CREDIT AGREEMENT dated as of May 25, 2006 among CARRIZO OIL & GAS, INC. as Borrower CERTAIN SUBSIDIARIES OF BORROWER, as Guarantors The Lenders Party Hereto JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Administrative Agent J.P. MORGAN SECURITIES...
Exhibit
10.1
dated
as
of
May
25,
2006
among
CARRIZO
OIL & GAS, INC.
as
Borrower
CERTAIN
SUBSIDIARIES OF BORROWER,
as
Guarantors
The
Lenders Party Hereto
JPMORGAN
CHASE BANK, NATIONAL ASSOCIATION,
as
Administrative Agent
▇.▇.
▇▇▇▇▇▇ SECURITIES INC.,
as
Sole
Bookrunner and Lead Arranger
$200,000,000
Senior Secured Revolving Credit Facility
TABLE
OF CONTENTS
i
ii
iii
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Page
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| Section 11.14. | USA PATRIOT Act |
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iv
SCHEDULES:
Schedule
2.01 - Applicable Percentages and Initial Commitments
Schedule
4.06 -- Disclosed Matters
Schedule
4.13 - Capitalization
Schedule
4.15 - Title Exceptions
Schedule
4.18 -- Deposit and Investment Accounts
Schedule
6.10 - Title Comments
Schedule
7.01 -- Existing Indebtedness
Schedule
7.02 -- Existing Liens
Schedule
7.04 - Pending Dispositions
Schedule
7.08 - Transactions with Affiliates
Schedule
7.09 -- Existing Restrictions
EXHIBITS:
Exhibit
A
-- Form of Assignment and Assumption
Exhibit
B
-- Form of Opinion of Borrower’s Counsel
Exhibit
C
- Form of Counterpart Agreement
Exhibit
D
- Form of Solvency Certificate
Exhibit
E
- Form of Intercreditor Agreement Amendment
v
CREDIT
AGREEMENT dated as of May 25, 2006, among CARRIZO OIL & GAS, INC., as
Borrower, CERTAIN SUBSIDIARIES OF BORROWER, as Guarantors, the LENDERS party
hereto, and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Administrative
Agent.
The
parties hereto agree as follows:
Article
I
Definitions
Section
1.01. 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.
“Acquisition”
means,
the acquisition by the Borrower or any Restricted Subsidiary, whether by
purchase, merger (and, in the case of a merger with any such Person, with
such
Person being the surviving corporation) or otherwise, of all or substantially
all of the Equity Interest of, or the business, property or fixed assets
of or
business line or unit or a division of, any other Person primarily engaged
in
the business of producing Crude Oil or Natural Gas or the acquisition by
such
Person of property or assets consisting of Oil and Gas Interests.
“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.
“Adjustment
Percentage”
means,
at any date prior to August 1, 2007, the quotient, expressed as a percentage,
of
the Conforming Borrowing Base divided by the Borrowing Base.
“Administrative
Agent”
means
JPMorgan Chase Bank, National Association, in its capacity as contractual
representative of the Lenders hereunder pursuant to Article
X
and not
in its individual capacity as a Lender, and any successor agent appointed
pursuant to Article
X.
“Administrative
Questionnaire”
means
an Administrative Questionnaire in a form supplied by the Administrative
Agent.
“Advance
Payment Contract”
means
any contract whereby any Credit Party either (a) receives or becomes
entitled to receive (either directly or indirectly) any payment (an
“Advance
Payment”)
to be
applied toward payment of the purchase price of Hydrocarbons produced or
to be
produced from Oil and Gas Interests owned by any Credit Party and which Advance
Payment is, or is to be, paid in advance of actual delivery of such production
to or for the account of the purchaser regardless of such production, or
(b) grants an option or right of
refusal
to the purchaser to take delivery of such production in lieu of payment,
and, in
either of the foregoing instances, the Advance Payment is, or is to be,
applied
as payment in full for such production when sold and delivered or is, or
is to
be, applied as payment for a portion only of the purchase price thereof
or of a
percentage or share of such production; provided
that inclusion
of the standard “take or pay” provision in any gas sales or purchase contract or
any other similar contract shall not, in and of itself, constitute such
contract
as an Advance Payment Contract for the purposes hereof.
“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.
“Aggregate
Commitment”
means
the aggregate amount of the Commitments of all of the Lenders, provided
that in
no event shall the Aggregate Commitment exceed the Maximum Facility
Amount.
“Aggregate
Credit Exposure”
means,
as of any date of determination, the sum of the outstanding principal amount
of
the Loans of all Lenders as of such date, plus
the
aggregate LC Exposure of all Lenders as of such date.
“Agreement”
means
this Credit Agreement, dated as of May 25, 2006 as it may be amended,
supplemented or otherwise modified from time to time.
“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 ½ of 1%.
Any change in the Alternate Base Rate due to a change in the Prime Rate
or the
Federal Funds Effective Rate shall be effective from and including the
effective
date of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
“Applicable
Percentage”
means,
with respect to any Lender, the percentage of the Aggregate Commitment
represented by such Lender’s Commitment. The initial amount of each Lender’s
Applicable Percentage is as set forth on Schedule 2.01. If the Aggregate
Commitment has terminated or expired, the Applicable Percentages shall
be
determined based upon the Aggregate Commitment most recently in effect,
giving
effect to any assignments.
“Applicable
Rate”
means,
for any day, with respect to any ABR Loan or Eurodollar Loan, or with respect
to
the Unused Commitment Fees payable hereunder, as the case may be, the applicable
rate per annum set forth below under the caption “ABR Spread”, “Eurodollar
Spread” or “Unused Commitment Fee Rate”, as the case may be, based upon the
Borrowing Base Usage applicable on such date:
|
Borrowing
Base
Usage
|
Eurodollar
Spread
|
ABR
Spread
|
Unused
Commitment Fee Rate
|
|
Greater
than or equal
to
100%
|
300
b.p.
|
175
b.p.
|
50
b.p.
|
|
Borrowing
Base
Usage
|
Eurodollar
Spread
|
ABR
Spread
|
Unused
Commitment Fee Rate
|
|
Greater
than 90%
and
less than 100%
|
225
b.p.
|
100
b.p.
|
50
b.p.
|
|
Greater
than 75%
and
less than or
equal
to 90%
|
200
b.p.
|
75
b.p.
|
50
b.p.
|
|
Greater
than 50%
and
less than or
equal
to 75%
|
175
b.p.
|
50
b.p.
|
37.5
b.p.
|
|
Less
than or equal
to
50%
|
150
b.p.
|
25
b.p.
|
37.5
b.p.
|
Each
change in the Applicable Rate 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 change.
“Approved
Counterparty”
means,
at any time and from time to time, (i) any Person engaged in the business
of
writing Swap Agreements for commodity, interest rate or currency risk that
is
acceptable to the Administrative Agent or has (or the credit support provider
of
such Person has), at the time Borrower or any Restricted Subsidiary enters
into
a Swap Agreement with such Person, a long term senior unsecured debt credit
rating of BBB+ or better from S&P or Baa1 or better by ▇▇▇▇▇’▇ and (ii) any
Lender Counterparty.
“Approved
Fund”
has
the
meaning assigned to such term in Section
11.04.
“Approved
Petroleum Engineer”
means
▇▇▇▇▇ ▇▇▇▇▇ Company, L.P., ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇
or any other reputable firm of independent petroleum engineers selected by
the
Borrower and acceptable to the Administrative Agent and the Required
Lenders.
“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 such 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
11.04),
and
accepted by the Administrative Agent, in the form of Exhibit A or any other
form approved by the Administrative Agent.
“Availability
Period”
means
the period from and including the Effective Date to but excluding the earlier
of
the Maturity Date and the date of termination of the Aggregate
Commitment.
“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.
“Board”
means
the Board of Governors of the Federal Reserve System of the United States of
America.
“Borrower”
means
Carrizo Oil & Gas, Inc., a Texas corporation, and its successors and
permitted assigns.
“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
3.01,
as the
same may be redetermined, adjusted or reduced from time to time pursuant to
Section
3.02,
Section
3.03,
Section
3.04
and
Section
3.05,
or as
otherwise adjusted or redetermined pursuant to Section
7.04;
provided
that in
no event shall the Borrowing Base on any date exceed the Maximum Facility
Amount.
“Borrowing
Base Deficiency”
means,
as of any date, the amount, if any, by which the Aggregate Credit Exposure
on
such date exceeds the Borrowing Base in effect on such date; provided
that,
for purposes of determining the existence and amount of any Borrowing Base
Deficiency, obligations under any Letter of Credit will not be deemed to be
outstanding to the extent such obligations are secured by cash in the manner
contemplated by Section
2.05(j).
“Borrowing
Base Properties”
means,
at any time, all proved Oil and Gas Interests of the Borrower and the Restricted
Subsidiaries described in the most recent Reserve Report evaluated by the
Lenders for purposes of establishing the Borrowing Base and any other property
or assets of the Borrower or the Restricted Subsidiaries, including the Equity
Interests of Pinnacle, which may, at the request of the Borrower and with the
approval of the Lenders, in their sole and absolute discretion, be evaluated
and
included in the determination of the Borrowing Base.
“Borrowing
Base Usage”
means,
as of any date and for all purposes, other than as set forth in the following
proviso, the quotient, expressed as a percentage, of (i) the Aggregate Credit
Exposure as of such date, divided
by
(ii) the
Borrowing Base; provided
that,
with respect to the determination of the Applicable Margin prior to August
1,
2007, “Borrowing
Base Usage”
means
the quotient, expressed as a percentage, of (x) the quotient calculated pursuant
to the foregoing clauses (i) and (ii), divided by (y) the Adjustment
Percentage.
“Borrowing
Request”
means
a
request by the Borrower for a Borrowing in accordance with Section
2.04.
“Business
Day”
means
any day that is not a Saturday, Sunday or other day on which commercial banks
in
Chicago, Illinois are authorized or required by law to remain closed;
provided
that,
when used in connection with a Eurodollar Loan, the term “Business
Day”
shall
also exclude any day on which banks are not open for dealings in dollar deposits
in the London interbank market.
“Capital
Lease Obligations”
of
any
Person means the obligations of such Person to pay rent or other amounts
under
any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such
Person
under GAAP, and the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.
“CCBM”
means
CCBM, Inc., a Delaware corporation and its successors and permitted
assigns.
“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
2.14(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.
A
“Change
in Control”
shall
be deemed to have occurred if (a) any “person” or “group” (within the meaning of
Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the date
hereof) other than the Permitted Investors shall own, directly or indirectly,
beneficially or of record, shares representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock
of
the Borrower, (b) a majority of the seats (other than vacant seats) on the
board
of directors of the Borrower shall at any time be occupied by persons who
were
neither (i) nominated by the board of directors of the Borrower nor (ii)
appointed by directors so nominated, or (c) any change in control (or similar
event, however denominated) with respect to the Borrower or any Subsidiary
shall
occur under (and not be waived in accordance with) and as defined in the
Second
Lien Credit Agreement or any indenture or other loan or credit agreement
or any
other debt instrument evidencing any Material Indebtedness to which the Borrower
or any Subsidiary is a party.
“Charges”
has
the
meaning assigned to such term in Section
11.13.
“Code”
means
the Internal Revenue Code of 1986, as amended from time to time.
“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 Credit Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant
to
Section
2.02,
and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section
11.04;
provided
that, no
Lender’s Commitment shall exceed such Lender’s Applicable Percentage of the
lesser of (x) the Maximum Facility Amount, and (y) the Borrowing Base. The
initial amount of each Lender’s Commitment is set forth in Schedule 2.01, or in
the
Assignment
and Assumption pursuant to which such Lender shall have assumed its Commitment,
as applicable.
“Competitor”
means
(a) any Person who is actively engaged in the Subject Business and (b) any
Affiliate of a Person identified in the preceding clause (a) (it being agreed
that an investment firm shall not be deemed to Control a Person described in
such clause (a) merely as a result of owning a minority interest in such Person
if it does not otherwise control such Person).
“Conforming
Borrowing Base”
means,
at any time an amount equal to the amount determined in accordance with
Section
3.01,
as the
same may be redetermined, adjusted or reduced from time to time pursuant to
Section
3.02,
Section
3.03,
Section
3.04
and
Section
3.05
or as
otherwise adjusted or redetermined pursuant to Section
7.04,
provided
that in
no event shall the Conforming Borrowing Base exceed the Borrowing Base.
“Consolidated
Current Assets”
means,
as of any date of determination, the total of the Borrower’s consolidated
current assets (excluding assets of Unrestricted Subsidiaries), including all
Unused Commitments, determined in accordance with GAAP. Current assets will
not
include non-cash assets, if any, arising from the marking to market of Swap
Agreements pursuant to FASB Statement No. 133 and related
pronouncements.
“Consolidated
Current Liabilities”
means,
as of any date of determination, the total of the Borrower’s consolidated
current liabilities (excluding liabilities of Unrestricted Subsidiaries),
excluding current maturities of the Loans, determined in accordance with GAAP.
Current liabilities will not include (a) non-cash obligations, if any, arising
from the marking to market of Swap Agreements pursuant to FASB Statement No.
133
and related pronouncements or (b) the non-cash effects, if any, of any non-cash
stock option re-pricing accrual.
“Consolidated
Current Ratio”
means,
as of any date of determination, the ratio of Consolidated Current Assets to
Consolidated Current Liabilities as of such date.
“Consolidated
EBITDAX”
means
the Borrower’s consolidated earnings determined in accordance with GAAP
(excluding earnings of Unrestricted Subsidiaries) before interest expense,
income taxes, depreciation, amortization, depletion, oil and gas asset
impairment write downs, lease impairment expense, gains and losses from the
sale
of capital assets, and other non-cash charges. EBITDA shall not include non-cash
effects of (i) the early extinguishment of long-term debt, (ii) CCBM’s equity
investment in Pinnacle and (iii) stock option re-pricing expense.
“Consolidated
Subsidiaries”
means,
for any Person, any Subsidiary or other entity the accounts of which would
be
consolidated with those of such Person in its consolidated financial statements
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.
“Counterpart
Agreement”
means
a
Counterpart Agreement substantially in the form of Exhibit C delivered by
a
Guarantor pursuant to Section
6.13.
“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.
“Credit
Parties”
means
collectively, Borrower, and each Guarantor and each individually, a
“Credit
Party”.
“Crude
Oil”
means
all crude oil
and
condensate.
“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.
“Defaulting
Lender”
means
any Lender that (a) has failed to fund any portion of the Loans or any
participation in any Letter of Credit required to be funded by it hereunder
within one Business Day of the date required to be funded by it hereunder,
(b)
has otherwise failed to pay over to the Administrative Agent or any other
Lender
any other amount required to be paid by it hereunder within one Business
Day of
the date when due, unless the subject of a good faith dispute, or (c) has
been
deemed insolvent or become the subject of a bankruptcy or insolvency
proceeding.
“Defensible
Title”
means,
with respect to the assets of the Borrower (a) the title of the Borrower
to such
assets is free and clear of all Liens of any kind whatsoever (except Permitted
Liens) and (b) with respect to the Mortgaged Properties, the representations
and
warranties set forth in Section
4.15
are true
and correct.
“Designated
Title Exceptions”
has
the
meaning assigned to such term in Section
4.15.
“Disclosed
Matters”
means
the actions, suits and proceedings and the environmental matters disclosed
in
Schedule 4.06.
“Disposition”
or
“Dispose”
means
the sale, transfer, license, lease or other disposition (including any sale
and
leaseback transaction) of any property by any Person, including any sale,
assignment, transfer or other disposal, with or without recourse, of any
notes
or accounts receivable or any rights and claims associated
therewith.
“Disqualified
Stock”
means
any Equity Interest which, 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, pursuant to a sinking
fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof, in whole or in part, on or prior to the Maturity Date.
“Dollars”
or
“$”
refers
to lawful money of the United States of America.
“Domestic
Subsidiary”
means,
with respect to any Person, a subsidiary of such Person that is incorporated
or
formed under the laws of the United States of America, any state thereof or
the
District of Columbia.
“Effective
Date”
means
the date on which the conditions specified in Section
5.01
are
satisfied (or waived in accordance with Section
11.02).
“Eligible
Account”
has
the
meaning assigned to such term in Section
6.15.
“Engineered
Value”
means,
the value attributed to the Borrowing Base Properties for purposes of the most
recent Redetermination of the Borrowing Base pursuant to Article
III
(or for
purposes of determining the Initial Borrowing Base in the event no such
Redetermination has occurred), based upon the discounted present value of the
estimated net cash flow to be realized from the production of Hydrocarbons
from
the Oil and Gas Interests as set forth in the Reserve Report.
“Environmental
Laws”
means
all laws, rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions, notices or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, the management, release or
threatened release of any Hazardous Material or to health and safety
matters.
“Environmental
Liability”
means
any liability, contingent or otherwise (including any liability for damages,
costs of environmental remediation, fines, penalties or indemnities), of any
Credit Party directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
“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 from time to
time.
“ERISA
Affiliate”
means
any trade or business (whether or not incorporated) that, together with any
Credit Party, is treated as a single employer under Section 414(b) or (c)
of the Code or, solely for purposes of Section 302 of ERISA and Section 412
of
the Code, is treated as a single employer under Section 414 of the
Code.
“ERISA
Event”
means
(a) any “reportable event”, as defined in Section 4043 of ERISA or the
regulations issued thereunder with respect to a Plan (other than an event for
which the 30-day notice period is waived); (b) the existence with respect
to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of
ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d) of
the Code or Section 303(d) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (d) the incurrence by
any Credit Party or any of its ERISA Affiliates of any liability under
Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by any Credit Party or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan
or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence
by any
Credit Party or any of its ERISA Affiliates of any liability with respect
to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or
(g) the receipt by any Credit Party or any ERISA Affiliate of any notice,
or the receipt by any Multiemployer Plan from any Credit Party or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a
determination that a Multiemployer Plan is, or is expected to be, insolvent
or
in reorganization, within the meaning of Title IV of ERISA.
“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 to such term in Article
IX.
“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 hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America, or by the 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
is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section
2.18(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
2.16(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 from the Borrower with respect to such withholding tax
pursuant to Section
2.16(a).
“Existing
Revolving Facility”
means
that certain revolving credit facility evidenced by that certain Credit
Agreement dated September 30, 2004, by and among the Borrower, CCBM, Hibernia
National Bank, as Agent, Union Bank of California, as Co-Agent and the banks
and
other financial institutions from time to time a party thereto as lenders,
and
any promissory notes executed in connection therewith, security instruments
and
any other agreements executed in connection with such Credit Agreement as
amended, modified, supplemented or restated from time to time.
“FASB”
means
Financial Accounting Standards Board.
“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 any Credit Party.
“Foreign
Lender”
means
any Lender that is organized under the laws of a jurisdiction other than
that in
which any Credit Party 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.
“Gas
Balancing Agreement”
means
any agreement or arrangement whereby the Borrower or any Restricted Subsidiary,
or any other party having an interest in any Hydrocarbons to be produced
from
Oil and Gas Interests in which the Borrower or any Restricted Subsidiary
owns an
interest, has a right to take more than its proportionate share of production
therefrom.
“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
properly exercising executive, legislative, judicial, taxing, regulatory
or
administrative powers or functions of or pertaining to government.
“Guarantee”
of
or
by any Person (in this definition, the “guarantor”)
means
any obligation, contingent or otherwise, of the guarantor guaranteeing
or having
the economic effect of guaranteeing any Indebtedness or other obligation
of any
other Person (the “primary
obligor”)
in any
manner, whether directly or indirectly, and including any obligation of
the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation
or
to purchase (or to advance or supply funds for the purchase of) any security
for
the payment thereof, (b) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Indebtedness or
other
obligation of the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the
primary
obligor so as to enable the primary obligor to pay such Indebtedness or
other
obligation or (d) as an account party in respect of any letter of credit
or
letter of guaranty issued to support such Indebtedness or obligation;
provided,
that
the term Guarantee shall not include endorsements for collection or deposit
in
the ordinary course of business.
“Guaranteed
Liabilities”
has
the
meaning assigned to such term in Section
8.01.
“Guarantor”
means
CCBM and each other Restricted Subsidiary that hereafter executes and delivers
to the Administrative Agent and the Lenders, a Counterpart
Agreement.
“Hazardous
Materials”
means
all explosive or radioactive substances or wastes and all hazardous or toxic
substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances
or
wastes of any nature regulated pursuant to any Environmental Law.
“Hydrocarbons”
means
all Crude Oil and Natural Gas produced from or attributable to the Oil and
Gas
Interests of the Credit Parties.
“Indebtedness”
of
any
Person means, without duplication, (a) all obligations of such Person for
borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges
are paid, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase
price of property or services (excluding current accounts payable incurred
in
the ordinary course of business), (f) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed,
(g) all Guarantees by such Person of Indebtedness of others, (h) all
Capital Lease Obligations of such Person, (i) all obligations, contingent
or otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers’ acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership
in
which such Person is a general partner) to the extent such Person is liable
therefore as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
“Indemnified
Taxes”
means
Taxes other than Excluded Taxes.
“Indemnitee”
has
the
meaning assigned to such term in Section
11.03.
“Information”
has
the
meaning assigned to such term in Section
11.12.
“Initial
Borrowing Base”
has
the
meaning assigned to such term in Section
3.01.
“Initial
Reserve Reports”
means
the reserve reports of ▇▇▇▇▇ ▇▇▇▇▇ Company L.P., ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. and
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇, in each case setting forth, among other things, (a)
the oil and gas properties owned directly by the Borrower and CCBM (other than
immaterial properties excluded consistent with past practice) as of December
31,
2005, (b) the proved reserves attributable to such oil and gas properties and
(c) a projection of the rate of production and net income of such proved
reserves as of December 31, 2005.
“Intercreditor
Agreement”
means
an Intercreditor Agreement by and among the Administrative Agent, the Second
Lien Agent, the Borrower and CCBM, dated July 21, 2005, as amended, modified,
supplemented or restated from time to time.
“Interest
Election Request”
means
a
request by the Borrower to convert or continue a Borrowing in accordance with
Section
2.07.
“Interest
Payment Date”
means
(a) with respect to any ABR Loan, the last day of each calendar month, and
(b) with respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of
a
Eurodollar Borrowing with an Interest Period of more than three months’
duration, each day prior to the last day of such Interest Period that occurs
at
intervals of three months’ duration after the first day of such Interest
Period.
“Interest
Period”
means
with respect to any Eurodollar Borrowing, the period commencing on the date
of
such Borrowing and ending on the numerically corresponding day in the calendar
month that is one, two, three or six months thereafter, as the Borrower may
elect; provided,
that
(i) 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,
in
the case of a Eurodollar Borrowing only, 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 (ii) 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.
“Issuing
Bank”
means
JPMorgan Chase Bank, National Association, in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity as provided
in
Section
2.05(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
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.
“Lender
Counterparty”
means
any Lender or any Affiliate of a Lender counterparty to a Swap Agreement with
any Credit Party.
“Lenders”
means
the Persons listed on Schedule 2.01 and any other 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.
“Letter
of Credit”
means
any letter of credit issued pursuant to this Agreement.
“LIBO
Rate”
means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate
appearing on Page 3750 of the Telerate (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,
with respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset,
(b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.
“Loan
Documents”
means
this Agreement, any promissory notes executed in connection herewith, Security
Instruments, the Letters of Credit (and any applications therefore and
reimbursement agreements related thereto), the Fee Letter, the Intercreditor
Agreement and any other agreements executed in connection with this
Agreement.
“Loans”
means
the loans made by the Lenders to the Borrower pursuant to this Agreement.
“Material
Adverse Effect”
means
a
material adverse effect on (a) the business assets, property, or condition
(financial or otherwise) of the Borrower and its Restricted Subsidiaries taken
as a whole, or (b) the validity or enforceability of any of the Loan Documents
or the rights and remedies of the Administrative Agent or the Lenders under
this
Agreement and the other Loan Documents.
“Material
Gas Imbalance”
means,
with respect to all Gas Balancing Agreements to which Borrower or any Restricted
Subsidiary is a party or by which any Oil and Gas Interests owned by Borrower
or
a Restricted Subsidiary is bound, a net overproduced gas imbalance to Borrower
and the Restricted Subsidiaries, taken as a whole, in excess of
$5,000,000.
“Material
Indebtedness”
means
Indebtedness permitted under Section
7.01(h)
and any
other Indebtedness (other than the Loans and Letters of Credit), or obligations
in respect of one or more Swap Agreements, of the Borrower or any one or more
of
the Restricted 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 Guarantor in respect of any
Swap Agreement at any time shall be the maximum aggregate amount (giving effect
to any netting agreements) that the Borrower or such Guarantor would be required
to pay if such Swap Agreement were terminated at such time.
“Material
Sales Contract”
means,
as of any date of determination, any agreement for the sale of Hydrocarbons
from
the Borrowing Base Properties to which the Borrower or any Restricted Subsidiary
is a party if the aggregate volume of Hydrocarbons sold pursuant to such
agreement during the twelve months immediately preceding such date equals or
exceeds 10% of the aggregate volume of Hydrocarbons sold by the Borrower and
the
Restricted Subsidiaries, on a consolidated basis, from the Borrowing Base
Properties during the twelve months immediately preceding such
date.
“Maturity
Date”
means
May 25, 2010.
“Maximum
Facility Amount”
means
$200,000,000.
“Maximum
Liability”
has
the
meaning assigned to such term in Section
8.10.
“Maximum
Rate”
has
the
meaning assigned to such term in Section
11.13.
“Monthly
Reduction”
has
the
meaning assigned to such term in Section
3.05.
“Moody’s”
means
▇▇▇▇▇’▇ Investors Service, Inc.
“Mortgaged
Properties”
means
the Oil and Gas Interests described in one or more duly executed, delivered
and
filed Mortgages evidencing a first and prior Lien in favor of the Administrative
Agent for the benefit of the Secured Parties and subject only to the Liens
permitted pursuant to Section
7.02.
“Mortgages”
means
all mortgages, deeds of trust, amendments to mortgages, security agreements,
assignments of production, pledge agreements, collateral mortgages, collateral
chattel mortgages, collateral assignments, financing statements and other
documents, instruments and agreements evidencing, creating, perfecting or
otherwise establishing the Liens required by Section
6.09.
All
Mortgages shall be in form and substance reasonably satisfactory to
Administrative Agent.
“Multiemployer
Plan”
means
a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Natural
Gas”
means
all natural gas, distillate or sulphur, natural gas liquids and all products
recovered in the processing of
natural
gas (other than condensate) including, without limitation, natural gasoline,
coalbed methane gas, casinghead gas, iso-butane, normal butane, propane and
ethane (including such methane allowable in commercial ethane).
“Non-Consenting
Lender”
has
the
meaning assigned to such term in Section
2.18(c).
“Non-Recourse
Debt”
means
Indebtedness of CCBM to Rocky Mountain Gas, Inc., and Indebtedness of the
Borrower or any Guarantor for which the Borrower or such Guarantor, as the
case
may be, is not personally liable for payment of such Indebtedness.
“Obligations”
means
all obligations of every nature of the Borrower from time to time owed to the
Administrative Agent, the Issuing Bank, the Lenders or any of them and the
Lender Counterparties under any Loan Document or Swap Agreement (including,
with
respect to any Swap Agreement, obligations owed under any Swap Agreement to
any
Person that was a Lender Counterparty at the time such Swap Agreement was
entered into), whether for principal, interest, reimbursement of amounts drawn
under any Letter of Credit, payments for early termination of Swap Agreements,
funding indemnification amounts, fees, expenses, indemnification or
otherwise.
“Off-Balance
Sheet Liability”
of
a
Person means (i) any repurchase obligation or liability of such Person with
respect to accounts or notes receivable sold by such Person, (ii) any liability
under any Sale and Leaseback Transaction which is not a Capital Lease
Obligation, (iii) any liability under any so-called “synthetic lease”
transaction entered into by such Person, (iv) any Material Gas Imbalance, (v)
any Advance Payment Contract, or (vi) any obligation arising with respect to
any
other transaction which is the functional equivalent of or takes the place
of
borrowing but which does not constitute a liability on the balance sheets of
such Person, but excluding from the foregoing clauses (iii) through (vi)
operating leases and usual and customary oil, gas and mineral
leases.
“Oil
and Gas Interest(s)”
means:
(a) direct and indirect interests in and rights with respect to oil, gas,
mineral and related properties and assets of any kind and nature, direct or
indirect, including, without limitation, working, royalty and overriding royalty
interests, mineral interests, leasehold interests, production payments,
operating rights, net profits interests, other non-working interests,
contractual interests, non-operating interests and rights in any pooled,
unitized or communitized acreage by virtue of such interest being a part
thereof; (b) interests in and rights with respect to Crude Oil, Natural Gas
and
other minerals or revenues therefrom and contracts and agreements in connection
therewith and claims and rights thereto (including oil and gas leases, operating
agreements, unitization, communitization and pooling agreements and orders,
division orders, transfer orders, mineral deeds, royalty deeds, oil and gas
sales, exchange and processing contracts and agreements and, in each case,
interests thereunder), and surface interests, fee interests, reversionary
interests, reservations and concessions related to any of the foregoing; (c)
easements, rights-of-way, licenses, permits, leases, and other interests
associated with, appurtenant to, or necessary for the operation of any of the
foregoing; (d) interests in oil, gas, water, disposal and injection ▇▇▇▇▇,
equipment and machinery (including well equipment and machinery), oil and gas
production, gathering, transmission, compression, treating, processing and
storage facilities (including tanks, tank batteries, pipelines and gathering
systems), pumps, water plants, electric plants, gasoline and gas processing
plants, refineries and other tangible or intangible, movable or immovable,
real
or personal property and fixtures located on, associated with, appurtenant
to,
or necessary for the operation of any of the
foregoing;
and (e) all seismic, geological, geophysical and engineering records, data,
information, maps, licenses and interpretations.
“Organizational
Documents”
means
(a) with respect to any corporation, its certificate or articles of
incorporation or organization, as amended, and its by-laws, as amended, (b)
with
respect to any limited partnership, its certificate of limited partnership,
as
amended, and its partnership agreement, as amended, (c) with respect to any
general partnership, its partnership agreement, as amended, and (d) with respect
to any limited liability company, its certificate of formation or articles
of
organization, as amended, and its limited liability company agreement or
operating agreement, as amended.
“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.
“Participant”
has
the
meaning assigned to such term in Section
11.04.
“Payment
Currency”
has
the
meaning assigned to such term in Section
8.07.
“PBGC”
means
the Pension Benefit Guaranty Corporation referred to and defined in ERISA and
any successor entity performing similar functions.
“Permitted
Disposition”
means
any Disposition (a) of equipment which is worthless or obsolete, (b) of
inventory (including Hydrocarbons sold as produced and seismic data) which
is
sold in the ordinary course of business, (c) of interests in oil and gas leases,
or portions thereof (if released or abandoned but not otherwise sold or
transferred), so long as no well situated on any such lease, or located on
any
unit containing all or any part thereof, is capable (or is subject to being
made
capable through commercially feasible operations) of producing Hydrocarbons
or
minerals in commercial quantities, (d) of cash and cash equivalents otherwise
permitted under this Agreement, (e) constituting dividends and distributions
permitted by Section
7.07,
(f)
constituting Permitted Liens and (g) constituting investments, loans and
advances permitted by Section
7.05.
“Permitted
Encumbrances”
means:
(a) Liens
for
taxes, assessments, or other governmental charges not yet due or which are
being
contested in good faith by appropriate action promptly initiated and diligently
conducted, if such reserves as shall be required by GAAP shall have been made
therefore;
(b) Liens
of
landlords, vendors, carriers, warehousemen, mechanics, laborers, material men
and other Liens arising by law in the ordinary course of business for sums
either not yet due or being contested in good faith by appropriate action
promptly initiated and diligently conducted, if such reserve as shall be
required by GAAP shall have been made therefore;
(c) inchoate
liens arising under ERISA to secure the contingent liabilities, if any,
permitted by this Agreement;
(d) pledges
and deposits made in the ordinary course of business in compliance with
workmen’s compensation, unemployment insurance and other social security laws or
regulations;
(e) deposits
to secure the performance of bids, trade contracts (other than for
Indebtedness), leases (other than Capital Lease Obligations and oil, gas and
mineral leases), statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course
of
business;
(f) zoning
restrictions, easements, licenses, covenants, conditions, rights-of-way,
restrictions on use of real property and other similar encumbrances incurred
in
the ordinary course of business and minor irregularities of title that, in
the
aggregate, are not substantial in amount and do not materially detract form
the
value of the property subject thereto or interfere with the ordinary conduct
of
the business of the Borrower or any Subsidiary;
(g) deposits,
encumbrances or pledges to secure payments of workmen’s compensation and other
payments, public liability, unemployment and other insurance, old-age pensions
or other social security obligations, or the performance of bids, tenders,
leases, contracts (other than contracts for the payment of money), public or
statutory obligations, surety, stay or appeal bonds, or other similar
obligations arising in the ordinary course of business;
(h) any
Designated Title Exceptions which are incurred in the ordinary course of
business and would not materially adversely affect the operations of the
Borrower or otherwise in the aggregate have a Material Adverse
Effect;
(i) encumbrances
arising out of judgments or awards in respect of which the Borrower shall in
good faith be prosecuting an appeal or proceedings for review and in respect
of
which it shall have secured a subsisting stay of execution pending such appeal
or proceedings for review; provided that the Borrower shall have set aside
on
its books adequate reserves, in accordance with GAAP, with respect to such
judgment or award; and
(j) Liens
affecting the Borrower’s Equity Interests in an Unrestricted
Subsidiary.
“Permitted
Investments”
means:
(a) investments
in U.S. Government Securities;
(b) investments
in commercial paper maturing within 270 days from the date of acquisition
thereof (other than commercial paper issued by the Borrower or an Affiliate
of
the Borrower) and having, at such date of acquisition, one of the two highest
credit ratings obtainable from S&P or Moody’s;
(c) investments
in certificates of deposit, banker’s acceptances, repurchase agreements and time
deposits maturing within one year from the date of acquisition thereof issued
or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the
laws
of the
United
States of America or any State thereof that has a combined capital and surplus
and undivided profits of not less than $250,000,000;
(d) investments
in shares of funds registered under the Investment Company Act of 1940, as
amended, that have assets of at least $100,000,000 and invest only in
obligations described in clauses (a) through (c) above to the extent that such
shares are rated by Moody’s or S&P in one of the two highest rating
categories assigned by such agency for shares of such nature.
“Permitted
Investors”
means
the directors, officers and other management employees of the Borrower that
are
shareholders of the Borrower on the Effective Date and their respective
affiliates.
“Permitted
Liens”
means
Liens permitted under Section
7.02.
“Person”
means
any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.
“Pinnacle”
means
Pinnacle Gas Resources, Inc., a Delaware corporation and its successors and
permitted assigns.
“Plan”
means
any employee pension benefit plan (other than a Multiemployer Plan) subject
to
the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which any Credit Party or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.
“Pledge
Agreement”
means
a
Pledge and Security Agreement in favor of the Administrative Agent for the
benefit of the Secured Parties covering, among other things, the rights and
interests of Borrower or any Restricted Subsidiary in the Equity Interest of
each Restricted Subsidiary and otherwise in form and substance satisfactory
to
the Administrative Agent and the Required Lenders.
“Prime
Rate”
means
the rate of interest per annum publicly announced from time to time by JPMorgan
Chase Bank, N.A. as its prime rate in effect at its principal office in Chicago,
Illinois, each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.
“Projections”
means
(i) with respect to the Projections to be attached to the Solvency Certificate
required under Section
5.01(m),
the
Borrower’s forecasted cash flow projections for the remaining portion of the
fiscal year ending December 31, 2006, and (ii) with respect to the Projections
required under Section
6.01(h),
the
Borrower’s forecasted cash flow projections for such fiscal year, in each case
with respect to clauses (i) and (ii), prepared on a basis consistent with the
historical financial statements described in Section
4.04
and
after giving effect to the Transactions, together with appropriate supporting
details and a statement of underlying assumptions, in form and substance
reasonably satisfactory to the Administrative Agent.
“Redetermination”
means
any Scheduled Redetermination, any Special Redetermination.
“Redetermination
Date”
means
(a) with respect to any Scheduled Redetermination, each May 1 and
November 1 of each year, commencing November 1, 2006, and (b) with
respect to any Special Redetermination (other than the Special Redetermination
set forth in the following clause (c)), the first day of the first month which
is not less than twenty (20) Business Days following the date of a request
for a
Special Redetermination and (c) with respect to any Redetermination pursuant
to
Section
3.04
or
Section
7.04,
the
date notice of such Redetermination is delivered to the Borrower pursuant to
Section
3.06.
“Register”
has
the
meaning assigned to such term in Section
11.04.
“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.
“Required
Lenders”
means,
at any time, Lenders having Credit Exposures and Unused Commitments representing
at least 66-2/3% of the sum of the Aggregate Credit Exposure and all Unused
Commitments of all Lenders at such time or, if the Aggregate Commitment has
been
terminated, Lenders having Credit Exposures representing at least 66-2/3% of
the
sum of the Aggregate Credit Exposure of all Lenders at such time; provided
that the
Commitment of and the Credit Exposures held or deemed held by any Defaulting
Lender shall be excluded for purposes of making a determination of the Required
Lenders.
“Reserve
Report”
means an
unsuperseded engineering analysis of the Borrowing Base Properties, in form
and
substance reasonably acceptable to the Administrative Agent, prepared in
accordance with customary and prudent practices in the petroleum engineering
industry.
“Restricted
Payment”
means
any dividend or other distribution (whether in cash, securities or other
property) with respect to any Equity Interests in any Credit Party, 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 any
Credit Party or any option, warrant or other right to acquire any such Equity
Interests in any Credit Party.
“Restricted
Subsidiary”
means
any Subsidiary that is not an Unrestricted Subsidiary.
“S&P”
means
Standard & Poor’s Ratings Group, a division of The McGraw Hill
Corporation.
“Sale
and Leaseback Transaction”
means
any sale or other transfer of any property by any Person with the intent to
lease such property as lessee.
“Scheduled
Redetermination”
means
any redetermination of the Borrowing Base pursuant to Section
3.02.
“Second
Lien Agent”
means,
Credit Suisse in its capacity as contractual representative of the financial
institutions and other Persons from time to time a party to the Second Lien
Facility and any successor agent appointed pursuant to the terms of the Second
Lien Facility Documents.
“Second
Lien Credit Agreement”
means
that certain Second Lien Credit Agreement, dated July 21, 2005, by and among
the
Borrower, certain subsidiaries of the Borrower, as guarantors, the lenders
party
thereto and Credit Suisse, as Administrative Agent, as amended, modified,
supplemented or restated from time to time to the extent permitted under this
Agreement.
“Second
Lien Facility”
means
the second lien term loan facility evidenced by the Second Lien Facility
Documents.
“Second
Lien Facility Documents”
means
the Second Lien Credit Agreement and any promissory notes executed in connection
therewith, security instruments and any other agreements executed in connection
with such Second Lien Credit Agreement as the same may be amended, modified,
supplemented or restated from time to time to the extent permitted under this
Agreement.
“Second
Lien Loans”
means
the term loans made under the Second Lien Facility.
“Second
Lien Obligations”
has
the
meaning assigned to such term in the Intercreditor Agreement.
“Secured
Party”
means
the Administrative Agent, any Lender and any Lender Counterparty and shall
include Lenders and Lender Counterparties to the extent that any Obligations
owing to such Persons were incurred while such Persons were Lenders or Lender
Counterparties.
“Security
Instruments”
means
collectively, all Guarantees of the Obligations evidenced by the Loan Documents
and all mortgages, security agreements, pledge agreements, collateral
assignments and other collateral documents covering the Oil and Gas Interests
of
the Borrower and the Restricted Subsidiaries and the Equity Interests of the
Restricted Subsidiaries and other personal property, equipment, oil and gas
inventory and proceeds of the foregoing, all such documents to be in form and
substance reasonably satisfactory to the Administrative Agent.
“Special
Redetermination”
means
any redetermination of the Borrowing Base made pursuant to Section
3.03
or
Section
3.04.
“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 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 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 peroration, 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.
“Subject
Business”
means
the exploration, development, exploitation and production of Natural Gas and
Crude Oil.
“Subsidiary”
means,
with respect to any Person (the “parent”)
at any
date, any corporation, limited liability company, partnership, association
or
other entity the accounts of which would be consolidated with those of the
parent in the parent’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as
any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or,
in
the case of a partnership, more than 50% of the general partnership interests
are, as of such date, owned, controlled or held, or (b) that is, as of such
date, otherwise Controlled, by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent any
subsidiary of the Borrower. Unless the context otherwise clearly requires,
references herein to a “Subsidiary” refer to a Subsidiary of the Borrower. For
the sake of clarity, Administrative Agent and each Lender acknowledge and agree
that as of the Effective Date, Pinnacle is not a Subsidiary.
“Swap
Agreement”
means
any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement 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 payments only on account of services
provided by current or former directors, officers, employees or consultants
of
the Credit Parties shall be a Swap Agreement.
“Taxes”
means
any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.
“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 Business Day) by the Administrative Agent
from three negotiable certificate of deposit dealers of recognized standing
selected by it.
“Total
Net Debt”
means,
on any date of determination, the Borrower’s consolidated Indebtedness excluding
Non-Recourse Debt and Indebtedness of any Unrestricted Subsidiary on such date,
less the amount of unrestricted cash and cash equivalents on hand of the
Borrower and the Guarantors as of such date.
“Transactions”
means
the execution, delivery and performance by the Credit Parties of this Agreement
and the Loan Documents, the borrowing of Loans, the use of the proceeds thereof,
the issuance of Letters of Credit hereunder, the repayment of all amounts
outstanding under the Existing Revolving Facility and the amendment of the
Intercreditor Agreement pursuant to an amendment in substantially the form
of
Exhibit E.
“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 Adjusted LIBO Rate or the Alternate Base Rate.
“Unrestricted
Subsidiary”
means
(a) any Subsidiary that at the time of determination shall be designated an
Unrestricted Subsidiary by the Board of Directors of the Borrower in the manner
provided below and (b) any Subsidiary of an Unrestricted Subsidiary. The Board
of Directors of the Borrower may at any time and from time to time designate
any
Subsidiary (including any newly acquired or newly formed Subsidiary but
excluding CCBM or any other Subsidiary that owns or operates Oil and Gas
Interests included in the Borrowing Base Properties or other interests of the
type described in clauses (d) or (e) of the definition of Oil and Gas Interests
relating to any Borrowing Base Properties)) to be an Unrestricted Subsidiary
provided
that (i)
no Default or Event of Default has occurred or is continuing at the time of
such
designation and after giving effect to such designation, (ii) immediately after
such designation, no Restricted Person has any Obligation to pay any
Indebtedness of such Subsidiary, has in any way guaranteed any Indebtedness
of
such Subsidiary, or has any assets or properties (excluding a pledge of the
Equity Interests in such Subsidiary) which are subject to any Lien securing
any
Indebtedness of such Subsidiary, and (iii) notice of any such designation is
promptly given to the Administrative Agent in writing.
“Unused
Commitment”
means,
with respect to each Lender at any time, such Lender’s Commitment at such time
minus such Lender’s Credit Exposure at such time.
“Unused
Commitment Fee”
has
the
meaning assigned to such term in Section
2.11(a).
“U.S.
Government Securities”
means
direct obligations of, or obligations the principal of and interest on which
are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing within one year from
the
date of acquisition thereof.
“Withdrawal
Liability”
means
liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in
Part I of Subtitle E of Title IV of ERISA.
Section
1.02. Types
of Loans and Borrowings.
For
purposes of this Agreement, Loans may be classified and referred to by Type
(e.g.,
a
“Eurodollar Loan” or an “ABR Loan) and Borrowings also may be classified and
referred to by Type (e.g.,
a
“Eurodollar Borrowing” or an “ABR Borrowing”).
Section
1.03. 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, (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,
(d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules
to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
Section
1.04. Accounting
Terms; GAAP.
Except
as otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided
that, if
the Borrower notifies the Administrative Agent that the Borrower request an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been
withdrawn or such provision amended in accordance herewith.
Section
1.05. Oil
and Gas Definitions.
For
purposes of this Agreement, the terms “proved reserves,” “proved developed
reserves,” “proved undeveloped reserves,” “proved developed non-producing
reserves” and “proved developed producing reserves,” have the meaning given such
terms from time to time and at the time in question by the Society of Petroleum
Engineers of the American Institute of Mining Engineers.
Section
1.06. Times
of Day.
Unless
otherwise specified, all references herein to times of day shall be references
to Central time (daylight or standard, as applicable).
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 from time to time during the Availability Period in an aggregate
principal amount that will not result in (a) such Lender’s Credit Exposure
exceeding such Lender’s Commitment or (b) the Aggregate Credit Exposure
exceeding the Aggregate Commitment. Within the foregoing limits and subject
to
the terms and conditions set forth herein, the Borrower may borrow, prepay
and
reborrow Loans.
Section
2.02. Termination
and Reduction of the Aggregate Commitment.
(a) Unless
previously terminated, the Aggregate Commitment shall terminate on the Maturity
Date.
(b) The
Borrower may at any time terminate, or from time to time reduce, the Aggregate
Commitment; provided
that (i)
each reduction of the Aggregate Commitment shall be in an amount that is an
integral multiple of $1,000,000 and not less than $1,000,000, and (ii) the
Borrower shall not terminate or reduce the Aggregate Commitment if, after giving
effect to any concurrent prepayment of the Loans in accordance with Section
2.09
and
Section
2.10,
the
Aggregate Credit Exposure would exceed the Aggregate Commitment.
(c) The
Borrower shall notify the Administrative Agent of any election to terminate
or
reduce the Aggregate Commitment under paragraph (b) of this Section 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 shall be irrevocable; provided
that a
notice of termination of the Aggregate Commitment delivered by the Borrower
may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if
such
condition is not satisfied. Any termination of the Aggregate Commitment shall
be
permanent. Each reduction of the Aggregate Commitment shall be made ratably
among the Lenders in accordance with their respective Commitment.
Section
2.03. Loans
and Borrowings.
(a) 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 of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Loans as required.
(b) Subject
to Section
2.13,
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) 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
$100,000 and not less than $1,000,000. At the time that each ABR Borrowing
is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $1,000,000; provided
that an
ABR Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the Aggregate Commitment or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section
2.05(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 eight (8) Eurodollar
Borrowings outstanding.
(d) 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.
Section
2.04. 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
11:00 a.m., three Business Days before the date of the proposed Borrowing
or
(b) in the case of an ABR Borrowing, not later than 11:00 a.m., 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
2.05(e)
may be
given not later than 10:00 a.m., 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 (or transmit by electronic communication
if arrangements for doing so have been approved by the Administrative Agent)
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
2.03:
(i) the
aggregate amount of the requested Borrowing;
(ii) the
date
of such Borrowing, which shall be a Business Day;
(iii) whether
such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(iv) in
the
case of a Eurodollar Borrowing, the initial Interest Period to be applicable
thereto, which shall be a period contemplated by the definition of the term
“Interest Period”; and
(v) the
location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section
2.06.
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. Promptly following receipt
of a Borrowing Request in accordance with this Section, 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
2.05. 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 or the account of any Restricted
Subsidiary 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, or such
terms and conditions contain representations, defaults, covenants, or grants
of
security not found in this Agreement or any other Loan Document, such provisions
shall be deemed ineffective and the terms and conditions of this Agreement
shall
control.
(b) Notice
of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter
of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, 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. 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. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal
or
extension of each Letter of Credit the Borrower shall be deemed to represent
and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $10,000,000 and (ii) the
Aggregate Credit Exposure shall not exceed the Aggregate
Commitment.
(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; provided that any Letter of Credit with a one-year term
may
provide for the renewal thereof for additional one-year periods (which
shall in
no event extend beyond the date referred to in clause (ii) above);
(d) Participations.
By the
issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing
the amount thereof) and without any further action on the part of the Issuing
Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and
each
Lender hereby acquires from the Issuing Bank, a participation in such Letter
of
Credit equal to such Lender’s Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit. In consideration and
in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the Issuing
Bank,
such Lender’s Applicable Percentage of each LC Disbursement made by the Issuing
Bank and not reimbursed by the Borrower on the date due as provided in
paragraph
(e) of this Section, 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 paragraph 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 Aggregate Commitment, and that each such payment shall
be
made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement.
If the
Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit,
the Borrower shall reimburse such LC Disbursement by paying to the
Administrative Agent an amount equal to such LC Disbursement not later
than
12:00 noon, on the date that such LC Disbursement is made, if the Borrower
shall
have received notice of such LC Disbursement prior to 10:00 a.m., on such
date,
or, if such notice has not been received by the Borrower prior to such
time on
such date, then not later than 12:00 noon, on (i) the Business Day that
the
Borrower receives such notice, if such notice is received prior to 10:00
a.m.,
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 the
Borrower may, subject to the conditions to borrowing set forth herein,
request
in accordance with Section
2.04
that
such payment be financed with an ABR Borrowing in an equivalent amount
and, to
the extent so financed, the Borrower’s obligation to make such payment shall be
discharged and replaced by the resulting ABR Borrowing. If the Borrower
fails to
make such payment when due, the Administrative Agent shall notify each
Lender of
the applicable LC Disbursement, the payment then due from the Borrower
in
respect thereof and such Lender’s Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower,
in
the same manner as provided in Section
2.06
with
respect to Loans made by such Lender (and Section
2.06
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 paragraph, the Administrative Agent shall distribute such
payment to the Issuing Bank or,
to
the
extent that Lenders have made payments pursuant to this paragraph to
reimburse
the Issuing Bank, then to such Lenders and the Issuing Bank as their
interests
may appear. Any payment made by a Lender pursuant to this paragraph to
reimburse
the Issuing Bank for any LC Disbursement (other than the funding of ABR
Loans as
contemplated above) shall not constitute a Loan and shall not relieve
the
Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations
Absolute.
The
Borrower’s obligation to reimburse LC Disbursements as provided in
paragraph (e) of this Section 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 or
this
Agreement, or any term or provision therein, (ii) any draft or other
document
presented under a Letter of Credit proving to be forged, fraudulent or
invalid
in any respect or any statement therein being untrue or inaccurate in
any
respect, (iii) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the
terms of
such Letter of Credit, or (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, 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 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 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, unless the Borrower shall
reimburse such LC Disbursement in full on the date such LC Disbursement is
made,
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; provided
that, if
the Borrower fails to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section
2.12(c)
shall
apply. Interest accrued pursuant to this paragraph 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 paragraph (e) of this Section to reimburse the
Issuing
Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement
of the Issuing Bank.
The
Issuing Bank may be replaced at any time by written agreement among the
Borrower, the Administrative Agent, the replaced Issuing Bank and the successor
Issuing Bank. The Administrative Agent shall notify the Lenders of any such
replacement of the Issuing Bank. At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account
of the
replaced Issuing Bank pursuant to Section
2.11(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 an
Issuing
Bank hereunder, the replaced Issuing Bank shall remain a party hereto and
shall
continue to have all the rights and obligations of an 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 any
Event of Default shall occur and be continuing, on the Business Day that
the
Borrower receives notice from the Administrative Agent or the Required Lenders
(or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure
representing greater than 66-2/3% of the total LC Exposure) demanding the
deposit of cash collateral pursuant to this paragraph, 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 the LC Exposure 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 described in clause (h) or (i) of Article
IX.
Such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under
this
Agreement. 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 deposits and interest at the rate
per
annum in effect for accounts of the same type maintained with the Administrative
Agent at such time, 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 (but subject to the consent of Lenders with LC Exposure
representing 66-2/3% or more of the total LC Exposure), be applied to satisfy
other obligations of the Borrower under this Agreement. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of
the
occurrence of an Event of Default, 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.
Section
2.06. Funding
of Borrowings.
(a) 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 12:00 noon, 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 Eligible Account of the Borrower designated by the Borrower
in the
applicable Borrowing Request; provided
that ABR
Loans made to finance the reimbursement of an LC Disbursement as provided
in
Section
2.05(e)
shall be
remitted by the Administrative Agent to the Issuing Bank.
(b) 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 paragraph (a) of this Section 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
2.07. Interest
Elections.
(a) 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; provided that all
Borrowings on the Effective Date shall be ABR Borrowings. 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. 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) To
make
an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section
2.04
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 (or transmit by electronic communication, if arrangements
for doing so have been approved by the Administrative Agent) to the
Administrative Agent of a written Interest Election Request in a form approved
by the Administrative Agent and signed by the Borrower.
(c) Each
telephonic and written Interest Election Request shall specify the following
information in compliance with Section
2.03:
(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 clauses (iii) and (iv) below 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) with
respect to any Borrowing, 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) 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) 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 and the Administrative Agent, at the request of
the
Required Lenders, so notifies the Borrower, then, so long as an Event of Default
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
2.08. Repayment of
Loans; Evidence of Debt.
(a) 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
Maturity Date.
(b) Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time
hereunder.
(c) The
Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to
each
Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender’s
share thereof.
(d) The
entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be prima facie
evidence
of the existence and amounts of the obligations recorded therein; provided
that the
failure of any Lender or the Administrative Agent to maintain such accounts
or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any
Lender may request that Loans made by it be evidenced by a promissory note.
In
such event, the Borrower shall prepare, execute and deliver to such Lender
a
promissory note payable to the order of such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) and in a form approved by
the
Administrative Agent; provided
that any
promissory note issued to evidence any Lender’s Loans shall be in a stated
amount equal to such Lender’s Applicable Percentage of the Maximum Facility
Amount. Thereafter, the Loans evidenced by such promissory note
and
interest thereon shall at all times (including after assignment pursuant to
Section
11.04)
be
represented by one or more promissory notes in such form payable to the order
of
the payee named therein (or, if such promissory note is a registered note,
to
such payee and its registered assigns).
Section
2.09. Optional
Prepayment of Loans.
(a) The
Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole and or in part, subject to prior notice in accordance with
paragraph (b) of this Section. Any prepayment by the Borrower of any Borrowing
shall be without premium or penalty, provided that the Borrower shall be
obligated to pay any funding indemnification amounts due under Section
2.15.
(b) The
Borrower shall notify the Administrative Agent by telephone (confirmed by
telecopy or other electronic communication approved by the Administrative Agent)
of any prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 11:00 a.m., three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later
than 11:00 a.m., 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;
provided
that, if
a notice of prepayment is given in connection with a conditional notice of
termination or reduction of the Aggregate Commitment as contemplated by
Section
2.02,
then
such notice of prepayment may be revoked if such notice of termination or
reduction is revoked in accordance with Section
2.02.
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
2.03.
Each
prepayment of a Borrowing shall be applied ratably to the Loans included in
the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to
the
extent required by Section
2.12.
Section
2.10. Mandatory
Prepayment of Loans.
(a) Except
as
otherwise provided in Section
2.10(b),
in the
event a Borrowing Base Deficiency exists, the Borrower shall, within ten (10)
days after written notice from the Administrative Agent to the Borrower of
such
Borrowing Base Deficiency, notify the Administrative Agent that the Borrower
intends to take one or more of the following actions: (i) provide the Secured
Parties within thirty (30) days thereafter and by instruments reasonably
satisfactory in form and substance to the Administrative Agent, with additional
security consisting of Oil and Gas Interests with a value and quality
satisfactory to the Lenders in their sole discretion sufficient to eliminate
such Borrowing Base Deficiency, or (ii) within thirty (30) days thereafter,
prepay, without premium or penalty (other than funding indemnification amounts
due under Section
2.15),
the
principal amount of the Loans in an amount sufficient to eliminate such
Borrowing Base Deficiency, (iii) prepay, without premium or penalty, the
principal amount of such Borrowing Base Deficiency in not more than six (6)
equal monthly installments plus
accrued
interest thereon and to make the first such monthly payment on the 30th day
after the Borrower’s receipt of notice of such Borrowing Base Deficiency or (iv)
by a combination of such additional security and such prepayments to eliminate
such Borrowing Base Deficiency.
(b) If
the
Borrower or any Restricted Subsidiary Disposes of any Borrowing Base Properties
at any time a Borrowing Base Deficiency exists or would exist after giving
effect to such Disposition, the Borrower shall prepay the Borrowings in an
amount sufficient to eliminate such Borrowing Base Deficiency on the date such
Disposition is consummated; provided,
however
that amounts applied to the payment of Borrowings pursuant to this Section
may
be reborrowed subject to and in accordance with the terms of this Agreement.
Amounts applied to the prepayment of Borrowings pursuant to this Section shall
be first applied ratably to ABR Borrowings then outstanding and, upon payment
in
full of all outstanding ABR Borrowings, second, to Eurodollar Borrowings then
outstanding, and if more than one Eurodollar Borrowing is then outstanding,
to
each such Eurodollar Borrowing 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, subject to the payment of any funding
indemnification amounts required by Section
2.15
but
without penalty or premium.
Section
2.11. Fees.
(a) The
Borrower agrees to pay to the Administrative Agent, for the account of each
Lender, an unused commitment fee (the “Unused
Commitment Fee”)
equivalent to the Applicable Rate times the daily average of the Unused
Commitment. Such Unused Commitment Fee shall be calculated on the basis of
a
year consisting of 360 days. The Unused Commitment Fee shall be payable in
arrears on the last day of March, June, September and December of each year,
commencing with the first such date to occur after the Effective Date, and
on
the Maturity Date for any period then ending for which the Unused Commitment
Fee
shall not have been theretofore paid. In the event the Aggregate Commitment
terminates on any date other than the last day of March, June, September or
December of any year, the Borrower agrees to pay to the Administrative Agent,
for the account of each Lender, on the date of such termination, the total
Unused Commitment Fee due for the period from the last day of the immediately
preceding March, June, September or December, as the case may be, to the date
such termination occurs.
(b) 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 Rate 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 Effective Date 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, and (ii) to the
Issuing Bank a fronting fee, which shall accrue at the rate or rates per annum
separately agreed upon between the Borrower and the Issuing Bank 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 Effective Date to but excluding the later of the date of
termination of the Aggregate Commitment and the date on which there ceases
to be
any LC Exposure, as well as the Issuing Bank’s 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 Effective Date; provided
that all
such fees shall be payable on the date on which the Aggregate Commitment
terminates and any such fees accruing after the date on which the Aggregate
Commitment terminates shall be payable on demand. Any other fees payable to
the
Issuing Bank pursuant to this paragraph 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 and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(c) 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) All
fees
payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent (or to the Issuing Bank, in the case of
fees
payable to it) for distribution, in the case of Unused Commitment Fees and
participation fees, to the Lenders. Fees paid shall not be refundable under
any
circumstances.
Section
2.12. Interest.
(a) The
Loans
comprising each ABR Borrowing shall bear interest at the Alternate Base
Rate plus the Applicable Rate.
(b) 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
Rate.
(c) Notwithstanding
the foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrower hereunder 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 (i)
in
the case of overdue principal of any Loan, 2% plus the rate otherwise applicable
to such Loan as provided in the preceding paragraphs of this Section or (ii)
in
the case of any other amount, 2% plus the rate applicable to ABR Loans as
provided in paragraph (a) of this Section.
(d) Accrued
interest on each Loan shall be payable in arrears on each Interest Payment
Date
for such Loan, upon termination of the Aggregate Commitment and on the Maturity
Date; provided
that (i)
interest accrued pursuant to paragraph (c) of this Section shall be payable
on
demand, (ii) in the event of any repayment or prepayment of any Loan
(other
than a prepayment of an ABR Loan prior to the end of the Availability Period
at
a time when no Borrowing Base Deficiency exists), 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.
(e) All
interest hereunder shall be computed on the basis of a year of 360 days,
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.
Section
2.13. 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, as applicable, for such Interest
Period; or
(b) the
Administrative Agent is advised by the Required Lenders that the Adjusted
LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of making
or
maintaining their Loans (or its Loan) 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
2.14. Increased
Costs.
(a) 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 the Issuing Bank; or
(ii) impose
on
any Lender or the Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender
or
any Letter of Credit or participation therein;
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 increase the cost to such Lender or the Issuing Bank
of participating in, issuing or maintaining any Letter of Credit or to reduce
the amount of any sum received or receivable by such Lender or the Issuing
Bank
hereunder (whether of principal, interest or otherwise), then 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, as the
case may be, for such additional costs incurred or reduction
suffered.
(b) 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) A
certificate of a Lender or the Issuing Bank setting forth (i) the amount or
amounts reasonably necessary to compensate such Lender or the Issuing Bank
or
its holding company, as the case may be, as specified in paragraph (a) or
(b) of this Section, and (ii) in reasonable detail the basis for, and the
calculation of, such additional amount or amounts, shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall
pay
such Lender or the Issuing Bank, as the case may be, the amount shown as due
on
any such certificate within 15 days after receipt thereof.
(d) Failure
or delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section 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 180 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the Issuing Bank’s
intention to claim compensation therefor; provided further
that, if
the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.
Section
2.15. 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 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 (regardless of whether such notice may
be
revoked under Section
2.09(b)
and is
revoked in accordance therewith), (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
2.18,
then,
in any such event, the Borrower shall compensate each Lender for the loss,
cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had
such
event not occurred, at the Adjusted LIBO Rate that would have been applicable
to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits
of a
comparable amount and period from other banks in the Eurodollar market. A
certifi-cate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 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 15 days
after
receipt thereof.
Section
2.16. Taxes.
(a) Any
and
all payments by or on account of any obligation of the Borrower hereunder 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) the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an amount equal
to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.
(c) 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) 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 as to the
amount of such payment or liability delivered to the Borrower by a Lender
or the
Issuing Bank shall be conclusive absent manifest error.
(d) As
soon
as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a 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) 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 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) 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 have paid
additional amounts pursuant to this Section
2.16,
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
2.16
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 shall not be construed
to
require the Administrative Agent or any Lender to make available its tax
returns
(or any other information relating to its taxes which it deems confidential)
to
the Borrower or any other Person.
Section
2.17. Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) 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
2.14,
Section
2.15
or
Section
2.16,
or
otherwise) prior to 12:00 noon, on the date when due, in immediately available
funds, without set-off or counterclaim. 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 at Mail Code IL1-0634, 21 South ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, except payments to be made directly to the Issuing Bank
as
expressly provided herein and except that payments pursuant to Section
2.14,
Section
2.15,
Section
2.16
and
Section
11.03
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) 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; provided that in the event such
funds
are received by and available to the Administrative Agent as a result of
the
exercise of any rights and remedies with respect to any collateral under
the
Security Instruments, the parties entitled to a ratable share of such funds
pursuant to the foregoing clause (ii) and the determination of each parties’
ratable share shall include, on a pari
passu
basis,
the Lender Counterparties and the actual aggregate amounts then due and
owing to
each Lender Counterparty by the Borrower or any Guarantor as a result of
the
early termination of any transactions under any Swap Agreements included
in the
Obligations (after giving effect to any netting agreements).
(c) 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 paragraph 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 paragraph 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.
(d) 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 hereunder that the Borrower will not
make
such payment, the Administrative Agent may assume that the Borrower have
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 have 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.
(e) If
any
Lender shall fail to make any payment required to be made by it pursuant
to
Section
2.05(d)
or
Section
2.05(e),
Section
2.06(b),
Section
2.17(d)
or
Section
11.03(c),
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
2.18. Mitigation
Obligations; Replacement of Lenders.
(a) If
any
Lender requests compensation under Section
2.14,
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
2.16,
then
such Lender shall use reasonable efforts to (x) file any certificate
or document
reasonably requested by the Borrower or (y) designate a different lending
office
for funding or booking its Loans hereunder or to or (y) assign its rights
and
obligations hereunder to another of its offices, branches or affiliates,
if, in
the reasonable judgment of such Lender, such filing, designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section
2.14
or
Section
2.16,
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) If
any
Lender requests compensation under Section
2.14,
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
2.16,
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
11.04),
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 (and if a Commitment is being assigned, the Issuing Bank), which
consent
shall not unrea-sonably 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
2.14
or
payments required to be made pursuant to Section
2.16,
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.
(c) If
in
connection with any proposed amendment, modification, termination,
waiver or
consent with respect to any of the provisions of this Agreement or
any other
Loan Document as contemplated by Section
11.02,
the
consent of Required Lenders shall have been obtained but the consent
of one or
more of such other Lenders (each a “Non-Consenting
Lender”)
whose
consent is required has not been obtained or if any Lender is a Defaulting
Lender; then, the Borrower may elect to replace such Non-Consenting
Lender or
Defaulting Lender, as the case may be, as a Lender party to this Agreement
in
accordance with and subject to the restrictions contained in, and consents
required by Section
11.04;
provided
that (i)
the Borrower shall have received the prior written consent of the Administrative
Agent (and if a Commitment is being assigned, the Issuing Bank), which
consent
shall not unrea-sonably 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
2.14
or
payments required to be made pursuant to Section
2.16,
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.
Article
III
Borrowing
Base
Section
3.01. Reserve
Report; Proposed Borrowing Base; Conforming Borrowing Base.
During
the period from the Effective Date until the first Redetermination
after the
Effective Date, the Borrowing Base shall be $40,000,000 (the “Initial
Borrowing Base”)
and
the Conforming Borrowing Base shall be $35,000,000. As soon as available
and in
any event by March 1 and September 1 of each year, beginning September
1, 2006,
the Borrower shall deliver
to
the
Administrative Agent and each Lender a Reserve Report, prepared as
of the
immediately preceding December 31 and June 30, respectively, in form
and
substance reasonably satisfactory to the Administrative Agent and
prepared by an
Approved Petroleum Engineer (or, in the case of any Reserve Report
other than
the Reserve Report due on March 1 of each year, by petroleum engineers
employed
by the Borrower or its Subsidiaries) together with such other information,
reports and data concerning the value of the Borrowing Base Properties
as the
Administrative Agent shall deem reasonably necessary to determine
the value of
such Borrowing Base Properties. Simultaneously with the delivery
to the
Administrative Agent and the Lenders of each Reserve Report, the
Borrower shall
submit to the Administrative Agent and each Lender the Borrower’s requested
amount of the Borrowing Base as of the next Redetermination Date
and a
certificate of the chief financial officer of the Borrower certifying
that such
requested amount does not exceed the maximum principal amount of
Loans
outstanding plus LC Exposure permitted under Section
7.01
of the
Intercreditor Agreement together with reasonably detailed calculations
of such
maximum amount. Promptly after the receipt by the Administrative
Agent of such
Reserve Report and Borrower’s requested amount for the Borrowing Base, the
Administrative Agent shall submit to the Lenders a recommended amount
of the
Borrowing Base and, with respect to any Redetermination prior to
August 1, 2007,
the Conforming Borrowing Base as of the next Redetermination Date;
provided that
no Redetermination of the Conforming Borrowing Base shall be required
after
August 1, 2007.
Section
3.02. Scheduled
Redeterminations of the Borrowing Base; Procedures and Standards.
Based
in part on the Reserve Reports made available to the Administrative
Agent and
the Lenders pursuant to Section
3.01,
the
Lenders shall redetermine the Borrowing Base on or prior to the next
Redetermination Date and, if such Redetermination Date is prior to
August 1,
2007, the Conforming Borrowing Base (or such date promptly thereafter
as
reasonably possible based on the engineering and other information
available to
the Lenders). Any Borrowing Base or Conforming Borrowing Base which
becomes
effective as a result of any Redetermination shall be subject to
the following
restrictions: (a) such Borrowing Base shall not exceed the Maximum
Facility
Amount, (b) such Conforming Borrowing Base shall not exceed such
Borrowing Base,
(c) to the extent such Borrowing Base or Conforming Borrowing Base
represents an
increase in the Borrowing Base or the Conforming Borrowing Base in
effect prior
to such Redetermination, such Borrowing Base or Conforming Borrowing
Base, as
the case may be, must be approved by all Lenders, and (d) to the
extent such
Borrowing Base or Conforming Borrowing Base represents a decrease
in the
Borrowing Base or Conforming Borrowing Base in effect prior to such
Redetermination or a reaffirmation of such prior Borrowing Base or
Conforming
Borrowing Base, such Borrowing Base or Conforming Borrowing Base
must be
approved by the Administrative Agent and Required Lenders. If a redetermined
Borrowing Base or Conforming Borrowing Base is not approved by the
Administrative Agent and Required Lenders within twenty (20) days
after the
submission to the Lenders by the Administrative Agent of its recommended
Borrowing Base and Conforming Borrowing Base pursuant to Section
3.01,
or by
all Lenders within such twenty (20) day period in the case of any
increase in
the Borrowing Base or Conforming Borrowing Base, the Administrative
Agent shall
notify each Lender that the recommended Borrowing Base and Conforming
Borrowing
Base, as the case may be, has not been approved and request that
each Lender
submit to the Administrative Agent within ten (10) days thereafter
its proposed
Borrowing Base and proposed Conforming Borrowing Base. Promptly following
the
10th
day
after the Administrative Agent’s request for each Lender’s proposed Borrowing
Base and proposed Conforming Borrowing Base, the Administrative Agent
shall
determine the Borrowing Base and Conforming Borrowing Base for
such
Redetermination by calculating the highest Borrowing Base and highest
Conforming
Borrowing Base then acceptable to the Administrative Agent and
a number of
Lenders sufficient to constitute Required Lenders (or all Lenders
in the case of
an increase in the Borrowing Base or the Conforming Borrowing Base).
Each
Redetermination shall be made by the Lenders in their sole discretion,
but based
on the Administrative Agent’s and such Lender’s usual and customary procedures
for evaluating Oil and Gas Interests as such exist at the time
of such
Redetermination, and including adjustments to reflect the effect
of any Swap
Agreements of the Borrower and the Restricted Subsidiaries as such
exist at the
time of such Redetermination. The Borrower acknowledges and agrees
that each
Redetermination shall be based upon the loan collateral value which
each Agent
and each Lender in its sole discretion (using such methodology,
assumptions and
discount rates as the Administrative Agent and such Lender customarily
uses in
assigning collateral value to Oil and Gas Interests) to the Borrowing
Base
Properties at the time in question and based upon such other credit
factors
consistently applied (including, without limitation, the assets,
liabilities,
cash flow, business, properties, prospects, management and ownership
of the
Credit Parties) as the Administrative Agent and such Lender customarily
considers in evaluating similar oil and gas credits. It is expressly
understood
that the Administrative Agent and Lenders have no obligation to
designate the
Borrowing Base or the Conforming Borrowing Base at any particular
amounts,
except in the exercise of their discretion, whether in relation
to the Aggregate
Commitment or otherwise. If the Borrower does not furnish all information,
reports and data required to be delivered by any date specified
in this
Article
III,
the
Administrative Agent and Lenders may nonetheless designate the
Borrowing Base
and the Conforming Borrowing Base at any amounts which the Administrative
Agent
and Lenders in their reasonable discretion determine and may redesignate
the
Borrowing Base and the Conforming Borrowing Base from time to time
thereafter
until the Administrative Agent and Lenders receive all such information,
reports
and data, whereupon the Administrative Agent and Lenders shall
designate a new
Borrowing Base and a new Conforming Borrowing Base, as described
above.
Section
3.03. Special
Redeterminations.
In
addition to Scheduled Redeterminations, the Borrower shall be permitted
to
request a Special Redetermination of the Borrowing Base and the
Conforming
Borrowing Base once between each Scheduled Redetermination and
the Required
Lenders shall be permitted to request a Special Redetermination
at any time. Any
request by Borrower pursuant to this Section
3.03
shall be
submitted to the Administrative Agent and each Lender and at the
time of such
request (or within twenty (20) days thereafter in the case of the
Reserve
Report) Borrower shall (1) deliver to the Administrative Agent and each
Lender a Reserve Report prepared as of a date prior to the date
of such request
that is reasonably acceptable to the Administrative Agent and such
other
information which the Administrative Agent shall reasonably request,
and (2)
notify the Administrative Agent and each Lender of the Borrowing
Base requested
by Borrower in connection with such Special Redetermination. Any
request by
Required Lenders pursuant to this Section
3.03
shall be
submitted to the Administrative Agent and the Borrower. Any Special
Redetermination shall be made by the Administrative Agent and Lenders
in
accordance with the procedures and standards set forth in Section
3.02;
provided that no Reserve Report is required to be delivered to
the
Administrative Agent or the Lenders in connection with any Special
Redetermination requested by the Required Lenders pursuant to this
Section
3.03.
Section
3.04. Special
2006 Redetermination.
In
addition to any Special Redetermination pursuant to Section
3.03,
the
Borrower shall deliver to the Administrative Agent, on or before
July 1, 2006,
an update of each of the Initial Reserve Reports as of June 1,
2006 which update
shall be prepared by petroleum engineers that are employees of
the Borrower and
shall set forth, in reasonable detail, any material changes in
the values
assigned to the Borrowing Base Properties since December 31,
2005. On or about
August 1, 2006, the Administrative Agent and the Lenders shall
make a Special
Redetermination of the Borrowing Base in accordance with the
procedures and
standards set forth in Section
3.02 based
on
the Initial Reserve Reports as adjusted by such update.
Section
3.05. Potential
Monthly Reductions and Other Adjustments.
(a) In
the
event the Redetermination of the Borrowing Base pursuant to Section
3.04
is not
made on or prior to August 1, 2006 as a result of the Borrower
failing to comply
with the requirements of this Article
III
with
respect to such Redetermination on the dates required without
giving effect to
any grace or cure period provided in Article IX with respect
to any such
failure, the Borrowing Base shall be reduced by $1,750,000 on
August 1, 2006 and
on the first day of each month thereafter (the “Monthly Reduction”) until the
Borrowing Base is otherwise redetermined pursuant to this Article
III.
(b) In
the
event the outstanding principal balance of the Indebtedness under
the Second
Lien Facility exceeds $150,000,000 at any time after the Effective
Date, the
Borrowing Base then in effect shall be reduced by $1.00 for every
$4.00 of such
additional Indebtedness as of the date such additional Indebtedness
is
incurred.
Section
3.06. Notice
of Redetermination.
Promptly following any Redetermination of the Borrowing Base
or the Conforming
Borrowing Base, the Administrative Agent shall notify the Borrower
of the amount
of the redetermined Borrowing Base and Conforming Borrowing Base,
which
Borrowing Base and Conforming Borrowing Base shall be effective
as of the date
specified in such notice, and such Borrowing Base and Conforming
Borrowing Base
shall remain in effect for all purposes of this Agreement until
the next
Redetermination.
Section
3.07. Pinnacle
Equity Interests.
In
connection with any Redetermination of the Borrowing Base and
at the request of
Borrower, the Lenders may, in their sole and absolute discretion,
consider
whether to attribute value to the Borrower’s investment in the Equity Interests
of Pinnacle in connection with such Redetermination and in the
event value is
attributed to the Borrowing Base for such Equity Interests, the
Borrower shall
cause such Equity Interests to be subject to a first and prior
Lien in favor of
the Administrative Agent, for the benefit of the Secured Parties,
pursuant to a
pledge agreement substantially similar to the Pledge Agreement
and take all
actions reasonably required to perfect such Lien.
Article
IV
Representations
and Warranties
Each
Credit Party represents and warrants to the Lenders that (it
being understood
and agreed that with respect to the Effective Date such representations
and
warranties are
deemed
to
be made concurrently with and after giving effect to the consummation of the
Transactions):
Section
4.01. Organization;
Powers.
Each
Credit Party is duly organized, validly existing and in good standing under
the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in,
and is in good standing in, every juris-diction where such qualification is
required.
Section
4.02. Authorization;
Enforceability.
The
Transactions are within each Credit Party’s corporate, limited liability company
or partnership powers and have been duly authorized by all necessary corporate,
limited liability company or partnership and, if required, stockholder action.
This Agreement has been duly executed and delivered by each Credit Party and
constitutes a legal, valid and binding obligation of each Credit Party,
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
4.03. Governmental
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, except such
as
have been obtained or made and are in full force and effect (except for reports
required to be filed by the Borrower with the SEC pursuant to the Securities
Exchange Act of 1934), (b) will not result in a violation by the Borrower or
any
Restricted Subsidiary of any applicable law or regulation or the charter,
by-laws or other Organizational Documents of the Borrower or any Restricted
Subsidiary or any order of any Governmental Authority, (c) will not violate
or
result in a default under any indenture, agreement or other instrument
evidencing Material Indebtedness or a Material Sales Contract binding upon
the
Borrower or any Restricted Subsidiary or any of their respective assets, or
give
rise to a right thereunder to require any payment to be made by the Borrower
or
any Restricted Subsidiary in excess of $5,000,000, and (d) will not result
in
the creation or imposition of any Lien on any asset of the Borrower or any
Restricted Subsidiary other than Permitted Liens.
Section
4.04. 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, 2005, reported on by ▇▇▇▇▇▇▇ ▇▇▇▇ Forester
of
Texas, P.C., independent public accountants and (ii) as of and for the fiscal
quarter and portion of the fiscal year ended March 31, 2006, certified by its
chief financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations 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 statements referred to in clause (ii) above.
(b) Since
March 31, 2006, there has been no material adverse change in the business,
assets, operations or condition, financial or otherwise, of the Borrower and
its
Restricted Subsidiaries, taken as a whole.
(c) As
of the
Effective Date, the aggregate outstanding principal balance of the Second Lien
Loans is $150,000,000.
Section
4.05. Properties.
(a) Except
as
otherwise provided in Section
4.15
with
respect to Oil and Gas Interests, the Borrower and each Restricted Subsidiary
has good title to, or valid leasehold interests in, all real and personal
property material to its business, except for minor defects in title that do
not
interfere with its ability to conduct its business as currently conducted or
to
utilize such properties for their intended purposes.
(b) The
Borrower and each Restricted Subsidiary owns, or is licensed to use, all
trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and such
Restricted Subsidiaries, as the case may be, 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.
Section
4.06. Litigation
and Environmental Matters.
(a) There
are
no actions, suits 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 Restricted Subsidiary, (i) as to
which there is a reasonable possi-bility of an adverse determination and that,
if adversely deter-mined, could reasonably be expected, individually or in
the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions;
provided
that no
breach of this Section
4.06
shall
occur if the same is discharged within 30 days after the date of entry thereof
or an appeal or appropriate proceeding for review thereof is taken within such
period and a stay of execution pending such appeal is obtained.
(b) Except
for the Disclosed Matters and except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result
in
a Material Adverse Effect, neither the Borrower nor any Restricted Subsidiary
to
the Borrower’s knowledge (i) has failed to comply with any Environmental
Law or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability.
(c) Since
the
date of this Agreement, there has been no change in the status of the Disclosed
Matters that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.
Section
4.07. Compliance
with Laws and Agreements.
The
Borrower and each Restricted Subsidiary is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon
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. No Default has occurred and is continuing.
Section
4.08. Investment
and Holding Company Status.
Neither
the Borrower nor any Restricted Subsidiary is (a) an “investment company”
as defined in, or subject to regulation under, the Investment Company Act of
1940 or (b) a “holding company” as defined in, or subject to regula-tion
under, the Public Utility Holding Company Act of 1935.
Section
4.09. Taxes.
The
Borrower and each Restricted Subsidiary 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 Restricted Subsidiary, as applicable, has set aside on
its
books adequate reserves or (b) to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse
Effect.
Section
4.10. ERISA.
No ERISA
Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events for which liability is reasonably expected
to
occur, could reasonably be expected to result in a Material Adverse Effect.
The
present value of all accumulated benefit obligations under each Plan (based
on
the assumptions used for purposes of FASB Statement 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed
by
more than $500,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of FASB Statement 87) did not,
as of the date of the most recent financial statements reflecting such amounts,
exceed by more than $500,000 the fair market value of the assets of all such
underfunded Plans.
Section
4.11. Disclosure.
All
written information heretofore or contemporaneously herewith furnished by the
Borrower to the Administrative Agent and/or the Lenders for the purposes of
or
in connection with this Agreement or any transaction contemplated hereby
(excluding projections, estimates, and engineering reports) is, and all such
information hereafter furnished by or on behalf of the Borrower to the
Administrative Agent and/or the Lenders will be, true and accurate in every
material respect on the date as of which such information is dated or certified;
and none of such information is or will be incomplete by omitting to state
any
material fact necessary to make such information not misleading as of such
date,
in light of the circumstances under which the statements contained in such
information were made, taken as a whole. To the best knowledge of the Borrower,
the engineering reports delivered to the Administrative Agent and/or the Lenders
in connection with this Agreement do not contain any material inaccuracies
and/or omissions. The said engineering reports, however, are based upon
professional opinions, estimates and projections and the Borrower does not
warrant that such opinions, estimates and projections will ultimately prove
to
have been accurate. All other projections and estimates by the Borrower
delivered hereunder or in connection herewith were prepared in good faith on
the
basis of the assumptions believed by the Borrower in good faith to be reasonable
in light of the then current and foreseeable business conditions of the Borrower
and
its
Subsidiaries at the time of preparation thereof, it being understood by the
Administrative Agent and the Lenders that actual results may vary from projected
results.
Section
4.12. Labor
Matters.
There
are no strikes, lockouts or slowdowns against the Borrower or any of its
Restricted Subsidiaries pending or, to the knowledge of the Borrower, threatened
that could reasonably be expected to have a Material Adverse Effect. The
hours
worked by and payments made to employees of the Borrower and its Restricted
Subsidiaries have not been in violation of the Fair Labor Standards Act or
any
other Law dealing with such matters to the extent that such violation could
reasonably be expected to have a Material Adverse Effect.
Section
4.13. Capitalization.
Schedule 4.13 lists for the Borrower and each Restricted Subsidiary as of
the
Effective Date, its full legal name, its jurisdiction of organization, and
its
federal tax identification number and for each Restricted Subsidiary, the
number
of shares of capital stock or other Equity Interests outstanding and the
owner(s) of such shares or Equity Interests.
Section
4.14. Margin
Stock.
Neither
the Borrower nor any Restricted Subsidiary is engaged principally, or as
one of
its important activities, in the business of extending credit for the purpose
of
purchasing or carrying margin stock (within the meaning of Regulation T,
U or X
of the Board of Governors of the Federal Reserve System), and no part of
the
proceeds of any Loan will be used to purchase or carry any margin stock in
violation of said Regulation T, U or X or to extend credit to others for
the
purpose of purchasing or carrying margin stock in violation of said Regulation
T, U or X.
Section
4.15. Title
to Mortgaged Properties.
Except
as set forth on Schedule 4.15 attached hereto, each Credit Party has Defensible
Title to each Mortgaged Property having a book cost in excess of $200,000
(except to the extent that (a) such assets have thereafter been disposed
of in
compliance with this Agreement or (b) leases for such property have expired
pursuant to their terms), in each case free and clear of all Liens, except
(i)
Permitted Liens, (ii) obligations or duties to any municipality or public
authority with respect to any franchise, grant, license or permit and all
applicable laws, rules, regulations and orders of any Governmental Authority,
(iii) all lessors’ royalties, overriding royalties, net profits interests,
production payments, carried interests, reversionary interests and other
burdens
on or deductions from the proceeds of production, (iv) the terms and conditions
of joint operating agreements and other oil and gas contracts, (v) all rights
to
consent by required notices to, and filing with or other actions by governmental
or tribal entities, if any, in connection with the change of ownership or
control of an interest in federal, state, trial or other domestic governmental
oil and gas leases, if the same are customarily obtained subsequent to such
change of ownership or control, but only insofar as such consents, notices,
filings and other actions relate to the transactions contemplated by this
Agreement, (vi) any preferential purchase rights, (vii) required third party
consents to assignment, (viii) conventional rights of reassignment prior
to
abandonment and (ix) the terms and provisions of oil and gas leases, unit
agreements, pooling agreements, and other documents creating interests
comprising the oil and gas properties; provided,
however,
the
exceptions described in clauses
(i)
through
(viii)
inclusive above are qualified to include only those exceptions in each case
which do not operate to (A) reduce the net revenue interest of any Credit
Party
below that set forth in the Reserve Report, (B) increase the proportionate
share
of costs and
expenses
of leasehold operations attributable to or to be borne by the working interest
of any Credit Party above that set forth in the Reserve Report without
a
proportionate increase in the net revenue interest of such Credit Party
or (C)
increase the working interest of any Credit Party above that set forth
in the
Reserve Report without a proportionate increase in the net revenue interest
of
such Credit Party, and provided further
that the
foregoing defects, limitations, liens and encumbrances, whether individually
material or not, do not in the aggregate create a Material Adverse Effect
(the
categories of exceptions in clauses
(i)
through
(viii),
as so
qualified and as any such exceptions may exist from time to time, being
referred
to as the “Designated
Title Exceptions”).
The
Mortgages constitute legal, valid and perfected first Liens on the property
interests covered thereby, subject only to Designated Title Exceptions,
Permitted Liens, the Intercreditor Agreement, and matters disclosed on
Schedule
4.15. Further, (x) as of the Effective Date, all Oil and Gas Interests
subject
to mortgages pursuant to the Second Lien Credit Agreement are Mortgaged
Properties and (y) the matters disclosed on Schedule 4.15 do not materially
alter the net revenue interest or working interest of any Credit Party
set forth
in the Reserve Report.
Section
4.16. Insurance.
The
certificate signed by the Financial Officer that attests to the existence
and
adequacy of, and summarizes, the property and casualty insurance program
maintained by the Credit Parties that has been furnished by the Borrower
to the
Administrative Agent and the Lenders as of the Effective Date, is complete
and
accurate in all material respects as of the Effective Date and demonstrates
the
Borrower’s and the Restricted Subsidiaries’ compliance with Section
6.05.
The
Borrower maintains insurance with insurance companies in such amounts and
against such risks as is usually carried by owners of similar businesses
and
properties in the same general areas in which the Borrower
operates.
Section
4.17. Solvency.
(a) Immediately
after the consummation of the Transactions and immediately following the
making
of the initial Borrowing made on the Effective Date and after giving effect
to
the application of the proceeds thereof, (1) the fair value of the assets
of the
Credit Parties on a consolidated basis, at a fair valuation, will exceed
the
debts and liabilities, subordinated, contingent or otherwise, of the Credit
Parties on a consolidated basis; (2) the present fair saleable value of
the real
and personal property of the Credit Parties on a consolidated basis will
be
greater than the amount that will be required to pay the probable liability
of
the Credit Parties on a consolidated basis on their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (3) the Credit Parties on a consolidated basis
will
be able to pay their debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and
(4)
the Credit Parties on a consolidated basis will not have unreasonably small
capital with which to conduct the businesses in which they are engaged
as such
businesses are now conducted and are proposed to be conducted after the
date
hereof.
(b) The
Credit Parties do not intend to, and do not believe that they will, incur
debts
beyond their ability to pay such debts as they mature, taking into account
the
timing of and amounts of cash to be received by it and the timing of the
amounts
of cash to be payable on or in respect of its Indebtedness.
Section
4.18. Deposit
Accounts.
Except
as set forth on Schedule 4.18 and other deposit and investment accounts
maintained at financial institutions other than the Administrative Agent (the
aggregate balance of which does not exceed $200,000 at any time for all such
other deposit and investment accounts taken as a whole), no Credit Party has
any
deposit or investment accounts (and no Affiliate of any Credit Party has any
deposit or investment account) into which proceeds of Hydrocarbon production
from the Oil and Gas Interests included in the Borrowing Base Properties are
deposited. From and after 60 days after the Effective Date, except for deposit
and investment accounts maintained at financial institutions other than the
Administrative Agent the aggregate balance of which does not exceed $200,000
at
any time, all proceeds of Hydrocarbon production from the Oil and Gas Interests
included in the Borrowing Base Properties and all distributions and dividends
on
any Equity Interests owned by any Credit Party are deposited and maintained,
from the date of receipt by any Credit Party, in a deposit or investment account
subject to a first and prior perfected security interest in favor of the
Administrative Agent for the benefit of the Secured Parties.
Section
4.19. Pending
Dispositions.
Except
for the Oil and Gas Interests identified as the C&E ▇▇▇▇ ▇▇, ▇▇▇▇ of the Oil
and Gas Interests or other properties listed on Schedule 7.04 are Borrowing
Base
Properties.
Article
V
Conditions
Section
5.01. 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
11.02):
(a) The
Administrative Agent (or its counsel) shall have received from each party hereto
either (i) a counterpart of this Agreement signed on behalf of such party
or (ii) written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page of this Agreement)
that
such party has signed a counterpart of this Agreement.
(b) The
Administrative Agent shall have received a favorable written opinion (addressed
to the Administrative Agent and the Lenders and dated the Effective Date) of
(i)
▇▇▇▇▇ ▇▇▇▇▇ LLP, counsel for the Credit Parties, substantially in the form
of
Exhibit B, (ii) special Louisiana counsel for the Administrative Agent covering
the enforceability and recordability of the Mortgages relating to Borrowing
Base
Properties in Louisiana and with respect to the foregoing clauses (i) and (ii)
covering such other matters relating to the Credit Parties, this Agreement
or
the Transactions as the Administrative Agent shall reasonably request. The
Credit Parties hereby request such counsel to deliver such
opinions.
(c) The
Administrative Agent shall have received such documents and certificates as
the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of each Credit Party, the
authorization of the Transactions and any other legal matters relating to the
Credit Parties, this Agreement or
the
Transactions, all in form and substance satisfactory to the Administrative
Agent
and its counsel.
(d) The
Administrative Agent shall have received a certificate, dated the Effective
Date
and signed by the President, a Vice President or a chief financial officer
of
the Borrower, confirming that the Borrower has (i) complied with the conditions
set forth in paragraphs (a) and (b) of Section
5.02,
(ii)
complied with the covenants set forth in Section
6.05
(and
demonstrating such compliance by the attachment of an insurance summary and
insurance certificates evidencing the coverage described in such summary)
(iii)
taken all actions necessary to cause the Loan Documents to be the “First Lien
Loan Documents” under and as defined in the Intercreditor Agreement and the
Obligations to be the “First Lien Obligations” under and as defined in the
Intercreditor Agreement, and (iv) calculated that, based on the Initial Reserve
Reports and as of the Effective Date after giving effect to the Transactions,
the maximum principal amount of the Loans plus LC Exposure permitted under
Section
7.01
of the
Intercreditor Agreement is at least 120% of the Initial Borrowing Base and
attached to such certificate reasonable detailed calculations demonstrating
that
such maximum principal amount exceeds the Initial Borrowing Base by such
percentage.
(e) The
Administrative Agent, the Lenders and the Lead Arranger shall have received
all
fees and other amounts due and payable on or prior to the Effective Date,
and,
to the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder, including all
fees,
expenses and disbursements of counsel for the Administrative Agent to the
extent
invoiced on or prior to the Effective Date, together with such additional
amounts as shall constitute such counsel’s reasonable estimate of expenses and
disbursements to be incurred by such counsel in connection with the recording
and filing of Mortgages and financing statements; provided,
that,
such
estimate shall not thereafter preclude further settling of accounts between
the
Borrower and the Administrative Agent.
(f) The
Administrative Agent shall have received the Mortgages to be executed on
the
Effective Date pursuant to Section
6.09
of this
Agreement, duly executed and delivered by the appropriate Credit Party, together
with such other assignments, conveyances, amendments, agreements and other
writings reasonably requested by the Administrative Agent, including, without
limitation, UCC-1 financing statements, tax affidavits and applicable department
of revenue documentation, creating first and prior Liens, subject to Permitted
Encumbrances, in Oil and Gas Interests having an Engineered Value equal to
or
greater than (i) ninety percent (90%) of the Engineered Value of the proved
developed producing and proved developed non-producing reserves included
in the
Borrowing Base Properties, (ii) fifty percent (50%) of the Engineered Value
of
all Borrowing Base Properties, in each case with respect to the foregoing
clauses (i) and (ii), excluding any Oil and Gas Interests in the area known
as
the Camp Hill Field in ▇▇▇▇▇▇▇▇ County, Texas and (iii) fifty percent (50%)
of
the Engineered Value of the Borrower’s and each Guarantor’s Oil and Gas
Interests, taken as a whole, in the area known as the Camp Hill Field in
▇▇▇▇▇▇▇▇ County, Texas.
(g) The
Administrative Agent shall have received opinions of counsel and other evidence
of title as the Administrative Agent shall deem reasonably necessary or
appropriate to verify (i) the Credit Parties’ title to not less than fifty
percent (50%) of the Engineered Value of the Borrowing Base Properties and
(ii)
the validity, perfection and priority of the Liens to be created by the
Mortgages.
(h) The
Administrative Agent shall have received the Pledge Agreement to be executed
on
the Effective Date pursuant to Section
6.14
of this
Agreement, duly executed and delivered by the appropriate Credit Party, together
with such other assignments, conveyances, amendments, agreements and other
writings, including, without limitation, UCC-1 financing statements and control
agreements, creating first and prior Liens, subject to Permitted Liens, in
all
Equity Interests of each Restricted Subsidiary now or hereafter owned by
Borrower or any Restricted Subsidiary.
(i) On
or
prior to the Effective Date, the Administrative Agent shall have received a
Borrowing Request acceptable to the Administrative Agent setting forth the
Loans
requested by the Borrower on the Effective Date, the Type and amount of each
Loan and the accounts to which such Loans are to be funded; provided that all
Borrowings on the Effective Date shall be ABR Borrowings.
(j) If
the
initial Borrowing includes the issuance of a Letter of Credit, the
Administrative Agent shall have received a written request in accordance with
Section
2.05
of this
Agreement.
(k) The
Administrative Agent shall have received such financing statements (including,
without limitation, the financing statements referenced in clauses (f) and
(h)
above) as Administrative Agent shall specify to fully evidence and perfect
all
Liens contemplated by the Loan Documents, all of which shall be filed of record
on or after the Effective Date in such jurisdictions as the Administrative
Agent
shall require in its sole discretion.
(l) The
Administrative Agent shall have received evidence or assurances satisfactory
to
it that the Existing Revolving Facility shall have been (or concurrently with
the effectiveness of this Agreement and the funding of the initial Loans
hereunder, will be) paid in full and that all Liens securing the Existing
Revolving Facility, have been (or concurrently with the funding of the initial
Loans, will be) released, and promptly after the Effective Date original
executed instruments releasing and terminating any such Liens in a form suitable
for filing in the applicable jurisdiction shall be delivered.
(m) The
Administrative Agent shall have received a Solvency Certificate in the form
attached hereto as Exhibit D, dated the Effective Date, and signed by the Chief
Financial Officer of the Borrower.
(n) The
Lenders shall have received from the Borrower (i) the financial statements
described in Section
4.04,
(ii) a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
as
of and for the fiscal quarter and portion of the fiscal year ended March 31,
2006, which balance sheet shall be prepared consistent in all respects
with
the
information previously provided by the Borrower to the Administrative Agent
and
the Lenders and otherwise in form and substance satisfactory to the
Administrative Agent and (iii) the Projections.
(o) The
Administrative Agent, the Second Lien Agent and the Credit Parties shall
have
executed and delivered an amendment to the Intercreditor Agreement in the
form
attached hereto as Exhibit E.
(p) Each
Credit Party shall have obtained all approvals required from any
Governmental Authority and all consents of other Persons, in each case that
are
necessary or advisable in connection with the Transactions and each of the
foregoing shall be in full force and effect and in form and substance reasonably
satisfactory to the Administrative Agent.
(q) There
shall not exist any action, suit, investigation, litigation or proceeding
or
other legal or regulatory developments, pending or threatened in any court
or
before any arbitrator or Governmental Authority that, in the reasonable opinion
of Administrative Agent, singly or in the aggregate, materially impairs the
Transactions, the financing thereof or any of the other transactions
contemplated by the Loan Documents or that could reasonably be expected to
have
a Material Adverse Effect.
(r) All
partnership, corporate and other proceedings taken or to be taken in connection
with the Transactions and all documents incidental thereto shall be reasonably
satisfactory in form and substance to Administrative Agent and its counsel,
and
Administrative Agent and such counsel shall have received all such counterpart
originals or certified copies of such documents as Administrative Agent may
reasonably request.
(s) The
Borrower shall have delivered to the Administrative Agent a description of
the
sources and uses of funding for the Transactions that is consistent with
the
terms of the Loan Documents and otherwise satisfactory to the Administrative
Agent.
The
Administrative Agent shall notify the Borrower and the Lenders of the Effective
Date, and such notice shall be conclusive and binding.
Section
5.02. Each
Credit Event.
The
obligation of each Lender to make a Loan on the occasion of any Borrowing,
and
of the Issuing Bank to issue, amend, renew or extend any Letter of Credit,
is
subject to the satisfaction of the following conditions:
(a) The
representations and warranties of each Credit Party set forth in 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 that such representations
and warranties specifically refer to an earlier date, in which case they
shall
be true and correct in all material respects as of such earlier date and
taking
into account any amendments to the schedules or exhibits as a result of any
disclosures made in writing by the Borrower to the Administrative Agent after
the Effective Date and approved by the Administrative Agent and Required
Lenders
in writing.
(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
Default shall have occurred and be continuing.
(c) 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
Borrowing Base Deficiency exists or would be caused thereby.
Each
Borrowing and each issuance, amendment, renewal or extension of a 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 paragraphs (a),
(b)
and (c) of this Section.
Article
VI
Affirmative
Covenants
Until
the
Aggregate Commitment has expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each Credit Party covenants and agrees
with the Lenders that:
Section
6.01. Financial
Statements; Other Information.
The
Borrower will furnish to the Administrative Agent and each Lender:
(a) as
soon
as available and in any event within 120 days after the end of each fiscal
year
of the Borrower, the audited consolidated balance sheet and related statements
of operations, stockholders’ equity and cash flows of the Borrower and its
Consolidated Subsidiaries 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 a firm of independent public accountants reasonably acceptable
to
Administrative Agent (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) as
soon
as available and in any event within 45 days after the end of each fiscal
quarter of the Borrower, the consolidated balance sheet and related statements
of operations, stockholders’ equity and cash flows of the Borrower and its
Consolidated Subsidiaries 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) concurrently
with any delivery of financial statements under clause (a) or (b) above, a
certificate in a form reasonably acceptable to Administrative Agent signed
by a
Financial Officer of the Borrower (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, and
(ii) setting forth reasonably detailed calculations demonstrating
compliance with Section
7.12;
(d) 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 Securities and Exchange Commission, or any Govern-mental
Authority succeeding to any or all of the functions of said Commission, or
with
any national securities exchange, or distributed by the Borrower to its
share-holders generally, as the case may be;
(e) as
soon
as available, and in any event no later than March 1 and September 1 of each
year, the Reserve Reports required on such dates pursuant to Section
3.01;
(f) together
with the Reserve Reports required under clause (e) above, (i) a report, in
reasonable detail, setting forth the Swap Agreements then in effect, the
notional volumes of and prices for, on a monthly basis and in the aggregate,
the
Crude Oil and Natural Gas for each such Swap Agreement and the term of each
such
Swap Agreement; (ii) a true and correct schedule of the Mortgaged Properties,
(iii) the percentage of the Engineered Value of the Borrowing Base that the
Mortgaged Properties represent and (iv) a description of the additional Oil
and
Gas Interests, if any, to be mortgaged by the Credit Parties to comply with
Section
6.09
and the
Engineered Value thereof;
(g) as
soon
as available and in any event within 45 days after the end of each fiscal
quarter of the Borrower, the following reports and information for such fiscal
quarter: production reports for the Borrowing Base Properties, commodity prices,
sales revenues, operating expenses for the Borrowing Base Properties and
production taxes, in form reasonably acceptable to the Administrative
Agent;
(h) as
soon
as available and in any event within 60 days after the beginning of each fiscal
year of the Borrower, Projections for such fiscal year on a month to month
basis; and
(i) promptly
following any request therefor, including any request made following the receipt
by the Administrative Agent of notice of any Disposition pursuant to
Section
7.04(c),
such
other information regarding the operations, business affairs and financial
condition of any Credit Party, or compliance with the terms of this Agreement,
as the Administrative Agent or any Lender may reasonably request, including
information relating to any Borrowing Base Properties in connection with any
Disposition pursuant to Section
7.04(c).
Documents
required to be delivered pursuant to Section
6.01(a),
Section
6.01(b)
or
Section
6.01(d)
(to the
extent any such documents are included in materials otherwise filed with the
Securities
and Exchange Commission) may be delivered electronically and if so delivered,
shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at ▇▇▇.▇▇▇▇▇▇▇.▇▇;
or
(ii) on which such documents are posted on the Borrower’s behalf on the
website of the Securities and Exchange Commission or any other Internet or
intranet website, if any, to which each Lender and the Administrative Agent
have
access (whether a commercial, third-party website or whether sponsored by
the
Administrative Agent); provided
that the
Borrower shall notify the Administrative Agent, which shall then promptly
notify
each Lender (by telecopier or electronic mail) of the posting of any such
documents, and the Borrower shall provide to the Administrative Agent by
electronic mail electronic versions (i.e.,
soft
copies) of such documents. Notwithstanding anything contained herein, in
every
instance the Borrower shall be required to provide paper copies of the
compliance certificate required by Section
6.01(c)
to the
Administrative Agent, which shall then promptly furnish such compliance
certificate to the Lenders. Except for such compliance certificates, the
Administrative Agent shall have no obligation to request the delivery or
to
maintain copies of the documents referred to above, and in any event shall
have
no responsibility to monitor compliance by the Borrower with any such request
for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.
Section
6.02. Notices
of Material Events.
The
Borrower will furnish to the Administrative Agent prompt written notice of
the
following:
(a) the
occurrence of any Default of which it has knowledge;
(b) the
filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority of which it has knowledge against or
affecting any Credit Party 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 the Restricted Subsidiaries in an aggregate amount exceeding
$500,000;
(d) any
written notice or written claim from any Governmental Authority to the effect
that any Credit Party is or may be liable to any Person as a result of the
release by any Credit Party, or any other Person of any Hazardous Materials
into
the environment, which could reasonably be expected to have a Material Adverse
Effect; and
(e) any
other
development of which it has knowledge that results in, or could reasonably
be
expected to result in, a Material Adverse Effect.
Each
notice delivered under this Section shall be accompanied by a statement of
a
Financial Officer or other executive officer of the Borrower 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
6.03. Existence;
Conduct of Business.
The
Borrower will, and will cause each Restricted Subsidiary to, do or cause
to be
done all things necessary to preserve, renew and keep
in
full
force and effect (a) its legal existence and (b) except where the failure
to do
so could not reasonably be excepted to result in a Material Adverse Effect,
the
rights, licenses, permits, privileges and franchises material to the conduct
of
its business; provided
that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section
7.03.
Section
6.04. Payment
of Obligations.
The
Borrower will, and will cause each Restricted Subsidiary to, pay its
obligations, including Tax liabilities, that, if not paid, could reasonably
be
expected to result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof
is
being contested in good faith by appropri-ate proceedings, (b) the Borrower
or
such Restricted 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.
Section
6.05. Maintenance
of Properties; Insurance.
The
Borrower will, and will cause each Restricted Subsidiary and use commercially
reasonable efforts to cause each operator of Borrowing Base Properties
to, keep
and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted. The
Borrower shall maintain in effect all insurance required by this Agreement
and
the Collateral Documents, and the Borrower agrees to comply with the
representations and warranties set forth in Section
4.16.
The
Borrower agrees to provide the Administrative Agent with certificates or
binders
evidencing such insurance coverage on an annual basis, and, if requested
by the
Administrative Agent, the Borrower further agrees to promptly furnish the
Administrative Agent with copies of all renewal notices and copies of receipts
for paid premiums. The Borrower shall provide the Administrative Agent
with
certificates or binders evidencing insurance coverage pursuant to all renewal
or
replacement policies of insurance no later than the seventh day before
any such
existing policy or policies should expire (or, in the event such certificates
or
binders are unavailable to the Borrower on such day, within one Business
Day of
receipt of such certificates or binders of the Borrower).
Section
6.06. Books
and Records; Inspection Rights.
The
Borrower will keep proper consolidated books of record and account in accordance
with GAAP. Upon reasonable prior notice, the Borrower shall allow the
Administrative Agent’s employees and agents access to its books and records and
properties during normal business hours to perform field audits from time
to
time (provided,
that so
long as no Event of Default has occurred and is continuing, there may be
no more
than two such field audits in any calendar year). The Borrower shall pay
all
reasonable costs and expenses associated with such field audits. The Borrower
shall provide the Administrative Agent with such other information as the
Administrative Agent may reasonably request from time to time, subject
in all
cases to any confidentiality restrictions that may be applicable to the
Borrower
and its Subsidiaries and to any confidentiality restrictions that the Borrower
reasonably imposes on the Persons receiving such information; provided,
however,
that
neither the Borrower nor any of its Subsidiaries shall be required to disclose
to the Administrative Agent or any agents or representatives thereof any
information which is the subject of attorney-client privilege or attorney’s work
product privilege properly asserted by the applicable Person to prevent
the loss
of such privilege in connection with such information; and provided,
further,
that
the Borrower will use commercially reasonable efforts to furnish such
information (excluding information covered by confidentiality restrictions
in
agreements relating
to
seismic, geologic or geophysical data or similar technical and business
matters
relating to the exploration for oil and gas), which requirement shall
be
satisfied if the Administrative Agent is offered the opportunity to review
such
confidential information by executing or otherwise becoming a party to
the
confidentiality restrictions on substantially the same terms (including
any
standstill provisions) as are applicable to the Borrower.
Section
6.07. Compliance
with Laws.
The
Borrower will, and will cause each Restricted 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
6.08. Use
of
Proceeds and Letters of Credit.
The
proceeds of the Loans will be used only (a) repay all of the outstanding
principal balance of and accrued unpaid interest on the Existing Revolving
Facility, (b) to satisfy reimbursement obligations with respect to Letters
of
Credit, (c) to pay the fees, expenses and transaction costs of the Transactions,
(d) to finance the working capital needs of the Borrower and the Restricted
Subsidiaries, including capital expenditures, and (e) for general corporate
purposes of the Borrower and the Guarantors, in the ordinary course of
business,
including the exploration, acquisition and development of Oil and Gas
Interests.
No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the regulations
of the Board, including Regulations T, U and X. Letters of Credit will
be issued
only to support general corporate purposes of the Borrower and the
Subsidiaries.
Section
6.09. Mortgages.
From
time to time as requested by the Administrative Agent and in any event
to the
extent required under the Intercreditor Agreement and no later than sixty
(60)
days after the Effective Date, the Borrower will, and will cause each
Guarantor
to, execute and deliver to the Administrative Agent, for the benefit
of the
Secured Parties, Mortgages in form and substance reasonably acceptable
to the
Administrative Agent together with such other assignments, conveyances,
amendments, agreements and other writings, including, without limitation,
UCC-1
financing statements (each duly authorized and executed, as applicable)
as the
Administrative Agent shall reasonably deem necessary or appropriate to
grant,
evidence and perfect a valid first priority Lien, subject only to Permitted
Liens, in (a) not less than eighty percent (80%) of the Engineered Value
of all
Borrowing Base Properties (excluding any Oil and Gas Interests in the
area known
as the Camp Hill Field in ▇▇▇▇▇▇▇▇ County, Texas) and (b) not less than
eighty
percent (80%) of the Engineered Value of the Borrower’s and each Guarantor’s Oil
and Gas Interests in the area known as the Camp Hill Field in ▇▇▇▇▇▇▇▇
County,
Texas.
Section
6.10. Title
Data.
As soon
as available and in any event no later than six months after the Effective
Date,
the Borrower will, and will cause each Guarantor to, deliver to the
Administrative Agent such opinions of counsel and other evidence of title
as the
Administrative Agent shall deem reasonably necessary or appropriate to
verify
(i) such Credit Party’s title to not less than seventy-five percent (75%) of the
Engineered Value of the Borrowing Base Properties (excluding any Oil
and Gas
Interests in the area known as the Camp Hill Field in ▇▇▇▇▇▇▇▇ County,
Texas),
(ii) such Credit Party’s title to not less than fifty percent (50%) of the
Engineered Value of the Oil and Gas Interests in the area known as the
Camp Hill
Field in ▇▇▇▇▇▇▇▇ County, Texas and (iii) the validity, perfection and
priority
of the Liens created by the
Mortgages
and such other matters regarding the Mortgages as Administrative Agent
shall
reasonably request. The Borrower will, and will cause each Guarantor
to, use
commercially reasonable efforts to deliver to the Administrative Agent,
or its
counsel, within 120 days after the Effective Date, reasonably satisfactory
evidence demonstrating that the Borrower or such Guarantor, as the
case may be,
has performed all of the title curative actions described on Schedule
6.10. To
the extent any such title curative action is not performed within 120
days of
the Effective Date, the Administrative Agent may, in its reasonable
discretion,
reduce the Borrowing Base and the Conforming Borrowing Base to account
for such
failure to perform such title curative action and such reduction shall
be
restored upon the performance of such title curative action to the
reasonable
satisfaction of the Administrative Agent.
Section
6.11. Swap
Agreements.
The
Borrower will maintain all hedge, collar and swap transactions that
are in
effect as of the Effective Date without waiver or amendment of any
terms or
provisions thereof. Upon the request of the Required Lenders, each
of Borrower
and each Restricted Subsidiary will take all actions necessary to cause
all of
its right, title and interest in each Swap Agreement to which it is
a party and
the hedge transactions related thereto to be collaterally assigned
to the
Administrative Agent, for the benefit of the Secured Parties (unless
such
assignment is subject to the prior consent of any counterparty to such
Swap
Agreement in which event each Credit Party that is a party to such
Swap
Agreement shall use its commercially reasonable efforts to obtain such
consent),
and shall, if requested by the Administrative Agent or the Required
Lenders, use
its commercially reasonable efforts to cause each such agreement or
contract to
(a) expressly permit such assignment and (b) upon the occurrence of
any default
or event of default under such agreement or contract, (i) to permit
the Lenders
to cure such default or event of default and assume the obligations
of such
Credit Party under such agreement or contract and (ii) to prohibit the
termination of such agreement or contract by the counterparty thereto
if the
Lenders assume the obligations of such Credit Party under such agreement
or
contract and the Lenders take the actions required under the foregoing
clause
(i). Upon the request of the Administrative Agent, the Borrower shall,
within
thirty (30) days of such request, provide to the Administrative Agent
and each
Lender copies of all agreements, documents and instruments evidencing
the Swap
Agreements not previously delivered to the Administrative Agent and
Lenders,
certified as true and correct by a Financial Officer of the Borrower,
and such
other information regarding such Swap Agreements as the Administrative
Agent and
Lenders may reasonably request.
Section
6.12. Operation
of Oil and Gas Interests.
(a) The
Borrower will, and will cause each Restricted Subsidiary to, maintain,
develop
and operate its Oil and Gas Interests in a good and workmanlike manner,
and
observe and comply with all of the terms and provisions, express or
implied, of
all oil and gas leases relating to such Oil and Gas Interests so long
as such
Oil and Gas Interests are capable of producing Hydrocarbons and accompanying
elements in paying quantities, except where such failure to comply
could not
reasonably be expected to have a Material Adverse Effect.
(b) The
Borrower will, and will cause each Restricted Subsidiary to, comply
in all
respects with all contracts and agreements applicable to or relating
to its Oil
and Gas Interests or the production and sale of Hydrocarbons and accompanying
elements
therefrom,
except to the extent a failure to so comply could not reasonably
be expected to
have a Material Adverse Effect.
Section
6.13. Restricted
Subsidiaries.
In the
event any Person is or becomes a Restricted Subsidiary after the
Effective Date,
the Borrower will (a) promptly take all action necessary to comply
with
Section
6.14,
and,
with respect to each such Restricted Subsidiary, provide to the Administrative
Agent the information required pursuant to Section
4.13
for
Restricted Subsidiaries existing on the Effective Date, (b) promptly
take all
such action and execute and deliver, or cause to be executed and
delivered, to
the Administrative Agent all such documents, opinions, instruments,
agreements,
and certificates similar to those described in Section
5.01(b)
and
Section
5.01(c)
that the
Administrative Agent may request, and (c) promptly cause such Restricted
Subsidiary to (i) become a party to this Agreement and Guarantee
the Obligations
by executing and delivering to the Administrative Agent a Counterpart
Agreement
in the form of Exhibit C, and (ii) to the extent required to comply
with
Section
6.09,
grant
to the Administrative Agent, for the benefit of the Secured Parties,
a security
interest in all of such Restricted Subsidiary’s Oil and Gas Interests to secure
the Obligations. Upon delivery of any such Counterpart Agreement
to the
Administrative Agent, notice of which is hereby waived by each Credit
Party,
such Restricted Subsidiary shall be a Guarantor and shall be as fully
a party
hereto as if such Restricted Subsidiary were an original signatory
hereto. Each
Credit Party expressly agrees that its obligations arising hereunder
shall not
be affected or diminished by the addition or release of any other
Credit Party
hereunder. This Agreement shall be fully effective as to any Credit
Party that
is or becomes a party hereto regardless of whether any other Person
becomes or
fails to become or ceases to be a Credit Party hereunder. With respect
to each
such Restricted Subsidiary, the Borrower shall promptly send to the
Administrative Agent written notice setting forth with respect to
such Person
the date on which such Person became a Restricted Subsidiary of the
Borrower,
and supplement the data required to be set forth in the Schedules
to this
Agreement as a result of the acquisition or creation of such Restricted
Subsidiary; provided that such supplemental data must be reasonably
acceptable
to the Administrative Agent and Required Lenders.
Section
6.14. Pledged
Equity Interests.
On
the
date hereof and at the time hereafter that any Restricted Subsidiary
of the
Borrower is created or acquired or any Unrestricted Subsidiary becomes
a
Restricted Subsidiary, the Borrower and the Subsidiaries (as applicable)
shall
execute and deliver to the Administrative Agent for the benefit of
the Secured
Parties, a Pledge Agreement, in form and substance reasonably acceptable
to the
Administrative Agent, from the Borrower and/or the Subsidiaries (as
applicable)
covering all Equity Interests owned by the Borrower or such Restricted
Subsidiaries in such Restricted Subsidiaries, together with all certificates
(or
other evidence reasonably acceptable to Administrative Agent) evidencing
the
issued and outstanding Equity Interests of each such Restricted Subsidiary
of
every class owned by such Credit Party (as applicable) which, if
certificated,
shall be duly endorsed or accompanied by stock powers executed in
blank (as
applicable), as Administrative Agent shall reasonably deem necessary
or
appropriate to grant, evidence and perfect a first priority security
interest in
the issued and outstanding Equity Interests owned by Borrower or
any Restricted
Subsidiary in each Restricted Subsidiary.
Section
6.15. Production
Proceeds and Bank Accounts.
Except
as otherwise provided in Section
4.18,
Subject
to the terms and conditions of the Mortgages, each Credit Party shall
cause
all
production proceeds and revenues attributable to the Oil and Gas
Interests of
such Credit Party to be paid and deposited into deposit accounts
of such Credit
Party maintained with the Administrative Agent or with other financial
institutions acceptable to the Administrative Agent and cause all
such deposit
accounts at such other financial institutions to be subject to
a control
agreement in favor of the Administrative Agent for the benefit
of the Secured
Parties, in form and substance reasonably satisfactory to the Administrative
Agent (each, an “Eligible
Account”).
Section
6.16. Existing
Swap Agreements.
With
respect to each Swap Agreement in effect on the Effective Date
and secured by
the assets and properties that secure the Existing Revolving Facility,
the
Borrower shall, on or before June 2, 2006, either (a) terminate
such Swap
Agreement and pay in full any and all Indebtedness and liabilities
arising from
such termination or (b) novate such Swap Agreement on terms and
conditions
reasonably satisfactory to the Administrative Agent.
Article
VII
Negative
Covenants
Until
the
Aggregate Commitment has expired or terminated and the principal
of and interest
on each Loan and all fees payable hereunder have been paid in full
and all
Letters of Credit have expired or terminated and all LC Disbursements
shall have
been reimbursed, each Credit Party covenants and agrees with the
Lenders
that:
Section
7.01. Indebtedness.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries
to,
create, incur, assume or permit to exist any Indebtedness, except:
(a) the
Obligations;
(b) Indebtedness
existing on the date hereof and set forth in Schedule 7.01 and extensions,
renewals and replacements of any such Indebtedness that do not
increase the
outstanding principal amount thereof;
(c) Indebtedness
of the Borrower to any Guarantor and of any Guarantor to the Borrower
or any
other Guarantor; provided
that (i)
all such Indebtedness shall be unsecured and subordinated in right
of payment to
the payment in full of all of the Obligations in a manner and on
terms and
conditions reasonably satisfactory to the Administrative Agent
and (ii) all such
Indebtedness is evidenced by promissory notes in form and substance
reasonably
satisfactory to the Administrative Agent, and such promissory notes
are subject
to a first priority security interest in favor of the Administrative
Agent for
the benefit of the Secured Parties on terms and conditions reasonably
satisfactory to the Administrative Agent;
(d) Guarantees
by any Credit Party of the Indebtedness of any other Credit Party;
(e) Indebtedness
of the Borrower and the Restricted Subsidiaries incurred to finance
the
acquisition, construction or improvement of any fixed or capital
assets,
including Capital Lease Obligations, and any Indebtedness assumed
in connection
with
the
acquisition of any such assets or secured by a Lien on any such
assets prior to
the acquisition thereof, and extensions, renewals and replacements
of any such
Indebtedness that do not increase the outstanding principal amount
thereof;
provided
that (i)
such Indebtedness is incurred prior to or within 180 days after
such acquisition
or the completion of such construction or improvement and (ii)
the aggregate
principal amount of Indebtedness permitted by this Section
7.01(e)
together
with the aggregate principal amount of Indebtedness permitted
under Section
7.01(f)
and
Section
7.01(k)
does not
exceed $5,000,000 at any time outstanding;
(f) Indebtedness
arising under any performance bond, or letter of credit obtained
for similar
purposes or any reimbursement obligations in respect thereof,
entered into in
the ordinary course of business;
(g) Indebtedness
under Swap Agreements to the extent permitted under Section
7.06;
(h) subject
to any adjustment to the Borrowing Base and Conforming Borrowing
Base required
under Section
3.05,
Indebtedness under the Second Lien Facility, including Guarantees
thereof by the
Restricted Subsidiaries, in an aggregate principal amount not
to exceed
$175,000,000 at any time outstanding;
(i) Indebtedness
consisting of Non-Recourse Debt in an aggregate principal amount
not to exceed
$25,000,000 at any time outstanding; provided
that no
Credit Party shall incur any Non-Recourse Debt after the Effective
Date without
the Required Lenders’ prior written consent to the relevant documentation
establishing or evidencing the non-recourse nature and amount
of such
Non-Recourse Debt, which consent shall not be unreasonably withheld;
(j) Indebtedness
of any Person that becomes a Restricted Subsidiary after the
date hereof;
provided
that (i)
such Indebtedness exists at the time such Person becomes a Restricted
Subsidiary
and is not created in contemplation of or in connection with
such Person
becoming a Restricted Subsidiary and (ii) the aggregate principal
amount of
Indebtedness permitted by this Section
7.01(j)
together
with the aggregate principal amount of the Indebtedness permitted
under
Section
7.01(e)
and
Section
7.01(k)
does not
exceed $5,000,000 at any time outstanding; and
(k) other
unsecured Indebtedness of the Credit Parties in an aggregate
principal amount
that together with the aggregate principal amount of the Indebtedness
permitted
under Section
7.01(e)
and
Section
7.01(j)
do not
exceed $5,000,000.
Section
7.02. Liens.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries
to,
create, incur, assume or permit to exist any Lien on any property
or asset now
owned or hereafter acquired by it, or assign or sell any income
or revenues
(including accounts receivable) or rights in respect of any thereof,
except:
(a) any
Lien
created pursuant to this Agreement or the Security Instruments;
(b) Permitted
Encumbrances;
(c) any
Lien
on any property or asset of the Borrower or any Restricted Subsidiary existing
on the date hereof and set forth in Schedule 7.02; provided
that (i)
such Lien shall not apply to any other property or asset of the Borrower or
any
other Restricted Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;
(d) any
Lien
existing on any property or asset (together with any receivables, intangibles
and proceeds related thereto) in prior to the acquisition thereof by the
Borrower or any Restricted Subsidiary or existing on any property or asset
of
any Person that becomes a Restricted Subsidiary after the date hereof prior
to
the time such Person becomes a Restricted Subsidiary; provided
that
(i) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Restricted Subsidiary, as the case may
be,
(ii) such Lien shall not apply to any other property or assets of the
Borrower or any other Restricted Subsidiary or to any of the Mortgaged
Properties and (iii) such Lien shall secure only those obligations or
Indebtedness which it secures on the date of such acquisition or the date such
Person becomes a Restricted Subsidiary, as the case may be, and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof and such obligations or Indebtedness is permitted under this
Agreement;
(e) Liens
on
fixed or capital assets (together with any receivables, intangibles and proceeds
related thereto) acquired, constructed or improved by the Borrower or any
Restricted Subsidiary; provided
that
(i) such Liens, secure Indebtedness permitted under this Agreement,
(ii) such Liens and the Indebtedness secured thereby are incurred prior to
or within 180 days after such acquisition or the completion of such
construction or improvement, (iii) the Indebtedness secured thereby does
not exceed the cost of acquiring, constructing or improving such fixed or
capital assets and (iv) such security interests shall not apply to any
other property or assets of the Borrower or any other Restricted Subsidiaries
or
to any of the Mortgaged Properties;
(f) subject
to the Intercreditor Agreement, Liens securing the Second Lien Obligations;
provided
that
such Liens shall not encumber any property or asset that is not subject to
a
lien of the appropriate priority in favor of or for the benefit of the Secured
Parties to secure the Obligations;
(g) Liens
securing the obligations and liabilities of the Borrower or any Restricted
Subsidiary under Swap Agreements to the extent permitted under, and subject
to
the limitations set forth in, Section
7.06;
and
(h) Liens
granted prior to the Effective Date to secure Non-Recourse Debt, outstanding
as
of the Effective Date, or Liens granted after the date of this Agreement to
secure Non-Recourse Debt permitted under Section
7.01(i).
Section
7.03. Fundamental
Changes.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries to,
engage to any material extent in any business other than businesses of the
type
conducted by the Borrower and its Restricted Subsidiaries on the date of
execution of
this
Agreement and after giving effect to the Transactions and businesses reasonably
related thereto. The Borrower will not, nor will it permit any of its Restricted
Subsidiaries to, merge, dissolve, liquidate, consolidate with or into another
Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as
no
Default exists or would result therefrom:
(a) the
Borrower may merge or consolidate with any other Person; provided
that the
continuing or surviving person is the Borrower;
(b) any
Restricted Subsidiary may merge or consolidate with (i) the Borrower;
provided
that the
Borrower shall be the continuing or surviving Person, or (ii) any other Person;
provided
that the
continuing or surviving Person is a Restricted Subsidiary;
(c) any
Restricted Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or to another
Restricted Subsidiary; and
(d) any
Restricted Subsidiary may participate in a merger or consolidation as part
of a
Disposition of such Restricted Subsidiary that is permitted under Section
7.04.
Section
7.04. Dispositions.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries
to,
make any Disposition, except:
(a) Dispositions
permitted by Section
7.03;
(b) Dispositions
made between Scheduled Redeterminations of the Borrowing Base having an
Engineered Value not exceeding, in the aggregate for the Borrower and its
Restricted Subsidiaries taken as a whole, 5% of the Borrowing Base most recently
determined;
(c) subject
to the prior written consent of the Required Lenders, any other Disposition
of
Borrowing Base Properties, provided that no such consent is required if (i)
the
Borrower delivers prior written notice of such Disposition to the Administrative
Agent at least 30 days prior to the date of such Disposition specifying the
Borrowing Base Properties to be included in such Disposition, the proposed
closing date for such Disposition and the consideration to be received by
the
Borrower and any Guarantors, as the case may be, as a result of such
Disposition, and (ii) the Credit Parties prepay the Borrowings pursuant to
Section
2.10(b)
in an
amount sufficient to eliminate any Borrowing Base Deficiency as determined
by
the Required Lenders after the receipt of such notice by the Administrative
Agent and in such Lenders’ complete and sole discretion using such
methodologies, assumptions and discount rates as such Lenders customarily
use in
assigning collateral value to Oil and Gas Interests
as of
such date of determination;
(d) Dispositions
consisting of assignments of customary overrides, royalties, working interests
in exchange for a commitment of the transferee to bear a
interests
relate, and similar ordinary course transactions;
(e) Permitted
Dispositions;
(f) the
Disposition of Oil and Gas Interests and other properties described on
Schedule
7.04; and
(g) Dispositions
of any assets not constituting Borrowing Base Properties or the proceeds
thereof;
provided,
however,
that
any Disposition pursuant to clauses (b) through (f) shall be for fair
market.
Section
7.05. Investments,
Loans, Advances, Guarantees and Acquisitions.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries
to,
purchase, hold or acquire (including pursuant to any merger with any Person
that
was not a wholly owned Restricted Subsidiary prior to such merger) any
Equity
Interests, evidences of Indebtedness or other securities (including any
option,
warrant or other right to acquire any of the foregoing) of, make or permit
to
exist any loans or advances to, Guarantee any Indebtedness of, or make
or permit
to exist any investment or any other interest in, any other Person, or
purchase
or otherwise acquire (in one transaction or a series of transactions) any
assets
of any other Person constituting a business unit, except:
(a) Permitted
Investments;
(b) investments
by the Borrower in the Equity Interests of any Restricted Subsidiary;
provided
that
none of the proceeds of any such investment are used to make an investment
in
Pinnacle or any Person other than a Restricted Subsidiary;
(c) investments
by the Borrower or any Guarantor consisting of intercompany Indebtedness
permitted under Section
7.01(c)
provided
that none of the proceeds of any such investment are used to make an investment
in Pinnacle or any Person other than a Restricted Subsidiary;
(d) Guarantees
constituting Indebtedness permitted by Section
7.01;
(e) investments
consisting of Swap Agreements to the extent permitted under Section
7.06;
and
(f) Loans
or
advances to employees in the ordinary course of business in an aggregate
amount
for all employees of the Borrower and its Subsidiaries not in excess of
$750,000
at any one time outstanding
(g) trade
credits and accounts arising in the ordinary course of business;
(h) investments
made as a result of the receipt of non-cash considerations from a Disposition
that was made pursuant to and in compliance with this Agreement;
(i) investments
made in any debtor of the Borrower as a result of the receipt of stock,
obligations or securities in settlement of debts created in the ordinary course
of business and owing to the Borrower or any Restricted Subsidiary;
(j) investments
made pursuant to the requirements of farm-out, farm-in, joint operating, joint
venture or area of mutual interest agreements, gathering systems, pipelines
or
other similar or customary arrangements entered into the ordinary course of
business (including advances to operators under operating agreements entered
into by the Borrower in the ordinary course of business); provided that any
such
single investment in excess of $1,000,000 shall be approved by the Board of
Directors of the Borrower.
(k) investments
made in connection with the purchase, lease, or other acquisition of tangible
assets of any Person and investments made in connection with the purchase,
lease
or other acquisition of all or substantially all of the business, of any Person,
or all of the capital stock or other equity interests of any Person, or any
division, line of business or business unit of any Person (including (i) by
the
merger or consolidation of such Person into the Borrower or any Restricted
Subsidiary or by the merger of a Restricted Subsidiary into such Person and
(ii)
the purchase of proved reserves); provided that any newly acquired Subsidiary
shall promptly comply with the requirements of Section
6.13;
(l) investments
in Pinnacle existing as of the Effective Date; and
(m) any
other
investments in any Person having an aggregate fair market value (measured on
the
date each such investment was made and without giving effect to subsequent
changes in value), when taken together will all other investments made pursuant
to this clause (m) do not exceed $2,000,000.
Section
7.06. Swap
Agreements.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries to,
enter into or maintain any Swap Agreement, except the Swap Agreements required
under Section
6.11
and Swap
Agreements entered into in the ordinary course of business and not for
speculative purposes to (a) hedge or mitigate Crude Oil and Natural Gas price
risks to which the Borrower or any Restricted Subsidiary has actual exposure,
and (b) effectively cap, collar or exchange interest rates (from fixed to
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of any Credit
Party; provided
that
with respect to the preceding clause (a), (i) to the extent any such Swap
Agreements require any Credit Party to deliver money, assets or other security,
including letters of credit, against any event of nonperformance prior to actual
default by such Credit Party in the performance of its obligations thereunder
(excluding any such Swap Agreement with any Lender Counterparty that only
requires the delivery of the money, assets or other security required pursuant
to the Loan Documents), the aggregate value of all money, assets or other
security, including the amount drawn or which could be drawn under any such
letters of credit, delivered by the Credit Parties, taken as a whole, shall
not
exceed $10,000,000 in the aggregate at any time, and the term of any transaction
entered into after the Effective Date under any such Swap Agreements requiring
such delivery of money, assets or other security shall not exceed twelve (12)
months, (ii) such Swap Agreements (at the time each transaction under such
Swap
Agreement is entered into) would not cause the aggregate notional amount of
Crude
Oil
and
Natural Gas under all Swap Agreements then in effect (including the Swap
Agreements required under Section
6.11)
to
exceed (x) eighty-five percent (85%) of the “forecasted production from proved
producing reserves” (as defined below) of the Borrower and the Restricted
Subsidiaries for the first two years of the forthcoming four year period
or (y)
fifty percent (50%) of the “forecasted production from proved producing
reserves” of the Borrower and the Restricted Subsidiaries for the last two years
of the forthcoming four year period, and (iii) the maximum duration of any
transaction under such Swap Agreements does not exceed 48 months. As used
in
this clause, “forecasted production from proved producing reserves” means the
forecasted production of Crude Oil and Natural Gas as reflected in the most
recent Reserve Report delivered to the Administrative Agent pursuant to
Section
6.01,
after
giving effect to any pro forma adjustments for the consummation of any
Acquisitions or Dispositions of Oil and Gas Interests and production from
new
▇▇▇▇▇ completed since the effective date of such Reserve Report. Once the
Borrower or any Restricted Subsidiaries enters into a Swap Agreement or any
hedge transaction pursuant to any Swap Agreement, the terms and conditions
of
such Swap Agreement and such hedge transaction may not be amended or modified,
nor may such Swap Agreement or hedge transaction be cancelled without the
prior
written consent of Required Lenders.
Section
7.07. Restricted
Payments.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries
to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except that (a) the Borrower may declare and pay dividends with
respect
to its Equity Interests payable solely in additional shares of its common
stock,
(b) any Restricted Subsidiary may make Restricted Payments to the Borrower
or
any Guarantor, (c) the Borrower may make cash payments in lieu of issuing
fractional shares in an aggregate amount not exceeding $200,000 during the
term
of this Agreement, and (d) the Borrower may declare and pay distributions
effecting “poison pill” rights plans provided that any securities or rights so
distributed have a nominal fair market value at the time of
declaration.
Section
7.08. Transactions
with Affiliates.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries
to,
sell, lease or otherwise transfer any property or assets to, or purchase,
lease
or otherwise acquire any property or assets from, or otherwise engage in
any
other transactions with, any of its Affiliates, except (a) in the ordinary
course of business at prices and on terms and conditions not less favorable
to
the Borrower or such Restricted Subsidiary than could be obtained on an
arm’s-length basis from unrelated third parties, (b) transactions between or
among the Borrower and its Restricted Subsidiaries not involving any other
Affiliate, (c) transactions described on Schedule 7.08, (d) any Restricted
Payment permitted by Section
7.07,
(e)
investments permitted under Section
7.05,
(f)
with respect to any Person serving as an officer, director, employee or
consultant of the Borrower or any Restricted Subsidiary, (i) the payment
of
reasonable compensation, benefits or indemnification liabilities in connection
with his or her services in such capacity provided that the payment of any
such
compensation, benefits or indemnification liabilities are approved by a majority
of the disinterested members of the Board of Directors of the Borrower or
by the
Compensation Committee of the Borrower, (iii) the making of advances for
travel
or other business expenses in the ordinary course of business or (iii) such
Person’s participation in any benefit or compensation plan; and (g) the
repayment of Indebtedness permitted under Section
7.01(c).
Section
7.09. Restrictive
Agreements.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into, incur or permit to exist any agreement
or
other arrangement that prohibits, restricts or imposes any condition upon (a)
the ability of the Borrower or any Restricted Subsidiary to create, incur or
permit to exist any Lien upon any of its property or assets (other than (1)
Equity Interests in any Unrestricted Subsidiary, (2) other investments in Equity
Interests of joint ventures permitted under Section
7.05(m),
(3)
investments permitted under Section
7.05(j)
if such
restriction or conditions apply only to the property or assets that are the
subject of such investment and (4) unless the value of such Equity Interests
are
included in the determination of the Borrowing Base, the investments permitted
under Section
7.05(l)),
or (b)
the ability of any Restricted Subsidiary to pay dividends or other distributions
with respect to any of its Equity Interests or to make or repay loans or
advances to the Borrower or any Restricted Subsidiary or to Guarantee
Indebtedness of the Borrower or any Restricted Subsidiary; provided
that (i)
the foregoing shall not apply to restrictions and conditions imposed by law
or
by this Agreement, (ii) the foregoing shall not apply to restrictions and
conditions set forth in the Second Lien Facility Documents, (iii) the foregoing
shall not apply to restrictions and conditions existing on the date hereof
identified on Schedule 7.09 (but shall apply to any extension or renewal of,
or
any amendment or modification expanding the scope of, any such restriction
or
condition), (iv) clause (a) of the foregoing shall not apply to restrictions
or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement (other than the Second Lien Facility) if such restrictions
or
conditions apply only to the property or assets securing such Indebtedness,
(v)
clause (a) of the foregoing shall not apply to customary provisions in leases
and other contracts restricting the assignment thereof (other than oil, gas
and
mineral leases constituting Mortgaged Properties), (vi) existing
restrictions with respect to a Person acquired by the Borrower or any of its
Restricted Subsidiaries (except to the extent such restrictions were put in
place in connection with or in contemplation of such acquisition), which
restrictions are not applicable to any Person, or the properties or assets
of
any Person, other than the Person, or the property or assets of the Person,
so
acquired; and (vii) any restriction with respect to Equity Interests of a
Restricted Subsidiary imposed pursuant to an agreement entered into for the
sale
or disposition of such Equity Interests or any restriction with respect to
the
assets of a Credit Party imposed pursuant to an agreement entered into for
the
sale or disposition of such assets or all or substantially all the Equity
Interests of such Restricted Subsidiary pending the closing of such sale or
disposition.
Section
7.10. Disqualified
Stock.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries to,
issue any Disqualified Stock.
Section
7.11. Amendments
to Organizational Documents and Fiscal Year.
The
Borrower will not, nor will it permit any of its Restricted Subsidiaries to,
enter into or permit any modification or amendment of, or waive any material
right or obligation of any Restricted Subsidiary under the Organizational
Documents of any Restricted Subsidiary that would materially and adversely
affect the voting rights or relative priority of any Equity Interests of any
Restricted Subsidiary. The Borrower will not, nor will it permit any of its
Restricted Subsidiaries to, change its fiscal year.
Section
7.12. Financial
Covenants.
(a) Consolidated
Current Ratio.
The
Borrower will not permit the Consolidated Current Ratio to be less than 1.00
to
1.00 at any time.
(b) Leverage
Ratio.
(i) The
Borrower will not permit the ratio, determined as of the end of the fiscal
quarter ending June 30, 2006, of (A) Total Net Debt as of the end of such fiscal
quarter, to (B) Consolidated EBITDAX for the trailing four fiscal quarter period
ending on such date, to be greater than 3.50 to 1.0.
(ii) The
Borrower will not permit the ratio, determined as of the end of any fiscal
quarter ending on or after September 30, 2006, of (A) Total Net Debt as of
the
end of such fiscal quarter to (B) Consolidated EBITDAX for the trailing four
fiscal quarter period ending on such date, to be greater than 3.25 to
1.00.
For
purposes of determining the Borrower’s compliance with this Section
7.12(b),
Consolidated EBITDAX shall not include the net revenue attributable to any
assets that are subject to a Lien granted to secure the Non-Recourse
Debt.
Section
7.13. Sale
and Leaseback Transactions and other Off-Balance Sheet
Liabilities.
The
Borrower will not, nor will it permit any Restricted Subsidiary to, enter into
or suffer to exist any (i) Sale and Leaseback Transaction or (ii) any other
transaction pursuant to which it incurs or has incurred Off-Balance Sheet
Liabilities, except for Swap Agreements permitted under the terms of
Section
7.06
and
Advance Payment Contracts; provided,
that
the
aggregate amount of all Advance Payments received by any Credit Party that
have
not been satisfied by delivery of production at any time does not exceed, in
the
aggregate $1,000,000.
Section
7.14. Second
Lien Facility Restrictions.
The
Borrower will not, nor will it permit any Restricted Subsidiary to, (a) except
for the regularly scheduled payments of principal and interest required under
the Second Lien Facility Documents, directly or indirectly, retire, redeem,
defease, repurchase or prepay prior to the scheduled due date thereof any part
of the principal of, or interest on, the Second Lien Loans, or (b) except as
otherwise permitted under the Intercreditor Agreement, enter into or permit
any
supplement, modification or amendment of, or waive any right or obligation
of
any Person under, any Second Lien Document.
Article
VIII
Guarantee
of Obligations
Section
8.01. Guarantee
of Payment.
Each
Guarantor unconditionally and irrevocably guarantees to the Administrative
Agent
for the benefit of the Lenders and the Lender Counterparties, the punctual
payment of all Obligations now or which may in the future be owing by the
Borrower under the Loan Documents and all Obligations which may now or which
may
in the future be owing by the Borrower or any other Guarantor to any Lender
Counterparty under any Swap Agreement (the “Guaranteed
Liabilities”).
This
Guarantee is a guaranty of payment and not of collection only. The
Administrative Agent shall not be required to exhaust any right or remedy or
take any action against the Borrower or any other Person or any collateral.
The
Guaranteed Liabilities include interest accruing after the commencement of
a
proceeding
under
bankruptcy, insolvency or similar laws of any jurisdiction at the rate or
rates
provided in the Loan Documents, or the Swap Agreements between any Credit
Party
and any Lender Counterparty, as the case may be, regardless of whether such
interest is an allowed claim. Each Guarantor agrees that, as between the
Guarantor and the Administrative Agent, the Guaranteed Liabilities may be
declared to be due and payable for the purposes of this Guarantee
notwithstanding any stay, injunction or other prohibition which may prevent,
delay or vitiate any declaration as regards the Borrower or any other Guarantor
and that in the event of a declaration or attempted declaration, the Guaranteed
Liabilities shall immediately become due and payable by each Guarantor for
the
purposes of this Guarantee.
Section
8.02. Guarantee
Absolute.
Each
Guarantor guarantees that the Guaranteed Liabilities shall be paid strictly
in
accordance with the terms of this Agreement and the Swap Agreements to which
any
Lender Counterparty is a party. The liability of each Guarantor hereunder
is
absolute and unconditional irrespective of: (a) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Loan
Documents or the Guaranteed Liabilities, or any other amendment or waiver
of or
any consent to departure from any of the terms of any Loan Document or
Guaranteed Liability, including any increase or decrease in the rate of interest
thereon; (b) any release or amendment or waiver of, or consent to departure
from, any other guaranty or support document, or any exchange, release or
non-perfection of any collateral, for all or any of the Loan Documents or
Guaranteed Liabilities; (c) any present or future law, regulation or order
of
any jurisdiction (whether of right or in fact) or of any agency thereof
purporting to reduce, amend, restructure or otherwise affect any term of
any
Loan Document or Guaranteed Liability; (d) without being limited by the
foregoing, any lack of validity or enforceability of any Loan Document or
Guaranteed Liability; and (e) any other setoff, defense or counterclaim
whatsoever (in any case, whether based on contract, tort or any other theory)
with respect to the Loan Documents or the transactions contemplated thereby
which might constitute a legal or equitable defense available to, or discharge
of, the Borrower or a Guarantor.
Section
8.03. Guarantee
Irrevocable.
This
Guarantee is a continuing guaranty of the payment of all Guaranteed Liabilities
now or hereafter existing under this Agreement and such Swap Agreements to
which
any Lender Counterparty is a party and shall remain in full force and effect
until payment in full of all Guaranteed Liabilities and other amounts payable
hereunder and until this Agreement and the Swap Agreements are no longer
in
effect or, if earlier, when the Guarantor has given the Administrative Agent
written notice that this Guarantee has been revoked; provided
that any
notice under this Section shall not release the revoking Guarantor from any
Guaranteed Liability, absolute or contingent, existing prior to the
Administrative Agent’s actual receipt of the notice at its branches or
departments responsible for this Agreement and such Swap Agreements and
reasonable opportunity to act upon such notice.
Section
8.04. Reinstatement.
This
Guarantee shall continue to be effective or be reinstated, as the case may
be,
if at any time any payment of any of the Guaranteed Liabilities is rescinded
or
must otherwise be returned by the Administrative Agent, any Lender or any
Lender
Counterparty on the insolvency, bankruptcy or reorganization of the Borrower,
or
any other Credit Party, or otherwise, all as though the payment had not been
made.
Section
8.05. Subrogation.
No
Guarantor shall exercise any rights which it may acquire by way of subrogation,
by any payment made under this Guarantee or otherwise, until all the Guaranteed
Liabilities have been paid in full and this Agreement and the Swap Agreements
to
which any Lender Counterparty is a party are no longer in effect. If any amount
is paid to the Guarantor on account of subrogation rights under this Guarantee
at any time when all the Guaranteed Liabilities have not been paid in full,
the
amount shall be held in trust for the benefit of the Lenders and the Lender
Counterparties and shall be promptly paid to the Administrative Agent to be
credited and applied to the Guaranteed Liabilities, whether matured or unmatured
or absolute or contingent, in accordance with the terms of this Agreement and
such Swap Agreements. If any Guarantor makes payment to the Administrative
Agent, Lenders, or any Lender Counterparties of all or any part of the
Guaranteed Liabilities and all the Guaranteed Liabilities are paid in full
and
this Agreement and such Swap Agreements are no longer in effect, the
Administrative Agent, Lenders and Lender Counterparties shall, at such
Guarantor’s request, execute and deliver to such Guarantor appropriate
documents, without recourse and without representation or warranty, necessary
to
evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Liabilities resulting from the payment.
Section
8.06. Subordination.
Without
limiting the rights of the Administrative Agent, the Lenders and the Lender
Counterparties under any other agreement, any liabilities owed by the Borrower
to any Guarantor in connection with any extension of credit or financial
accommodation by any Guarantor to or for the account of the Borrower, including
but not limited to interest accruing at the agreed contract rate after the
commencement of a bankruptcy or similar proceeding, are hereby subordinated
to
the Guaranteed Liabilities, and such liabilities of the Borrower to such
Guarantor, if the Administrative Agent so requests, shall be collected, enforced
and received by any Guarantor as trustee for the Administrative Agent and shall
be paid over to the Administrative Agent on account of the Guaranteed
Liabilities but without reducing or affecting in any manner the liability of
the
Guarantor under the other provisions of this Guarantee.
Section
8.07. Payments
Generally.
All
payments by the Guarantors shall be made in the manner, at the place and in
the
currency (the “Payment
Currency”)
required by the Loan Documents and the Swap Agreement to which any Lender
Counterparty is a party, as the case may be; provided,
however,
that
(if the Payment Currency is other than Dollars) any Guarantor may, at its option
(or, if for any reason whatsoever any Guarantor is unable to effect payments
in
the foregoing manner, such Guarantor shall be obligated to) pay to the
Administrative Agent at its principal office the equivalent amount in Dollars
computed at the selling rate of the Administrative Agent or a selling rate
chosen by the Administrative Agent, most recently in effect on or prior to
the
date the Guaranteed Liability becomes due, for cable transfers of the Payment
Currency to the place where the Guaranteed Liability is payable. In any case
in
which any Guarantor makes or is obligated to make payment in Dollars, the
Guarantor shall hold the Administrative Agent, the Lenders and the Lender
Counterparties harmless from any loss incurred by the Administrative Agent,
any
Lender or any Lender Counterparty arising from any change in the value of
Dollars in relation to the Payment Currency between the date the Guaranteed
Liability becomes due and the date the Administrative Agent, such Lender or
such
Lender Counterparty is actually able, following the conversion of the Dollars
paid by such Guarantor into the Payment Currency and remittance of such Payment
Currency to the place
where
such Guaranteed Liability is payable, to apply such Payment Currency to such
Guaranteed Liability.
Section
8.08. Setoff.
Each
Guarantor agrees that, in addition to (and without limitation of) any right
of
setoff, banker’s lien or counterclaim the Administrative Agent, any Lender or
any Lender Counterparty may otherwise have, the Administrative Agent, such
Lender or such Lender Counterparty shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final) held
by it
for the account of any Guarantor at any office of the Administrative Agent,
such
Lender or such Lender Counterparty, in Dollars or in any other currency,
against
any amount payable by such Guarantor under this Guarantee which is not paid
when
due (regardless of whether such balances are then due to such Guarantor),
in
which case it shall promptly notify such Guarantor thereof; provided
that the
failure of the Administrative Agent, such Lender, or such Lender Counterparty
to
give such notice shall not affect the validity thereof.
In
addition to the foregoing, as collateral security for the repayment of such
Guarantor’s obligations and liabilities under this Agreement, each Guarantor
hereby grants to each Secured Party, as well as its successors and assigns,
a
security interest in any and all deposit accounts (within the meaning of
the
Uniform Commercial Code as in effect from time to time in any applicable
jurisdiction) maintained with such Secured Party and all funds that such
Guarantor may then have on deposit with or may then be in the possession
or
control of such Secured Party and its successors or assigns, and such Secured
Party is hereby authorized to apply any such funds, upon the occurrence of
an
Event of Default under the Credit Agreement and the expiration of any applicable
grace period allowed to cure the Event of Default, towards repayment of any
of
the Borrower’s Obligations that are due and payable at such time (whether at
maturity, by acceleration, after notice of prepayment or otherwise) subject
to
this Agreement.
Section
8.09. Formalities.
Each
Guarantor waives presentment, notice of dishonor, protest, notice of acceptance
of this Guarantee or incurrence of any Guaranteed Liability and any other
formality with respect to any of the Guaranteed Liabilities or this
Guarantee.
Section
8.10. Limitations
on Guarantee.
The
provisions of the Guarantee under this Article VIII are severable, and in
any
action or proceeding involving any state corporate law, or any state, federal
or
foreign bankruptcy, insolvency, reorganization or other law affecting the
rights
of creditors generally, if the obligation of any Guarantor under this Guarantee
would otherwise be held or determined to be avoidable, invalid or unenforceable
on account of the amount of such Guarantor’s liability under this Guarantee,
then, notwithstanding any other provision of this Guarantee to the contrary,
the
amount of such liability shall, without any further action by the guarantors,
the Administrative Agent, any Lender or an Lender Counterparty, be automatically
limited and reduced to the highest amount that is valid and enforceable as
determined in such action or proceeding (such highest amount determined
hereunder being the relevant Guarantor’s “Maximum Liability”). This Section
8.10
with
respect to the Maximum Liability of the Guarantors is intended solely to
preserve the rights of the Administrative Agent, Lenders and Lender
Counterparties hereunder to the maximum extent not subject to avoidance under
applicable law, and no Guarantor nor any other Person shall have any right
or
claim under this Section
8.10
with
respect to the Maximum Liability, except to the extent necessary so that
none of
the obligations of any Guarantor hereunder shall not be rendered voidable
under
applicable law.
Article
IX
Events
of Default
If
any of
the following events (“Events
of Default”)
shall
occur:
(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 clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and
payable,
and such failure shall continue unremedied for a period of five (5)
days;
(c) any
representation or warranty made or deemed made by or on behalf of the Borrower
or any Restricted Subsidiary in this Agreement or any other Loan Document,
or in
any report, certificate, financial statement or other document furnished
hereunder or thereunder, shall prove to have been incorrect in any material
respect when made or deemed made;
(d) the
Borrower or any Restricted Subsidiary shall fail to observe or perform
any
covenant, condition or agreement contained in (i) Section
6.01, Section
6.02,
Section
6.05
(with
respect to insurance),and such failure shall continue unremedied for a
period of
10 days after the occurrence thereof or (ii) Section
6.03
(with
respect to the Borrower or any Restricted Subsidiary’s existence),Section
6.08,
or in
Article
VII;
(e) the
Borrower or any Restricted Subsidiary shall fail to observe or perform
any
covenant, condition or agree-ment contained in (i) this Agreement (other
than
those specified in clause (a), (b) or (d) of this Article) and such failure
shall continue unremedied for a period of 30 days after the occurrence
thereof or (ii) any other Loan Document and such failure shall continue
unremedied for a period of 20 days after the occurrence thereof;
(f) the
Borrower or any Restricted 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
(or, if
permitted by the terms of the relevant document, within 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 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 prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided
that
this clause (g) shall not apply to secured Indebtedness permitted under
Section
7.01(e)
that
becomes due as a result of the voluntary sale or transfer of the property
or
assets securing such Indebtedness;
(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 Restricted 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 Restricted 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 Restricted 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 clause (h) of this Article, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Restricted 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 for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the
fore-going;
(j) the
Borrower or any Restricted 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 (exclusive of amounts fully covered by valid and collectible
insurance for which the issuer has not denied coverage) shall be rendered
against the Borrower or any Restricted Subsidiary or any combination thereof
and
the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall
be
legally taken by a judgment creditor to attach or levy upon any assets of the
Borrower or any Restricted Subsidiary to enforce any such judgment;
(l) an
ERISA
Event shall have occurred that, in the opinion of the Required Lenders, when
taken together with all other ERISA Events that have occurred, could reasonably
be expected to result in a Material Adverse Effect;
(m) except
in
connection with a transaction period by Section
7.03
or
Section
7.04,
the
delivery by any Guarantor to the Administrative Agent of written notice that
its
Guarantee under Article
VIII
has been
revoked or any Guarantee of the Obligations is declared invalid or
unenforceable; or
(n) a
Change
in Control shall occur;
then,
and
in every such event (other than an event with respect to the Borrower or any
Restricted Subsidiary described in clause (h) or (i) of this Article), and
at
any time thereafter during the
continuance
of such event, the Administrative Agent may, and at the request of the Required
Lenders shall, by notice to the Borrower, take either or both of the following
actions, at the same or different times: (i) terminate the
Aggregate Commitment, and thereupon the Aggregate Commitment shall terminate
immediately, and (ii) declare 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
accrued hereunder, 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 in case of any event with respect to the
Borrower described in clause (h) or (i) of this Article, the Aggregate
Commitment shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become
due
and payable, without present-ment, demand, protest or other notice of any
kind,
all of which are hereby waived by the Borrower.
Article
X
The
Administrative Agent
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, together with such actions and powers as are
reasonably incidental thereto.
The
bank
serving as the Administrative 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 the Administrative Agent, and such bank and its Affiliates
may accept deposits from, lend money to and generally engage in any kind
of
business with any Credit Party or other Affiliate thereof as if it were not
the
Administrative Agent hereunder.
The
Administrative Agent shall not have any duties or obligations except those
expressly set forth herein. 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 discretionary
rights and powers expressly contemplated hereby that the Administrative Agent
is
required to exercise in writing as directed by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section
11.02),
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 any Credit Party 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 not be liable for any action taken
or
not taken by it with the consent or at the request of the Required Lenders
(or
such other number or percentage of the Lenders as shall be necessary under
the
circumstances as provided in Section
11.02)
or in
the absence of its own gross negligence or willful misconduct. 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 the Administrative Agent 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, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement
or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article
V
or
elsewhere herein, other than to confirm receipt of items expressly required
to
be delivered to the 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. The Administrative Agent may consult with legal counsel
(who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken
by it
in accordance with the advice of any such counsel, accountants or
experts.
The
Administrative Agent may 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
paragraphs 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.
Subject
to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any
time by
notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation
with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within
30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent
which
shall be a bank with an office in Chicago, Illinois or New York, New York,
or an
Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed
to
and become vested with all the rights, powers, privileges and duties of
the
retiring Administrative Agent, and the retiring Administrative Agent shall
be
discharged from its duties and obligations hereunder. The fees payable
by the
Borrower to a successor Administrative Agent shall be the same as those
payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section
11.03
shall
continue in effect for the benefit of such retiring Administrative Agent,
its
sub-agents and their respective Related Parties in respect of any actions
taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.
Each
Lender acknowledges that it has, independently and without reliance upon
the
Administrative Agent or any other Lender and based on such documents
and
information as it has deemed appropriate, made its own credit analysis
and
decision to enter into this Agreement. Each Lender also acknowledges
that it
will, independently and without reliance upon the Administrative Agent
or any
other Lender and based on such documents and information as it shall
from time
to time deem appropriate, continue to make its own decisions in taking
or not
taking action under or based upon this Agreement, any related agreement
or any
document furnished hereunder or thereunder.
Article
XI
Miscellaneous
Section
11.01. Notices.
(a) Except
in
the case of notices and other communications expressly permitted to be
given by
telephone (and subject to paragraph (b) below), 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 Carrizo Oil & Gas, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer;
(ii) if
to the
Administrative Agent or Issuing Bank, to JPMorgan ▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 19, Mail Code IL1-0010, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇,
Telecopy
No.: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, with a copy to JPMorgan
Chase
Bank, N.A., 600 ▇▇▇▇▇▇ Street, 20th
Floor,
Mail Code TX2-T086, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Jo ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Vice
President, Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇;
(iii) 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
if such
Lender has notified the Administrative Agent that it is incapable of
receiving
notices under Article II by electronic communication. The Administrative
Agent
or the Borrower may, in their 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
11.02. Waivers;
Amendments.
(a) No
failure or delay by the Administrative Agent, the Issuing Bank or any
Lender in
exercising any right or power hereunder shall operate as a waiver thereof,
nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any
other
right or power. The rights and remedies of the Administrative Agent,
the Issuing
Bank and the Lenders hereunder are cumulative and are not exclusive of
any
rights or remedies that they would otherwise have. No waiver of any provision
of
this Agree-ment or consent to any departure by the Borrower therefrom
shall in
any event be effective unless the same shall be permitted by paragraph (b)
of this Section, 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 may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into
by the
Credit Parties and the Required Lenders or by the Credit Parties and
the
Administrative Agent with the consent of the Required Lenders; provided
that no
such agreement shall (1) increase the Borrowing Base or, at any time
prior to
August 1, 2007, the Conforming Borrowing Base without the written consent
of
each Lender, (2) increase the Applicable Percentage of any Lender or
the
Aggregate Commitment above the Maximum Facility Amount without the written
consent of such Lender, (3) reduce the principal amount of any Loan or
LC
Disbursement or reduce the specified rate of interest thereon, or reduce
any
fees payable hereunder, without the written consent of each Lender affected
thereby, (4) decrease the Monthly Reduction without the written consent
of each
Lender, (5) 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 reduce the amount of, waive or excuse any such payment,
or
postpone the scheduled date of expiration of any of the Aggregate Commitment,
without the written consent of each Lender affected thereby, (6) change
Section
2.17(b)
or
Section
2.17(c)
in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (7) release any Credit Party
from
its obligations under the Loan Documents or, except in connection with
any
sales, transfers, leases or other Dispositions permitted in Section
7.04,
release
any of the Collateral, or (8) change any of the provisions of this Section
or
the definition of “Required Lenders” or any other provision hereof specifying
the number or percentage of Lenders required to waive, amend or modify
any
rights hereunder or make any determination or grant any consent hereunder,
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 without the prior
written
consent of the Administrative Agent or the Issuing Bank, as the case
may
be.
Notwithstanding anything to the contrary herein, no Defaulting Lender
shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Commitment of such Lender may not be increased or extended
without the consent of such Lender.
Section
11.03. 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 the reasonable fees,
charges
and disbursements of counsel for the Administrative Agent, in connection
with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement and the other Loan Documents or
any
amendments, modifications or waivers of the provi-sions hereof (whether
or not
the transactions contemplated hereby or thereby shall be consummated),
(ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit
or
any demand for payment thereunder and (iii) 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, including its rights under
this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during
any
workout, restructuring or negotiations in respect of such Loans or Letters
of
Credit.
(b) THE
CREDIT PARTIES 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 AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY, THE PERFORMANCE BY THE PARTIES HERETO
OF THEIR
RESPECTIVE OBLIGATIONS HEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS
OR ANY
OTHER TRANSACTIONS CONTEMPLATED HEREBY, (II) ANY LOAN OR LETTER OF CREDIT
OR THE USE OF THE PROCEEDS THEREFROM (INCLUDING 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), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE
OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE
BORROWER
OR ANY SUBSIDIARY, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY
TO THE
BORROWER OR ANY SUBSIDIARY, OR (IV) 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; PROVIDED
THAT
SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT
THAT
SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE
DETERMINED
BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT
TO HAVE
RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNITEE.
(c) To
the
extent that any Credit Party fails to pay any amount required to be paid
by it
to the Administrative Agent or the Issuing Bank under paragraph (a) or
(b) of
this Section, each Lender severally agrees to pay to the Administrative
Agent or
the Issuing Bank, as the case may be, such Lender’s Applicable Percentage (in
each case, determined as of the time that the applicable unreimbursed
expense or
indemnity payment is sought) of such unpaid amount; provided
that the
unreimbursed expense or indemnified loss, claim, damage, liability or
related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Issuing Bank in its capacity as such.
(d) To
the
extent permitted by applicable law, the Credit Parties shall not assert,
and
hereby waive, 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 or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All
amounts due under this Section shall be payable not later than 10 days
after
written demand therefor.
Section
11.04. 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) no Credit Party may 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 such Credit Party 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. 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
paragraph (c) of this Section) 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 paragraph (b)(ii) below, 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, a Federal Reserve Bank, 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
of any
Commitment to an assignee that is a Lender with a Commitment immediately
prior
to giving effect to such assignment;
(C) the
Issuing Bank.
(ii) Assignments
shall be subject to the following additional conditions:
(A) except
in
the case of an assignment to a Lender, an Affiliate of a Lender, an Approved
Fund or an assignment of the entire remaining amount of the assigning
Lender’s
Commitment or Loans, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of
the
Borrower and the Administrative Agent otherwise consent, provided
that no
such consent of the Borrower shall be required if an Event of Default
has
occurred and is continuing;
(B) each
partial assignment shall be made as an assignment of a proportionate
part of all
the assigning Lender’s rights and obligations in respect of such Lender’s
Commitment and such Lender’s Loans under this Agreement;
(C) the
parties to each assignment shall execute and deliver to the Administrative
Agent
an Assignment and Assumption, together with a processing and recordation
fee of
$3,500; and
(D) the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent
an Administrative Questionnaire in which the assignee designates one
or more
Credit Contacts to whom all syndicate-level information (which may contain
material non-public information about the Borrower and its affiliates,
the
Credit Parties and their related parties or their respective securities)
will be
made available and who may receive such information in accordance with
the
assignee’s compliance procedures and applicable laws, including Federal and
state securities laws.
For
the
purposes of this Section
11.04(b),
the
term “Approved
Fund”
has
the
following meaning:
“Approved
Fund”
means
any Person (other than a natural person) that is engaged in making, purchasing,
holding or investing in bank loans and similar extensions of credit in
the
ordinary course of its business and that is administered or managed by
(a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate
of an
entity that administers or manages a Lender.
(iii) Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, 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
2.14,
Section
2.15,
Section
2.16
and
Section
11.03).
Any
assignment or transfer by a Lender of rights or obligations under this
Agreement
that does not comply with this Section
11.04
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 paragraph
(c) of
this Section except that any attempted assignment or transfer by any
Lender that
does not comply with clause (C) of Section
11.04(b)(ii)
shall be
null and void.
(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 Commitment and Applicable Percentage 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 Credit Parties,
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 Credit
Parties,
the Issuing Bank and any Lender, at any reasonable time and from time
to time
upon reasonable prior notice.
(v) Upon
its
receipt of a duly completed Assignment and 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 paragraph (b) of this Section any written
consent to such assignment required by paragraph (b) of this Section,
the
Administrative Agent shall accept such Assignment and Assumption and
record the
information contained therein in the Register; provided
that if
either the assigning Lender or the assignee shall have failed to make
any
payment required to be made by it pursuant to Section
2.05(d)
or
Section
2.05(e),
Section
2.06,
Section
2.17(d)
or
Section
11.03(c),
the
Administrative Agent shall have no
obligation
to accept such Assignment and Assumption and record the information therein
in
the Register unless and until such payment shall have been made in full,
together with all accrued interest thereon. No assignment shall be effective
for
purposes of this Agreement unless it has been recorded in the Register
as
provided in this paragraph.
(c)
(i) Any
Lender may, without the consent of the Borrower (unless such sale is
to a
Competitor and no Event of Default exists in which event Borrower’s prior
written consent shall be required), 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 the first proviso to Section
11.02(b)
that
affects such Participant. Subject to paragraph (c)(ii) of this Section,
the
Borrower agrees that each Participant shall be entitled to the benefits
of
Section
2.14,
Section
2.15
and
Section
2.16
to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. To the extent permitted by
law, each
Participant also shall be entitled to the benefits of Section
11.08
as
though it were a Lender, provided such Participant agrees to be subject
to
Section
2.17(c)
as
though it were a Lender.
(ii) A
Participant shall not be entitled to receive any greater payment under
Section
2.14
or
Section
2.16
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 prior written consent of the Borrower. A
Participant that would be a Foreign Lender if it were a Lender shall
not be
entitled to the benefits of Section
2.16
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
2.16(e)
as
though it were a Lender.
(d) Any
Lender may at any time pledge or assign a security interest in all or
any
portion of its rights under this Agreement to secure obligations of such
Lender,
including without limitation any pledge or assignment to secure obligations
to a
Federal
Reserve
Bank, and this Section shall not apply to any such pledge or assignment
of a
security interest; provided
that no
such pledge or assignment of a security interest shall release a Lender
from any
of its obligations hereunder or substitute any such pledge or assignee
for such
Lender as a party hereto.
Section
11.05. Survival.
All
covenants, agreements, representations and warranties made by the Credit
Parties
herein and in the certificates or other instru-ments delivered in connection
with or pursuant to this Agreement 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 Aggregate Commitment has not expired or terminated. The
provisions of Section
2.14,
Section
2.15,
Section
2.16
and
Section
11.03
and
Article
X
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 Aggregate Commitment
or the
termination of this Agreement or any provision hereof.
Section
11.06. Counterparts;
Integration; Effectiveness.
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. This Agreement
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 supersede any and all previous agreements
and
understandings, oral or written, relating to the subject matter hereof.
THIS
WRITTEN CREDIT AND GUARANTY AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Except
as provided in Section
5.01,
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
11.07. Severability.
Any
provision of this Agreement 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; and the
invalidity of a particular provision in a particular jurisdiction shall
not
invalidate such provision in any other jurisdiction.
Section
11.08. 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 at any time owing by such Lender or Affiliate to or
for the
credit or the account of the Borrower against any of and all the obligations
of
any Credit Party now or hereafter existing under this Agreement held
by such
Lender, irrespective of whether or not such Lender shall have made any
demand
under this Agreement and although such obligations may be unmatured.
The rights
of each Lender under this Section and Section
8.08
are in
addition to other rights and remedies (including other rights of setoff)
which
such Lender may have.
Section
11.09. GOVERNING
LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE
STATE OF TEXAS.
(b) EACH
CREDIT PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR TEXAS
STATE COURT SITTING IN DALLAS, TEXAS IN ANY ACTION OR PROCEEDING ARISING
OUT OF
OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY
BE HEARD
AND DETERMINED IN SUCH TEXAS STATE OR, TO THE EXTENT PERMITTED BY LAW,
IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT
IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW.
NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE
AGENT,
THE ISSUING BANK OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION
OR
PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY CREDIT PARTY OR ITS
PROPERTIES
IN THE COURTS OF ANY JURISDICTION.
(c) EACH
CREDIT PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR
HERE-AFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING
OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH
(B)
OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES,
TO THE
FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM
TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) EACH
PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER
PROVIDED FOR NOTICES IN Section
11.01.
NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT
TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
Section
11.10. WAIVER
OF JURY TRIAL.
EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREE-MENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND
CERTIFICATIONS IN THIS SECTION.
Section
11.11. 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
11.12. 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, (e) in connection with the exercise of any remedies
hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee
of or
Participant in, or any prospective assignee of or Participant in, any
of its
rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction
relating to
the Credit Parties and their 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 or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender
on a
non-confidential basis from a source other than a Credit Party. For the
purposes
of this Section, “Information”
means
all information received from any Credit Party relating to any Credit
Party or
its business, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a non-confidential
basis
prior to disclosure by any Credit Party. Any Person required to maintain
the
confidentiality of Information as provided in this Section 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.
EACH
LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THIS Section
11.12
FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR
RESPECTIVE
SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
REGARDING
THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH
MATERIAL
NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE
LAW,
INCLUDING FEDERAL AND STATE SECURITIES LAWS.
ALL
INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED
BY THE
BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH
MAY
CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS AFFILIATES
,
THE CREDIT PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.
ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE
AGENT
THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT
WHO
MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION
IN
ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
Section
11.13. Interest
Rate Limitation.
Notwithstanding anything herein to the contrary, if at any time the interest
rate applicable to any Loan, together with all fees, charges and other
amounts
which are treated as interest on such Loan under appli-cable law (collectively
the “Charges”),
shall
exceed the maximum lawful rate (the “Maximum
Rate”)
which
may be contracted for, charged, taken, received or reserved by the Lender
holding such Loan in accordance with applicable law, the rate of interest
payable in respect of such Loan hereunder, together with all Charges
payable in
respect thereof, shall be limited to the Maximum Rate and, to the extent
lawful,
the interest and Charges that would have been payable in respect of such
Loan
but were not payable as a result of the operation of this Section shall
be
cumulated and the interest and Charges payable to such Lender in respect
of
other Loans or periods shall be increased (but not above the Maximum
Rate
therefor) until such cumulated amount, together with interest thereon
at the
Federal Funds Effective Rate to the date of repayment, shall have been
received
by such Lender.
Chapter
346 of the Texas Finance Code (which regulates certain revolving credit
accounts
(formerly Tex. Rev. Civ. Stat. ▇▇▇. Art. ▇▇▇▇, ▇▇. 15)) shall not apply
to this
Agreement or to any Loan, nor shall this Agreement or any Loan be governed
by or
be subject to the provisions of such Chapter 346 in any manner
whatsoever.
▇▇▇▇▇▇▇
▇▇.▇▇. ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇.
Each
Lender that is subject to the requirements of the USA Patriot Act (Title
III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies
each Credit Party that pursuant to the requirements of the Act, it is
required
to obtain, verify and record information that identifies each Credit
Party,
which information includes the name and address of each Credit Party
and other
information that will allow such Lender to identify each Credit Party
in
accordance with the Act.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly
executed by their respective authorized officers as of the day and
year first
above written.
BORROWER:
CARRIZO
OIL & GAS, INC.
By: /s/
▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇
▇. ▇▇▇▇▇▇
Title: Vice
President and Chief Financial Officer
GUARANTOR:
CCBM,
INC.
By: /s/
▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇
▇. ▇▇▇▇▇▇
Title: Vice
President
JPMORGAN
CHASE BANK, NATIONAL
ASSOCIATION,
individually and as
Administrative
Agent
By: /s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
Name: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
Title: Senior
Vice President
CARRIZO
REVOLVING CREDIT AGREEMENT - SIGNATURE PAGE