Scheduled and Interim Redeterminations. Subject to Section
2.07(d), the Borrowing Base shall be redetermined (a "Scheduled
Redetermination") on May 1st and November 1st of each year, commencing November
1, 2004. In addition, (i) the Borrower may, by written notice to the
Administrative Agent, request that the Borrowing Base be redetermined one time
between each Scheduled Redetermination, and (ii) the Administrative Agent may,
at the direction of the Required Lenders, by written notice to the Borrower,
request that the Borrowing Base be redetermined one time between each Scheduled
Redetermination (each redetermination pursuant to clause (i) and (ii) of this
Section 2.07(b), an "Interim Redetermination"), all in accordance with this
Section 2.07.
(c) Scheduled and Interim Redetermination Procedure.
(i) Each Scheduled Redetermination and each Interim
Redetermination shall be effectuated as follows: Upon receipt by the
Administrative Agent of (A) the Reserve Report and the certificate
required to be delivered by the Borrower to the Administrative Agent,
in the case of a Scheduled Redetermination, pursuant to Section
8.12(a) and (c), and, in the case of an Interim Redetermination,
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pursuant to Section 8.12(b) and (c), and (B) such other reports, data
and supplemental information, including, without limitation, the
information provided pursuant to Section 8.12(c), as may, from time to
time, be reasonably requested by the Majority Lenders (the Reserve
Report, such certificate and such other reports, data and supplemental
information being the "Engineering Reports"), the Administrative Agent
shall evaluate the information contained in the Engineering Reports
and shall, in good faith, propose a new Borrowing Base (the "Proposed
Borrowing Base") based upon such information and such other
information (including, without limitation, the status of title
information with respect to the Oil and Gas Properties as described in
the Engineering Reports and the existence of any other Debt) as the
Administrative Agent deems appropriate and consistent with its normal
oil and gas lending criteria as it exists at the particular time. For
purposes of the Administrative Agent's evaluation in connection with
determining the Proposed Borrowing Base as described in the foregoing
sentence, the Administrative Agent shall only evaluate those Oil and
Gas Properties located in the United States of America or Canada (or
their respective territorial waters) unless otherwise agreed by the
requisite number of Lenders as specified in Section 12.01(b). In no
event shall the Proposed Borrowing Base exceed the Aggregate Maximum
Credit Amounts.
(ii) The Administrative Agent shall notify the Borrower and the
Lenders of the Proposed Borrowing Base (the "Proposed Borrowing Base
Notice"):
(A) in the case of a Scheduled Redetermination (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on or before the April 15th and October 15th of such year
following the date of delivery or (2) if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then
promptly after the Administrative Agent has received complete Engineering
Reports from the Borrower and has had a reasonable opportunity to determine the
Proposed Borrowing Base in accordance with Section 2.07(c)(i); and
(B) in the case of an Interim Redetermination, promptly, and
in any event, within fifteen (15) days after the Administrative Agent has
received the required Engineering Reports.
(iii) Any Proposed Borrowing Base that would increase the
Borrowing Base then in effect must be approved or deemed to have been
approved by all of the Lenders as provided in this Section
2.07(c)(iii); and any Proposed Borrowing Base that would decrease or
maintain the Borrowing Base then in effect must be approved or be
deemed to have been approved by the Required Lenders as provided in
this Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing Base
Notice, each Lender shall have fifteen (15) days to agree with the
Proposed Borrowing Base or disagree with the Proposed Borrowing Base
by proposing an alternate Borrowing Base. If at the end of such
fifteen (15) days, any Lender has not communicated its approval or
disapproval in writing to the Administrative Agent, such silence shall
be deemed to be an approval of the Proposed Borrowing Base. If, at the
end of such 15-day period, all of the Lenders, in the case of a
Proposed Borrowing Base that would increase the Borrowing Base then in
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effect, or the Required Lenders, in the case of a Proposed Borrowing
Base that would decrease or maintain the Borrowing Base then in
effect, have approved or deemed to have approved, as aforesaid, then
the Proposed Borrowing Base shall become the new Borrowing Base,
effective on the date specified in Section 2.07(d). If, however, at
the end of such 15-day period, all of the Lenders or the Required
Lenders, as applicable, have not approved or deemed to have approved,
as aforesaid, then the Administrative Agent shall poll the Lenders to
ascertain the highest Borrowing Base then acceptable to the Required
Lenders for purposes of this Section 2.07 and, so long as such amount
does not increase the Borrowing Base then in effect, such amount shall
become the new Borrowing Base, effective on the date specified in
Section 2.07(d).
(d) Effectiveness of a Redetermined Borrowing Base. After a
redetermined Borrowing Base is approved or is deemed to have been approved by
all of the Lenders or the Required Lenders, as applicable, pursuant to Section
2.07(c)(iii), the Administrative Agent shall notify the Borrower and the Lenders
of the amount of the redetermined Borrowing Base (the "New Borrowing Base
Notice"), and such amount shall become the new Borrowing Base, effective and
applicable to the Borrower, the Agents, the Issuing Bank and the Lenders:
(A) in the case of a Scheduled Redetermination, (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on the May 1st or November 1st, as applicable, following
such notice, or (2) if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrower pursuant to Section
8.12(a) and (c) in a timely and complete manner, then on the Business Day next
succeeding delivery of such notice; and
(B) in the case of an Interim Redetermination, on the Business
Day next succeeding delivery of such notice.
Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 8.13(c), Section 9.12(a) or
Section 9.13, whichever occurs first. Notwithstanding the foregoing, no
Scheduled Redetermination or Interim Redetermination shall become effective
until the New Borrowing Base Notice related thereto is received by the Borrower.
Section 2.08 Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein,
the Borrower may request the issuance of Letters of Credit for its own account
or for the account of any of its Subsidiaries, in a form reasonably acceptable
to the Administrative Agent and the Issuing Bank, at any time and from time to
time during the Availability Period. In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of any
form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
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(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (not less than five (5) Business Days in
advance of the requested date of issuance, amendment, renewal or extension) a
notice:
(i) requesting the issuance of a Letter of Credit or
identifying the Letter of Credit to be amended, renewed or extended;
(ii) specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day);
(iii) specifying the date on which such Letter of Credit is to
expire (which shall comply with Section 2.08(c));
(iv) specifying the amount of such Letter of Credit;
(v) specifying the name and address of the beneficiary
thereof and such other information as shall be necessary to prepare, amend,
renew or extend such Letter of Credit; and
(vi) specifying the amount of the then effective Borrowing
Base, the current total Revolving Credit Exposures (without regard to the
requested Letter of Credit or the requested amendment, renewal or extension of
an outstanding Letter of Credit) and the pro forma total Revolving Credit
Exposures (giving effect to the requested Letter of Credit or the requested
amendment, renewal or extension of an outstanding Letter of Credit).
Each notice shall constitute a representation that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the LC
Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing Base).
If requested by the Issuing Bank, the Borrower also shall submit a letter of
credit application on the Issuing Bank's standard form in connection with any
request for a Letter of Credit.
(c) Expiration Date. Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely
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and unconditionally agrees to pay to the Administrative Agent, for the account
of the Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement
made by the Issuing Bank and not reimbursed by the Borrower on the date due as
provided in Section 2.08(e), or of any reimbursement payment required to be
refunded to the Borrower for any reason. Each Lender acknowledges and agrees
that its obligation to acquire participations pursuant to this Section 2.08(d)
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 11:00 a.m., Houston, Texas time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 9:00 a.m., Houston, Texas time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 11:00 a.m., Houston, Texas time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
9:00 a.m., Houston, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
if such LC Disbursement is not less than $1,000,000, the Borrower may, subject
to the conditions to Borrowing set forth herein, request in accordance with
Section 2.03 that such payment be financed with an ABR Borrowing in an
equivalent amount and, to the extent so financed, the Borrower's obligation to
make such payment shall be discharged and replaced by the resulting ABR
Borrowing. If the Borrower makes such a request (and if the Borrower fails to
make such a request and has not made the relevant reimbursement, it shall be
deemed to have made such a request), the Administrative Agent shall notify each
Lender of the applicable LC Disbursement, the payment then due from the Borrower
in respect thereof and such Lender's Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower, in
the same manner as provided in Section 2.05 with respect to Loans made by such
Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Issuing Bank the amounts so received by it from the Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this Section 2.08(e), the Administrative Agent shall distribute such
payment to the Issuing Bank or, to the extent that Lenders have made payments
pursuant to this Section 2.08(e) to reimburse the Issuing Bank, then to such
Lenders and the Issuing Bank as their interests may appear.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in Section 2.08(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any
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respect, (iii) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit or any Letter of Credit Agreement, or (iv) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section 2.08(f), constitute a legal or
equitable discharge of, or provide a right of setoff against, the Borrower's
obligations hereunder. Neither the Administrative Agent, the Lenders nor the
Issuing Bank, nor any of their Related Parties shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; provided that the foregoing in
this and the preceding sentence shall not be construed to excuse the Issuing
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised all requisite care in each such
determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section
2.08(e)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse
the Issuing Bank shall be for the account of such Lender to the extent of such
payment.
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(i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of the
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 3.05(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to Letters
of Credit to be issued thereafter and (ii) references herein to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of the Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of the Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.
(j) Cash Collateralization. If (i) any Event of Default shall occur
and be continuing and the Borrower receives notice from the Administrative Agent
or the Majority Lenders demanding the deposit of cash collateral pursuant to
this Section 2.08(j), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower or any Subsidiary described in
Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to the
Administrative Agent, for the benefit of the Issuing Bank and the Lenders, an
exclusive first priority and continuing perfected security interest in and Lien
on such account and all cash, checks, drafts, certificates and instruments, if
any, from time to time deposited or held in such account, all deposits or wire
transfers made thereto, any and all investments purchased with funds deposited
in such account, all interest, dividends, cash, instruments, financial assets
and other Property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any or all of the foregoing, and all
proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor. The Borrower's obligation to
deposit amounts pursuant to this Section 2.08(j) shall be absolute and
unconditional, without regard to whether any beneficiary of any such Letter of
Credit has attempted to draw down all or a portion of such amount under the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower or any of its Subsidiaries may now
or hereafter have against any such beneficiary, the Issuing Bank, the
Administrative Agent, the Lenders or any other Person for any reason whatsoever.
Such deposit shall be held as collateral securing the payment and performance of
the Borrower's and the Guarantor's obligations under this Agreement and the
other Loan Documents. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such
33
deposits, which investments shall be made at the option and sole discretion of
the Administrative Agent and at the Borrower's risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the Issuing Bank for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated, be applied to satisfy other obligations of the Borrower and the
Guarantors under this Agreement or the other Loan Documents. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, and the Borrower is not otherwise required to
pay to the Administrative Agent the excess attributable to an LC Exposure in
connection with any prepayment pursuant to Section 3.04(c), then such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
Section 3.01 Repayment of Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date.
Section 3.02 Interest.
(a) ABR Loans. The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.
(b) Eurodollar Loans. The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.
(c) Post-Default Rate. Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by the
Borrower or any Guarantor hereunder or under any other Loan Document is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to two percent (2%) plus the rate applicable to ABR Loans as
provided in Section 3.02(a), but in no event to exceed the Highest Lawful Rate.
(d) Interest Payment Dates. Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and on the
Termination Date; provided that (i) interest accrued pursuant to Section 3.02(c)
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than an optional prepayment of an ABR Loan prior to the
Termination Date), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment, and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
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(e) Interest Rate Computations. All interest hereunder shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall
be determined by the Administrative Agent, and such determination shall be
conclusive, absent manifest error, and be binding upon the parties hereto.
Section 3.03 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest
Period; or
(b) the Administrative Agent is advised by the Majority Lenders that
the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
Section 3.04 Prepayments.
(a) Optional Prepayments. The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with Section 3.04(b).
(b) Notice and Terms of Optional Prepayment. The Borrower shall
notify the Administrative Agent by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing,
not later than 10:00 a.m., Houston, Texas time, three Business Days before the
date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not
later than 10:00 a.m., Houston, Texas time, one Business Day before the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid. Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02. Each prepayment of a Borrowing shall be applied
ratably to the Loans
35
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 3.02.
(c) Mandatory Prepayments.
(i) If, after giving effect to any termination or reduction of
the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), the total
Revolving Credit Exposures exceed the total Commitments, then the Borrower shall
(A) prepay the Borrowings on the date of such termination or reduction in an
aggregate principal amount equal to such excess, and (B) if any excess remains
after prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(j).
(ii) Upon any redetermination of or adjustment to the amount
of the Borrowing Base in accordance with Section 2.07 or Section 8.13(c), if the
total Revolving Credit Exposures exceeds the redetermined or adjusted Borrowing
Base, then the Borrower shall (A) prepay the Borrowings in an aggregate
principal amount equal to such excess, and (B) if any excess remains after
prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(j). The Borrower shall be
obligated to make 50% of such prepayment and/or deposit of cash collateral
within forty-five (45) days following its receipt of the New Borrowing Base
Notice in accordance with Section 2.07(d) or the date the adjustment occurs,
with the balance of such prepayment and/or deposit of cash collateral to be made
on or prior to the earlier of (x) ninety (90) days following the Borrower's
receipt of such New Borrowing Base Notice or the date such adjustment occurs or
(y) the Termination Date; provided that all payments and/or deposits of cash
collateral required to be made pursuant to this Section 3.04(c)(ii) must be made
on or prior to the Termination Date.
(iii) Upon any adjustments to the Borrowing Base pursuant to
Section 9.12(a) or Section 9.13, if the total Revolving Credit Exposures exceed
the Borrowing Base as adjusted, then the Borrower shall (A) prepay the
Borrowings in an aggregate principal amount equal to such excess, and (B) if any
excess remains after prepaying all of the Borrowings as a result of an LC
Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
equal to such excess to be held as cash collateral as provided in Section
2.08(j). The Borrower shall be obligated to make such prepayment and/or deposit
of cash collateral on the date it receives cash proceeds as a result of such
disposition; provided that all payments required to be made pursuant to this
Section 3.04(c)(iii) must be made on or prior to the Termination Date.
(iv) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding,
and, second, to any Eurodollar Borrowings then outstanding, and if more than one
Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in
order of priority beginning with the Eurodollar Borrowing with the least number
of days remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.
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(v) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied ratably to the Loans included in the prepaid
Borrowings. Prepayments pursuant to this Section 3.04(c) shall be accompanied by
accrued interest to the extent required by Section 3.02.
(d) No Premium or Penalty. Prepayments permitted or required under
this Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.
Section 3.05 Fees.
(a) Commitment Fees. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the applicable Commitment Fee Rate on the daily unused amount of
the Commitment of such Lender during the period from and including the date of
this Agreement to but excluding the Termination Date. Accrued commitment fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the Termination Date, commencing on the first such
date to occur after the date hereof. All commitment fees shall be computed on
the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender's Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate of 0.20% per annum on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the date of
this Agreement to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC Exposure, and (iii)
to the Issuing Bank, for its own account, its standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the date of this Agreement; provided that all
such fees shall be payable on the Termination Date and any such fees accruing
after the Termination Date shall be payable on demand. Any other fees payable to
the Issuing Bank pursuant to this Section 3.05(b) shall be payable within 10
days after demand. All participation fees and fronting fees shall be computed on
the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
37
(c) Administrative Agent Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.
(d) Borrowing Base Increase Fees. In the event that a redetermined
Borrowing Base represents an increase of the Borrowing Base above the highest
previous Borrowing Base, the Borrower agrees to pay to the Administrative Agent
for the account of each Lender a Borrowing Base increase fee, which shall accrue
at a rate of 0.01% for each $1,000,000 of such Lender's Commitment (in effect on
the applicable Redetermination Date) applied against the difference between such
Lender's Applicable Percentage of the Borrowing Base in effect immediately after
such increase and such Lender's highest previous Applicable Percentage of the
Borrowing Base. All Borrowing Base increase fees shall be payable on the third
Business day following the applicable Redetermination Date.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Payments by the Borrower. The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 11:00 a.m., Houston, Texas
time, on the date when due, in immediately available funds, without defense,
deduction, recoupment, set-off or counterclaim. Fees, once paid, shall not be
refundable under any circumstances absent manifest error on the part of the
Administrative Agent or any Lender in assessing the relevant fee. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices specified in Section
12.01, except payments to be made directly to the Issuing Bank as expressly
provided herein and except that payments pursuant to Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, unreimbursed LC Disbursements, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.
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(c) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this Section 4.01(c) shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
Section 4.02 Presumption of Payment by Borrower. Unless the Administrative
Agent shall have received notice from the Borrower prior to the date on which
any payment is due to the Administrative Agent for the account of the Lenders or
the Issuing Bank that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
Section 4.03 Certain Deductions by Administrative Agent. If any Lender
shall fail to make any payment required to be made by it pursuant to Section
2.05(b), Section 2.08(d), Section 2.08(e) or Section 4.02, then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
Section 4.04 Disposition of Proceeds. The Security Instruments contain an
assignment by the Borrower and/or the Guarantors unto and in favor of the
Administrative Agent for the benefit of the Lenders of all of the Borrower's or
each Guarantor's interest in and to production
39
and all proceeds attributable thereto which may be produced from or allocated to
the Mortgaged Property. The Security Instruments further provide in general for
the application of such proceeds to the satisfaction of the Indebtedness and
other obligations described therein and secured thereby. Notwithstanding the
assignment contained in such Security Instruments, until the occurrence of an
Event of Default, (a) the Administrative Agent and the Lenders agree that they
will neither notify the purchaser or purchasers of such production nor take any
other action to cause such proceeds to be remitted to the Administrative Agent
or the Lenders, but the Lenders will instead permit such proceeds to be paid to
the Borrower and its Subsidiaries and (b) the Lenders hereby authorize the
Administrative Agent to take such actions as may be necessary to cause such
proceeds to be paid to the Borrower and/or such Subsidiaries.
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
Section 5.01 Increased Costs.
(a) Eurodollar Changes in Law. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such
Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or the Issuing Bank
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's or the Issuing
Bank's capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender's or the Issuing Bank's holding company could
have achieved but for such Change in Law (taking into consideration such
Lender's or the Issuing Bank's policies and the policies of such Lender's or the
Issuing Bank's holding company with respect to capital adequacy), then from time
to time the Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender's or the Issuing Bank's holding company for any such
reduction suffered.
(c) Certificates. A certificate of a Lender or the Issuing Bank
setting forth the amount or amounts necessary to compensate such Lender or the
Issuing Bank or its holding company, as the case may be, as specified in Section
5.01(a) or (b) shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or
40
the Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Effect of Failure or Delay in Requesting Compensation. Failure
or delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section 5.01 shall not constitute a waiver of such Lender's or
the Issuing Bank's right to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender or the Issuing Bank pursuant to
this Section for any increased costs or reductions incurred more than 270 days
prior to the date that such Lender or the Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's or the Issuing Bank's intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
Section 5.02 Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to Section 5.04(b), then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
actually incurred and attributable to such event. In the case of a Eurodollar
Loan, such loss, cost or expense to any Lender shall include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market.
A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
Section 5.03 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower or any Guarantor under any Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 5.03(a)),
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
41
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 Governmental Authority in
accordance with applicable law.
(b) Payment of Other Taxes by the Borrower. The Borrower shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
(c) Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent, each Lender and the Issuing Bank, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section
5.03) and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate of the Administrative Agent, a Lender or the Issuing Bank as to
the amount of such payment or liability under this Section 5.03 shall be
delivered to the Borrower and shall be conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any payment
of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
(f) Tax Refunds. If the Administrative Agent or a Lender determines,
in its sole discretion, that it has received a refund of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with respect to
which the Borrower has paid additional amounts pursuant to this Section 5.03, it
shall pay over such refund to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
5.03 with respect to the Taxes or Other Taxes giving rise to such refund), net
of all out-of-pocket expenses of the Administrative Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to the Administrative Agent or such
Lender in the event the Administrative Agent or such Lender is required to repay
such refund to such Governmental Authority. This Section 5.03 shall not be
construed to require the Administrative Agent or any
42
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to the Borrower or any other Person.
Section 5.04 Mitigation Obligations; Replacement of Lenders.
(a) Designation of Different Lending Office. If any Lender requests
compensation under Section 5.01, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 5.03, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 5.01 or Section 5.03, as the case may be, in the future and (ii)
would not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation
under Section 5.01, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 5.03, or if any Lender defaults in its obligation to fund
Loans hereunder, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 12.04(b)), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC
Disbursements, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 5.01 or payments required to be made
pursuant to Section 5.03, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
Section 5.05 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender's obligation to make such Eurodollar Loans shall be
suspended (the "Affected Loans") until such time as such Lender may again make
and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans on the date specified by such Lender in such
43
notice) and, to the extent that Affected Loans are so made as (or converted
into) ABR Loans, all payments of principal which would otherwise be applied to
such Lender's Affected Loans shall be applied instead to its ABR Loans.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Effective Date. The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 12.02):
(a) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder.
(b) The Administrative Agent shall have received a certificate of
the Secretary or an Assistant Secretary of each of the Borrower and each
Guarantor setting forth (i) resolutions of its board of directors or managers
with respect to the authorization of the Borrower or such Guarantor to execute
and deliver the Loan Documents to which it is a party and to enter into the
transactions contemplated in those documents, (ii) the officers of the Borrower
or such Guarantor (y) who are authorized to sign the Loan Documents to which the
Borrower or such Guarantor is a party and (z) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of such authorized officers, and
(iv) the articles or certificate of incorporation or organization and bylaws,
operating agreement, limited liability company agreement or regulations of the
Borrower and such Guarantor, certified as being true and complete. The
Administrative Agent and the Lenders may conclusively rely on such certificate
until the Administrative Agent receives notice in writing from the Borrower to
the contrary.
(c) The Administrative Agent shall have received certificates of the
appropriate State agencies with respect to the existence, qualification and good
standing of the Borrower and each Guarantor.
(d) The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit B, duly and
properly executed by a Responsible Officer and dated the Effective Date.
(e) The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.
(f) The Administrative Agent shall have received duly executed Notes
payable to the order of each Lender in a principal amount equal to its Maximum
Credit Amount dated as of the date hereof.
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(g) The Administrative Agent shall have received from each party
thereto duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Security Instruments described on Exhibit D-1. In
connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall:
(i) be reasonably satisfied that the Security Instruments
create first priority, perfected Liens (subject only to Excepted Liens
identified in clauses (a) to (d) and (f) of the definition thereof, but subject
to the provisos at the end of such definition) on no less than 80% of the total
value of the Oil and Gas Properties evaluated in the Initial Reserve Report; and
(ii) have received certificates, together with undated, blank
stock powers for each such certificate, representing all of the issued and
outstanding Equity Interests of each of the Borrower's Subsidiaries, to the
extent such Equity Interests are certificated.
(h) The Administrative Agent shall have received an opinion of (i)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P., special counsel to the Borrower, substantially in the
form of Exhibit C-1 hereto, and (ii) local counsel in each of the following
states: Louisiana, Texas (if not addressed in the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
L.L.P.) and any other jurisdictions requested by the Administrative Agent,
substantially in the form of Exhibit C-2.
(i) The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.13.
(j) The Administrative Agent shall have received title information
as the Administrative Agent may reasonably require satisfactory to the
Administrative Agent setting forth the status of title to at least 80% of the
total value of the Oil and Gas Properties evaluated in the Initial Reserve
Report.
(k) The Administrative Agent shall be reasonably satisfied with the
environmental condition of the Oil and Gas Properties of the Borrower and its
Subsidiaries.
(l) The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has received
all consents and approvals required by Section 7.03.
(m) The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a) and the Initial Reserve Report
accompanied by a certificate covering the matters described in Section 8.12(c).
(n) The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens (other than those being assigned
or released on or prior to the Effective Date or Liens permitted by Section
9.03) encumbering the Properties of the Borrower and the Subsidiaries for each
of the following jurisdictions: Delaware, Louisiana, Texas, and any other
jurisdiction requested by the Administrative Agent.
(o) The Administrative Agent shall have received a letter from CT
Corporation evidencing the appointment of CT Corporation as authorized agent for
service of
45
process on each of the Borrower and each Obligor (as defined in the Guarantee
and Collateral Agreement) under each Loan Document to which it is a party.
(p) The Administrative Agent shall be reasonably satisfied that the
Borrower has no other Debt for borrowed money other than Debt reflected in the
Financial Statements.
(q) The Administrative Agent shall have received such other
documents as the Administrative Agent or special counsel to the Administrative
Agent may reasonably request.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 12.02)
at or prior to 2:00 p.m., Houston, Texas time, on August 3, 2004 (and, in the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).
Section 6.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding), and of
the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions, in addition to the
conditions in Section 6.01:
(a) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Material Adverse Effect shall have occurred.
(c) The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct in all material respects on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, except to the extent any such representations
and warranties are expressly limited to an earlier date, in which case, on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, such representations and
warranties shall continue to be true and correct as of such specified earlier
date.
(d) The making of such Loan or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, would not conflict with, or
cause any Lender or the Issuing Bank to violate or exceed, any applicable
Governmental Requirement, and no Change in Law shall have occurred, and no
litigation shall be pending or threatened, which does or, with respect to any
threatened litigation, seeks to, enjoin, prohibit or restrain, the making or
repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.
46
(e) The receipt by the Administrative Agent of a Borrowing Request
in accordance with Section 2.03 or a request for a Letter of Credit in
accordance with Section 2.08(b), as applicable.
Each Borrowing and each issuance, amendment, renewal or extension of any
Letter of Credit shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in Section 6.02(a)
through (e).
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
Section 7.01 Organization; Powers. Each of the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, and has all material governmental licenses, authorizations, consents
and approvals necessary, to own its assets and to carry on its business as now
conducted, and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where failure to have
such power, authority, licenses, authorizations, consents, approvals and
qualifications could not reasonably be expected to have a Material Adverse
Effect.
Section 7.02 Authority; Enforceability. The Transactions are within the
Borrower's and each Guarantor's corporate or limited liability company powers
and have been duly authorized by all necessary corporate or limited liability
company and, if required, stockholder or member action. Each Loan Document to
which the Borrower and each Guarantor is a party has been duly executed and
delivered by the Borrower and such Guarantor and constitutes a legal, valid and
binding obligation of the Borrower and such Guarantor, as applicable,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
Section 7.03 Approvals; No Conflicts. The Transactions (a) do not require
any consent or approval of, registration or filing with, or any other action by,
any Governmental Authority or any other third Person, nor is any such consent,
approval, registration, filing or other action necessary for the validity or
enforceability of any Loan Document or the consummation of the transactions
contemplated thereby, except such as have been obtained or made and are in full
force and effect other than (i) the recording and filing of the Security
Instruments as required by this Agreement and (ii) those third party approvals
or consents which, if not made or obtained, would not cause a Default hereunder,
could not reasonably be expected to have a Material Adverse Effect or do not
have an adverse effect on the enforceability of the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any Subsidiary or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or any
Subsidiary or its Properties, or give rise to a right thereunder to require any
payment to be made by the Borrower or such Subsidiary and (d) will not result in
the
47
creation or imposition of any Lien on any Property of the Borrower or any
Subsidiary (other than the Liens created by the Loan Documents).
Section 7.04 Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders equity and
cash flows (i) as of and for the fiscal year ended December 31, 2003 (including
the footnotes thereto), reported on by KPMG, LLP, independent public
accountants, and (ii) as of and for the fiscal quarter and the portion of the
fiscal year ended March 31, 2004, certified by its chief financial officer. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of the Borrower and its
Consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to year-end audit adjustments and the absence of footnotes in
the case of the unaudited quarterly financial statements.
(b) Since December 31, 2003, (i) there has been no material adverse
change in the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole and (ii) the
business of the Borrower and its Subsidiaries has been conducted only in the
ordinary course consistent with past business practices.
(c) Neither the Borrower nor any Subsidiary has on the date hereof
any material Debt (including Disqualified Capital Stock) or any contingent
liabilities, off-balance sheet liabilities or partnerships, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments, except as referred to or reflected or
provided for in the Financial Statements.
Section 7.05 Litigation.
(a) Except as set forth on Schedule 7.05, there are no actions,
suits, investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Subsidiary (i) not fully covered by
insurance (except for normal deductibles or self-insured retentions) as to which
there is a reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect, or (ii) that involve any Loan Document.
(b) Since the date of this Agreement, there has been no change in
the status of the matters disclosed in Schedule 7.05 that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
Section 7.06 Environmental Matters. Except as could not be reasonably
expected to have a Material Adverse Effect (or with respect to (c), (d) and (e)
below, where the failure to take such actions could not be reasonably expected
to have a Material Adverse Effect):
(a) neither any Property of the Borrower or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court or
Governmental Authority or any Environmental Laws.
48
(b) no Property of the Borrower or any Subsidiary nor the operations
currently conducted thereon or, to the knowledge of the Borrower, by any prior
owner or operator of such Property or operation, are in violation of or subject
to any existing, pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or Governmental Authority or to any remedial
obligations under Environmental Laws.
(c) all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of the Borrower and each Subsidiary,
including, without limitation, past or present treatment, storage, disposal or
release of a hazardous substance, oil and gas waste or solid waste into the
environment, have been duly obtained or filed, and the Borrower and each
Subsidiary are in compliance with the terms and conditions of all such notices,
permits, licenses and similar authorizations.
(d) all hazardous substances, solid waste and oil and gas waste, if
any, generated at any and all Property of the Borrower or any Subsidiary have in
the past been transported, treated and disposed of in accordance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and, to the
knowledge of the Borrower, all such transport carriers and treatment and
disposal facilities have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment, and are not the subject of any existing,
pending or threatened action, investigation or inquiry by any Governmental
Authority in connection with any Environmental Laws.
(e) the Borrower has taken all steps reasonably necessary to
determine and has determined that no oil, hazardous substances, solid waste or
oil and gas waste, have been disposed of or otherwise released and there has
been no threatened release of any oil, hazardous substances, solid waste or oil
and gas waste on or to any Property of the Borrower or any Subsidiary except in
compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment.
(f) to the extent applicable, all Property of the Borrower and each
Subsidiary currently satisfies all design, operation, and equipment requirements
imposed by the OPA, and the Borrower does not have any reason to believe that
such Property, to the extent subject to the OPA, will not be able to maintain
compliance with the OPA requirements during the term of this Agreement.
(g) neither the Borrower nor any Subsidiary has any known contingent
liability or Remedial Work in connection with any release or threatened release
of any oil, hazardous substance, solid waste or oil and gas waste into the
environment.
Section 7.07 Compliance with the Laws and Agreements; No Defaults.
(a) Each of the Borrower and each Subsidiary is in compliance with
all Governmental Requirements applicable to it or its Property and all
agreements and other instruments binding upon it or its Property, and possesses
all licenses, permits, franchises, exemptions, approvals and other governmental
authorizations necessary for the ownership of its
49
Property and the conduct of its business, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
(b) Neither the Borrower nor any Subsidiary is in default nor has
any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default or would require the Borrower or a Subsidiary to Redeem or make any
offer to do any of the foregoing under any indenture, note, credit agreement or
instrument pursuant to which any Material Indebtedness is outstanding or by
which the Borrower or any Subsidiary or any of their Properties is bound.
(c) No Default has occurred and is continuing.
Section 7.08 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of, or subject to regulation under, the
Investment Company Act of 1940, as amended.
Section 7.09 Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of, or subject
to regulation under, the Public Utility Holding Company Act of 1935, as amended.
Section 7.10 Taxes. Each of the Borrower and its Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves in accordance with GAAP or (b) to the
extent that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of Taxes and other governmental charges
are, in the reasonable opinion of the Borrower, adequate. No Tax Lien has been
filed and, to the knowledge of the Borrower, no claim is being asserted with
respect to any such Tax or other such governmental charge.
Section 7.11 ERISA.
(a) Except as set forth on Schedule 7.11, the Borrower, the
Subsidiaries and each ERISA Affiliate have complied in all material respects
with ERISA and, where applicable, the Code regarding each Plan.
(b) Except as set forth on Schedule 7.11, each Plan is, and has
been, maintained in substantial compliance with ERISA and, where applicable, the
Code.
(c) Except as set forth on Schedule 7.11, no act, omission or
transaction has occurred which could result in imposition on the Borrower, any
Subsidiary or any ERISA Affiliate (whether directly or indirectly) of (i) either
a civil penalty assessed pursuant to subsections (c), (i) or (l) of section 502
of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or
(ii) breach of fiduciary duty liability damages under section 409 of ERISA.
50
(d) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September 2, 1974. No
liability to the PBGC (other than for the payment of current premiums which are
not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has been or
is expected by the Borrower, any Subsidiary or any ERISA Affiliate to be
incurred with respect to any Plan. No ERISA Event with respect to any Plan has
occurred.
(e) Full payment when due has been made of all amounts which the
Borrower, the Subsidiaries or any ERISA Affiliate is required under the terms of
each Plan or applicable law to have paid as contributions to such Plan as of the
date hereof, and no accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists with respect
to any Plan.
(f) The actuarial present value of the benefit liabilities under
each Plan which is subject to Title IV of ERISA does not, as of the end of the
Borrower's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA.
(g) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its
sole discretion at any time without any material liability.
(h) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the six-year period
preceding the date hereof sponsored, maintained or contributed to, any
Multiemployer Plan.
(i) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate
is required to provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the Plan.
Section 7.12 Disclosure; No Material Misstatements. The Borrower has
disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which it or any of its Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of the Borrower or any Subsidiary to
the Administrative Agent or any Lender or any of their Affiliates in connection
with the negotiation of this Agreement or any other Loan Document or delivered
hereunder or under any other Loan Document (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time. There is no fact
51
peculiar to the Borrower or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect or in the future is reasonably likely to have a
Material Adverse Effect and which has not been set forth in this Agreement or
the Loan Documents or the other documents, certificates and statements furnished
to the Administrative Agent or the Lenders by or on behalf of the Borrower or
any Subsidiary prior to, or on, the date hereof in connection with the
transactions contemplated hereby. There are no statements or conclusions in any
Reserve Report which are based upon or include misleading information or fail to
take into account material information regarding the matters reported therein.
Section 7.13 Insurance. The Borrower has, and has caused all its
Subsidiaries to have, (a) all insurance policies sufficient for the compliance
by each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in at least amounts and against such risk
(including, without limitation, public liability) that are usually insured
against by companies similarly situated and engaged in the same or a similar
business for the assets and operations of the Borrower and its Subsidiaries.
Section 7.14 Restriction on Liens. Neither the Borrower nor any of the
Subsidiaries is a party to any material agreement or arrangement (other than
Capital Leases creating Liens permitted by Section 9.03(c), but then only on the
Property subject of such Capital Lease), or subject to any order, judgment, writ
or decree, which either restricts or purports to restrict its ability to grant
Liens to the Administrative Agent and the Lenders on or in respect of their
Properties to secure the Indebtedness and the Loan Documents.
Section 7.15 Subsidiaries. Except as set forth on Schedule 7.15 or as
disclosed in writing to the Administrative Agent (which shall promptly furnish a
copy to the Lenders), which shall be a supplement to Schedule 7.15, the Borrower
has no Subsidiaries. Each Subsidiary on Schedule 7.15 is a Wholly-Owned
Subsidiary, organized under the laws of a state of the United States of America
or the District of Columbia.
Section 7.16 Location of Business and Offices. The Borrower's jurisdiction
of organization is Delaware; the name of the Borrower as listed in the public
records of its jurisdiction of organization is Energy Partners, Ltd.; and the
organizational identification number of the Borrower in its jurisdiction of
organization is DE 2863545. The Borrower's principal place of business and chief
executive offices are located at the address specified in Section 12.01 (or as
set forth in a notice delivered pursuant to Section 8.01(m) and Section
12.01(c)). Each Subsidiary's jurisdiction of organization, name as listed in the
public records of its jurisdiction of organization, organizational
identification number in its jurisdiction of organization, and the location of
its principal place of business and chief executive office is stated on Schedule
7.15 (or as set forth in a notice delivered pursuant to Section 8.01(m)).
Section 7.17 Properties; Titles, Etc.
(a) Each of the Borrower and the Subsidiaries has good and
defensible title (or has earned an assignment which, upon receipt, will result
in good and defensible title) to the working and net revenue interests in the
Oil and Gas Properties evaluated in the most recently delivered Reserve Report
and good title to all its personal Properties, in each case, free and clear of
all Liens except Liens permitted by Section 9.03. After giving full effect to
the Excepted
52
Liens, the Borrower or the Subsidiary specified as the owner owns the net
interests in production attributable to the Hydrocarbon Interests as reflected
in the most recently delivered Reserve Report, and the ownership of such
Properties shall not in any material respect obligate the Borrower or such
Subsidiary to bear the costs and expenses relating to the maintenance,
development and operations of each such Property in an amount in excess of the
working interest of each Property set forth in the most recently delivered
Reserve Report that is not offset by a corresponding proportionate increase in
the Borrower's or such Subsidiary's net revenue interest in such Property.
(b) All material leases and agreements necessary for the conduct of
the business of the Borrower and the Subsidiaries are valid and subsisting, in
full force and effect, and there exists no default or event or circumstance
which with the giving of notice or the passage of time or both would give rise
to a default under any such lease or leases, which would affect in any material
respect the conduct of the business of the Borrower and the Subsidiaries, taken
as a whole.
(c) The leases which constitute any part of the Oil and Gas
Properties are in full force and effect as to those portions within such Oil and
Gas Properties, are valid, subsisting leases as to those portions within such
Oil and Gas Properties to which they pertain and all rentals, royalties,
overriding royalties, net profits or other production burdens and other amounts
due and payable in accordance with the terms of the leases as to those portions
within such Oil and Gas Properties have been duly paid or provided for; the
obligations to be performed under the leases as to those portions within such
Oil and Gas Properties have been duly performed; and the Borrower is not aware
of any default by any third party under any of the leases with respect to such
third party's obligations.
(d) The rights and Properties presently owned, leased or licensed by
the Borrower and the Subsidiaries including, without limitation, all easements
and rights of way, include all rights and Properties necessary to permit the
Borrower and the Subsidiaries to conduct their business in all material respects
in the same manner as its business has been conducted prior to the date hereof.
(e) All of the Properties of the Borrower and the Subsidiaries which
are reasonably necessary for the operation of their businesses are in good
working condition and are maintained in accordance with prudent business
standards.
(f) The Borrower and each Subsidiary owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual Property
material to its business, and the use thereof by the Borrower and such
Subsidiary does not infringe upon the rights of any other Person, except for any
such infringements that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. The Borrower and its
Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, seismic data,
maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and
53
production of Hydrocarbons, with such exceptions as could not reasonably be
expected to have a Material Adverse Effect.
Section 7.18 Interest in the Oil and Gas Properties. With respect to each
of the Oil and Gas Properties of the Borrower and its Subsidiaries, the
ownership of the Borrower or the relevant Subsidiary in such property will, with
respect to the ▇▇▇▇▇, units and/or tracts of land in connection with such
property, (i) entitle the Borrower or the relevant Subsidiary to receive
(subject to the terms and provisions of this Agreement) a decimal share of the
oil and gas produced from, or allocated to, such ▇▇▇▇▇, units and/or tracts
equal to not less than the decimal share set forth in connection with such
▇▇▇▇▇, units and/or tracts, and (ii) cause the Borrower or the relevant
Subsidiary to be obligated to bear a decimal share of the cost of exploration,
development and operation of such ▇▇▇▇▇, units and/or tracts of land not greater
than the decimal share set forth in connection with such ▇▇▇▇▇, units and/or
tracts, unless any increase in the Borrower's or the relevant Subsidiary's share
of costs is accompanied by a pro-rata increase in the Borrower's share of
revenue. All such shares of production which the Borrower or the relevant
Subsidiary is entitled to receive, and shares of expenses which the Borrower or
the relevant Subsidiary is obligated to bear, are not subject to change, except
for changes attributable to future elections by the Borrower or the relevant
Subsidiary not to participate in operations proposed pursuant to customary forms
of applicable joint operating agreements, and except for changes attributable to
changes in participating areas under any federal units wherein participating
areas may be formed, enlarged or contracted in accordance with the rules and
regulations of the applicable Governmental Authority.
Section 7.19 Maintenance of Properties. Except for such acts or failures
to act as could not be reasonably expected to have a Material Adverse Effect,
the Oil and Gas Properties of the Borrower and its Subsidiaries (and Properties
unitized therewith) have been maintained, operated and developed in a good and
workmanlike manner and in conformity with all Government Requirements and in
conformity with the provisions of all leases, subleases or other contracts
comprising a part of the Hydrocarbon Interests and other contracts and
agreements forming a part of such Oil and Gas Properties. Specifically in
connection with the foregoing, except for those as could not be reasonably
expected to have a Material Adverse Effect, (i) no Oil and Gas Property of the
Borrower and its Subsidiaries is subject to having allowable production reduced
below the full and regular allowable (including the maximum permissible
tolerance) because of any overproduction (whether or not the same was
permissible at the time) and (ii) none of the ▇▇▇▇▇ comprising a part of the Oil
and Gas Properties of the Borrower and its Subsidiaries (or Properties unitized
therewith) is deviated from the vertical more than the maximum permitted by
Government Requirements, and such ▇▇▇▇▇ are, in fact, bottomed under and are
producing from, the relevant Oil and Gas Properties (or in the case of ▇▇▇▇▇
located on Properties unitized therewith, such unitized Properties). All
pipelines, ▇▇▇▇▇, gas processing plants, platforms and other material
improvements, fixtures and equipment owned in whole or in part by the Borrower
or any of its Subsidiaries that are necessary to conduct normal operations are
being maintained in a state adequate to conduct normal operations, and, with
respect to such of the foregoing which are operated by the Borrower or any of
its Subsidiaries, in a manner consistent with the Borrower's or its
Subsidiaries' past practices (other than those the failure of which to maintain
in accordance with this Section 7.07 could not reasonably be expect to have a
Material Adverse Effect).
54
Section 7.20 Gas Imbalances, Prepayments. As of the date hereof, except as
set forth on Schedule 7.19 or on the most recent certificate delivered pursuant
to Section 8.12(c), on a net basis there are no gas imbalances, take or pay or
other prepayments which would require the Borrower or any of its Subsidiaries to
deliver Hydrocarbons produced from the Oil and Gas Properties of the Borrower
and its Subsidiaries at some future time without then or thereafter receiving
full payment therefor which, in the aggregate, are material.
Section 7.21 Marketing of Production. (a) Except for contracts listed on
Schedule 7.21 and in effect on the date hereof, and thereafter either disclosed
in writing to the Administrative Agent or included in the most recently
delivered Reserve Report (with respect to all of which contracts the Borrower
represents that it or its Subsidiaries are receiving a price for all production
sold thereunder which is computed substantially in accordance with the terms of
the relevant contract and are not having deliveries curtailed substantially
below the subject Property's delivery capacity), no material agreements exist
which are not cancelable on 60 days notice or less without penalty or detriment
for the sale of production from the Borrower's or its Subsidiaries' Hydrocarbon
Interests (including, without limitation, calls on or other rights to purchase,
production, whether or not the same are currently being exercised) that (i)
pertain to the sale of production at a fixed price and (ii) have a maturity or
expiry date of longer than six (6) months from the date hereof.
(a) Except as set forth on Schedule 7.21 attached hereto, neither
the Borrower nor any of its Subsidiaries is obligated, by virtue of any
prepayment under any contract providing for the sale by the Borrower or the
relevant Subsidiary of Hydrocarbons which contains a "take-or-pay" clause or
under any similar prepayment agreement or arrangement, including, without
limitation, "gas balancing agreements", to deliver a material amount of
Hydrocarbons produced from the Oil and Gas Properties of the Borrower and its
Subsidiaries at some future time without then or thereafter receiving full
payment therefor (i.e., in the case of oil, not in excess of sixty (60) days,
and in the case of gas, not in excess of ninety (90) days). The Oil and Gas
Properties of the Borrower and its Subsidiaries are not subject to any
contractual, or other arrangement for the sale of crude oil which cannot be
canceled on ninety (90) days' (or less) notice, unless the price provided for
therein is equal to or greater than the prevailing market price in the vicinity.
The Oil and Gas Properties of the Borrower and its Subsidiaries are not subject
to any gas sales contract that contains any material terms which are not
customary in the industry within the region in which such Oil and Gas Properties
affected thereby are located. The Oil and Gas Properties of the Borrower and its
Subsidiaries are not subject to any regulatory refund obligation and no facts
exist which might cause the same to be imposed.
Section 7.22 Purchasers of Production. The persons who are purchasing the
Borrower's or the relevant Subsidiary's interests in oil and gas produced from
the Oil and Gas Properties of the Borrower and its Subsidiaries as of the
calendar month during which this Agreement is executed are identified on
Schedule 7.22 attached hereto.
Section 7.23 Existing Hedging Agreements. Schedule 7.23, as of the date
hereof, and, after the date hereof, each report required to be delivered by the
Borrower pursuant to Section 8.01(e), sets forth, a true and complete list of
all Hedging Agreements of the Borrower and each Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net ▇▇▇▇ to market value thereof, all credit support
55
agreements relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.
Section 7.24 Use of Loans and Letters of Credit. The proceeds of the Loans
and the Letters of Credit shall be used to provide working capital for
exploration and production operations, to refinance Debt under the Existing
Credit Agreement, and for general corporate purposes, including, without
limitation, the acquisition of Oil and Gas Properties otherwise permitted
hereby. The Borrower and its Subsidiaries are not engaged principally, or as one
of its or their important activities, in the business of extending credit for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
margin stock (within the meaning of Regulation T, U or X of the Board). No part
of the proceeds of any Loan or Letter of Credit will be used for any purpose
which violates the provisions of Regulations T, U or X of the Board.
Section 7.25 Solvency. After giving effect to the transactions
contemplated hereby, (a) the aggregate assets (after giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement), at a fair valuation, of the Borrower and the
Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and
the Guarantors on a consolidated basis, as the Debt becomes absolute and
matures, (b) each of the Borrower and the Guarantors will not have incurred or
intended to incur, and will not believe that it will incur, Debt beyond its
ability to pay such Debt (after taking into account the timing and amounts of
cash to be received by each of the Borrower and the Guarantors and the amounts
to be payable on or in respect of its liabilities, and giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement) as such Debt becomes absolute and matures and (c) each
of the Borrower and the Guarantors will not have (and will have no reason to
believe that it will have thereafter) unreasonably small capital for the conduct
of its business.
Section 7.26 Specified Senior Indebtedness. The Indebtedness of the
Borrower constitutes "Senior Indebtedness" and "Specified Senior Indebtedness,"
and the Indebtedness of each Guarantor under the Loan Documents to which it is a
party constitutes "Guarantor Senior Indebtedness" and "Specified Guarantor
Senior Indebtedness," in each case, under and as defined in the Senior Notes
Indenture pursuant to which the Senior Notes have been issued.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 8.01 Financial Statements; Other Information. The Borrower will
furnish to the Administrative Agent and each Lender:
(a) Annual Financial Statements. Within 90 days after the end of
each fiscal year of the Borrower (or no later than the date specified by the
SEC), its audited consolidated
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balance sheet and related statements of operations, stockholders' equity and
cash flows as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
KPMG, LLP or other independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied.
(b) Quarterly Financial Statements. Within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Borrower (or
no later than the date specified by the SEC), its consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes.
(c) Certificate of Financial Officer -- Compliance. Concurrently
with any delivery of financial statements under Section 8.01(a) or Section
8.01(b), a certificate of a Financial Officer in substantially the form of
Exhibit B hereto (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 9.01 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the audited financial statements referred to in Section 7.04
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate.
(d) Reserved.
(e) Certificate of Financial Officer - Hedging Agreements.
Concurrently with any delivery of financial statements under Section 8.01(a) and
Section 8.01(b), a certificate of a Financial Officer, in form and substance
satisfactory to the Administrative Agent, setting forth as of the last Business
Day of such fiscal quarter or fiscal year, a true and complete list of all
Hedging Agreements of the Borrower and each Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net ▇▇▇▇-to-market value therefor, any new credit
support agreements relating thereto not listed on Schedule 7.21, any margin
required or supplied under any credit support document, and the counterparty to
each such agreement.
(f) Certificate of Insurer -- Insurance Coverage. By April 30 of
each year, a certificate of insurance coverage from each insurer with respect to
the insurance required by Section 8.07, in form and substance satisfactory to
the Administrative Agent.
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(g) SEC and Other Filings; Reports to Shareholders. Promptly after
the same become publicly available, copies of all periodic and other reports,
proxy statements and other materials filed by the Borrower or any Subsidiary
with the SEC, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be, unless such are
available on the Borrower's website or in the SEC's ▇▇▇▇▇ database.
(h) Notices Under Material Instruments. Promptly after the
furnishing thereof, copies of any financial statement, report or notice
furnished to or by any Person pursuant to the terms of any preferred stock
designation, indenture, loan or credit or other similar agreement, other than
this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01 or available on the
Borrower's website or on ▇▇▇▇▇.
(i) Lists of Purchasers. On or before each anniversary of the
Effective Date, and at any other time that the Administrative Agent may so
request in writing, written notice of the identity and address of each
then-current purchaser of production from the Oil and Gas Properties of the
Borrower and its Subsidiaries and, if requested by the Administrative Agent,
shall provide the Administrative Agent with Transfer Order Letters executed by
the Borrower or a Subsidiary, as applicable, and addressed to such purchasers of
production.
(j) Notice of Sales of Oil and Gas Properties. In the event the
Borrower or any Subsidiary intends to sell, transfer, assign or otherwise
dispose of any Oil or Gas Properties or any Equity Interests in any Subsidiary
in accordance with Section 9.13, prior written notice of such disposition, the
price thereof and the anticipated date of closing.
(k) Notice of Casualty Events. Prompt written notice, and in any
event within three Business Days, of the occurrence of any Casualty Event or the
commencement of any action or proceeding that could reasonably be expected to
result in a Casualty Event.
(l) Reserved.
(m) Information Regarding Borrower and Subsidiaries. Prompt written
notice (and in any event within thirty (30) days upon becoming aware thereof) of
any change (i) in the Borrower or any Subsidiary's corporate name or in any
trade name used to identify such Person in the conduct of its business or in the
ownership of its Properties, (ii) in the location of the Borrower or any
Subsidiary's chief executive office or principal place of business, (iii) in the
Borrower or any Subsidiary's identity or corporate structure or in the
jurisdiction in which such Person is incorporated or formed, (iv) in the
Borrower or any Subsidiary's jurisdiction of organization or such Person's
organizational identification number in such jurisdiction of organization, and
(v) in the Borrower or any Subsidiary's federal taxpayer identification number.
(n) Other Requested Information. Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of the Borrower or any Subsidiary (including, without
limitation, any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA), or compliance with the terms of this
Agreement or any other Loan Document, as the Administrative Agent or any Lender
may reasonably request.
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Section 8.02 Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $5,000,000; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
Section 8.03 Existence; Conduct of Business. The Borrower will, and will
cause each Subsidiary to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.12.
Section 8.04 Payment of Obligations. The Borrower will, and will cause
each Subsidiary to, pay its obligations, including Tax liabilities of the
Borrower and all of its Subsidiaries, before the same shall become delinquent or
in default, except where (a) the validity or amount thereof is being contested
in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect or result in the
seizure or levy of any Property of the Borrower or any Subsidiary.
Section 8.05 Performance of Obligations under Loan Documents. The Borrower
will pay the Notes according to the reading, tenor and effect thereof, and the
Borrower will and will cause each Subsidiary to do and perform every act and
discharge all of the obligations to be performed and discharged by them under
the Loan Documents, including, without limitation, this Agreement, at the time
or times and in the manner specified.
Section 8.06 Operation and Maintenance of Properties. The Borrower, at its
own expense, will, and will cause each Subsidiary to:
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(a) operate its Oil and Gas Properties and other material Properties
or cause such Oil and Gas Properties and other material Properties to be
operated in a prudent manner in accordance with the practices of the industry
and in compliance with all applicable contracts and agreements and in compliance
with all Governmental Requirements, including, without limitation, applicable
pro ration requirements and Environmental Laws, and all applicable laws, rules
and regulations of every other Governmental Authority from time to time
constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
(b) keep and maintain all Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its material Oil and Gas Properties and
other material Properties, including, without limitation, all equipment,
machinery and facilities.
(c) promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties and do all other things
necessary to keep unimpaired their rights with respect thereto and prevent any
forfeiture thereof or default thereunder.
(d) promptly perform or make reasonable and customary efforts to
cause to be performed, in accordance with industry standards, the obligations
required by each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its Oil and Gas Properties
and other material Properties.
(e) to the extent the Borrower is not the operator of any Property,
the Borrower shall use reasonable efforts to cause the operator to comply with
this Section 8.06.
Section 8.07 Insurance. The Borrower will, and will cause each Subsidiary
to, maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations. Said insurance policies shall name the Administrative Agent
and the Lenders as "additional insureds" and provide that the insurer will
endeavor to give at least 30 days prior notice of any cancellation to the
Administrative Agent.
Section 8.08 Books and Records; Inspection Rights. The Borrower will, and
will cause each Subsidiary to, keep proper books of record and account in which
full, true and correct entries are made of all dealings and transactions in
relation to its business and activities. The Borrower will, and will cause each
Subsidiary to, permit any representatives designated by the Administrative Agent
or any Lender, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
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Section 8.09 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 8.10 Environmental Matters.
(a) The Borrower shall at its sole expense: (i) comply, and shall
cause its Properties and operations and each Subsidiary and each Subsidiary's
Properties and operations to comply, with all applicable Environmental Laws, to
the extent noncompliance could be reasonably expected to have a Material Adverse
Effect; (ii) not dispose of or otherwise release, and shall cause each
Subsidiary not to dispose of or otherwise release, any oil, oil and gas waste,
hazardous substance, or solid waste on, under, about or from any of the
Borrower's or its Subsidiaries' Properties or any other Property to the extent
caused by the Borrower's or any of its Subsidiaries' operations except in
compliance with applicable Environmental Laws and where the disposal or release
of which could reasonably be expected to have a Material Adverse Effect; (iii)
timely obtain or file, and shall cause each Subsidiary to timely obtain or file,
all notices, permits, licenses, exemptions, approvals, registrations or other
authorizations, if any, required under applicable Environmental Laws to be
obtained or filed in connection with the operation or use of the Borrower's or
its Subsidiaries' Properties, which failure to obtain or file could reasonably
be expected to have a Material Adverse Effect; (iv) promptly commence and
diligently prosecute to completion, and shall cause each Subsidiary to promptly
commence and diligently prosecute to completion, any assessment, evaluation,
investigation, monitoring, containment, cleanup, removal, repair, restoration,
remediation or other remedial obligations (collectively, the "Remedial Work") in
the event any Remedial Work is required or reasonably necessary under applicable
Environmental Laws because of or in connection with the actual or suspected
past, present or future disposal or other release of any oil, oil and gas waste,
hazardous substance or solid waste on, under, about or from any of the
Borrower's or its Subsidiaries' Properties, which failure to commence and
diligently prosecute to completion could reasonably be expected to have a
Material Adverse Effect; and (v) establish and implement, and shall cause each
Subsidiary to establish and implement, such procedures as may be necessary to
continuously determine and assure that the Borrower's and its Subsidiaries'
obligations under this Section 8.10(a) are timely and fully satisfied, which
failure to establish and implement could reasonably be expected to have a
Material Adverse Effect.
(b) The Borrower will promptly, but in no event later than five days
of the occurrence of a triggering event, notify the Administrative Agent and the
Lenders in writing of any threatened action, investigation or inquiry by any
Governmental Authority or any threatened demand or lawsuit by any landowner or
other third party against the Borrower or its Subsidiaries or their Properties
of which the Borrower has knowledge in connection with any Environmental Laws
(excluding routine testing and corrective action) if the Borrower reasonably
anticipates that such action will result in liability (whether individually or
in the aggregate) in excess of $5,000,000, not fully covered by insurance,
subject to normal deductibles or self-insured retentions.
(c) The Borrower will and will cause each Subsidiary to provide
environmental audits and tests in accordance with American Society of Testing
Materials
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standards upon request by the Administrative Agent and the Lenders and
no more than once per year in the absence of any Event of Default (or as
otherwise required to be obtained by the Administrative Agent or the Lenders by
any Governmental Authority), in connection with any future acquisitions of Oil
and Gas Properties or other Properties.
Section 8.11 Further Assurances.
(a) The Borrower at its expense will, and will cause each Subsidiary
to, promptly execute and deliver to the Administrative Agent all such other
documents, agreements and instruments reasonably requested by the Administrative
Agent to comply with, cure any defects or accomplish the conditions precedent,
covenants and agreements of the Borrower or any Subsidiary, as the case may be,
in the Loan Documents, including the Notes, or to further evidence and more
fully describe the collateral intended as security for the Indebtedness, or to
correct any omissions in this Agreement or the Security Instruments, or to state
more fully the obligations secured therein, or to perfect, protect or preserve
any Liens created pursuant to this Agreement or any of the Security Instruments
or the priority thereof, or to make any recordings, file any notices or obtain
any consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.
(b) The Borrower hereby authorizes the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Mortgaged Property without the signature of
the Borrower or any other Guarantor where permitted by law. A carbon,
photographic or other reproduction of the Security Instruments or any financing
statement covering the Mortgaged Property or any part thereof shall be
sufficient as a financing statement where permitted by law. The Administrative
Agent will promptly send the Borrower any financing or continuation statements
it files without the signature of the Borrower or any other Guarantor and the
Administrative Agent will promptly send the Borrower the filing or recordation
information with respect thereto.
Section 8.12 Reserve Reports.
(a) On or before April 1st and October 1st of each year, commencing
October 1, 2004, the Borrower shall furnish to the Administrative Agent, with a
copy to each of the Lenders, a Reserve Report. The Reserve Report due on or
before April 1st of each year shall be as of January 1 of such year and shall be
prepared by one or more Approved Petroleum Engineers, and the Reserve Report due
on or before October 1st of each year shall be as of July 1 of such year and
shall be prepared by or under the supervision of the chief engineer of the
Borrower who shall certify such Reserve Report has been prepared on the basis of
true and accurate information and good faith estimates of recoverable quantities
of Hydrocarbons.
(b) In the event of an Interim Redetermination, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report prepared by
or under the supervision of the chief engineer of the Borrower who shall certify
such Reserve Report has been prepared on the basis of true and accurate
information and good faith estimates of recoverable quantities of Hydrocarbons.
For any Interim Redetermination requested by the Administrative Agent or the
Borrower pursuant to Section 2.07(b), the Borrower shall provide such Reserve
Report with an
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"as of" date as required by the Administrative Agent as soon as possible, but in
any event no later than thirty (30) days following the receipt of such request.
(c) With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material respects attached thereto is
a schedule of the Oil and Gas Properties evaluated by such Reserve Report that
are Mortgaged Properties and demonstrating the percentage of the Borrowing Base
that the value of such Mortgaged Properties represent.
Section 8.13 Title Information.
(a) On or before the delivery to the Administrative Agent and the
Lenders of each Reserve Report required by Section 8.12(a), the Borrower will
deliver title information in form and substance acceptable to the Administrative
Agent covering enough of the Oil and Gas Properties evaluated by such Reserve
Report that were not included in the immediately preceding Reserve Report, so
that the Administrative Agent shall have received together with title
information previously delivered to the Administrative Agent, satisfactory title
information on at least 80% of the total value of the Oil and Gas Properties
evaluated by such Reserve Report.
(b) If the Borrower has provided title information for additional
Properties under Section 8.13(a), the Borrower shall, within 60 days of notice
from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute acceptable
Mortgaged Properties with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such
definition) having an equivalent value or (iii) deliver title information in
form and substance acceptable to the Administrative Agent so that the
Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 80% of the value of the Oil and Gas Properties evaluated by such
Reserve Report.
(c) If the Borrower is unable to cure any title defect requested by
the Administrative Agent or the Lenders to be cured within the 60-day period or
the Borrower does not comply with the requirements to provide acceptable title
information covering 80% of the total value of the Oil and Gas Properties
evaluated in the most recent Reserve Report, such default shall not be a
Default, but instead the Administrative Agent and/or the Majority Lenders shall
have the right to exercise the following remedy in their sole discretion from
time to time, and any failure to so exercise this remedy at any time shall not
be a waiver as to future exercise of the remedy by the Administrative Agent or
the Lenders. To the extent that the Administrative Agent or the Majority Lenders
are not satisfied with title to any Mortgaged Property after the 60-day period
has elapsed, such unacceptable Mortgaged Property shall not count towards the
80% requirement, and the Administrative Agent may send a notice to the Borrower
and the Lenders that the then outstanding Borrowing Base shall be reduced by an
amount as determined by the Required Lenders to cause the Borrower to be in
compliance with the requirement to provide acceptable title information on 80%
of the value of the Oil and Gas Properties evaluated by the
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relevant Reserve Report. This new Borrowing Base shall become effective
immediately after receipt of such notice.
Section 8.14 Additional Collateral; Additional Guarantors.
(a) In connection with each redetermination of the Borrowing Base,
the Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(c)) to ascertain whether the Mortgaged
Properties represent at least 80% of the total value of the Oil and Gas
Properties evaluated in the most recently completed Reserve Report after giving
effect to exploration and production activities, acquisitions, dispositions and
production. In the event that the Mortgaged Properties do not represent at least
80% of the total value, then the Borrower shall, and shall cause its
Subsidiaries to, grant to the Administrative Agent as security for the
Indebtedness a first-priority Lien interest (subject only to Excepted Liens of
the type described in clauses (a) to (d) and (f) of the definition thereof, but
subject to the provisos at the end of such definition) on additional Oil and Gas
Properties not already subject to a Lien of the Security Instruments such that
after giving effect thereto, the Mortgaged Properties will represent at least
80% of the total value evaluated by the relevant Reserve Report. All such Liens
will be created and perfected by and in accordance with the provisions of deeds
of trust, security agreements and financing statements or other Security
Instruments, all in form and substance reasonably satisfactory to the
Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes.
(b) In order to comply with the provisions of Section 8.14(a), if
any Subsidiary places a Lien on its Oil and Gas Properties and such Subsidiary
is not a Guarantor, the Borrower shall promptly cause such Subsidiary to
guarantee the Indebtedness pursuant to the Guarantee and Collateral Agreement.
In connection with any such guaranty, the Borrower shall cause such Subsidiary
to, (i) execute and deliver a supplement to the Guarantee and Collateral
Agreement executed by such Subsidiary, (ii) pledge all of its assets to secure
payment of the Indebtedness and (iii) execute and deliver such other additional
closing documents, certificates and legal opinions as shall reasonably be
requested by the Administrative Agent.
(c) Reserved.
(d) Subject to the limits described in clauses (a) and (b) of this
Section 8.14, the Borrower will at all times cause the other material tangible
and intangible assets of the Borrower and each Subsidiary to be subject to a
Lien of the Security Instruments.
Section 8.15 ERISA Compliance. The Borrower will promptly furnish and will
cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the
Administrative Agent (i) promptly after the filing thereof with the United
States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of
each annual and other report with respect to each Plan or any trust created
thereunder, (ii) immediately upon becoming aware of the occurrence of any ERISA
Event or of any "prohibited transaction," as described in section 406 of ERISA
or in section 4975 of the Code, in connection with any Plan or any trust created
thereunder, a written notice signed by the President or the principal Financial
Officer, the Subsidiary or the ERISA Affiliate, as the case may be, specifying
the nature thereof, what action the Borrower, the Subsidiary or the
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ERISA Affiliate is taking or proposes to take with respect thereto, and, when
known, any action taken or proposed by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto, and (iii) immediately upon
receipt thereof, copies of any notice of the PBGC's intention to terminate or to
have a trustee appointed to administer any Plan. With respect to each Plan
(other than a Multiemployer Plan), the Borrower will, and will cause each
Subsidiary and ERISA Affiliate to, (x) 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 (y) pay, or cause to be paid, to the
PBGC in a timely manner, without incurring any late payment or underpayment
charge or penalty, all premiums required pursuant to sections 4006 and 4007 of
ERISA.
Section 8.16 Hazardous Substances Indemnification. Indemnify and hold the
Agents and the Lenders harmless from and against any and all claims, losses,
damages, liabilities, fines, penalties, charges, administrative and judicial
proceedings and orders, judgments, remedial actions, requirements and
enforcement actions of any kind, and all costs and expenses incurred in
connection therewith (including, without limitation, attorneys' fees and
expenses), arising directly or indirectly, in whole or in part, out of (a) the
presence of any Hazardous Substances on, under or from its property, whether
prior to or during the term hereof, or (b) any activity carried on or undertaken
on or off its property, whether prior to or during the term hereof, and whether
by the Borrower, or any predecessor in title or any employees, agents,
contractors or subcontractors of the Borrower, or any predecessor in title, or
any third Persons at any time occupying or present on such property, in
connection with the handling, treatment, removal, storage, decontamination,
cleanup, transportation or disposal of any Hazardous Substances at any time
located or present on or under such property; with the foregoing indemnity
further applying to any residual contamination on or under the property of the
Borrower, or any property of any other Person, or affecting any natural
resources, and to any contamination of any property or natural resources arising
in connection with the generation, use, handling, storage, transportation or
disposal of any Hazardous Substances, irrespective of whether any of such
activities were or will be undertaken in accordance with applicable requirements
of Law, including, without limitation, Environmental Laws, and surviving
satisfaction of all Indebtedness of the Borrower to the Agents and the Lenders
and the termination of this Agreement, unless all such Indebtedness has been
satisfied wholly in cash from the Borrower and not by way of realization against
any property or the conveyance of any property of the Borrower in lieu thereof,
provided that the claims and other actions of any kind against the Agents, or
the Lenders which give rise to such indemnity are not barred by the applicable
statute of limitations at the time such claims or actions are instituted and
such indemnity shall not extend to any act or omission by the Agents, or the
Lenders with respect to the relevant property subsequent to the Agents, or any
Lender becoming the owner of, taking possession of to the exclusion of the
Borrower or assuming operations of any property previously owned by the Borrower
and with respect to which property such claim, loss, damage, liability, fine,
penalty, charge, proceeding, order, judgment, action or requirement arises
subsequent to the acquisition of title thereto, taking possession thereof or
assumption of operations thereon by the Agents, or any Lender.
Section 8.17 Assignments. Upon request of the Administrative Agent,
execute and deliver written notices of assignments to any persons, corporations
or other entities owing or
65
which may in the future owe to the Borrower monies or accounts arising in
connection with any of the following matters: (a) any oil, gas or mineral
production from the Oil and Gas Properties of the Borrower or its Subsidiaries;
(b) any gas contracts, processing contracts or other contracts relating to the
Oil and Gas Properties of the Borrower or its Subsidiaries; or (c) the operation
of or production from any part of the Oil and Gas Properties of the Borrower or
its Subsidiaries.
Section 8.18 Reserved.
Section 8.19 Reserved.
ARTICLE IX
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 9.01 Financial Covenants.
(a) Interest Coverage Ratio. The Borrower will not, as of the last
day of any fiscal quarter, permit its ratio of EBITDAX for the period of four
fiscal quarters then ending to Interest Expense for such period to be less than
3.5 to 1.0.
(b) Current Ratio. The Borrower will not permit, as of the last day
of any fiscal quarter, its ratio of (i) consolidated current assets (including
the unused amount of the total Commitments) to (ii) consolidated current
liabilities (excluding non-cash obligations under FAS 133 and FAS 143) to be
less than 1.0 to 1.0.
Section 9.02 Debt. Neither the Borrower nor any Subsidiary will incur,
create, assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan Documents
or any guaranty of or suretyship arrangement for the Notes or other Indebtedness
arising under the Loan Documents.
(b) Debt of the Borrower and its Subsidiaries existing on the date
hereof that is reflected in the Financial Statements, and any Permitted
Refinancing Debt in respect thereof.
(c) accounts payable (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business which
are not greater than sixty (60) days past the date of invoice or delinquent or
which are being contested in good faith by appropriate action or as to which
additional material supporting documentation has been requested but not yet
received and for which, in either case, adequate reserves have been maintained
in accordance with GAAP.
(d) Debt under Capital Leases not to exceed $5,000,000.
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(e) Debt associated with bonds or surety obligations required by
Governmental Requirements in connection with the operation of the Oil and Gas
Properties of the Borrower and its Subsidiaries.
(f) intercompany Debt between the Borrower and any Subsidiary or
between Subsidiaries to the extent permitted by Section 9.05(g); provided that
such Debt is not held, assigned, transferred, negotiated or pledged to any
Person other than the Borrower or one of its Wholly-Owned Subsidiaries, and,
provided further, that any such Debt owed by either the Borrower or a Guarantor
shall be subordinated to the Indebtedness on terms set forth in the Guarantee
and Collateral Agreement.
(g) endorsements of negotiable instruments for collection in the
ordinary course of business.
(h) Debt (i) under the Senior Notes and any guarantees thereof, the
principal amount of which does not exceed $150,000,000 in the aggregate, and
(ii) which constitutes Permitted Refinancing Debt of any Debt described in
clause (i) of this Section 9.02(h) and any guarantees thereof.
(i) purchase money obligations of the Borrower or the Guarantors of
up to $2,000,000 at any time for the purchase of equipment, so long as the
purchase money obligation as to any individual item of equipment does not exceed
the fair market value thereof.
(j) Lease dated August 12, 1999, as amended, between the Borrower
(as tenant) and ▇▇ ▇▇▇▇▇▇▇ Associates, L.P. (as landlord) covering the
Borrower's office located at ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
(k) Office Space Lease Agreement dated February 26, 1989 between
▇▇▇▇-▇▇▇▇▇▇▇ Oil Company (later merged into the Borrower) and RBC Limited, as
amended (including subleases of rights thereunder), covering the office of
Delaware EPL of Texas, LLC located at ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
(l) income taxes payable, but not overdue.
(m) accrued abandonment liabilities.
(n) Debt arising out of Hedging Agreements permitted hereby.
(o) Debt of the Borrower under the Earnout Agreement.
(p) Debt of the Borrower under the Redfish Synthetic Lease.
(q) other Debt not to exceed $5,000,000 in the aggregate at any one
time outstanding.
Section 9.03 Liens. Neither the Borrower nor any Subsidiary will create,
incur, assume or permit to exist any Lien on any of its Properties (now owned or
hereafter acquired), except:
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(a) Liens securing the payment of any Indebtedness.
(b) Excepted Liens.
(c) Liens securing Capital Leases permitted by Section 9.02(d) but
only on the Property under lease.
(d) Liens securing any Permitted Refinancing Debt provided that any
such Permitted Refinancing Debt is not secured by any additional or different
Property not securing the Refinanced Debt.
(e) Liens on Property not constituting collateral for the
Indebtedness and not otherwise permitted by the foregoing clauses of this
Section 9.03; provided that the aggregate principal or face amount of all Debt
secured under this Section 9.03(e) shall not exceed $5,000,000 at any time.
(f) Liens securing purchase money obligations not prohibited by
Section 9.02, so long as such Liens relate only to the equipment which is the
subject of the relevant purchase money obligation.
(g) Liens securing Hedging Agreements permitted hereby, so long as
such Liens do not secure, in the aggregate, Debt in excess of $10,000,000.
Section 9.04 Dividends, Distributions and Redemptions; Repayment of Senior
Notes.
(a) Restricted Payments. The Borrower will not, and will not permit
any of its Subsidiaries to, declare or make, or, except as to delivery of a
notice of redemption of the Preferred Stock, agree to pay or make, directly or
indirectly, any Restricted Payment, return any capital to its stockholders or
make any distribution of its Property to its Equity Interest holders, except (i)
the Borrower may declare and pay dividends with respect to its Equity Interests
(other than the Preferred Stock) payable solely in additional shares of its
common stock (other than Disqualified Capital Stock), (ii) Subsidiaries may
declare and pay dividends ratably with respect to their Equity Interests, (iii)
the Borrower may make Restricted Payments pursuant to and in accordance with
stock option plans or other benefit plans for management or employees of the
Borrower and its Subsidiaries, (iv) the Borrower may redeem part or all of its
Preferred Stock strictly through the issuance of common stock upon the exercise
by the holder of any Preferred Stock of the Borrower of the right to convert
such Preferred Stock to common stock of the Borrower or through the issuance of
new preferred stock with no cash payments, except as provided in clause (v) of
this Section 9.04(a), and (v) the Borrower may (A) declare and pay in cash the
dividends specified in Section 3.1 of the Series D Certificate of Designations
with respect to the Preferred Stock and (B) redeem for cash part or all of the
Preferred Stock pursuant to Section 4.1 of the Series D Certificate of
Designations (a Restricted Payment of the type described in subclause (A) or (B)
of this clause (v), a "Preferred Stock Restricted Payment"); provided, however,
that the Borrower will not declare or make a Preferred Stock Restricted Payment
if (x) the amount of such Preferred Stock Restricted Payment taken together with
the aggregate amount of all other Preferred Stock Restricted Payments made by
the Borrower in the same fiscal year would exceed $15,000,000, or (y) the
Borrower has a Borrowing Base
68
Utilization Percentage greater than 75.0% on the day that the Borrower proposes
to declare or make such Preferred Stock Restricted Payment.
(b) Repayment of Senior Notes; Amendment of Senior Notes Indenture.
The Borrower will not, and will not permit any Subsidiary to, prior to the
Termination Date: (i) call, make or offer to make any optional or voluntary
Redemption of or otherwise optionally or voluntarily Redeem the Senior Notes or
any Permitted Refinancing Debt in respect thereof; provided, however, that the
Borrower may prepay the Senior Notes or any Permitted Refinancing Debt with the
proceeds of either (A) any Permitted Refinancing Debt or (B) a combination of
any Permitted Refinancing Debt and the net cash proceeds of a sale of Equity
Interests (other than Disqualified Capital Stock) of the Borrower that is
contemporaneous to such Permitted Refinancing Debt, (ii) amend, modify, waive or
otherwise change, consent or agree to any amendment, modification, waiver or
other change to, any of the terms of the Senior Notes, any Permitted Refinancing
Debt or the Senior Notes Indenture if (A) the effect thereof would be to shorten
its maturity or average life or increase the amount of any payment of principal
thereof or increase the rate or shorten any period for payment of interest
thereon or (B) such action requires the payment of a consent fee, provided that
the foregoing shall not prohibit the execution of supplemental indentures
associated with the incurrence of additional Senior Notes to the extent
permitted by Section 9.02(h), the execution of other indentures or agreements in
connection with the issuance of Permitted Refinancing Debt or the execution of
supplemental indentures to add guarantors if required by the terms of any Senior
Notes Indenture provided such Person complies with Section 8.14(b), or (iii)
designate any Debt (other than obligations of the Borrower and the Subsidiaries
pursuant to the Loan Documents) as "Specified Senior Indebtedness" or "Specified
Guarantor Senior Indebtedness" or give any such other Debt any other similar
designation for the purposes of any Senior Notes Indenture.
Section 9.05 Investments, Loans and Advances. Neither the Borrower nor any
Subsidiary will make or permit to remain outstanding any Investments in or to
any Person, except that the foregoing restriction shall not apply to:
(a) Investments reflected in the Financial Statements or which are
disclosed to the Lenders in Schedule 9.05.
(b) accounts receivable arising in the ordinary course of business.
(c) direct obligations of the United States or any agency thereof,
or obligations guaranteed by the United States or any agency thereof, in each
case maturing within one year from the date of creation thereof.
(d) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by S&P or ▇▇▇▇▇'▇.
(e) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000 (as of the date
of such bank or trust company's most recent financial reports) and has a short
term
69
deposit rating of no lower than A2 or P2, as such rating is set forth from time
to time, by S&P or ▇▇▇▇▇'▇, respectively.
(f) deposits in money market funds investing exclusively in
Investments described in Section 9.05(c), Section 9.05(d) or Section 9.05(e).
(g) Investments (i) made by the Borrower in or to the Guarantors in
an amount not to exceed $100,000,000, and (ii) made by any Subsidiary in or to
the Borrower or any Guarantor in an amount not to exceed $75,000,000.
(h) Investments (including, without limitation, capital
contributions) in general or limited partnerships or other types of entities
(each a "venture") entered into by the Borrower or a Subsidiary with others in
the ordinary course of business; provided that (i) any such venture is engaged
exclusively in oil and gas exploration, development, production, processing and
related activities, including transportation, (ii) the interest in such venture
is acquired in the ordinary course of business and on fair and reasonable terms
and (iii) such venture interests acquired and capital contributions made (valued
as of the date such interest was acquired or the contribution made) do not
exceed, in the aggregate at any time outstanding an amount equal to $5,000,000.
(i) Investments in direct ownership interests in additional Oil and
Gas Properties and gas gathering systems related thereto or related to farm-out,
farm-in, joint operating, joint venture or area of mutual interest agreements,
gathering systems, pipelines or other similar arrangements which are usual and
customary in the oil and gas exploration and production business located within
the geographic boundaries of the United States of America.
(j) loans and advances to directors, officers and employees not to
exceed $1,000,000 in the aggregate at any time.
(k) Investments in stock, obligations or securities received in
settlement of debts arising from Investments permitted under this Section 9.05
owing to the Borrower or any Subsidiary as a result of a bankruptcy or other
insolvency proceeding of the obligor in respect of such debts or upon the
enforcement of any Lien in favor of the Borrower or any of its Subsidiaries;
provided that the Borrower shall give the Administrative Agent prompt written
notice in the event that the aggregate amount of all investments held at any one
time under this Section 9.05(k) exceeds $500,000.
(l) other Investments not to exceed $5,000,000 in the aggregate at
any time.
Section 9.06 Reserved.
Section 9.07 Nature of Business. Neither the Borrower nor any Subsidiary
will allow any material change to be made in the character of the business as an
independent oil and gas exploration and production company.
Section 9.08 Limitation on Leases. Neither the Borrower nor any Subsidiary
will create, incur, assume or suffer to exist any obligation for the payment of
rent or hire of Property of any kind whatsoever (real or personal but excluding
Capital Leases and leases of Hydrocarbon
70
Interests), under leases or lease agreements which would cause the aggregate
amount of all payments made by the Borrower and the Subsidiaries pursuant to all
such leases or lease agreements, including, without limitation, any residual
payments at the end of any lease, to exceed $5,000,000 in any period of twelve
consecutive calendar months during the life of such leases.
Section 9.09 Proceeds of Notes. The Borrower will not permit the proceeds
of the Notes to be used for any purpose other than those permitted by Section
7.24. Neither the Borrower nor any Person acting on behalf of the Borrower has
taken or will take any action which might cause any of the Loan Documents to
violate Regulations T, U or X or any other regulation of the Board or to violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
effect. If requested by the Administrative Agent, the Borrower will furnish to
the Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 or such other form referred to
in Regulation U, Regulation T or Regulation X of the Board, as the case may be.
Section 9.10 ERISA Compliance. The Borrower and the Subsidiaries will not
at any time:
(a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Borrower, a Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by Chapter
43 of Subtitle D of the Code.
(b) terminate, or permit any ERISA Affiliate to terminate, any Plan
in a manner, or take any other action with respect to any Plan, which could
result in any liability of the Borrower, a Subsidiary or any ERISA Affiliate to
the PBGC.
(c) fail to make, or permit any ERISA Affiliate to fail to make,
full payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Borrower, a Subsidiary or any
ERISA Affiliate is required to pay as contributions thereto.
(d) permit to exist, or allow any ERISA Affiliate to permit to
exist, any accumulated funding deficiency within the meaning of section 302 of
ERISA or section 412 of the Code, whether or not waived, with respect to any
Plan.
(e) permit, or allow any ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities under any Plan maintained by the
Borrower, a Subsidiary or any ERISA Affiliate which is regulated under Title IV
of ERISA to exceed the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA.
(f) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan.
71
(g) acquire, or permit any ERISA Affiliate to acquire, an interest
in any Person that causes such Person to become an ERISA Affiliate with respect
to the Borrower or a Subsidiary or with respect to any ERISA Affiliate of the
Borrower or a Subsidiary if such Person sponsors, maintains or contributes to,
or at any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (1) any Multiemployer Plan, or (2) any other Plan
that is subject to Title IV of ERISA under which the actuarial present value of
the benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities.
(h) incur, or permit any ERISA Affiliate to incur, a liability to or
on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA.
(i) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability.
(j) amend, or permit any ERISA Affiliate to amend, a Plan resulting
in an increase in current liability such that the Borrower, a Subsidiary or any
ERISA Affiliate is required to provide security to such Plan under section
401(a)(29) of the Code.
Section 9.11 Sale or Discount of Receivables. Except for receivables
obtained by the Borrower or any Subsidiary out of the ordinary course of
business or the settlement of joint interest billing accounts in the ordinary
course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of
business in connection with the compromise or collection thereof and not in
connection with any financing transaction, neither the Borrower nor any
Subsidiary will discount or sell (with or without recourse) any of its notes
receivable or accounts receivable.
Section 9.12 Mergers, Etc. Neither the Borrower nor any Subsidiary will
merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property to any other Person (any such
transaction, a "consolidation"); provided that
(a) the Borrower or any Subsidiary may participate in a
consolidation with any other Person; provided that (i) no Default is continuing,
(ii) any such consolidation would not cause a Default hereunder, (iii) if the
Borrower consolidates with any Person, the Borrower shall be the surviving
Person, (iv) Borrower has provided the Administrative Agent complete and
detailed information relating to such consolidation fifteen (15) days in advance
thereof and (v) the Borrowing Base will be redetermined using the procedures for
an Interim Redetermination in accordance with Section 2.07;
(b) any Subsidiary may participate in a consolidation with the
Borrower (provided that the Borrower shall be the continuing or surviving
corporation).
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Section 9.13 Sale of Properties. The Borrower will not, and will not
permit any Subsidiary to, sell, assign, farm-out, convey or otherwise transfer
any Property except for (a) the sale of Hydrocarbons in the ordinary course of
business; (b) farmouts of undeveloped acreage and assignments in connection with
such farmouts; (c) the sale or transfer of equipment that is no longer necessary
for the business of the Borrower or such Subsidiary or is replaced by equipment
of at least comparable value and use; (d) sales or other dispositions (including
Casualty Events) of Oil and Gas Properties or any interest therein or
Subsidiaries owning Oil and Gas Properties; provided that (i) if such sales or
other dispositions of Oil and Gas Properties or Subsidiaries owning Oil and Gas
Properties included in the most recently delivered Reserve Report during any
period between two successive Scheduled Redetermination Dates has a fair market
value in excess of 10% of the then current Borrowing Base, individually or in
the aggregate, the Borrowing Base shall be reduced, effective immediately upon
such sale or disposition, by an amount equal to the value, if any, assigned such
Property in the most recently delivered Reserve Report and (ii) if any such sale
or other disposition is of a Subsidiary owning Oil and Gas Properties, such sale
or other disposition shall include all the Equity Interests of such Subsidiary;
and (e) sales and other dispositions of Properties not regulated by Section
9.13(a) to (d) having a fair market value not to exceed $5,000,000 during any
6-month period.
Section 9.14 Environmental Matters. Neither the Borrower nor any
Subsidiary will cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to
any Remedial Work under any Environmental Laws, assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations could reasonably be expected to have a Material Adverse
Effect.
Section 9.15 Transactions with Affiliates. Neither the Borrower nor any
Subsidiary will enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate (other than the Guarantors and Wholly-Owned Subsidiaries of
the Borrower) unless such transactions are otherwise permitted under this
Agreement and are upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm's length transaction with a Person not an
Affiliate.
Section 9.16 Subsidiaries. The Borrower shall not, and shall not permit
any Subsidiary to, create or acquire any additional Subsidiary unless the
Borrower gives written notice to the Administrative Agent of such creation or
acquisition and complies with Section 8.14(b). The Borrower shall not, and shall
not permit any Subsidiary to, sell, assign or otherwise dispose of any Equity
Interests in any Subsidiary except in compliance with Section 9.13(d).
Section 9.17 Negative Pledge Agreements; Dividend Restrictions. Neither
the Borrower nor any Subsidiary will create, incur, assume or suffer to exist
any contract, agreement or understanding (other than this Agreement, the
Security Instruments or Capital Leases creating Liens permitted by Section
9.03(c)) which in any way prohibits or restricts the granting, conveying,
creation or imposition of any Lien on any of its Property in favor of the
Administrative Agent and the Lenders or restricts any Subsidiary from paying
dividends or making distributions to the Borrower or any Guarantor, or which
requires the consent of or notice to other Persons in connection therewith.
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Section 9.18 Gas Imbalances, Take-or-Pay or Other Prepayments. The
Borrower will not allow gas imbalances, take-or-pay or other prepayments with
respect to the Oil and Gas Properties of the Borrower or any Subsidiary that
would require the Borrower or such Subsidiary to deliver Hydrocarbons at some
future time without then or thereafter receiving full payment therefor to exceed
2.5 million mcf of gas (on an mcfe equivalent basis) in the aggregate.
Section 9.19 Hedging Agreements. Neither the Borrower nor any Subsidiary
will enter into any Hedging Agreements with any Person other than Hedging
Agreements in respect of (a)commodities (i) with an Approved Counterparty and
(ii) the notional volumes for which (when aggregated with other commodity
Hedging Agreements then in effect) do not exceed, as of the date such Hedging
Agreement is executed (iii) with respect to swaps and collars, the lesser of (A)
50% of the proved production from proved, developed, producing Oil and Gas
Properties of the Borrower and its Subsidiaries and (B) 75% of the reasonably
anticipated production from proved, developed, producing Oil and Gas Properties
of the Borrower and its Subsidiaries, and (iv) with respect to puts and
synthetic puts, 75% of the reasonably anticipated projected production from
proved, developed, producing Oil and Gas Properties of the Borrower and its
Subsidiaries for each month during the period during which such Hedging
Agreement is in effect, and (b) interest rates (i) with an Approved Counterparty
and (ii) the notional amounts of which (when aggregated with other interest rate
Hedging Agreements then in effect) do not exceed $150,000,000.
Section 9.20 Margin Stock. Neither the Borrower nor any Subsidiary will
directly or indirectly apply any part of the proceeds of the Loans to the
purchasing or carrying of any "margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, or any regulations,
interpretations or rulings thereunder.
Section 9.21 Cancellation of Insurance. Allow any insurance policy
required to be carried hereunder to be terminated or lapse or expire without
provision for adequate renewal thereof.
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 Events of Default. One or more of the following events shall
constitute an "Event of Default":
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise.
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of five
Business Days.
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with any Loan
Document or any amendment
74
or modification of any Loan Document or waiver under such Loan Document, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect in
any material respect when made or deemed made.
(d) the Borrower or any Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in Section 8.01(h), Section
8.01(m), Section 8.02, Section 8.03, Section 8.15 or in ARTICLE IX.
(e) the Borrower or any Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in this Agreement (other than
those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or
any other Loan Document, and such failure shall continue unremedied for a period
of 30 days after the earlier to occur of (A) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender) or (B) a Responsible Officer of the Borrower or such Subsidiary
otherwise becoming aware of such default.
(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable and
such failure shall remain unremedied beyond any applicable grace period.
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
Redemption thereof or any offer to Redeem to be made in respect thereof, prior
to its scheduled maturity or require the Borrower or any Subsidiary to make an
offer in respect thereof.
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be
entered.
(i) the Borrower or any Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in Section 10.01(h), (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment
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for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing.
(j) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due.
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 (to the extent not covered by independent third
party insurance provided by insurers of the highest claims paying rating or
financial strength as to which the insurer does not dispute coverage and is not
subject to an insolvency proceeding) shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 60 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of the Borrower or any Subsidiary to enforce any such
judgment.
(l) the Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms
against the Borrower or a Guarantor party thereto, or cease to create a valid
and perfected Lien of the priority required thereby on any of the collateral
purported to be covered thereby, except to the extent permitted by the terms of
this Agreement, or the Borrower or any Subsidiary or any of their Affiliates
shall so state in writing.
(m) an ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect.
(n) a Change in Control shall occur.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may,
and at the request of the Majority Lenders, shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Notes and the Loans then outstanding to be due
and payable in whole (or in part, in which case any principal not so declared to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower
and the Guarantors accrued hereunder and under the Notes and the other Loan
Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in Section 2.08(j)), shall become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower and each Guarantor; and in
case of an Event of Default described in Section 10.01(h), Section 10.01(i) or
Section 10.01(j), the Commitments shall automatically terminate and the Notes
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and the other obligations of the Borrower and the
Guarantors accrued
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hereunder and under the Notes and the other Loan Documents (including, without
limitation, the payment of cash collateral to secure the LC Exposure as provided
in Section 2.08(j)), shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor.
(b) In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and in equity.
(c) All proceeds realized from the liquidation or other disposition
of collateral or otherwise received after maturity of the Notes, whether by
acceleration or otherwise, shall be applied: first, to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second, to accrued interest on the Notes; third, to fees; fourth, pro rata to
principal outstanding on the Notes; and Indebtedness owing to a Lender or an
Affiliate of a Lender under any Hedging Agreement permitted hereby, pari passu;
fifth, to any other Indebtedness; sixth, to serve as cash collateral to be held
by the Administrative Agent to secure the LC Exposure; and any excess shall be
paid to the Borrower or as otherwise required by any Governmental Requirement.
ARTICLE XI
THE AGENTS
Section 11.01 Appointment; Powers. Each of the Lenders and the Issuing
Bank hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof and the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto.
Section 11.02 Duties and Obligations of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except as
provided in Section 11.03, and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
under any other Loan Document or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or in any other Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, (v) the satisfaction of
any condition set forth in ARTICLE VI or elsewhere herein, other than to confirm
receipt of items expressly
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required to be delivered to the Administrative Agent, (vi) the existence, value,
perfection or priority of any collateral security or the financial or other
condition of the Borrower and its Subsidiaries or any other obligor or
guarantor, or (vii) any failure by the Borrower or any other Person (other than
itself) to perform any of its obligations hereunder or under any other Loan
Document or the performance or observance of any covenants, agreements or other
terms or conditions set forth herein or therein.
Section 11.03 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 the Administrative Agent is required to exercise in
writing as directed by the Majority Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 12.02) and in all cases the Administrative Agent shall be fully
justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Majority
Lenders or the Lenders, as applicable, (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in Section
12.02) specifying the action to be taken and (b) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The
instructions as aforesaid and any action taken or failure to act pursuant
thereto by the Administrative Agent shall be binding on all of the Lenders. If a
Default has occurred and is continuing, then the Administrative Agent shall take
such action with respect to such Default as shall be directed by the requisite
Lenders in the written instructions (with indemnities) described in this Section
11.03, provided that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interests of the Lenders.
In no event, however, shall the Administrative Agent be required to take any
action which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement, the Loan Documents or applicable law. If a Default
has occurred and is continuing, neither the Syndication Agent nor the
Co-Documentation Agents shall have any obligation to perform any act in respect
thereof. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Majority Lenders or
the Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 12.02), and otherwise
shall not be liable for any action taken or not taken by it hereunder or under
any other Loan Document or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith INCLUDING
ITS OWN ORDINARY NEGLIGENCE, except for its own gross negligence or willful
misconduct.
Section 11.04 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower, the Lenders and the Issuing Bank hereby waives the right to dispute
the Administrative Agent's record of such statement, except in the case of gross
negligence or willful misconduct by the Administrative Agent. The Administrative
Agent may consult with legal counsel (who may be
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counsel for the Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts. The
Agents may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof permitted hereunder shall have been filed with the Administrative Agent.
Section 11.05 Subagents. The Administrative Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding Sections of this ARTICLE XI shall apply to any such sub-agent
and to the Related Parties of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
Section 11.06 Resignation or Removal of Agents. Subject to the appointment
and acceptance of a successor Agent as provided in this Section 11.06, any Agent
may resign at any time by notifying the Lenders, the Issuing Bank and the
Borrower, and any 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 the Borrower, to appoint a successor.
If no successor shall have been so appointed by the Majority Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation or removal of the retiring Agent, then the retiring
Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor
Agent which shall be a bank with an office in New York, New York, or an
Affiliate of any such bank. Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
The fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Agent's resignation hereunder, the provisions of this
ARTICLE XI and Section 12.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Agent.
Section 11.07 Agents as Lenders. Each bank serving as an Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not an Agent hereunder.
Section 11.08 No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Loan Document to which it is a party. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in
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taking or not taking action under or based upon this Agreement, any other Loan
Document, any related agreement or any document furnished hereunder or
thereunder. The Agents shall not be required to keep themselves informed as to
the performance or observance by the Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for
herein or to inspect the Properties or books of the Borrower or its
Subsidiaries. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, no Agent or Arranger shall have any duty or responsibility to provide
any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower (or any of its Affiliates) which
may come into the possession of such Agent or any of its Affiliates. In this
regard, each Lender acknowledges that ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. is acting in this
transaction as special counsel to the Administrative Agent only, except to the
extent otherwise expressly stated in any legal opinion or any Loan Document.
Each other party hereto will consult with its own legal counsel to the extent
that it deems necessary in connection with the Loan Documents and the matters
contemplated therein.
Section 11.09 Authority of Administrative Agent to Release Collateral and
Liens. Each Lender and the Issuing Bank 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 and the Issuing Bank
hereby authorizes the Administrative Agent to execute and deliver to the
Borrower, at the Borrower's sole cost and expense, any and all releases of
Liens, termination statements, assignments 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 9.13 or is otherwise authorized by the terms of the Loan Documents.
Section 11.10 The Syndication Agent and Co-Documentation Agents. The
Syndication Agent and the Co-Documentation Agents shall have no duties,
responsibilities or liabilities under this Agreement and the other Loan
Documents other than their duties, responsibilities and liabilities in their
capacity as Lenders hereunder.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention of Treasurer (Facsimile No.
(▇▇▇) ▇▇▇-▇▇▇▇);
(ii) if to the Administrative Agent, to it at ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (Facsimile No.
713-427-6307), with a
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copy to ▇▇▇▇▇ ▇▇▇▇▇▇▇, at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
(Facsimile No. 713-216-4117);
(iii) if to the Issuing Bank, to it at ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (Facsimile No.
713-427-6307); and
(iv) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
(b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V
unless otherwise agreed by the Administrative Agent and the applicable Lender.
The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.
(c) Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 12.02 Waivers; Amendments.
(a) No failure on the part of the Administrative Agent, the Issuing
Bank 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, the Issuing Bank and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by Section
12.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Majority Lenders or by the Borrower and the Administrative Agent with
the consent of the Majority Lenders; provided that no such agreement shall (i)
increase the Commitment or the Maximum Credit Amount of
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any Lender without the written consent of such Lender, (ii) increase the
Borrowing Base or modify Section 2.07, without the written consent of each
Lender, or the maintenance or decrease of the Borrowing Base, without the
written consent of the Required Lenders, (iii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, or reduce any other Indebtedness hereunder or under
any other Loan Document, without the written consent of each Lender affected
thereby, (iv) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or any other Indebtedness hereunder or under any other Loan Document,
or reduce the amount of, waive or excuse any such payment, or postpone or extend
the Termination Date without the written consent of each Lender affected
thereby, (v) change Section 4.01(b) or Section 4.01(c) in a manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each Lender, (vi) change the definition of the term "Material
Domestic Subsidiary", without the written consent of each Lender, (vii) release
any Guarantor (except as set forth in the Guarantee and Collateral Agreement),
release all or substantially all of the collateral (other than as provided in
Section 11.09), or reduce the percentage set forth in Section 8.14 to less than
80%, without the written consent of each Lender, or (viii) change any of the
provisions of this Section 12.02(b) or the definitions of "Required Lenders" or
"Majority Lenders" or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
under any other Loan Documents or make any determination or grant any consent
hereunder or any other Loan 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 or the Issuing Bank
hereunder or under any other Loan Document without the prior written consent of
the Administrative Agent or the Issuing Bank, as the case may be.
Notwithstanding the foregoing, any supplement to Schedule 7.15 (Subsidiaries)
shall be effective simply by delivering to the Administrative Agent a
supplemental schedule clearly marked as such and, upon receipt, the
Administrative Agent will promptly deliver a copy thereof to the Lenders.
Section 12.03 Expenses, Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including, without
limitation, the reasonable fees, charges and disbursements of counsel and other
outside consultants for the Administrative Agent, the reasonable travel,
photocopy, mailing, courier, telephone and other similar expenses, and the cost
of environmental audits and surveys and appraisals, in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the
execution hereof and including advice of counsel to the Administrative Agent as
to the rights and duties of the Administrative Agent and the Lenders with
respect thereto) of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments and
other charges incurred by 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 Instrument or any other document
referred to therein, (iii) all reasonable out-of-pocket expenses incurred by the
Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any
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demand for payment thereunder, (iv) all out-of-pocket expenses incurred by the
Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with this Agreement or any other Loan Document,
including its rights under this Section 12.03, or in connection with the Loans
made or Letters of Credit issued hereunder, including, without limitation, all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE
ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING
PERSONS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND
RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL
FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT
OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY
OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN
DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE
TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL
REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY
WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE
LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN
CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE
PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY THE
ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE
DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH
THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT OF A DRAWING UNDER ANY
LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER
IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v)
ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF
THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii)
ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS
RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW
APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES,
INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE, RELEASE,
THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR
TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON
ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE BORROWER
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OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY
SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF
THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH
LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY,
(xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION,
THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR
DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON OR
AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY SUBSIDIARY OR
ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY
PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, (xii) ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS
SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN
CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER
ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH
INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR
CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR
AN OMISSION, INCLUDING, WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF SUCH INDEMNITEE; AND FURTHER PROVIDED THAT
SUCH INDEMNITY SHALL NOT EXTEND TO ANY OCCURRENCE ARISING FROM AN ACT OR
OMISSION OF THE ADMINISTRATIVE AGENT OR ANY LENDER WITH RESPECT TO ANY PROPERTY
THAT OCCURS SUBSEQUENT TO THE ADMINISTRATIVE AGENT OR ANY LENDER BECOMING THE
OWNER OF SUCH PROPERTY AND WITH RESPECT TO WHICH PROPERTY SUCH CLAIM, LOSS,
DAMAGE, LIABILITY, FINE, PENALTY, CHARGE, PROCEEDING, ORDER, JUDGMENT, ACTION,
OR REQUIREMENT ARISES SUBSEQUENT TO THE ACQUISITION OF TITLE THERETO BY THE
ADMINISTRATIVE AGENT OR ANY LENDER.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent or the Issuing Bank under Section
12.03(a) or (b), each Lender severally agrees to pay to the Administrative Agent
or the Issuing Bank, as the case may be, such Lender's Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was
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incurred by or asserted against the Administrative Agent or the Issuing Bank in
its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the Transactions, any Loan or Letter
of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section 12.03 shall be payable
promptly after written demand therefor.
Section 12.04 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section 12.04. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in Section 12.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) (i) Subject to the conditions set forth in Section 12.04(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the
Borrower shall be required for an assignment to a Lender, an Affiliate of a
Lender, an Approved Fund or, if an Event of Default has occurred and is
continuing, any other assignee; and
(B) the Administrative Agent, provided that no consent
of the Administrative Agent shall be required for an assignment to an assignee
that is a Lender immediately prior to giving effect to such assignment.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or
an Affiliate of a Lender, the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such
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assignment is delivered to the Administrative Agent) shall not (1) be less than
$10,000,000 and (2) after giving effect thereto, result in the assigning Lender
having the sum of its Commitment and Revolving Credit Exposure be less than
$10,000,000, in the case of (1) and (2), unless each of the Borrower and the
Administrative Agent otherwise consent, provided that no such consent of the
Borrower shall be required if an Event of Default has occurred and is
continuing;
(B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement;
(C) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500;
(D) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire; and
(E) 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
Assumption 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 12.02 that affects such CLO.
(iii) Subject to Section 12.04(b)(iv) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Section
5.01, Section 5.02, Section 5.03 and Section 12.03). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this Section 12.04 shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 12.04(c).
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Maximum Credit Amount of, and
principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, the
Issuing Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice. In connection with any changes to the Register, if
necessary, the
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Administrative Agent will reflect the revisions on Annex I and forward a copy of
such revised Annex I to the Borrower, the Issuing Bank and each Lender.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
12.04(b) and any written consent to such assignment required by Section
12.04(b), the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this Section 12.04(b).
(c) (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender's
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Administrative Agent, the Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to 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 Section 12.02(b) that
affects such Participant. In addition such agreement must provide that the
Participant be bound by the provisions of Section 12.03. Subject to Section
12.04(c)(ii), the Borrower agrees that each Participant shall be entitled to the
benefits of Section 5.01, Section 5.02 and Section 5.03 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to Section
12.04(b). To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 12.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 4.01(c) as though it were a
Lender.
(ii) A Participant shall not be entitled to receive any
greater payment under Section 5.01 or Section 5.03 than the applicable Lender
would have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant is
made with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 5.03 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 5.03(e) as though it were a Lender.
(d) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section 12.04(d) shall not apply to any such
pledge or assignment of a security interest; provided that no
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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.
Section 12.05 Survival; Revival; Reinstatement.
(a) All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Section 5.01, Section 5.02, Section 5.03 and
Section 12.03 and ARTICLE XI shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement, any other Loan
Document or any provision hereof or thereof.
(b) To the extent that any payments on the Indebtedness or proceeds
of any collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.
Section 12.06 Counterparts; Integration; Effectiveness.
(a) This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.
(b) This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. This Agreement
and the other Loan Documents represent the final agreement among the parties
hereto and thereto and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
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(c) Except as provided in Section 6.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
Section 12.07 Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
Section 12.08 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitations obligations under Hedging Agreements) at
any time owing by such Lender or Affiliate to or for the credit or the account
of the Borrower or any Subsidiary against any of and all the obligations of the
Borrower or any Subsidiary owed to such Lender now or hereafter existing under
this Agreement or any other Loan Document, irrespective of whether or not such
Lender shall have made any demand under this Agreement or any other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 12.08 are in addition to other rights and remedies
(including other rights of setoff) which such Lender or its Affiliates may have.
Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT TO THE EXTENT THAT
UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE,
RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH
LENDER IS LOCATED.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN
DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF
AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
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FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO
JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING
JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.
(c) THE BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS AND HEREBY CONFERS AN IRREVOCABLE SPECIAL POWER, AMPLE AND SUFFICIENT,
TO CT CORPORATION, WITH OFFICES ON THE DATE HEREOF AT ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ AS ITS DESIGNEE, APPOINTEE AND AGENT WITH
RESPECT TO ANY SUCH ACTION OR PROCEEDING IN NEW YORK TO RECEIVE, ACCEPT AND
ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF
ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN
ANY SUCH PROCEEDING AND AGREES THAT THE FAILURE OF SUCH AGENT TO GIVE ANY ADVICE
OF ANY SUCH SERVICE OF PROCESS TO THE BORROWER SHALL NOT IMPAIR OR AFFECT THE
VALIDITY OF SUCH SERVICE OR OF ANY CLAIM BASED THEREON. IF FOR ANY REASON SUCH
DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE
BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK
CITY REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT ON THE TERMS AND FOR
THE PURPOSES OF THIS PROVISION. EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO IT AT THE ADDRESS SPECIFIED IN Section 12.01 OR SUCH OTHER ADDRESS
AS IS SPECIFIED PURSUANT TO Section 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION),
SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.
(d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
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AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS Section 12.09.
Section 12.10 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 12.11 Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement or any other
Loan Document, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section 12.11, to (i) any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any Hedging Agreement relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 12.11 or (ii) becomes available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis from a source other than
the Borrower. For the purposes of this Section 12.11, "Information" means all
information received from the Borrower or any Subsidiary relating to the
Borrower or any Subsidiary and their businesses, other than any such information
that is available to the Administrative Agent, the Issuing Bank or any Lender on
a nonconfidential basis prior to disclosure by the Borrower or a Subsidiary;
provided that, in the case of information received from the Borrower or any
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Section 12.12 Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America and the State of New York or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the
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Notes shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Lender may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or otherwise shall be canceled automatically by such Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.12. To the extent that Chapter 303 of
the Texas Finance Code is relevant for the purpose of determining the Highest
Lawful Rate applicable to a Lender, such Lender elects to determine the
applicable rate ceiling under such Chapter by the weekly ceiling from time to
time in effect. Chapter 346 of the Texas Finance Code does not apply to the
Borrower's obligations hereunder.
Section 12.13 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING
92
THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO
AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF
ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE
BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE
PROVISION IS NOT "CONSPICUOUS."
Section 12.14 Existing Credit Agreement. (a) On the date of the initial
funding, the loans and other Debt of the Borrower under the Existing Credit
Agreement shall be, or shall have been, assigned to the Lenders and the
commitments of the lenders under the Existing Credit Agreement shall be, or
shall have been, superseded by this Agreement and terminated.
(b) The current administrative agent under the Existing Credit
Agreement, Bank One, NA, has, this date, assigned to the Administrative Agent,
for the benefit of the Lenders, all liens, rights and interests held by it
securing the Existing Credit Agreement, which liens, rights and interests shall,
henceforth, serve as security for its obligations under this Agreement.
(c) Each of the Borrower and the Guarantors' existing pledge and
grant of a security interest in substantially all of its present and future real
and personal property granted in connection with the Existing Credit Agreement,
will continue as security for the payment and performance of the obligations of
the Borrower and each Guarantor under the Loan Documents and it does hereby
ratify and reaffirm said document and all of its obligations thereunder.
(d) Except as set forth herein, the Borrower, and any Guarantor so
pledging, agrees that its existing pledge of all of its capital stock in each of
its Subsidiaries, whether now existing or hereafter created or acquired or
granted in connection with the Existing Credit Agreement, will continue as
security for the payment and performance of the obligations of the Borrower and
each Guarantor under the Loan Documents and it does hereby ratify and reaffirm
said document and all of its obligations thereunder; and
(e) Each Guarantor agrees that its existing guaranty of the
obligations of the Borrower or any Guarantor under the Existing Credit Agreement
or any predecessor agreement thereto will continue as a guaranty of the
obligations of the Borrower and each Guarantor hereunder and it does hereby
ratify and reaffirm said document and all of its obligations thereunder.
Section 12.15 USA Patriot Act Notice. Each Agent and each Lender hereby
notifies the Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot
Act"), it is required to obtain, verify and record information that identifies
the Borrower, which information includes the name and address of the Borrower
and other information that will allow each Agent and each Lender to identify the
Borrower in accordance with the Patriot Act.
Section 12.16 Specified Senior Indebtedness. The Parties acknowledge and
agree that the Indebtedness hereunder is specifically designated "Specified
Senior Indebtedness" as required by the Senior Notes Indenture pursuant to which
the Senior Notes have been issued.
93
[SIGNATURES BEGIN NEXT PAGE]
94
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: ENERGY PARTNERS, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
[Signature Page - Credit Agreement]
ADMINISTRATIVE AGENT JPMORGAN CHASE BANK, Individually and
AND LENDER: as Administrative Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
_____________________________
Title: Managing Director
_____________________________
[Signature Page - Credit Agreement]
SYNDICATION AGENT AND BNP PARIBAS, Individually and
LENDER: as Syndication Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
_______________________________
Title: Vice President
_______________________________
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
_______________________________
Title: Vice President
_______________________________
[Signature Page - Credit Agreement]
CO-DOCUMENTATION AGENT WACHOVIA BANK, NATIONAL
AND LENDER: ASSOCIATION, Individually and as
Co-Documentation Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_______________________________
Title: Director
_______________________________
[Signature Page - Credit Agreement]
CO-DOCUMENTATION AGENT ▇▇▇▇▇ FARGO BANK, NATIONAL
AND LENDER: ASSOCIATION, Individually and as
Co-Documentation Agent
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
_______________________________
Title: Vice President
_______________________________
[Signature Page - Credit Agreement]
LENDER: ROYAL BANK OF CANADA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
_____________________________
Title: Authorized Signatory
_____________________________
[Signature Page - Credit Agreement]
LENDER: WHITNEY NATIONAL BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________
Title: Senior Vice President
_____________________________
[Signature Page - Credit Agreement]
ANNEX I
LIST OF MAXIMUM CREDIT AMOUNTS
AGGREGATE MAXIMUM CREDIT AMOUNTS
APPLICABLE MAXIMUM CREDIT
NAME OF LENDER PERCENTAGE AMOUNT
-------------------------------------------------------------------
JPMorgan Chase Bank 20% $ 40,000,000
BNP Paribas 20% $ 40,000,000
▇▇▇▇▇ Fargo Bank, National Association 15% $ 30,000,000
Wachovia Bank, National Association 15% $ 30,000,000
Royal Bank of Canada 15% $ 30,000,000
Whitney National Bank 15% $ 30,000,000
TOTAL 100.00% $200,000,000
Annex I - 1
EXHIBIT A
[FORM OF] NOTE
$[_______________] [ ], 200[ ]
FOR VALUE RECEIVED, ENERGY PARTNERS, LTD., a Delaware corporation (the
"Borrower") hereby promises to pay to the order of
[__________________________________] (the "Lender"), at the principal office of
JPMORGAN CHASE BANK (the "Administrative Agent"), at ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, the principal sum of
[_______________________________________] Dollars ($[______________]) (or such
lesser amount as shall equal the aggregate unpaid principal amount of the Loans
made by the Lender to the Borrower under the Credit Agreement, as hereinafter
defined), in lawful money of the United States of America and in immediately
available funds, on the dates and in the principal amounts provided in the
Credit Agreement, and to pay interest on the unpaid principal amount of each
such Loan, at such office, in like money and funds, for the period commencing on
the date of such Loan until such Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of
each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, may be endorsed by the Lender on the
schedules attached hereto or any continuation thereof or on any separate record
maintained by the Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender's or the Borrower's rights or obligations
in respect of such Loans or affect the validity of such transfer by any Lender
of this Note.
This Note is one of the Notes referred to in the Credit Agreement dated as
of August 3, 2004, among the Borrower, the Administrative Agent, and the other
agents and lenders signatory thereto (including the Lender), and evidences Loans
made by the Lender thereunder (such Credit Agreement as the same may be amended,
supplemented or restated from time to time, the "Credit Agreement"). Capitalized
terms used in this Note have the respective meanings assigned to them in the
Credit Agreement.
This Note is issued pursuant to the Credit Agreement and is entitled to
the benefits provided for in the Credit Agreement and the other Loan Documents.
The Credit Agreement provides for the acceleration of the maturity of this Note
upon the occurrence of certain events, for prepayments of Loans upon the terms
and conditions specified therein and other provisions relevant to this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
ENERGY PARTNERS, LTD.
By: _______________________________
Name: _______________________________
Title: _______________________________
Exhibit A - 1
EXHIBIT B
[FORM OF]
COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he/she is the [____________________]
of Energy Partners, Ltd., a Delaware corporation (the "Borrower"), and that as
such he/she is authorized to execute this certificate on behalf of the Borrower.
With reference to the Credit Agreement dated as of August 3, 2004 (together with
all amendments, supplements or restatements thereto being the "Agreement") among
the Borrower, JPMorgan Chase Bank, as Administrative Agent, and the other agents
and lenders (the "Lenders") which are or become a party thereto, and such
Lenders, the undersigned represents and warrants as follows (each capitalized
term used herein having the same meaning given to it in the Agreement unless
otherwise specified):
(a) The representations and warranties of the Borrower contained in
Article VII of the Agreement and in the Loan Documents and otherwise made in
writing by or on behalf of the Borrower pursuant to the Agreement and the Loan
Documents were true and correct when made, and are repeated at and as of the
time of delivery hereof and are true and correct in all material respects at and
as of the time of delivery hereof, except to the extent such representations and
warranties are expressly limited to an earlier date or the Majority Lenders have
expressly consented in writing to the contrary.
(b) The Borrower has performed and complied with all agreements and
conditions contained in the Agreement and in the Loan Documents required to be
performed or complied with by it prior to or at the time of delivery hereof [or
specify default and describe].
(c) Since [same date as audited financials in Section 7.04(a)], no change
has occurred, either in any case or in the aggregate, in the condition,
financial or otherwise, of the Borrower or any Subsidiary which could reasonably
be expected to have a Material Adverse Effect [or specify event].
(d) There exists no Default or Event of Default [or specify Default and
describe].
(e) Attached hereto are the detailed computations necessary to determine
whether the Borrower is in compliance with Section 9.01 as of the end of the
[fiscal quarter][fiscal year] ending [ ].
EXECUTED AND DELIVERED this [ ] day of [ ].
ENERGY PARTNERS, LTD.
By: _______________________________
Name: _______________________________
Title: _______________________________
Exhibit ▇-▇ - ▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT
made by
each of the Grantors (as defined herein)
in favor of
JPMORGAN CHASE BANK,
as Administrative Agent
Dated as of August ___, 2004
TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................................ 1
SECTION 1.01 DEFINITIONS.............................................................................. 1
SECTION 1.02 OTHER DEFINITIONAL PROVISIONS; REFERENCES................................................ 3
ARTICLE II GUARANTEE............................................................................................. 3
SECTION 2.01 GUARANTEE................................................................................ 3
SECTION 2.02 PAYMENTS................................................................................. 4
ARTICLE III GRANT OF SECURITY INTEREST........................................................................... 4
SECTION 3.01 GRANT OF SECURITY INTEREST............................................................... 4
SECTION 3.02 TRANSFER OF PLEDGED SECURITIES........................................................... 6
SECTION 3.03 GRANTORS REMAINS LIABLE UNDER ACCOUNTS, CHATTEL PAPER AND PAYMENT INTANGIBLES............ 6
ARTICLE IV ACKNOWLEDGMENTS, WAIVERS AND CONSENTS................................................................. 6
SECTION 4.01 ACKNOWLEDGMENTS, WAIVERS AND CONSENTS.................................................... 6
SECTION 4.02 NO SUBROGATION, CONTRIBUTION OR REIMBURSEMENT............................................ 9
ARTICLE V REPRESENTATIONS AND WARRANTIES......................................................................... 9
SECTION 5.01 REPRESENTATIONS IN CREDIT AGREEMENT...................................................... 9
SECTION 5.02 BENEFIT TO THE GUARANTOR................................................................. 9
SECTION 5.03 SOLVENCY................................................................................. 10
SECTION 5.04 TITLE; NO OTHER LIENS.................................................................... 10
SECTION 5.05 PERFECTED FIRST PRIORITY LIENS........................................................... 10
SECTION 5.06 LEGAL NAME, ORGANIZATIONAL STATUS, CHIEF EXECUTIVE OFFICE................................ 10
SECTION 5.07 PRIOR NAMES, ADDRESSES, LOCATIONS OF TANGIBLE ASSETS..................................... 10
SECTION 5.08 PLEDGED SECURITIES....................................................................... 10
SECTION 5.09 GOODS.................................................................................... 11
SECTION 5.10 INSTRUMENTS AND CHATTEL PAPER............................................................ 11
SECTION 5.11 TRUTH OF INFORMATION; ACCOUNTS........................................................... 11
SECTION 5.12 GOVERNMENTAL OBLIGORS.................................................................... 11
SECTION 5.13 PATENTS AND TRADEMARKS................................................................... 11
ARTICLE VI COVENANTS............................................................................................. 11
SECTION 6.01 COVENANTS IN CREDIT AGREEMENT............................................................ 12
SECTION 6.02 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER DOCUMENTATION........................ 12
SECTION 6.03 MAINTENANCE OF RECORDS................................................................... 13
SECTION 6.04 RIGHT OF INSPECTION...................................................................... 13
SECTION 6.05 FURTHER IDENTIFICATION OF COLLATERAL..................................................... 13
SECTION 6.06 CHANGES IN LOCATIONS, NAME, ETC.......................................................... 13
SECTION 6.07 COMPLIANCE WITH CONTRACTUAL OBLIGATIONS.................................................. 14
SECTION 6.08 LIMITATIONS ON DISPOSITIONS OF COLLATERAL................................................ 14
SECTION 6.09 PLEDGED SECURITIES....................................................................... 14
i
SECTION 6.10 LIMITATIONS ON MODIFICATIONS, WAIVERS, EXTENSIONS OF AGREEMENTS GIVING RISE TO ACCOUNTS.. 15
SECTION 6.11 ANALYSIS OF ACCOUNTS, ETC................................................................ 15
SECTION 6.12 INSTRUMENTS AND TANGIBLE CHATTEL PAPER................................................... 16
SECTION 6.13 MAINTENANCE OF EQUIPMENT................................................................. 16
SECTION 6.14 PATENTS AND TRADEMARKS................................................................... 16
SECTION 6.15 COMMERCIAL TORT CLAIMS................................................................... 17
ARTICLE VII REMEDIAL PROVISIONS.................................................................................. 18
SECTION 7.01 PLEDGED SECURITIES....................................................................... 18
SECTION 7.02 COLLECTIONS ON ACCOUNTS, ETC............................................................. 19
SECTION 7.03 PROCEEDS................................................................................. 19
SECTION 7.04 UCC AND OTHER REMEDIES................................................................... 19
SECTION 7.05 PRIVATE SALES OF PLEDGED SECURITIES...................................................... 21
SECTION 7.06 WAIVER; DEFICIENCY....................................................................... 21
SECTION 7.07 NON-JUDICIAL ENFORCEMENT................................................................. 21
ARTICLE VIII THE ADMINISTRATIVE AGENT............................................................................ 21
SECTION 8.01 ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC.............................. 21
SECTION 8.02 DUTY OF ADMINISTRATIVE AGENT............................................................. 23
SECTION 8.03 EXECUTION OF FINANCING STATEMENTS........................................................ 24
SECTION 8.04 AUTHORITY OF ADMINISTRATIVE AGENT........................................................ 24
ARTICLE IX SUBORDINATION OF INDEBTEDNESS......................................................................... 24
SECTION 9.01 SUBORDINATION OF ALL GUARANTOR CLAIMS.................................................... 24
SECTION 9.02 CLAIMS IN BANKRUPTCY..................................................................... 24
SECTION 9.03 PAYMENTS HELD IN TRUST................................................................... 25
SECTION 9.04 LIENS SUBORDINATE........................................................................ 25
SECTION 9.05 NOTATION OF RECORDS...................................................................... 25
ARTICLE X MISCELLANEOUS.......................................................................................... 26
SECTION 10.01 WAIVER................................................................................... 26
SECTION 10.02 NOTICES.................................................................................. 26
SECTION 10.03 PAYMENT OF EXPENSES, INDEMNITIES, ETC.................................................... 26
SECTION 10.04 AMENDMENTS IN WRITING.................................................................... 27
SECTION 10.05 SUCCESSORS AND ASSIGNS................................................................... 27
SECTION 10.06 INVALIDITY............................................................................... 27
SECTION 10.07 COUNTERPARTS............................................................................. 27
SECTION 10.08 SURVIVAL................................................................................. 27
SECTION 10.09 CAPTIONS................................................................................. 27
SECTION 10.10 NO ORAL AGREEMENTS....................................................................... 27
SECTION 10.11 GOVERNING LAW; SUBMISSION TO JURISDICTION................................................ 28
SECTION 10.12 ACKNOWLEDGMENTS.......................................................................... 28
SECTION 10.13 ADDITIONAL GRANTORS...................................................................... 29
SECTION 10.14 SET-OFF.................................................................................. 29
ii
SECTION 10.15 RELEASES................................................................................. 30
SECTION 10.16 REINSTATEMENT............................................................................ 30
SECTION 10.17 ACCEPTANCE............................................................................... 31
SCHEDULES:
1. Notice Addresses of Guarantors
2. Description of Pledged Securities
3. Filings and Other Actions Required to Perfect Security Interests
4. Legal Name, Location of Jurisdiction of Organization, Organizational
Identification Number, Taxpayor Identification Number and Chief
Executive Office
5. Prior Names, Prior Chief Executive Office, Location of Tangible
Assets
6. Patents and Patent Licenses
7. Trademarks and Trademark Licenses
8. Vehicles
ANNEX:
1. Form of Assumption Agreement
iii
This GUARANTEE AND COLLATERAL AGREEMENT, dated as of August ___, 2004, is
made by ENERGY PARTNERS, LTD., a Delaware corporation (the "Borrower"), and each
of the other signatories hereto other than the Administrative Agent (the
Borrower and each of the other signatories hereto other than the Administrative
Agent, together with any other Subsidiary of the Borrower that becomes a party
hereto from time to time after the date hereof, the "Grantors"), in favor of
JPMORGAN CHASE BANK, as administrative agent (in such capacity, together with
its successors in such capacity, the "Administrative Agent"), for the banks and
other financial institutions (the "Lenders") from time to time parties to the
Fourth Amended and Restated Credit Agreement, dated as of August ___, 2004 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the Lenders, the Administrative Agent, and the
other Agents party thereto.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
ARTICLE XIII
DEFINITIONS
Section 13.01 Definitions.
(a) As used in this Agreement, each term defined above shall have
the meaning indicated above. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms as well as all uncapitalized terms
which are defined in the UCC on the date hereof are used herein as so defined:
Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents,
Electronic Chattel Paper, Equipment, Fixtures, General Intangibles, Goods,
Instruments, Inventory, Investment Property, Letter-of-Credit Rights, Payment
Intangibles, Proceeds, Supporting Obligations, and Tangible Chattel Paper.
(b) The following terms shall have the following meanings:
"Account Debtor" shall mean a Person (other than any Grantor) obligated on
an Account, Chattel Paper, or General Intangible.
"Agreement" shall mean this Guarantee and Collateral Agreement, as the
same may be amended, supplemented or otherwise modified from time to time.
"Collateral" shall have the meaning assigned such term in Section 3.01.
"Guarantors" shall mean, collectively, each Grantor other than the
Borrower.
"Issuers" shall mean, collectively, each issuer of a Pledged Security.
"Obligations" shall mean, collectively, all Indebtedness, liabilities and
obligations of the Borrower and each Guarantor to the Administrative Agent, the
Issuing Bank, the Lenders and each Affiliate of a Lender party to a Permitted
Hedging Agreement, of whatsoever nature and
howsoever evidenced, due or to become due, now existing or hereafter arising,
whether direct or indirect, absolute or contingent, which may arise under, out
of, or in connection with the Credit Agreement, the other Loan Documents, each
Permitted Hedging Agreement (to the extent that the Obligations arise under, out
of, or in connection with such Permitted Hedging Agreement during such time as
the Lender party to such Permitted Hedging Agreement is a party to the Credit
Agreement, or in the case of an Affiliate of a Lender party to such Permitted
Hedging Agreement, the Lender affiliated with such Affiliate, is a party to the
Credit Agreement) and all other agreements, guarantees, notes and other
documents entered into by any party in connection therewith, and any amendment,
restatement or modification of any of the foregoing, including, but not limited
to, the full and punctual payment when due of any unpaid principal of the Loans
and LC Exposure, any amounts payable in respect of an early termination under
any Permitted Hedging Agreement, interest (including, without limitation,
interest accruing at any post-default rate and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), fees, reimbursement
obligations, guaranty obligations, penalties, indemnities, legal and other fees,
charges and expenses, and amounts advanced by and expenses incurred in order to
preserve any collateral or security interest, whether due after acceleration or
otherwise.
"Patents" shall mean: (i) all letters patent of the United States and all
reissues and extensions thereof, including, without limitation, any thereof
referred to in Schedule 6 hereto, and (ii) all applications for letters patent
of the United States and all divisions, continuations and continuations-in-part
thereof or any other country, including, without limitation, any thereof
referred to in Schedule I hereto.
"Patent License" shall mean all agreements, whether written or oral,
providing for the grant by any Grantor of any right to manufacture, use or sell
any invention covered by a Patent, including, without limitation, any thereof
referred to in Schedule 6 hereto.
"Permitted Hedging Agreement" shall mean any Hedging Agreement permitted
to be entered into by the Borrower or any Guarantor pursuant to Section 9.19 of
the Credit Agreement that is between any Grantor and any Lender or any Affiliate
of any Lender.
"Pledged Securities" shall mean: (i) the equity interests described or
referred to in Schedule 2; and (ii) (a) the certificates or instruments, if any,
representing such equity interests, (b) all dividends (cash, stock or
otherwise), cash, instruments, rights to subscribe, purchase or sell and all
other rights and property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such equity
interests, (c) all replacements, additions to and substitutions for any of the
property referred to in this definition, including, without limitation, claims
against third parties, (d) the proceeds, interest, profits and other income of
or on any of the property referred to in this definition and (e) all books and
records relating to any of the property referred to in this definition.
"Post-Default Rate" shall mean the rate of interest provided for in
Section 3.02(c) of the Credit Agreement.
- 2 -
"Secured Parties" shall mean, collectively, the Administrative Agent, the
Lenders and any Affiliate of any Lender that is a party to a Permitted Hedging
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Trademarks" shall mean: (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule 7 hereto, and (ii) all renewals
thereof.
"Trademark License" shall mean any agreement, written or oral, providing
for the grant by any Grantor of any right to use any Trademark, including,
without limitation, any thereof referred to in Schedule 7 hereto.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York; provided, however, that, in the event that, by
reason of mandatory provisions of law, any of the attachment, perfection or
priority of the Administrative Agent's and the Guaranteed Creditors' security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term "UCC" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection, the
effect thereof or priority and for purposes of definitions related to such
provisions.
Section 13.02 Other Definitional Provisions; References. The meanings
given to terms defined herein shall be equally applicable to both the singular
and plural forms of such terms. The gender of all words shall include the
masculine, feminine, and neuter, as appropriate. The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this Agreement refer
to this Agreement as a whole, and not to any particular article, section or
subsection. Any reference herein to a Section shall be deemed to refer to the
applicable Section of this Agreement unless otherwise stated herein. Any
reference herein to an exhibit, schedule or annex shall be deemed to refer to
the applicable exhibit, schedule or annex attached hereto unless otherwise
stated herein. Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
ARTICLE XIV
GUARANTEE
Section 14.01 Guarantee.
(a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent, for the
ratable benefit of the Secured Parties and each of their respective successors,
endorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower and the Guarantors when due (whether at
- 3 -
the stated maturity, by acceleration or otherwise) of the Obligations. This is a
guarantee of payment and not collection and the liability of each Guarantor is
primary and not secondary.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors.
(c) Each Guarantor agrees that the Obligations may at any time and
from time to time exceed the amount of the liability of such Guarantor hereunder
without impairing the guarantee contained in this Article II or affecting the
rights and remedies of the Administrative Agent or any Secured Party hereunder.
(d) Each Guarantor agrees that if the maturity of any of the
Obligations is accelerated by bankruptcy or otherwise, such maturity shall also
be deemed accelerated for the purpose of this guarantee without demand or notice
to such Guarantor. The guarantee contained in this Article II shall remain in
full force and effect until all the Obligations shall have been satisfied by
payment in full, no Letter of Credit shall be outstanding and all Permitted
Hedging Agreements secured hereby and the Credit Agreement and the Aggregate
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement, no Obligations may be outstanding.
(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any other Secured Party from the Borrower, any of the
Guarantors, any other guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Obligations or any payment received or
collected from such Guarantor in respect of the Obligations), remain liable for
the Obligations up to the maximum liability of such Guarantor hereunder until
the Obligations are paid in full, no Letter of Credit shall be outstanding, and
all Permitted Hedging Agreements secured hereby and the Credit Agreement and the
Aggregate Commitments are terminated.
Section 14.02 Payments. Each Guarantor hereby agrees and guarantees that
payments hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the Principal Office of the Administrative Agent
specified pursuant to the Credit Agreement.
ARTICLE XV
GRANT OF SECURITY INTEREST
Section 15.01 Grant of Security Interest. Each Grantor hereby pledges,
assigns and transfers to the Administrative Agent, and grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest and whether now existing or
hereafter coming
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into existence (collectively, the "Collateral"), as collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations:
(1) all Accounts;
(2) all Chattel Paper (whether Tangible Chattel Paper or Electronic
Chattel Paper);
(3) all Commercial Tort Claims;
(4) all Deposit Accounts other than payroll, withholding tax and
other fiduciary Deposit Accounts;
(5) all Documents;
(6) all General Intangibles (including, without limitation, rights
in and under any Hedging Agreements);
(7) all Goods (including, without limitation, all Inventory and all
Equipment, but excluding all Fixtures);
(8) all Instruments, including, without limitation, that certain
promissory note dated November 1, 2002, in the principal amount of
$80,000,000, executed by EPL of Louisiana, L.L.C. and payable to the order
of the Borrower, which was assigned by the Borrower to Delaware EPL of
Texas, LLC;
(9) all Investment Property;
(10) all Letter-of-Credit Rights (whether or not the letter of
credit is evidenced by a writing);
(11) all Patents;
(12) all Patent Licenses;
(13) all Pledged Securities;
(14) all Supporting Obligations;
(15) all Trademarks;
(16) all books and records pertaining to the Collateral; and
(17) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security, guarantees
and other Supporting Obligations given with respect to any of the
foregoing.
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Section 15.02 Transfer of Pledged Securities. All certificates and
instruments representing or evidencing the Pledged Securities shall be delivered
to and held pursuant hereto by the Administrative Agent or a Person designated
by the Administrative Agent and, in the case of an instrument or certificate in
registered form, shall be duly indorsed to the Administrative Agent or in blank
by an effective indorsement (whether on the certificate or instrument or on a
separate writing), and accompanied by any required transfer tax stamps to effect
the pledge of the Pledged Securities to the Administrative Agent.
Notwithstanding the preceding sentence, all Pledged Securities must be delivered
or transferred in such manner, and each Grantor shall take all such further
action as may be requested by the Administrative Agent, as to permit the
Administrative Agent to be a "protected purchaser" to the extent of its security
interest as provided in Section 8-303 of the UCC (if the Administrative Agent
otherwise qualifies as a protected purchaser).
Section 15.03 Grantors Remains Liable under Accounts, Chattel Paper and
Payment Intangibles. Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Accounts, Chattel Paper and
Payment Intangibles to observe and perform all the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to each such Account, Chattel Paper or Payment
Intangible. Neither the Administrative Agent nor any other Secured Party shall
have any obligation or liability under any Account, Chattel Paper or Payment
Intangible (or any agreement giving rise thereto) by reason of or arising out of
this Agreement or the receipt by the Administrative Agent or any such other
Secured Party of any payment relating to such Account, Chattel Paper or Payment
Intangible, pursuant hereto, nor shall the Administrative Agent or any other
Secured Party be obligated in any manner to perform any of the obligations of
any Grantor under or pursuant to any Account, Chattel Paper or Payment
Intangible (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party under any Account, Chattel
Paper or Payment Intangible (or any agreement giving rise thereto), to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to which it may
be entitled at any time or times.
ARTICLE XVI
ACKNOWLEDGMENTS, WAIVERS AND CONSENTS
Section 16.01 Acknowledgments, Waivers and Consents.
(a) Each Grantor acknowledges and agrees that the obligations
undertaken by it under this Agreement involve the guarantee and the provision of
collateral security for the obligations of Persons other than such Grantor and
that such Grantor's guarantee and provision of collateral security for the
Obligations are absolute, irrevocable and unconditional under any and all
circumstances. In full recognition and furtherance of the foregoing, each
Grantor understands and agrees, to the fullest extent permitted under applicable
law and except as may otherwise be expressly and specifically provided in the
Loan Documents, that each Grantor shall remain obligated hereunder (including,
without limitation, with respect to the guarantee made such Grantor hereby and
the collateral security provided by such Grantor herein) and the enforceability
and effectiveness of this Agreement and the liability of such Grantor, and the
rights, remedies, powers and privileges of the Administrative Agent and the
other Secured
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Parties under this Agreement and the other Loan Documents shall not be affected,
limited, reduced, discharged or terminated in any way:
(i) notwithstanding that, without any reservation of rights
against any Grantor and without notice to or further assent by any Grantor, (A)
any demand for payment of any of the Obligations made by the Administrative
Agent or any other Secured Party may be rescinded by the Administrative Agent or
such other Secured Party and any of the Obligations continued; (B) the
Obligations, the liability of any other Person upon or for any part thereof or
any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by,
or any indulgence or forbearance in respect thereof granted by, the
Administrative Agent or any other Secured Party; (C) the Credit Agreement, the
other Loan Documents, any Permitted Hedging Agreement and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent (or
the Required Lenders, the Majority Lenders or all Lenders, as the case may be)
may deem advisable from time to time; (D) the Borrower, any Grantor or any other
Person may from time to time accept or enter into new or additional agreements,
security documents, guarantees or other instruments in addition to, in exchange
for or relative to, any Loan Document or Permitted Hedging Agreement, all or any
part of the Obligations or any Collateral now or in the future serving as
security for the Obligations; (E) any collateral security, guarantee or right of
offset at any time held by the Administrative Agent or any other Secured Party
for the payment of the Obligations may be sold, exchanged, waived, surrendered
or released; and (F) any other event shall occur which constitutes a defense or
release of sureties generally; and
(ii) without regard to, and each Grantor hereby expressly
waives to the fullest extent permitted by law any defense now or in the future
arising by reason of, (A) the illegality, invalidity or unenforceability of the
Credit Agreement, any other Loan Document, any Permitted Hedging Agreement, any
of the Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any other Secured Party, (B) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by any Grantor or any other Person against
the Administrative Agent or any other Secured Party, (C) the insolvency,
bankruptcy arrangement, reorganization, adjustment, composition, liquidation,
disability, dissolution or lack of power of any Grantor or any other Person at
any time liable for the payment of all or part of the Obligations or the failure
of the Administrative Agent or any other Secured Party to file or enforce a
claim in bankruptcy or other proceeding with respect to any Person; or any sale,
lease or transfer of any or all of the assets of the any Grantor, or any changes
in the shareholders of any Grantor; (D) the fact that any Collateral or Lien
contemplated or intended to be given, created or granted as security for the
repayment of the Obligations shall not be properly perfected or created, or
shall prove to be unenforceable or subordinate to any other Lien, it being
recognized and agreed by each of the Grantors that it is not entering into this
Agreement in reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectability or value of any of the Collateral for the
Obligations; (E) any failure of the Administrative Agent or any other Secured
Party to marshal assets in favor of any Grantor or any other Person, to exhaust
any collateral for all or any part of the Obligations, to pursue or exhaust any
right, remedy, power or privilege it may have against any Grantor or
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any other Person or to take any action whatsoever to mitigate or reduce any
Grantor's liability under this Agreement or any other Loan Document; (F) any law
which provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety's or guarantor's obligation in proportion to
the principal obligation; (G) the possibility that the Obligations may at any
time and from time to time exceed the aggregate liability of such Grantor under
this Agreement; or (H) any other circumstance, act or omission whatsoever (with
or without notice to or knowledge of any Grantor), which constitutes, or might
be construed to constitute, an equitable or legal discharge or defense of the
Borrower for the Obligations, or of such Grantor under the guarantee contained
in Article II or with respect to the collateral security provided by such
Grantor herein, or which might be available to a surety or guarantor, in
bankruptcy or in any other instance.
(b) Each Grantor hereby waives to the extent permitted by law: (i)
except as expressly provided otherwise in any Loan Document, all notices to such
Grantor, or to any other Person, including but not limited to, notices of the
acceptance of this Agreement, the guarantee contained in Article II or the
provision of collateral security provided herein, or the creation, renewal,
extension, modification, accrual of any Obligations, or notice of or proof of
reliance by the Administrative Agent or any other Secured Party upon the
guarantee contained in Article II or upon the collateral security provided
herein, or of default in the payment or performance of any of the Obligations
owed to the Administrative Agent or any other Secured Party and enforcement of
any right or remedy with respect thereto; or notice of any other matters
relating thereto; the Obligations, and any of them, shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in Article II and the
collateral security provided herein and no notice of creation of the Obligations
or any extension of credit already or hereafter contracted by or extended to the
Borrower need be given to any Grantor; and all dealings between the Borrower and
any of the Grantors, on the one hand, and the Administrative Agent and the other
Secured Parties, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in Article
II and on the collateral security provided herein; (ii) diligence and demand of
payment, presentment, protest, dishonor and notice of dishonor; (iii) any
statute of limitations affecting any Grantor's liability hereunder or the
enforcement thereof; (iv) all rights of revocation with respect to the
Obligations, the guarantee contained in Article II and the provision of
collateral security herein; and (v) all principles or provisions of law which
conflict with the terms of this Agreement and which can, as a matter of law, be
waived.
(c) When making any demand hereunder or otherwise pursuing its
rights and remedies hereunder against any Grantor, the Administrative Agent or
any other Secured Party may, but shall be under no obligation to, join or make a
similar demand on or otherwise pursue or exhaust such rights and remedies as it
may have against the Borrower, any other Grantor or any other Person or against
any collateral security or guarantee for the Obligations or any right of offset
with respect thereto, and any failure by the Administrative Agent or any other
Secured Party to make any such demand, to pursue such other rights or remedies
or to collect any payments from the Borrower, any other Grantor or any other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower, any Grantor
or any other Person or any such collateral security, guarantee or right of
offset, shall not relieve any Grantor of any obligation or liability hereunder,
and shall not impair or affect the rights and remedies, whether express, implied
or available as a matter of law, of the
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Administrative Agent or any other Secured Party against any Grantor. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings. Neither the Administrative Agent nor any other Secured Party
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Obligations or for the guarantee contained
in Article II or any property subject thereto.
Section 16.02 No Subrogation, Contribution or Reimbursement.
Notwithstanding any payment made by any Grantor hereunder or any set-off or
application of funds of any Grantor by the Administrative Agent or any other
Secured Party, no Grantor shall be entitled to be subrogated to any of the
rights of the Administrative Agent or any other Secured Party against the
Borrower or any other Grantor or any collateral security or guarantee or right
of offset held by the Administrative Agent or any other Secured Party for the
payment of the Obligations, nor shall any Grantor seek or be entitled to seek
any indemnity, exoneration, participation, contribution or reimbursement from
the Borrower or any other Grantor in respect of payments made by such Grantor
hereunder, and each Grantor hereby expressly waives, releases, and agrees not to
exercise any all such rights of subrogation, reimbursement, indemnity and
contribution. Each Grantor further agrees that to the extent that such waiver
and release set forth herein is found by a court of competent jurisdiction to be
void or voidable for any reason, any rights of subrogation, reimbursement,
indemnity and contribution such Grantor may have against the Borrower, any other
Grantor or against any collateral or security or guarantee or right of offset
held by the Administrative Agent or any other Secured Party shall be junior and
subordinate to any rights the Administrative Agent and the other Secured Parties
may have against the Borrower and such Grantor and to all right, title and
interest the Administrative Agent and the other Secured Parties may have in any
collateral or security or guarantee or right of offset. The Administrative
Agent, for the benefit of the Secured Parties, may use, sell or dispose of any
item of Collateral or security as it sees fit without regard to any subrogation
rights any Grantor may have, and upon any disposition or sale, any rights of
subrogation any Grantor may have shall terminate.
ARTICLE XVII
REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the other Secured Parties to enter
into the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower thereunder and to induce the Lenders and
Affiliates of the Lenders to enter into Permitted Hedging Agreements, each
Grantor hereby represents and warrants to the Administrative Agent and each
other Secured Party that:
Section 17.01 Representations in Credit Agreement. In the case of each
Guarantor, the representations and warranties set forth in Article VII of the
Credit Agreement as they relate to such Guarantor (in its capacity as a
Subsidiary of the Borrower) or to the Loan Documents to which such Guarantor is
a party are true and correct in all material respects, provided that each
reference in each such representation and warranty to the Borrower's knowledge
shall, for the purposes of this Section 5.01, be deemed to be a reference to
such Guarantor's knowledge.
Section 17.02 Benefit to the Guarantor. The Borrower is a member of an
affiliated group of companies that includes each Guarantor, and the Borrower and
the Guarantors are engaged in
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related businesses. Each Guarantor is a Subsidiary of the Borrower and its
guaranty and surety obligations pursuant to this Agreement reasonably may be
expected to benefit, directly or indirectly, it; and it has determined that this
Agreement is necessary and convenient to the conduct, promotion and attainment
of the business of such Guarantor and the Borrower.
Section 17.03 Solvency. Such Grantor (i) is not insolvent as of the date
hereof and will not be rendered insolvent as a result of this Agreement (after
giving effect to Section 2.01(a)), (ii) is not engaged in a business or a
transaction, or about to engage in a business or a transaction, for which any
Property or assets remaining with it constitute unreasonably small capital, and
(iii) does not intend to incur, or believe it will incur, debts that will be
beyond its ability to pay as such debts mature.
Section 17.04 Title; No Other Liens. Except for the security interest
granted to the Administrative Agent for the ratable benefit of the Secured
Parties pursuant to this Agreement and Excepted Liens, such Grantor is the legal
and beneficial owner of its respective items of the Collateral free and clear of
any and all Liens other than Excepted Liens. No financing statement or other
public notice with respect to all or any part of the Collateral is on file or of
record in any public office, except such as have been filed in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, pursuant
to this Agreement, the Security Instruments or as are filed to secure Liens
permitted by Section 9.03 of the Credit Agreement.
Section 17.05 Perfected First Priority Liens. The security interests
granted pursuant to this Agreement (a) upon completion of the filings and other
actions specified on Schedule 3 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the
Administrative Agent in completed and duly executed form) will constitute valid
perfected security interests in all of the Collateral in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, as
collateral security for such Grantor's obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor and (b) are prior to all
other Liens on the Collateral in existence on the date hereof except for
Excepted Liens which have priority over the Liens on the Collateral by operation
of law.
Section 17.06 Legal Name, Organizational Status, Chief Executive Office.
On the date hereof, the correct legal name of such Grantor, such Grantor's
jurisdiction of organization, organizational number, taxpayor identification
number and the location of such Grantor's chief executive office or sole place
of business are specified on Schedule 4.
Section 17.07 Prior Names, Addresses, Locations of Tangible Assets.
Schedule 5 correctly sets forth (a) all names and trade names that such Grantor
has used in the last five years and (b) the chief executive office of such
Grantor over the last five years (if different from that which is set forth in
Section 5.06 above).
Section 17.08 Pledged Securities. The shares (or such other interests) of
Pledged Securities pledged by such Grantor hereunder constitute all the issued
and outstanding shares (or such other interests) of all classes of the capital
stock or other equity interests of each Issuer owned by such Grantor. All the
shares (or such other interests) of the Pledged Securities have been duly and
validly issued and are fully paid and nonassessable; and such Grantor is the
record
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and beneficial owner of, and has good title to, the Pledged Securities pledged
by it hereunder, free of any and all Liens except Excepted Liens or options in
favor of, or claims of, any other Person, except the security interest created
by this Agreement.
Section 17.09 Goods. No portion of the Collateral constituting Goods is in
the possession of a bailee that has issued a negotiable or non-negotiable
document covering such Collateral.
Section 17.10 Instruments and Chattel Paper. Such Grantor has delivered to
the Administrative Agent all Collateral constituting Instruments and Chattel
Paper. No Collateral constituting Chattel Paper or Instruments contains any
statement therein to the effect that such Collateral has been assigned to an
identified party other than the Administrative Agent, and the grant of a
security interest in such Collateral in favor of the Administrative Agent
hereunder does not violate the rights of any other Person as a secured party.
Section 17.11 Truth of Information; Accounts. All information with respect
to the Collateral set forth in any schedule, certificate or other writing at any
time heretofore or hereafter furnished by such Grantor to the Administrative
Agent or any other Secured Party, and all other written information heretofore
or hereafter furnished by such Grantor to the Administrative Agent or any other
Secured Party is and will be true and correct in all material respects as of the
date furnished. The amount represented by such Grantor to the Administrative
Agent and the Lenders from time to time as owing by each Account Debtor or by
all Account Debtors in respect of the Accounts, Chattel Paper and Payment
Intangibles will at such time be the correct amount actually owing by such
Account Debtor or Account Debtors thereunder. The place where each Grantor keeps
its records concerning the Accounts, Chattel Paper and Payment Intangibles is
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
Section 17.12 Governmental Obligors. None of the Account Debtors on such
Grantor's Accounts, Chattel Paper or Payment Intangibles is a Governmental
Authority.
Section 17.13 Patents and Trademarks. Schedule 6 hereto includes all
Patents and Patent Licenses owned by such Grantor in its own name as of the date
hereof. Schedule 7 hereto includes all Trademarks and Trademark Licenses owned
by such Grantor in its own name as of the date hereof. To the best of each such
Grantor's knowledge, each Patent and Trademark is valid, subsisting, unexpired,
enforceable and has not been abandoned. Except as set forth in either such
Schedule, none of such Patents and Trademarks is the subject of any licensing or
franchise agreement. No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of any
Patent or Trademark. No action or proceeding is pending (i) seeking to limit,
cancel or question the validity of any Patent or Trademark, or (ii) which, if
adversely determined, would have a material adverse effect on the value of any
Patent or Trademark.
ARTICLE XVIII
COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and the
other Secured Parties that, from and after the date of this Agreement until the
Obligations shall have been paid
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in full, no Letter of Credit shall be outstanding and the Aggregate Commitments
shall have terminated:
Section 18.01 Covenants in Credit Agreement. In the case of each
Guarantor, such Guarantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Guarantor or any of its
Subsidiaries.
Section 18.02 Maintenance of Perfected Security Interest; Further
Documentation.
(a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 5.05 and shall defend such security interest against the
claims and demands of all Persons whomsoever except for Excepted Liens.
(b) At any time and from time to time, upon the request of the
Administrative Agent or any other Secured Party, and at the sole expense of such
Grantor, such Grantor will promptly and duly give, execute, deliver, indorse,
file or record any and all financing statements, continuation statements,
amendments, notices (including, without limitation, notifications to financial
institutions and any other Person), contracts, agreements, assignments,
certificates, stock powers or other instruments, obtain any and all governmental
approvals and consents and take or cause to be taken any and all steps or acts
that may be necessary or advisable or as the Administrative Agent may reasonably
request to create, perfect, establish the priority of, or to preserve the
validity, perfection or priority of, the Liens granted by this Agreement or to
enable the Administrative Agent or any other Secured Party to enforce its
rights, remedies, powers and privileges under this Agreement with respect to
such Liens or to otherwise obtain or preserve the full benefits of this
Agreement and the rights, powers and privileges herein granted.
(c) Without limiting the obligations of the Grantors under Section
5.02(b): (i)upon the request of the Administrative Agent or any other Secured
Party, such Grantor shall take or cause to be taken all actions (other than any
actions required to be taken by the Administrative Agent or any Lender)
requested by the Administrative Agent to cause the Administrative Agent to (A)
have "control" (within the meaning of Sections 9-104, 9-105, 9-106, and 9-107 of
the UCC) over any Collateral constituting Deposit Accounts, Electronic Chattel
Paper, Investment Property (including the Pledged Securities), or
Letter-of-Credit Rights, including, without limitation, executing and delivering
any agreements, in form and substance satisfactory to the Administrative Agent,
with securities intermediaries, issuers or other Persons in order to establish
"control", and each Grantor shall promptly notify the Administrative Agent and
the other Secured Parties of such Grantor's acquisition of any such Collateral,
and (B) be a "protected purchaser" (as defined in Section 8-303 of the UCC);
(ii) with respect to Collateral other than certificated securities and goods
covered by a document in the possession of a Person other than such Grantor or
the Administrative Agent, such Grantor shall obtain written acknowledgment that
such Person holds possession for the Administrative Agent's benefit; and (iii)
with respect to any Collateral constituting Goods that are in the possession of
a bailee, such Grantor shall provide prompt notice to the Administrative Agent
and the other Secured Parties of any such Collateral then in the possession of
such bailee, and such Grantor shall take or cause to
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be taken all actions (other than any actions required to be taken by the
Administrative Agent or any other Secured Party) necessary or requested by the
Administrative Agent to cause the Administrative Agent to have a perfected
security interest in such Collateral under applicable law.
(d) This Section 6.02 and the obligations imposed on each Grantor by
this Section 6.02 shall be interpreted as broadly as possible in favor of the
Administrative Agent and the other Secured Parties in order to effectuate the
purpose and intent of this Agreement.
Section 18.03 Maintenance of Records. Such Grantor will keep and maintain
at its own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts. For the Administrative Agent's and the
other Secured Parties' further security, the Administrative Agent, for the
ratable benefit of the Secured Parties, shall have a security interest in all of
such Grantor's books and records pertaining to the Collateral, and such Grantor
shall turn over any such books and records to the Administrative Agent or to its
representatives during normal business hours at the request of the
Administrative Agent and shall provide such clerical and other assistance as may
be reasonably requested with regard thereto.
Section 18.04 Right of Inspection. The Administrative Agent and the other
Secured Parties and their respective representatives shall at all times have
full and free access during normal business hours and upon reasonable prior
written notice to inspect all the books, correspondence and records of such
Grantor, and the Administrative Agent and the other Secured Parties and their
respective representatives may examine the same, take extracts therefrom and
make photocopies thereof and shall at all times also have the right to enter
into and upon any premises where any of the Collateral (including, without
limitation, Inventory or Equipment) is located for the purpose of inspecting the
same, observing its use or otherwise protecting its interests therein, and such
Grantor agrees to render to the Administrative Agent and the other Secured
Parties and their respective representatives, at such Grantor's sole cost and
expense, such clerical and other assistance as may be reasonably requested with
regard to any of the foregoing.
Section 18.05 Further Identification of Collateral. Such Grantor will
furnish to the Administrative Agent and the Lenders from time to time, at such
Grantor's sole cost and expense, statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in reasonable
detail.
Section 18.06 Changes in Locations, Name, etc. Such Grantor recognizes
that financing statements pertaining to the Collateral have been or may be filed
where such Grantor maintains any Collateral or is organized. Without limitation
of any other covenant herein, such Grantor will not cause or permit (i) any
change to be made in its name, identity or corporate structure or (ii) any
change to (A) the identity of any warehouseman, common carrier, other
third-party transporter, bailee or any agent or processor in possession or
control of any Collateral or (iii) such Grantor's jurisdiction of organization
or (iv) the location of any Collateral, unless such Grantor shall have first (1)
notified the Administrative Agent and the other Secured Parties of such change
at least thirty (30) days prior to the effective date of such change, and (2)
taken all
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action reasonably requested by the Administrative Agent or any other Secured
Party for the purpose of maintaining the perfection and priority of the
Administrative Agent's security interests under this Agreement. In any notice
furnished pursuant to this Section 6.06, such Grantor will expressly state in a
conspicuous manner that the notice is required by this Agreement and contains
facts that may require additional filings of financing statements or other
notices for the purposes of continuing perfection of the Administrative Agent's
security interest in the Collateral.
Section 18.07 Compliance with Contractual Obligations. Such Grantor will
perform and comply in all material respects with all its contractual obligations
relating to the Collateral (including, without limitation, with respect to the
goods or services, the sale or lease or rendition of which gave rise or will
give rise to each Account).
Section 18.08 Limitations on Dispositions of Collateral. The
Administrative Agent and the other Secured Parties do not authorize, and such
Grantor agrees not to sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so except to the extent
expressly permitted by the Credit Agreement.
Section 18.09 Pledged Securities.
(a) If such Grantor shall become entitled to receive or shall
receive any stock certificate or other instrument (including, without
limitation, any certificate or instrument representing a dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate or instrument issued in connection with any
reorganization), option or rights in respect of the capital stock or other
equity interests of any Issuer, whether in addition to, in substitution of, as a
conversion of, or in exchange for, any shares (or such other interests) of the
Pledged Securities, or otherwise in respect thereof, such Grantor shall accept
the same as the agent of the Administrative Agent and the other Secured Parties,
hold the same in trust for the Administrative Agent and the other Secured
Parties and deliver the same forthwith to the Administrative Agent in the exact
form received, duly indorsed by such Grantor to the Administrative Agent, if
required, together with an undated stock power or other equivalent instrument of
transfer acceptable to the Administrative Agent covering such certificate or
instrument duly executed in blank by such Grantor and with, if the
Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) unless otherwise permitted hereby, vote to enable, or
take any other action to permit, any Issuer to issue any stock or other equity
interests of any nature or to issue any other securities or interests
convertible into or granting the right to purchase or exchange for any stock or
other equity interests of any nature of any Issuer, (ii) sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to, the
Pledged Securities or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Credit Agreement), (iii) create, incur or permit to
exist any Lien except for Excepted Liens or option in favor of, or any claim of
any Person with respect to, any of the Pledged Securities or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or (iv) enter into any
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agreement or undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Pledged Securities
or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
6.09(a) with respect to the Pledged Securities issued by it and (iii) the terms
of Section 7.01(c) and Section 7.05 shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 7.01(c) or
Section 7.05 with respect to the Pledged Securities issued by it.
(d) Such Grantor shall furnish to the Administrative Agent such
stock powers and other equivalent instruments of transfer as may be required by
the Administrative Agent to assure the transferability of and the perfection of
the security interest in the Pledged Securities when and as often as may be
reasonably requested by the Administrative Agent.
(e) The Pledged Securities will at all times constitute not less
than 100% of the capital stock or other equity interests of the Issuer thereof
owned by any Grantor. Each Grantor will not permit any Issuer of any of the
Pledged Securities to issue any new shares (or other interests) of any class of
capital stock or other equity interests of such Issuer without the prior written
consent of the Administrative Agent.
Section 18.10 Limitations on Modifications, Waivers, Extensions of
Agreements Giving Rise to Accounts. Such Grantor will not (i) amend, modify,
terminate or waive any provision of any Chattel Paper, Instrument or any
agreement giving rise to an Account or Payment Intangible in any manner which
could reasonably be expected to materially adversely affect the value of such
Chattel Paper, Instrument, Payment Intangible or Account as Collateral, or (ii)
fail to exercise promptly and diligently each and every material right which it
may have under any Chattel Paper, Instrument and each agreement giving rise to
an Account or Payment Intangible (other than any right of termination). Such
Grantor shall deliver to the Administrative Agent a copy of each material
demand, notice or document received by it relating in any way to any Chattel
Paper, Instrument or any agreement giving rise to an Account or Payment
Intangible.
Section 18.11 Analysis of Accounts, Etc. The Administrative Agent shall
have the right from time to time and upon reasonable prior written notice to
make test verifications of the Accounts, Chattel Paper and Payment Intangibles
in any manner and through any medium that it reasonably considers advisable, and
each Grantor, at such Grantor's sole cost and expense, shall furnish all such
assistance and information as the Administrative Agent may require in connection
therewith. At any time and from time to time, upon the Administrative Agent's
request and at the expense of each Grantor, such Grantor shall furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts, Chattel Paper and
Payment Intangibles, and all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the Accounts,
Chattel Paper and Payment Intangibles, including, without limitation, all
original orders, invoices and shipping receipts.
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Section 18.12 Instruments and Tangible Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Tangible Chattel Paper, such Instrument or
Tangible Chattel Paper shall be immediately delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative Agent, to be
held as Collateral pursuant to this Agreement.
Section 18.13 Maintenance of Equipment. Such Grantor will maintain each
item of Equipment in good operating condition, ordinary wear and tear and
immaterial impairments of value and damage by the elements excepted, and will
provide all maintenance, service and repairs necessary for such purpose.
Section 18.14 Patents and Trademarks.
(a) Such Grantor (either itself or through licensees) will, except
with respect to any Trademark that such Grantor shall reasonably determine is of
negligible economic value to it, (i) continue to use each Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) employ such Trademark with the appropriate notice of
registration, (iv) not adopt or use any ▇▇▇▇ which is confusingly similar or a
colorable imitation of such Trademark unless the Administrative Agent, for the
ratable benefit of the Secured Parties, shall obtain a perfected security
interest in such ▇▇▇▇ pursuant to this Agreement, and (v) not (and not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby any Trademark may become invalidated.
(b) Such Grantor will not, except with respect to any Patent that
such Grantor shall reasonably determine is of negligible economic value to it,
do any act, or omit to do any act, whereby any Patent may become abandoned or
dedicated.
(c) Such Grantor will notify the Administrative Agent and the other
Secured Parties immediately if it knows, that any application or registration
relating to any Patent or Trademark may become abandoned or dedicated, or of any
adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office or any court or tribunal in any
country) regarding such Grantor's ownership of any Patent or Trademark or its
right to register the same or to keep and maintain the same.
(d) Whenever a Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Patent or Trademark with the United States Patent and Trademark Office or
any similar office or agency in any other country or any political subdivision
thereof, such Grantor shall report such filing to the Administrative Agent and
the other Secured Parties within five Business Days after the last day of the
fiscal quarter in which such filing occurs. Upon request of the Administrative
Agent, such Grantor shall execute and deliver any and all agreements,
instruments, documents, and papers as the Administrative Agent may request to
evidence the Administrative Agent's and the other Secured Parties' security
interest in any Patent or Trademark and the goodwill and General Intangibles of
such Grantor relating thereto or represented thereby, and such Grantor hereby
constitutes the
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Administrative Agent its attorney-in-fact to execute and file all such writings
for the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable until the
Obligations are paid in full and the Commitments are terminated.
(e) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of the
Patents and Trademarks, including, without limitation, filing of applications
for renewal, affidavits of use and affidavits of incontestability.
(f) In the event that any Patent or Trademark included in the
Collateral is infringed, misappropriated or diluted by a third party, such
Grantor shall promptly notify the Administrative Agent and the other Secured
Parties after it learns thereof and shall, unless such Grantor shall reasonably
determine that such Patent or Trademark is of negligible economic value to such
Grantor which determination such Grantor shall promptly report to the
Administrative Agent and the other Secured Parties, promptly ▇▇▇ for
infringement, misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement,
misappropriation or dilution, or take such other actions as such Grantor shall
reasonably deem appropriate under the circumstances to protect such Patent or
Trademark.
Section 18.15 Commercial Tort Claims. If such Grantor shall at any time
hold or acquire a Commercial Tort Claim that satisfies the requirements of the
following sentence, such Grantor shall, within thirty (30) days after such
Commercial Tort Claim satisfies such requirements, notify the Administrative
Agent and the other Secured Parties in a writing signed by such Grantor
containing a brief description thereof, and granting to the Administrative Agent
in such writing (for the benefit of the Secured Parties) a security interest
therein and in the Proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance reasonably satisfactory to the
Administrative Agent and the other Secured Parties. The provisions of the
preceding sentence shall apply only to a Commercial Tort Claim that satisfies
the following requirements: (i) the monetary value claimed by or payable to the
relevant Grantor in connection with such Commercial Tort Claim shall exceed
$3,000,000, and either (ii) (A) such Grantor shall have filed a law suit or
counterclaim or otherwise commenced legal proceedings (including, without
limitation, arbitration proceedings) against the Person against whom such
Commercial Tort Claim is made, or (B) such Grantor and the Person against whom
such Commercial Tort Claim is asserted shall have entered into a settlement
agreement with respect to such Commercial Tort Claim. In addition, to the extent
that the existence of any Commercial Tort Claim held or acquired by any Grantor
is disclosed by such Grantor in any public filing with the Securities Exchange
Commission or any successor thereto or analogous Governmental Authority, or to
the extent that the existence of any such Commercial Tort Claim is disclosed in
any press release issued by any Grantor, then, upon the request of the
Administrative Agent, the relevant Grantor shall, within thirty (30) days after
such request is made, transmit to the Administrative Agent and the other Secured
Parties a writing signed by such Grantor containing a brief description of such
Commercial Tort Claim and granting to the Administrative Agent in such writing
(for the benefit of the Secured Parties) a security interest therein and in the
Proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to the Administrative Agent and the other
Secured Parties.
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ARTICLE XIX
REMEDIAL PROVISIONS
Section 19.01 Pledged Securities.
(a) Unless an Event of Default shall have occurred and be continuing
and the Administrative Agent shall have given notice to the relevant Grantor of
the Administrative Agent's intent to exercise its corresponding rights pursuant
to Section 7.01(b), each Grantor shall be permitted to receive all cash
dividends paid in respect of the Pledged Securities paid in the normal course of
business of the relevant Issuer, to the extent permitted in the Credit
Agreement, and to exercise all voting and corporate rights with respect to the
Pledged Securities.
(b) If an Event of Default shall occur and be continuing, then at
any time in the Administrative Agent's discretion without notice, (i) the
Administrative Agent shall have the right to receive any and all cash dividends,
payments or other Proceeds paid in respect of the Pledged Securities and make
application thereof to the Obligations in accordance with Section 10.02 of the
Credit Agreement, and (ii) any or all of the Pledged Securities shall be
registered in the name of the Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter exercise (x) all voting,
corporate and other rights pertaining to such Pledged Securities at any meeting
of shareholders (or other equivalent body) of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such Pledged
Securities as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Securities upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the organizational structure of any Issuer, or upon
the exercise by any Grantor or the Administrative Agent of any right, privilege
or option pertaining to such Pledged Securities, and in connection therewith,
the right to deposit and deliver any and all of the Pledged Securities with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Administrative Agent may determine), all
without liability except to account for property actually received by it, but
the Administrative Agent shall have no duty to any Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by such Grantor hereunder (and each Issuer party
hereto hereby agrees) to (i) comply with any instruction received by it from the
Administrative Agent in writing that (x) states that an Event of Default has
occurred and is continuing and (y) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from such Grantor, and
each Grantor agrees that each Issuer shall be fully protected in so complying,
and (ii) unless otherwise expressly permitted hereby, pay any dividends or other
payments with respect to the Pledged Securities directly to the Administrative
Agent.
(d) After the occurrence and during the continuation of an Event of
Default, if the Issuer of any Pledged Securities is the subject of bankruptcy,
insolvency, receivership, custodianship or other proceedings under the
supervision of any Governmental Authority, then all rights of the Grantor in
respect thereof to exercise the voting and other consensual rights
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which such Grantor would otherwise be entitled to exercise with respect to the
Pledged Securities issued by such Issuer shall cease, and all such rights shall
thereupon become vested in the Administrative Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights, but the
Administrative Agent shall have no duty to exercise any such voting or other
consensual rights and shall not be responsible for any failure to do so or delay
in so doing.
Section 19.02 Collections on Accounts, Etc. The Administrative Agent
hereby authorizes each Grantor to collect upon the Accounts, Instruments,
Chattel Paper and Payment Intangibles subject to the Administrative Agent's
direction and control, and the Administrative Agent may curtail or terminate
said authority at any time after the occurrence and during the continuance of an
Event of Default. Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify the Account Debtors that the applicable Accounts, Chattel Paper and
Payment Intangibles have been assigned to the Administrative Agent for the
ratable benefit of the Secured Parties and that payments in respect thereof
shall be made directly to the Administrative Agent. The Administrative Agent may
in its own name or in the name of others communicate with the Account Debtors to
verify with them to its satisfaction the existence, amount and terms of any
Accounts, Chattel Paper or Payment Intangibles.
Section 19.03 Proceeds. If required by the Administrative Agent at any
time after the occurrence and during the continuance of an Event of Default, any
payments of Accounts, Instruments, Chattel Paper and Payment Intangibles, when
collected or received by each Grantor, and any other cash or non-cash Proceeds
received by each Grantor upon the sale or other disposition of any Collateral,
shall be forthwith (and, in any event, within two Business Days) deposited by
such Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a special collateral account maintained by
the Administrative Agent, subject to withdrawal by the Administrative Agent for
the ratable benefit of the Secured Parties only, as hereinafter provided, and,
until so turned over, shall be held by such Grantor in trust for the
Administrative Agent for the ratable benefit of the Secured Parties, segregated
from other funds of any such Grantor. Each deposit of any such Proceeds shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit. All Proceeds (including, without
limitation, Proceeds constituting collections of Accounts, Chattel Paper,
Instruments) while held by the Administrative Agent (or by any Grantor in trust
for the Administrative Agent for the ratable benefit of the Secured Parties)
shall continue to be collateral security for all of the Obligations and shall
not constitute payment thereof until applied as hereinafter provided. At such
intervals as may be agreed upon by each Grantor and the Administrative Agent,
or, if an Event of Default shall have occurred and be continuing, at any time at
the Administrative Agent's election, the Administrative Agent shall apply all or
any part of the funds on deposit in said special collateral account on account
of the Obligations in such order as the Administrative Agent may elect, and any
part of such funds which the Administrative Agent elects not so to apply and
deems not required as collateral security for the Obligations shall be paid over
from time to time by the Administrative Agent to each Grantor or to whomsoever
may be lawfully entitled to receive the same.
Section 19.04 UCC and Other Remedies.
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(a) If an Event of Default shall occur and be continuing, the
Administrative Agent, on behalf of the Secured Parties, may exercise in its
discretion, in addition to all other rights, remedies, powers and privileges
granted to them in this Agreement, the other Loan Documents, any Permitted
Hedging Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, all rights, remedies, powers and privileges of a
secured party under the UCC (whether the UCC is in effect in the jurisdiction
where such rights, remedies, powers or privileges are asserted) or any other
applicable law or otherwise available at law or equity. Without limiting the
generality of the foregoing, the Administrative Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Administrative Agent or any other Secured Party or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Administrative Agent or any other Secured Party shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in any Grantor,
which right or equity is hereby waived and released. If an Event of Default
shall occur and be continuing, each Grantor further agrees, at the
Administrative Agent's request, to assemble the Collateral and make it available
to the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at such Grantor's premises or elsewhere. Any such
sale or transfer by the Administrative Agent either to itself or to any other
Person shall be absolutely free from any claim of right by Grantor, including
any equity or right of redemption, stay or appraisal which Grantor has or may
have under any rule of law, regulation or statute now existing or hereafter
adopted. Upon any such sale or transfer, the Administrative Agent shall have the
right to deliver, assign and transfer to the purchaser or transferee thereof the
Collateral so sold or transferred. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 7.04, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of the Administrative Agent
and the other Secured Parties hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in part
of the Obligations, in accordance with Section 10.02 of the Credit Agreement,
and only after such application and after the payment by the Administrative
Agent of any other amount required by any provision of law, including, without
limitation, Section 9-615 of the UCC, need the Administrative Agent account for
the surplus, if any, to any Grantor. To the extent permitted by applicable law,
each Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any other Secured Party arising out of the exercise by
them of any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition.
(b) In the event that the Administrative Agent elects not to sell
the Collateral, the Administrative Agent retains its rights to dispose of or
utilize the Collateral or any part or parts
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thereof in any manner authorized or permitted by law or in equity, and to apply
the proceeds of the same towards payment of the Obligations. Each and every
method of disposition of the Collateral described in this Agreement shall
constitute disposition in a commercially reasonable manner. The Administrative
Agent may appoint any Person as agent to perform any act or acts necessary or
incident to any sale or transfer of the Collateral.
Section 19.05 Private Sales of Pledged Securities. Each Grantor recognizes
that the Administrative Agent may be unable to effect a public sale of any or
all the Pledged Securities, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale. The Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged Securities for the period of
time necessary to permit the Issuer thereof to register such securities for
public sale under the Securities Act, or under applicable state securities laws,
even if such Issuer would agree to do so. Each Grantor agrees to use its best
efforts to do or cause to be done all such other acts as may reasonably be
necessary to make such sale or sales of all or any portion of the Pledged
Securities pursuant to this Section 7.05 valid and binding and in compliance
with any and all other applicable Governmental Requirements. Each Grantor
further agrees that a breach of any of the covenants contained in this Section
7.05 will cause irreparable injury to the Administrative Agent and the other
Secured Parties, that the Administrative Agent and the other Secured Parties
have no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 7.05 shall be
specifically enforceable against such Grantor, and such Grantor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants.
Section 19.06 Waiver; Deficiency. Each Grantor waives and agrees not to
assert any rights or privileges which it may acquire under the UCC or any other
applicable law. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the fees and disbursements of any attorneys employed by
the Administrative Agent or any other Secured Party to collect such deficiency.
Section 19.07 Non-Judicial Enforcement. The Administrative Agent may
enforce its rights hereunder without prior judicial process or judicial hearing,
and to the extent permitted by law, each Grantor expressly waives any and all
legal rights which might otherwise require the Administrative Agent to enforce
its rights by judicial process.
ARTICLE XX
THE ADMINISTRATIVE AGENT
Section 20.01 Administrative Agent's Appointment as Attorney-in-Fact, Etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful
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attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any and all
reasonably appropriate action and to execute any and all documents and
instruments which may be reasonably necessary or desirable to accomplish the
purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Administrative Agent the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:
(i) unless being disputed as provided in clause (a) of the
definition of Excepted Liens in the Credit Agreement, pay or discharge taxes and
Liens levied or placed on or threatened against the Collateral, effect any
repairs or any insurance called for by the terms of this Agreement and pay all
or any part of the premiums therefor and the costs thereof;
(ii) execute, in connection with any sale provided for in
Section 7.04 or Section 7.05, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(iii) (A) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative Agent
shall direct; (B) take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible, Chattle Paper or Payment Intangible or
with respect to any other Collateral, and to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of collecting any all
such moneys due under any Account, Instrument or General Intangible or with
respect to any other Collateral whenever payable; (C) ask or demand for,
collect, and receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; (D) sign and indorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Collateral; (E) receive, change the address for delivery, open and
dispose of mail addressed to any Grantor, and to execute, assign and indorse
negotiable and other instruments for the payment of money, documents of title or
other evidences of payment, shipment or storage for any form of Collateral on
behalf of and in the name of any Grantor; (F) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (G) defend any suit, action or
proceeding brought against such Grantor with respect to any Collateral; (H)
settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the Administrative
Agent may deem appropriate; (I) assign any Patent or Trademark (along with the
goodwill of the business to which any such Trademark pertains), throughout the
world for such term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (J) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Administrative
Agent were the absolute owner thereof for all purposes, and do, at the
Administrative Agent's option and such Grantor's expense, at any time, or from
time to time, all acts and things which the Administrative Agent deems necessary
to protect, preserve or realize upon the Collateral and
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the Administrative Agent's and the other Secured Parties' security interests
therein and to effect the intent of this Agreement, all as fully and effectively
as such Grantor might do.
Anything in this Section 8.01(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 8.01(a) unless an Event of Default
shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein within the applicable grace periods, the
Administrative Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 8.01, together with interest
thereon at the Post-Default Rate from the date of payment by the Administrative
Agent to the date reimbursed by the relevant Grantor, shall be payable by such
Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue and in compliance hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.
Section 20.02 Duty of Administrative Agent. The Administrative Agent's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the UCC or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals
with similar property for its own account and shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which comparable secured parties accord comparable collateral. Neither the
Administrative Agent, any other Secured Party nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the other Secured Parties hereunder
are solely to protect the Administrative Agent's and the other Secured Parties'
interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any other Secured Party to exercise any such powers. The
Administrative Agent and the other Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents shall
be responsible to any Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct. To the fullest extent
permitted by applicable law, the Administrative Agent shall be under no duty
whatsoever to make or give any presentment, notice of dishonor, protest, demand
for performance, notice of non-performance, notice of intent to accelerate,
notice of acceleration, or other notice or demand in connection with any
Collateral or the Obligations, or to take any steps necessary to preserve any
rights against any Grantor or other Person or ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not it has or is deemed to have
- 23 -
knowledge of such matters. Each Grantor, to the extent permitted by applicable
law, waives any right of marshaling in respect of any and all Collateral, and
waives any right to require the Administrative Agent or any other Secured Party
to proceed against any Grantor or other Person, exhaust any Collateral or
enforce any other remedy which the Administrative Agent or any other Secured
Party now has or may hereafter have against each Grantor, any Grantor or other
Person.
Section 20.03 Execution of Financing Statements. Pursuant to the UCC and
any other applicable law, each Grantor authorizes the Administrative Agent, its
counsel or its representative, at any time and from time to time, to file or
record financing statements, continuation statements, amendments thereto and
other filing or recording documents or instruments with respect to the
Collateral without the signature of such Grantor in such form and in such
offices as the Administrative Agent reasonably determines appropriate to perfect
the security interests of the Administrative Agent under this Agreement.
Additionally, each Grantor authorizes the Administrative Agent, its counsel or
its representative, at any time and from time to time, to file or record such
financing statements that describe the collateral covered thereby as "all assets
of the Grantor", "all personal property of the Grantor" or words of similar
effect. A photographic or other reproduction of this Agreement shall be
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction.
Section 20.04 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the other Secured Parties, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Secured Parties with full and valid authority so to act or refrain from
acting, and no Grantor shall be under any obligation, or entitlement, to make
any inquiry respecting such authority.
ARTICLE XXI
SUBORDINATION OF INDEBTEDNESS
Section 21.01 Subordination of All Guarantor Claims. As used herein, the
term "Guarantor Claims" shall mean all debts and obligations of the Borrower or
any other Grantor to any Grantor, whether such debts and obligations now exist
or are hereafter incurred or arise, or whether the obligation of the debtor
thereon be direct, contingent, primary, secondary, several, joint and several,
or otherwise, and irrespective of whether such debts or obligations be evidenced
by note, contract, open account, or otherwise, and irrespective of the Person or
Persons in whose favor such debts or obligations may, at their inception, have
been, or may hereafter be created, or the manner in which they have been or may
hereafter be acquired by. After and during the continuation of an Event of
Default, no Grantor shall receive or collect, directly or indirectly, from any
obligor in respect thereof any amount upon the Guarantor Claims.
Section 21.02 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief or other insolvency
proceedings involving any
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Grantor, the Administrative Agent on behalf of the Secured Parties shall have
the right to prove their claim in any proceeding, so as to establish their
rights hereunder and receive directly from the receiver, trustee or other court
custodian, dividends and payments which would otherwise be payable upon
Guarantor Claims. Each Grantor hereby assigns such dividends and payments to the
Administrative Agent for the benefit of the Secured Parties for application
against the Obligations as provided under Section 10.02 of the Credit Agreement.
Should any Agent or Secured Party receive, for application upon the Obligations,
any such dividend or payment which is otherwise payable to any Grantor, and
which, as between such Grantor, shall constitute a credit upon the Guarantor
Claims, then upon payment in full of the Obligations, the intended recipient
shall become subrogated to the rights of the Administrative Agent and the other
Secured Parties to the extent that such payments to the Administrative Agent and
the other Secured Parties on the Guarantor Claims have contributed toward the
liquidation of the Obligations, and such subrogation shall be with respect to
that proportion of the Obligations which would have been unpaid if the
Administrative Agent and the other Secured Parties had not received dividends or
payments upon the Guarantor Claims.
Section 21.03 Payments Held in Trust. In the event that notwithstanding
Section 9.01 and Section 9.02, any Grantor should receive any funds, payments,
claims or distributions which is prohibited by such Sections, then it agrees: to
hold in trust for the Administrative Agent and the other Secured Parties an
amount equal to the amount of all funds, payments, claims or distributions so
received, and (b) that it shall have absolutely no dominion over the amount of
such funds, payments, claims or distributions except to pay them promptly to the
Administrative Agent, for the benefit of the Secured Parties; and each Grantor
covenants promptly to pay the same to the Administrative Agent.
Section 21.04 Liens Subordinate. Each Grantor agrees that, until the
Obligations are paid in full and the Aggregate Commitments terminated, any Liens
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any Liens securing payment of the Obligations, regardless of
whether such encumbrances in favor of such Grantor, the Administrative Agent or
any other Secured Party presently exist or are hereafter created or attach.
Without the prior written consent of the Administrative Agent, no Grantor,
during the period in which any of the Obligations are outstanding or the
Aggregate Commitments are in effect, shall (a) exercise or enforce any
creditor's right it may have against any debtor in respect of the Guarantor
Claims, or (b) foreclose, repossess, sequester or otherwise take steps or
institute any action or proceeding (judicial or otherwise, including without
limitation the commencement of or joinder in any liquidation, bankruptcy,
rearrangement, debtor's relief or insolvency proceeding) to enforce any Lien
held by it.
Section 21.05 Notation of Records. Upon the request of the Administrative
Agent, all promissory notes and all accounts receivable ledgers or other
evidence of the Guarantor Claims accepted by or held by any Grantor shall
contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Agreement.
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ARTICLE XXII
MISCELLANEOUS
Section 22.01 Waiver. No failure on the part of the Administrative Agent
or any other Secured Party to exercise and no delay in exercising, and no course
of dealing with respect to, any right, remedy, 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, remedy, power or privilege. The rights, remedies, powers and
privileges provided herein are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law. The exercise by the
Administrative Agent of any one or more of the rights, powers and remedies
herein shall not be construed as a waiver of any other rights, powers and
remedies, including, without limitation, any rights of set-off.
Section 22.02 Notices. All notices and other communications provided for
herein shall be given in the manner and subject to the terms of Section 12.02 of
the Credit Agreement; provided that any such notice, request or demand to or
upon any Guarantor shall be addressed to such Guarantor at its notice address
set forth on Schedule 1.
Section 22.03 Payment of Expenses, Indemnities, Etc.
(a) Each Grantor agrees to pay or promptly reimburse the
Administrative Agent and each other Secured Party for all advances, charges,
costs and expenses (including, without limitation, all costs and expenses of
holding, preparing for sale and selling, collecting or otherwise realizing upon
the Collateral and all attorneys' fees, legal expenses and court costs) incurred
by any Secured Party in connection with the exercise of its respective rights
and remedies hereunder, including, without limitation, any advances, charges,
costs and expenses that may be incurred in any effort to enforce any of the
provisions of this Agreement or any obligation of any Grantor in respect of the
Collateral or in connection with (i) the preservation of the Lien of, or the
rights of the Administrative Agent or any other Secured Party under this
Agreement, (ii) any actual or attempted sale, lease, disposition, exchange,
collection, compromise, settlement or other realization in respect of, or care
of, the Collateral, including all such costs and expenses incurred in any
bankruptcy, reorganization, workout or other similar proceeding, or (iii)
collecting against such Grantor under the guarantee contained in Article II or
otherwise enforcing or preserving any rights under this Agreement and the other
Loan Documents to which such Grantor is a party.
(b) Each Grantor agrees to pay, and to save the Administrative Agent
and the other Secured Parties harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including, without
limitation, court costs and attorneys' fees, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp, excise,
sales or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement) incurred because of, incident to, or with
respect to, the Collateral (including, without limitation, any exercise of
rights or remedies in connection therewith) or the execution, delivery,
enforcement, performance and
- 26 -
administration of this Agreement, to the extent the Borrower would be required
to do so pursuant to Section 12.03 of the Credit Agreement. All amounts for
which any Grantor is liable pursuant to this Section 10.03 shall be due and
payable by such Grantor to the Secured Parties upon demand.
Section 22.04 Amendments in Writing. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
in accordance with Section 12.04 of the Credit Agreement.
Section 22.05 Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the other Secured Parties and their successors and
assigns; provided that except as set forth in Section 8.12 or Section 9.11 of
the Credit Agreement, no Grantor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent and the Lenders.
Section 22.06 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any of the Loan Documents to which
a Grantor is a party 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 such other Loan
Document.
Section 22.07 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 22.08 Survival. The obligations of the parties under Section 10.03
shall survive the repayment of the Loans and the termination of the Letters of
Credit, Permitted Hedging Agreements, Credit Agreement and Aggregate
Commitments. To the extent that any payments on the Obligations or proceeds of
any Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's and the other Secured Parties' Liens, security
interests, rights, powers and remedies under this Agreement and each Security
Instrument shall continue in full force and effect. In such event, each Security
Instrument shall be automatically reinstated and each Grantor shall take such
action as may be reasonably requested by the Administrative Agent and the other
Secured Parties to effect such reinstatement.
Section 22.09 Captions. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
Section 22.10 No Oral Agreements. The Loan Documents (other than the
Letters of Credit) embody the entire agreement and understanding between the
parties and supersede all other agreements and understandings between such
parties relating to the subject matter hereof and thereof. The Loan Documents
represent the final agreement between the parties and may not
- 27 -
be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties.
Section 22.11 Governing Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
(b) Any legal action or proceeding with respect to this Agreement or
any other Loan Documents to which a Grantor is a party shall be brought in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and each of the Lenders, the Administrative Agent
and the Grantors hereby accepts for itself and (to the extent permitted by law)
in respect of its Property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Each of the Lenders, the Administrative Agent and the
Grantors hereby irrevocably waives any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions. This submission to
jurisdiction is non-exclusive and does not preclude the Administrative Agent or
any Lender from obtaining jurisdiction over such Grantor in any court otherwise
having jurisdiction.
(c) Each of the Lenders, the Administrative Agent and the Grantors
irrevocably consents to the service of process of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such Person at the address
specified on its signature page of this Agreement or the Credit Agreement, as
applicable, such service to become effective thirty (30) days after such
mailing. Nothing herein shall affect the right of the Administrative Agent or
any Lender or any holder of a Note or Grantor to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against such Grantor in any other jurisdiction.
(d) Each Grantor and each Lender hereby (i) irrevocably and
unconditionally waive, to the fullest extent permitted by law, trial by jury in
any legal action or proceeding relating to this Agreement or any other Loan
Document and for any counterclaim therein; (ii) irrevocably waive, to the
maximum extent not prohibited by law, any right it may have to claim or recover
in any such litigation any special, exemplary, punitive or consequential
damages, or damages other than, or in addition to, actual damages; (iii) certify
that no party hereto nor any representative or agent of counsel for any party
hereto has represented, expressly or otherwise, or implied that such party would
not, in the event of litigation, seek to enforce the foregoing waivers, and (iv)
acknowledge that it has been induced to enter into this Agreement, the Loan
Documents and the transactions contemplated hereby and thereby by, among other
things, the mutual waivers and certifications contained in this Section 10.11.
Section 22.12 Acknowledgments. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any other Secured Party has
any fiduciary relationship with or duty to any Grantor arising out of or in
connection with this
- 28 -
Agreement or any of the other Loan Documents, and the relationship between the
Grantors, on the one hand, and the Administrative Agent and the other Secured
Parties, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Secured Parties or among the Grantors and the Lenders.
(d) Each of the parties hereto specifically agrees that it has a
duty to read this Agreement and the Security Instruments and agrees that it is
charged with notice and knowledge of the terms of this Agreement and the
Security Instruments; that it has in fact read this Agreement and is fully
informed and has full notice and knowledge of the terms, conditions and effects
of this Agreement; that it has been represented by independent legal counsel of
its choice throughout the negotiations preceding its execution of this Agreement
and the Security Instruments; and has received the advice of its attorney in
entering into this Agreement and the Security Instruments; and that it
recognizes that certain of the terms of this Agreement and the Security
Instruments result in one party assuming the liability inherent in some aspects
of the transaction and relieving the other party of its responsibility for such
liability. Each party hereto agrees and covenants that it will not contest the
validity or enforceability of any exculpatory provision of this Agreement and
the Security Instruments on the basis that the party had no notice or knowledge
of such provision or that the provision is not "conspicuous."
(e) Each Grantor warrants and agrees that each of the waivers and
consents set forth in this Agreement are made voluntarily and unconditionally
after consultation with outside legal counsel and with full knowledge of their
significance and consequences, with the understanding that events giving rise to
any defense or right waived may diminish, destroy or otherwise adversely affect
rights which such Grantor otherwise may have against the Borrower, any other
Grantor, the Secured Parties or any other Person or against any collateral. If,
notwithstanding the intent of the parties that the terms of this Agreement shall
control in any and all circumstances, any such waivers or consents are
determined to be unenforceable under applicable law, such waivers and consents
shall be effective to the maximum extent permitted by law.
Section 22.13 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 8.09 of the
Credit Agreement and is not a signatory hereto shall become a Grantor for all
purposes of this Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex I hereto.
Section 22.14 Set-Off. Each Grantor agrees that, in addition to (and
without limitation of) any right of set-off, bankers' lien or counterclaim a
Secured Party may otherwise have, each Secured Party shall have the right and be
entitled (after consultation with the Administrative Agent), at its option, to
offset (i) balances held by it or by any of its Affiliates for account of any
Grantor or any Subsidiary at any of its offices, in Dollars or in any other
currency, and (ii) amounts due and payable to such Lender (or any Affiliate of
such Lender) under any Permitted Hedging Agreement, against any principal of or
interest on any of such Secured Party's Loans, or any other amount due and
payable to such Secured Party hereunder, which is not paid when due (regardless
of whether such balances are then due to such Person), in which case it shall
- 29 -
promptly notify the Borrower and the Administrative Agent thereof, provided that
such Secured Party's failure to give such notice shall not affect the validity
thereof.
Section 22.15 Releases.
(a) Release Upon Payment in Full. The grant of a security interest
hereunder and all of rights, powers and remedies in connection herewith shall
remain in full force and effect until the Administrative Agent has (i)
retransferred and delivered all Collateral in its possession to the Grantors,
and (ii) executed a written release or termination statement and reassigned to
the Grantors without recourse or warranty any remaining Collateral and all
rights conveyed hereby. Upon the complete payment of the Obligations, the
termination of the Letters of Credit, Permitted Hedging Agreements secured
hereby, Credit Agreement and the Aggregate Commitments and the compliance by the
Grantors with all covenants and agreements hereof, the Administrative Agent, at
the written request and expense of the Borrower, will promptly release, reassign
and transfer the Collateral to the Grantors and declare this Agreement to be of
no further force or effect.
(b) Further Assurances. If any of the Collateral shall be sold,
transferred or otherwise disposed of by any Grantor in a transaction permitted
by the Credit Agreement, then the Administrative Agent, at the request and sole
expense of such Grantor, shall promptly execute and deliver to such Grantor all
releases or other documents reasonably necessary or desirable for the release of
the Liens created hereby on such Collateral and the capital stock of such
Grantor. At the request and sole expense of the Borrower, a Grantor shall be
released from its obligations hereunder in the event that all the capital stock
of such Grantor shall be sold, transferred or otherwise disposed of in a
transaction permitted by the Credit Agreement; provided that the Borrower shall
have delivered to the Administrative Agent, at least ten Business Days prior to
the date of the proposed release, a written request for release identifying the
relevant Grantor and the terms of the sale or other disposition in reasonable
detail, including the price thereof and any expenses in connection therewith,
together with a certification by the Borrower stating that such transaction is
in compliance with the Credit Agreement and the other Loan Documents.
(c) Retention in Satisfaction. Except as may be expressly applicable
pursuant to Section 9-620 of the UCC, no action taken or omission to act by the
Administrative Agent or the other Secured Parties hereunder, including, without
limitation, any exercise of voting or consensual rights or any other action
taken or inaction, shall be deemed to constitute a retention of the Collateral
in satisfaction of the Obligations or otherwise to be in full satisfaction of
the Obligations, and the Obligations shall remain in full force and effect,
until the Administrative Agent and the other Secured Parties shall have applied
payments (including, without limitation, collections from Collateral) towards
the Obligations in the full amount then outstanding or until such subsequent
time as is provided in Section 10.15(a).
Section 22.16 Reinstatement. The obligations of each Grantor under this
Agreement (including, without limitation, with respect to the guarantee
contained in Article II and the provision of collateral herein) shall continue
to be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any other Secured Party upon
- 30 -
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Grantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Grantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
Section 22.17 Acceptance. Each Grantor hereby expressly waives notice of
acceptance of this Agreement, acceptance on the part of the Administrative Agent
and the other Secured Parties being conclusively presumed by their request for
this Agreement and delivery of the same to the Administrative Agent.
- 31 -
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and
Collateral Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: ENERGY PARTNERS, LTD.
By: ________________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
GUARANTORS: EPL OF LOUISIANA, L.L.C.
By: ________________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
DELAWARE EPL OF TEXAS, LLC
By: ________________________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Secretary
EPL PIPELINE, L.L.C.
By: _______________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
NIGHTHAWK, L.L.C.
By: ________________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
EPL PIONEER HOUSTON, INC.
By: ________________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
SIGNATURE PAGE
GUARANTEE AND COLLATERAL AGREEMENT
Acknowledged and Agreed to
as of the date hereof by:
ADMINISTRATIVE AGENT: JPMORGAN CHASE BANK, as Administrative Agent
By: ________________________________________________
Name: ______________________________________________
Title: _____________________________________________
SIGNATURE PAGE
GUARANTEE AND COLLATERAL AGREEMENT
SCHEDULE 1
NOTICE ADDRESSES OF GRANTORS
Notice address of each Grantor is: ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Treasurer
Schedule 1 - 1
SCHEDULE 2
DESCRIPTION OF PLEDGED SECURITIES
Pledged Securities:
CLASS OF STOCK OR NO. OF CERTIFICATED OR
OWNER ISSUER OTHER EQUITY INTEREST SHARES UNCERTIFICATED
--------------------- -------------------------- -------------------- ------ ---------------
Energy Partners, Ltd. EPL Pioneer Houston, Inc. Common 1,000 Certified
Energy Partners, Ltd. EPL of Louisiana, L.L.C. Membership Interest N/A Uncertified
Energy Partners, Ltd. Delaware EPL of Texas, LLC Membership Interest N/A Uncertified
Energy Partners, Ltd. EPL Pipeline, L.L.C. Membership Interest N/A Uncertified
Energy Partners, Ltd. Nighthawk, L.L.C. Membership Interest N/A Uncertified
Schedule 2 - 1
SCHEDULE 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
Energy Partners, Ltd. - Delaware Secretary of State
EPL of Louisiana, L.L.C. - Orleans Parish, Louisiana
Delaware EPL of Texas, LLC - Delaware Secretary of State
EPL Pipeline, L.L.C. - Delaware Secretary of State
Nighthawk, L.L.C. - Orleans Parish, Louisiana
EPL Pioneer Houston, Inc. - Texas Secretary of State
Delivery to Administrative Agent of Pledged Securities
Schedule 3 - 1
SCHEDULE 4
CORRECT LEGAL NAME, LOCATION OF JURISDICTION OF ORGANIZATION,
ORGANIZATIONAL IDENTIFICATION NUMBER, TAXPAYOR IDENTIFICATION
NUMBER AND CHIEF EXECUTIVE OFFICE
1. Energy Partners, Ltd., a Delaware corporation
Organizational Identification Number: 2863545
Taxpayor Identification Number: ▇▇-▇▇▇▇▇▇▇
Chief Executive Office: ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. EPL of Louisiana, L.L.C., a Louisiana limited liability company
Organizational Identification Number: 35366114K
Taxpayor Identification Number: N/A
Chief Executive Office: ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3. Delaware EPL of Texas, LLC, a Delaware limited liability company
Organizational Identification Number: 3581276
Taxpayor Identification Number: N/A
Chief Executive Office: ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
4. EPL Pipeline, L.L.C., a Delaware limited liability company
Organizational Identification Number: 3172427
Taxpayor Identification Number: ▇▇-▇▇▇▇▇▇▇
Chief Executive Office: ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
5. Nighthawk, L.L.C., a Louisiana limited liability company
Organizational Identification Number: 35009246K
Taxpayor Identification Number: N/A
Chief Executive Office: ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6. EPL Pioneer Houston, Inc.
Organizational Identification Number: 100134200
Taxpayor Identification Number: ▇▇-▇▇▇▇▇▇▇
Chief Executive Office: ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
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Schedule 4 - 1
SCHEDULE 5
PRIOR NAMES AND PRIOR CHIEF EXECUTIVE OFFICE
NONE
Schedule 5 - 1
SCHEDULE 6
PATENTS AND PATENT LICENSES
NONE
Schedule 6- 1
SCHEDULE 7
TRADEMARKS AND TRADEMARK LICENSES
NONE
Schedule 7- 1
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee and
Collateral Agreement dated as of August ___, 2004 (the "Agreement"), made by the
Grantors parties thereto for the benefit of JPMorgan Chase Bank, as
Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The terms of Sections 6.01(c) and 6.03 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Sections 6.01(c) or 6.03 of the Agreement.
[NAME OF ISSUER]
By: ___________________________________________
Title: ________________________________________
Address for Notices:
_______________________________________________
_______________________________________________
_______________________________________________
Fax: __________________________________________
*THIS CONSENT IS NECESSARY ONLY WITH RESPECT TO ANY ISSUER WHICH IS NOT
ALSO A GRANTOR. THIS CONSENT MAY BE MODIFIED OR ELIMINATED WITH RESPECT TO ANY
ISSUER THAT IS NOT CONTROLLED BY A GRANTOR.
Acknowledgment and Consent
ANNEX I
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated as of ________________, 200__, made by
______________________________, a ______________ corporation (the "Additional
Grantor"), in favor of JPMorgan Chase Bank, as administrative agent (in such
capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Lenders") parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.
W I T N E S S E T H:
WHEREAS, Energy Partners, Ltd. (the "Borrower"), the Lenders, the
Administrative Agent and the other Agents, have entered into a Fourth Amended
and Restated Credit Agreement, dated as of August ___, 2004 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower and certain
of its Subsidiaries have entered into the Guarantee and Collateral Agreement,
dated as of ______________, 200__ (as amended, supplemented or otherwise
modified from time to time, the "Guarantee and Collateral Agreement") in favor
of the Administrative Agent for the benefit of the Lenders and Affiliates of the
Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to become a
party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering this
Assumption Agreement, the Additional Grantor, as provided in Section 9.15 of the
Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and
Collateral Agreement as a Grantor thereunder with the same force and effect as
if originally named therein as a Grantor and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of a
Grantor thereunder and expressly grants to the Administrative Agent, for the
benefit of the Secured Parties (as defined in the Guarantee and Collateral
Agreement), a security interest in all Collateral owned by such Additional
Grantor to secure all of such Additional Grantor's obligations and liabilities
thereunder. The information set forth in Annex 1-A hereto is hereby added to the
information set forth in Schedules 1 through 5 to the Guarantee and Collateral
Agreement. The Additional Grantor hereby represents and warrants that each of
the representations and warranties contained in Article IV of the Guarantee and
Collateral Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.
Exhibit D-2 - 1
2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement
to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By: ___________________________________________
Name: _________________________________________
Title: ________________________________________
Exhibit D-2 - 2
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION
Reference is made to the Credit Agreement dated as of August 3, 2004 (as
amended and in effect on the date hereof, the "Credit Agreement"), among Energy
Partners, Ltd., the Lenders named therein and JPMorgan Chase Bank, as
Administrative Agent for the Lenders. Terms defined in the Credit Agreement are
used herein with the same meanings.
The Assignor named on the reverse hereof hereby sells and assigns, without
recourse, to the Assignee named on the reverse hereof, and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of the
Assignment Date set forth on the reverse hereof, the interests set forth on the
reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and Loans owing to the Assignor which are outstanding on the
Assignment Date, together with the participations in Letters of Credit and LC
Disbursements held by the Assignor on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.
This Assignment and Assumption is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 5.03(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The [Assignee/Assignor] shall pay the fee payable to the
Administrative Agent pursuant to Section 12.04(b) of the Credit Agreement.
This Assignment and Assumption shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
Exhibit E - 1
Percentage Assigned of
Facility/Commitment (set forth,
to at least 8 decimals, as a
percentage of the Facility and
the aggregate Commitments of all
Principal Amount Lenders thereunder)
Assigned
Facility
Commitment Assigned: $ %
Loans:
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor], as Assignor
By: _________________________________________
Name:
Title:
[Name of Assignee], as Assignee
By:__________________________________________
Name:
Title:
Exhibit E - 2
The undersigned hereby consent to the within assignment: (1)
ENERGY PARTNERS, LTD., JPMORGAN CHASE BANK,
as Administrative Agent,
By: _______________________________ By: ________________________________
Name: Name:
Title: Title:]
--------
(1) Consents to be included to the extent required by Section 9.04(b) of the
Credit Agreement.
Exhibit E - 3
EXHIBIT F-1
FORM OF MAXIMUM CREDIT AMOUNT INCREASE CERTIFICATE
[_____________], 200[___]
To: JPMorgan Chase Bank,
as Administrative Agent
The Borrower, the Administrative Agent and the other Agents and certain
Lenders have heretofore entered into a Credit Agreement, dated as of August 3,
2004, as amended from time to time (the "Credit Agreement"). Capitalized terms
not otherwise defined herein shall have the meaning given to such terms in the
Credit Agreement.
This Maximum Credit Amount Increase Certificate is being delivered
pursuant to Section 2.06(c) of the Credit Agreement.
Please be advised that the undersigned has agreed to increase its Maximum
Credit Amount under the Credit Agreement effective [____________], 200[____]
from $[__________] to $[ ] and (b) that it shall continue to be a party in all
respect to the Credit Agreement and the other Loan Documents.
The Borrower shall pay the fee payable to the Administrative Agent
pursuant to Section 2.06(c)(ii) of the Credit Agreement.
Very truly yours,
[__________________________________]
By: ________________________________
Name: ____________________________
Title: ___________________________
Exhibit F-1 -1
Accepted and Agreed:
JPMorgan Chase,
as Administrative Agent
By:_________________________________________
Name: _____________________________________
Title: ____________________________________
Accepted and Agreed:
Energy Partners, Ltd.
By:_________________________________________
Name: _____________________________________
Title: ____________________________________
Exhibit F-1 -2
EXHIBIT F-2
FORM OF ADDITIONAL LENDER CERTIFICATE
[________________], 200[___]
To: JPMorgan Chase Bank,
as Administrative Agent
The Borrower, the Administrative Agent and the other Agents and certain
Lenders have heretofore entered into a Credit Agreement, dated as of August 3,
2004, as amended from time to time (the "Credit Agreement"). Capitalized terms
not otherwise defined herein shall have the meaning given to such terms in the
Credit Agreement.
This Additional Lender Certificate is being delivered pursuant to Section
2.06(c) of the Credit Agreement.
Please be advised that the undersigned has agreed (a) to become a Lender
under the Credit Agreement effective [_____________], 200[___] with a Maximum
Credit Amount of $[_____________] and (b) that it shall be a party in all
respect to the Credit Agreement and the other Loan Documents.
This Additional Lender Certificate is being delivered to the
Administrative Agent together with (i) if the Additional Lender is a Foreign
Lender, any documentation required to be delivered by such Additional Lender
pursuant to Section 5.03(e) of the Credit Agreement, duly completed and executed
by the Additional Lender, and (ii) an Administrative Questionnaire in the form
supplied by the Administrative Agent, duly completed by the Additional Lender.
The Borrower shall pay the fee payable to the Administrative Agent pursuant to
Section 2.06(c)(ii) of the Credit Agreement.
Very truly yours,
[__________________________________]
By: ________________________________
Name: ____________________________
Title: ___________________________
Exhibit F-2 - 1
Accepted and Agreed:
JPMorgan Chase Bank,
as Administrative Agent
By:_________________________________________
Name: _____________________________________
Title: ____________________________________
Accepted and Agreed:
Energy Partners, Ltd.
By:_________________________________________
Name: _____________________________________
Title: ____________________________________
Exhibit F-2 - 2