EXHIBIT 10.11
CREDIT AGREEMENT
Dated as of
July 3, 2002
among
PLAINS EXPLORATION & PRODUCTION COMPANY, L.P.,
as Borrower,
JPMORGAN CHASE BANK,
as Administrative Agent,
Bank One, NA (Main Office Chicago)
and
Fleet National Bank,
as Syndication Agents,
BNP Paribas
and
Fortis Capital Corp.,
as Documentation Agents,
and
the Lenders party hereto
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS.................................................................1
Section 1.01 Terms Defined Above..........................................................................1
Section 1.02 Certain Defined Terms........................................................................1
Section 1.03 Types of Loans and Borrowings...............................................................24
Section 1.04 Terms Generally.............................................................................24
Section 1.05 Accounting Terms and Determinations; GAAP...................................................24
ARTICLE II THE CREDITS......................................................................................25
Section 2.01 Commitments.................................................................................25
Section 2.02 Loans and Borrowings........................................................................25
Section 2.03 Requests for Borrowings.....................................................................26
Section 2.04 Interest Elections..........................................................................27
Section 2.05 Funding of Borrowings.......................................................................28
Section 2.06 Termination, Reduction and Increase of Aggregate Maximum Credit Amounts.....................29
Section 2.07 Borrowing Base..............................................................................31
Section 2.08 Letters of Credit...........................................................................33
ARTICLE III PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES...........................................38
Section 3.01 Repayment of Loans..........................................................................38
Section 3.02 Interest....................................................................................38
Section 3.03 Alternate Rate of Interest..................................................................39
Section 3.04 Prepayments.................................................................................39
Section 3.05 Fees........................................................................................41
ARTICLE IV PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS................................................42
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.................................42
Section 4.02 Presumption of Payment by the Borrower......................................................43
Section 4.03 Certain Deductions by the Administrative Agent..............................................43
Section 4.04 Disposition of Proceeds.....................................................................43
ARTICLE V INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY........................................44
Section 5.01 Increased Costs.............................................................................44
Section 5.02 Break Funding Payments......................................................................45
Section 5.03 Taxes.......................................................................................45
Section 5.04 Mitigation Obligations; Replacement of Lenders..............................................46
Section 5.05 Illegality..................................................................................47
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ARTICLE VI CONDITIONS PRECEDENT.............................................................................48
Section 6.01 Effective Date..............................................................................48
Section 6.02 Each Credit Event...........................................................................51
ARTICLE VII REPRESENTATIONS AND WARRANTIES..................................................................51
Section 7.01 Organization; Powers........................................................................51
Section 7.02 Authority; Enforceability...................................................................52
Section 7.03 Approvals; No Conflicts.....................................................................52
Section 7.04 Financial Condition; No Material Adverse Change.............................................53
Section 7.05 Litigation..................................................................................53
Section 7.06 Environmental Matters.......................................................................53
Section 7.07 Compliance with the Laws and Agreements; No Defaults........................................55
Section 7.08 Investment Company Act......................................................................55
Section 7.09 Public Utility Holding Company Act..........................................................55
Section 7.10 Taxes.......................................................................................55
Section 7.11 ERISA.......................................................................................55
Section 7.12 Disclosure; No Material Misstatements.......................................................56
Section 7.13 Insurance...................................................................................56
Section 7.14 Restriction on Liens........................................................................56
Section 7.15 Subsidiaries................................................................................56
Section 7.16 Location of Business and Offices............................................................57
Section 7.17 Properties; Titles, Etc.....................................................................57
Section 7.18 Maintenance of Properties...................................................................58
Section 7.19 Gas Imbalances, Prepayments.................................................................58
Section 7.20 Marketing of Production.....................................................................58
Section 7.21 Swap Agreements.............................................................................59
Section 7.22 Use of Loans and Letters of Credit..........................................................59
Section 7.23 Solvency....................................................................................59
Section 7.24 Designated Senior Indebtedness..............................................................59
Section 7.25 Spin-off....................................................................................60
ARTICLE VIII AFFIRMATIVE COVENANTS..........................................................................60
Section 8.01 Financial Statements; Ratings Change; Other Information.....................................60
Section 8.02 Notices of Material Events..................................................................62
Section 8.03 Existence; Conduct of Business..............................................................63
Section 8.04 Payment of Obligations; Redemption of PLX Senior Subordinated Notes.........................63
Section 8.05 Performance of Obligations under Loan Documents.............................................63
Section 8.06 Operation and Maintenance of Properties.....................................................64
Section 8.07 Insurance...................................................................................64
Section 8.08 Books and Records; Inspection Rights........................................................65
Section 8.09 Compliance with Laws........................................................................65
Section 8.10 Environmental Matters.......................................................................65
Section 8.11 Further Assurances..........................................................................66
Section 8.12 Reserve Reports.............................................................................67
Section 8.13 Title Information...........................................................................68
Section 8.14 Additional Collateral; Additional Guarantors................................................69
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Section 8.15 ERISA Compliance............................................................................70
Section 8.16 Unrestricted Subsidiaries...................................................................70
ARTICLE IX NEGATIVE COVENANTS...............................................................................71
Section 9.01 Financial Covenants.........................................................................71
Section 9.02 Debt........................................................................................71
Section 9.03 Liens.......................................................................................72
Section 9.04 Dividends, Distributions and Redemptions; Repayment of 2002 Senior Subordinated Notes.......73
Section 9.05 Investments, Loans and Advances.............................................................74
Section 9.06 Designation and Conversion of Restricted and Unrestricted Subsidiaries;t
Debt of Unrestricted Subsidiaries...........................................................76
Section 9.07 Nature of Business..........................................................................76
Section 9.08 Limitation on Leases........................................................................76
Section 9.09 Proceeds of Notes...........................................................................77
Section 9.10 ERISA Compliance............................................................................77
Section 9.11 Sale or Discount of Receivables.............................................................78
Section 9.12 Mergers, Etc................................................................................78
Section 9.13 Sale of Properties..........................................................................78
Section 9.14 Environmental Matters.......................................................................79
Section 9.15 Transactions with Affiliates................................................................79
Section 9.16 Subsidiaries................................................................................79
Section 9.17 Negative Pledge Agreements; Dividend Restrictions...........................................80
Section 9.18 Gas Imbalances, Take-or-Pay or Other Prepayments............................................80
Section 9.19 Swap Agreements.............................................................................80
Section 9.20 Spin-off Documents..........................................................................81
ARTICLE X EVENTS OF DEFAULT; REMEDIES.......................................................................81
Section 10.01 Events of Default...........................................................................81
Section 10.02 Remedies....................................................................................83
ARTICLE XI THE AGENTS.......................................................................................84
Section 11.01 Appointment; Powers.........................................................................84
Section 11.02 Duties and Obligations of Administrative Agent..............................................84
Section 11.03 Action by Administrative Agent..............................................................85
Section 11.04 Reliance by Administrative Agent............................................................85
Section 11.05 Subagents...................................................................................86
Section 11.06 Resignation or Removal of Agents............................................................86
Section 11.07 Agents as Lenders..........................................................................86
Section 11.08 No Reliance.................................................................................86
Section 11.09 Authority of Administrative Agent to Release Collateral and Liens...........................87
Section 11.10 The Syndication Agents and Documentation Agents.............................................87
ARTICLE XII MISCELLANEOUS...................................................................................87
Section 12.01 Notices.....................................................................................87
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Section 12.02 Waivers; Amendments.........................................................................88
Section 12.03 Expenses, Indemnity; Damage Waiver..........................................................89
Section 12.04 Successors and Assigns......................................................................92
Section 12.05 Survival; Revival; Reinstatement............................................................95
Section 12.06 Counterparts; Integration; Effectiveness....................................................95
Section 12.07 Severability................................................................................96
Section 12.08 Right of Setoff.............................................................................96
Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS..................................96
Section 12.10 Headings....................................................................................98
Section 12.11 Confidentiality.............................................................................98
Section 12.12 Interest Rate Limitation....................................................................98
Section 12.13 EXCULPATION PROVISIONS......................................................................99
Section 12.14 Specified Senior Indebtedness..............................................................100
Section 12.15 Limitation of Liability of the General Partner.............................................100
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Annex I List of Maximum Credit Amounts
Exhibit A Form of Note
Exhibit B Form of Compliance Certificate
Exhibit C-1 Form of Legal Opinion of Akin, Gump, Strauss, ▇▇▇▇▇ &
▇▇▇▇, L.L.P., special counsel to the Borrower
Exhibit C-2 Form of Legal Opinion of Local Counsel
Exhibit D-1 Security Instruments
Exhibit D-2 Form of Guaranty and Collateral Agreement
Exhibit E Form of Assignment and Assumption
Exhibit F-1 Form of Maximum Credit Amount Increase Certificate
Exhibit F-2 Form of Additional Lender Certificate
Schedule 1.02 Swap Agreements with BoA
Schedule 7.03 Approvals
Schedule 7.05 Litigation
Schedule 7.06 Environmental Matters
Schedule 7.14 Restriction on Liens
Schedule 7.15 Subsidiaries and Partnerships; Unrestricted Subsidiaries
Schedule 7.17 Properties; Titles, Etc.
Schedule 7.19 Gas Imbalances
Schedule 7.20 Marketing Contracts
Schedule 7.21 Swap Agreements
Schedule 9.03 Liens
Schedule 9.05 Investments
Schedule 9.07 Nature of Business
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THIS CREDIT AGREEMENT dated as of July 3, 2002, is among: PLAINS
EXPLORATION & PRODUCTION COMPANY, L.P., a limited partnership duly formed and
existing under the laws of the State of California (the "Borrower"); each of the
Lenders from time to time party hereto; JPMORGAN CHASE BANK (in its individual
capacity, "JPMorgan"), as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Administrative
Agent"); BANK ONE, NA (MAIN OFFICE CHICAGO) and FLEET NATIONAL BANK, as
syndication agents for the Lenders (each, in such capacity, together with its
successors in such capacity, a "Syndication Agent"); and BNP PARIBAS and FORTIS
CAPITAL CORP., as documentation agents for the Lenders (each, in such capacity,
together with its successors in such capacity, a "Documentation Agent").
R E C I T A L S
A. The Borrower has requested that the Lenders provide certain loans to and
extensions of credit on behalf of the Borrower.
B. The Lenders have agreed to make such loans and extensions of credit
subject to the terms and conditions of this Agreement.
C. In consideration of the mutual covenants and agreements herein contained
and of the loans, extensions of credit and commitments hereinafter referred to,
the parties hereto agree as follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above. As used in this Agreement, each term
defined above has the meaning indicated above.
Section 1.02. Certain Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Additional Lender" has the meaning assigned to such term in Section
2.06(c)(i).
"Additional Lender Certificate" has the meaning assigned to such term in
Section 2.06(c)(ii)(F).
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affected Loans" has the meaning assigned such term in Section 5.05.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Affiliate Agreements" means (i) that certain Crude Oil Marketing Agreement
dated as of the November 17, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., the Borrower
(f/k/a ▇▇▇▇▇▇▇ Resources, L.P.), Calumet Florida, Inc. and Plains Marketing LP
(as such may be amended in accordance with the express terms of the Transition
Agreements), (ii) that certain Omnibus Agreement dated as of the November 17,
1998 among PLX, Plains All American Pipeline, L.P., Plains Marketing LP, All
American Pipeline LP and Plains Holdings Inc. (f/k/a Plains All American Inc.)
(as such may be amended in accordance with the express terms of the Transition
Agreements), (iii) that certain Contribution, Conveyance and Assumption
Agreement dated as of the November 23, 1998 among Plains All American Pipeline,
L.P., PLX and certain other parties, (iv) that certain Letter Agreement dated
October 23, 2001 between Plains Marketing, L.P. and the Borrower regarding the
Crude Oil Sales Agreement dated April 1, 2001 between Tosco Refining Co. and
Plains Marketing, L.P., and (v) that certain Agreement for the Allocation of the
Consolidated Federal Income Tax Liability and State and Local Taxes Among the
Members of PLX Affiliate Group, dated June 30, 1998, between PLX and the members
of PLX's consolidated group identified therein.
"Agents" means, collectively, the Administrative Agent, the Syndication
Agents and the Documentation Agents; and "Agent" shall mean either the
Administrative Agent, any Syndication Agent or any Documentation Agent, as the
context requires.
"Aggregate Maximum Credit Amounts" at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be increased, reduced or terminated
pursuant to Section 2.06.
"Agreement" means this Credit Agreement, as the same may from time to time
be amended, modified, supplemented or restated.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, for any day, with respect to any ABR Loan or
Eurodollar Loan, or with respect to any commitment fees payable hereunder, as
the case may be, the rate per annum set forth in the Borrowing Base Utilization
Grid below based upon the Borrowing Base Utilization Percentage then in effect:
--------------------------------------------------------------------------------
Borrowing Base Utilization Grid
--------------------------------------------------------------------------------
2
---------------------------------------------------------------------
Borrowing Base *25% **=25%, but *50% **=50%, but *75% **=75%
Utilization
Percentage
---------------------------------------------------------------------
ABR Loans 0.125% 0.250% 0.375% 0.500%
---------------------------------------------------------------------
Eurodollar Loans 1.375% 1.500% 1.625% 1.750%
---------------------------------------------------------------------
Commitment Fee 0.375% 0.375% 0.500% 0.500%
Rate
---------------------------------------------------------------------
provided, that at any time when the Borrower's Index Debt is rated BB+ or higher
from S&P and Ba1 or higher from ▇▇▇▇▇'▇, then the Applicable Margin for
Eurodollar Loans set forth in each portion of the grid shall be reduced by an
amount equal to 0.125%.
Each change in the Applicable Margin resulting from either a change in the
Borrowing Base Utilization Percentage or in the Index Debt shall apply during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change, provided,
however, that if at any time the Borrower fails to deliver a Reserve Report
pursuant to Section 8.12(a), then the "Applicable Margin" means the rate per
annum set forth on the grid when the Borrowing Base Utilization Percentage is at
its highest level.
"Applicable Percentage" means, with respect to any Lender, the percentage
of the Aggregate Maximum Credit Amounts represented by such Lender's Maximum
Credit Amount as such percentage is set forth on Annex I.
"Approved Counterparty" means (a) any Lender or any Affiliate of a Lender
and (b) any other Person whose long term senior unsecured debt rating at the
time of entering into the Swap Agreement is BBB+/Baa3 by S&P or ▇▇▇▇▇'▇ (or
their equivalent) or higher.
"Approved Fund" means (a) a CLO and (b) with respect to any Lender that is
a fund which invests in bank loans and similar extensions of credit, any other
fund that invests in bank loans and similar extensions of credit and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Approved Petroleum Engineers" means (a) Netherland, ▇▇▇▇▇▇ & Associates,
Inc., (b) ▇▇▇▇▇ ▇▇▇▇▇ Company Petroleum Consultants, L.P. and (c) any other
independent petroleum engineers reasonably acceptable to the Administrative
Agent.
"Assessment Rate" means, for any day, the annual assessment rate in effect
on such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by 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
3
Assessment Rate shall be such annual rate as shall be determined by the
Administrative Agent to be representative of the cost of such insurance to the
Lenders.
"Assignment and Assumption" means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit E or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the Effective
Date to but excluding the Termination Date.
"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.
"BoA" means Bank of America, N.A.
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America or any successor Governmental Authority.
"Borrowing" means Loans of the same Type, made, converted or continued on
the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Base" means at any time an amount equal to the amount determined
in accordance with Section 2.07, as the same may be adjusted from time to time
pursuant to Section 8.13(c) or Section 9.13(e).
"Borrowing Base Utilization Percentage" means, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of the Revolving
Credit Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City or Houston, Texas are authorized or
required by law to remain closed; and if such day relates to a Borrowing or
continuation of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice
by the Borrower with respect to any such Borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day on which
dealings in dollar deposits are carried out in the London interbank market.
"Capital Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.
"Casualty Event" means any loss, casualty or other insured damage to, or
any nationalization, taking under power of eminent domain or by condemnation or
similar
4
proceeding of, any Property of the Borrower or any of its Restricted
Subsidiaries having a fair market value in excess of $5,000,000.
"Change in Control" means (a) prior to the completion of Step VI of the
Spin-off, if any Person other than PLX or a Subsidiary of PLX owns or acquires
any Equity Interests in the Borrower other than in connection with (i) a
registered public offering of Equity Interests in an amount not to exceed 40% of
the Equity Interests of the Borrower on a fully diluted basis, (ii) stock
options granted to employees of PLX or the Borrower or (iii) the issuance of
preferred stock of the Borrower by the Borrower in exchange for a comparable
amount of the Series D Cumulative Convertible Preferred Stock of PLX; (b)
subsequent to the completion of Step VI of the Spin-off, (i) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any person or
group other than PLX, any Subsidiary of PLX (within the meaning of the
Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect
on the date hereof) or any Permitted Holders (except that such person or group
shall be deemed to have "beneficial ownership" of all shares that any person or
group has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), of Equity Interests representing more than 40%
of the aggregate ordinary voting power represented by the issued and outstanding
Equity Interests of the Borrower (or its successor by merger, consolidation or
purchase of all or substantially all of its assets), (ii) the first day on which
a majority of the members of the Board of Directors of the Borrower are not
Continuing Directors or (iii) for so long as the Borrower is a partnership, such
time as PLX or any of its Subsidiaries ceases to own, directly or indirectly,
the General Partner, or PLX or its Subsidiaries, or their respective officers,
employees or agents cease to serve as the only general partners of the Borrower;
(c) at any time, the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Borrower and its
Restricted Subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d) and 14(d) of the Securities and Exchange Act of 1934); or (d) a
"Change of Control" under the 2002 Senior Subordinated Indenture.
Notwithstanding the foregoing, a conversion of the Borrower from a limited
partnership to a corporation, limited liability company or other form of entity
or an exchange of all of the outstanding limited partnership interests for
capital stock in a corporation, for member interests in a limited liability
company or for Equity Interests in such other form of entity shall not
constitute a Change of Control, so long as following such conversion or exchange
PLX beneficially owns, directly or indirectly, in the aggregate more than 50% of
the voting stock of such entity, or continues to own a sufficient number of the
outstanding shares of voting stock of such entity to elect a majority of its
directors, managers, trustees or other Persons serving a similar capacity for
such entity.
"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 any Issuing Bank
(or, for purposes of Section 5.01(b)), by any lending office of such Lender or
by such Lender's or such Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"CLO" means any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar
5
extensions of credit in the ordinary course of its business and is administered
or managed by a Lender or an Affiliate of such Lender.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a)
modified from time to time pursuant to Section 2.06 and (b) modified from time
to time pursuant to assignments by or to such Lender pursuant to Section
12.04(b). The amount representing each Lender's Commitment shall at any time be
the lesser of such Lender's Maximum Credit Amount and such Lender's Applicable
Percentage of the then effective Borrowing Base.
"Commitment Fee Rate" has the meaning set forth in the definition of
"Applicable Margin".
"Consolidated Net Income" means with respect to the Borrower and the
Consolidated Restricted Subsidiaries, for any period, the aggregate of the net
income (or loss) of the Borrower and the Consolidated Restricted Subsidiaries
after allowances for taxes for such period determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded from such net income
(to the extent otherwise included therein) the following: (a) the net income of
any Person in which the Borrower or any Consolidated Restricted Subsidiary has
an interest (which interest does not cause the net income of such other Person
to be consolidated with the net income of the Borrower and the Consolidated
Restricted Subsidiaries in accordance with GAAP), except to the extent of the
amount of dividends or distributions actually paid in cash during such period by
such other Person to the Borrower or to a Consolidated Restricted Subsidiary, as
the case may be; (b) the net income (but not loss) during such period of any
Consolidated Restricted Subsidiary to the extent that the declaration or payment
of dividends or similar distributions or transfers or loans by that Consolidated
Restricted Subsidiary is not at the time permitted by operation of the terms of
its charter or any agreement, instrument or Governmental Requirement applicable
to such Consolidated Restricted Subsidiary or is otherwise restricted or
prohibited, in each case determined in accordance with GAAP; (c) the net income
(or loss) of any Person acquired in a pooling-of-interests transaction for any
period prior to the date of such transaction; (d) any extraordinary gains or
losses during such period and (e) any gains or losses attributable to writeups
or writedowns of assets, including ceiling test writedowns.
"Consolidated Restricted Subsidiaries" means any Restricted Subsidiaries
that are Consolidated Subsidiaries.
"Consolidated Subsidiaries" means each Subsidiary of the Borrower (whether
now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP.
6
"Consolidated Unrestricted Subsidiaries" means any Unrestricted
Subsidiaries that are Consolidated Subsidiaries.
"Continuing Directors" means, as of any date of determination after the
Borrower is a corporation, any member of the Board of Directors of the Borrower
who: (a) was a member of such Board of Directors on the date of conversion of
the Borrower to a corporation; or (b) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Debt" means, for any Person, the sum of the following (without
duplication): (a) all obligations of such Person for borrowed money or evidenced
by bonds, bankers' acceptances, debentures, notes or other similar instruments;
(b) all obligations of such Person (whether contingent or otherwise) in respect
of letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable, accrued expenses, liabilities or other obligations of such
Person to pay the deferred purchase price of Property or services not excluded
pursuant to the final sentence of this definition; (d) all obligations under
Capital Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as
defined in the other clauses of this definition) of others secured by a Lien on
any Property of such Person, whether or not such Debt is assumed by such Person;
(g) all Debt (as defined in the other clauses of this definition) of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the Debt (howsoever such assurance shall be made) to the extent
of the lesser of the amount of such Debt and the maximum stated amount of such
guarantee or assurance against loss; (h) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or covenants
of others or to purchase the Debt or Property of others; (i) obligations to
deliver commodities, goods or services, including, without limitation,
Hydrocarbons, in consideration of one or more advance payments, other than gas
balancing arrangements in the ordinary course of business; (j) obligations to
pay for goods or services whether or not such goods or services are actually
received or utilized by such Person; (k) any Debt of a partnership for which
such Person is liable either by agreement, by operation of law or by a
Governmental Requirement but only to the extent of such liability; (l)
Disqualified Capital Stock; and (m) the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment. The Debt of any Person shall include all
obligations of such Person of the character described above to the extent such
Person remains legally liable in respect thereof notwithstanding that any such
obligation is not included as a liability of such Person under GAAP. The Debt of
any Person shall not include any accounts payable, accrued expenses or other
liabilities of such Person to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities) which are not greater than 120 days past the invoice or billing
date or, if greater than 120 days past the invoice or billing date, are being
contested in good faith by appropriate proceedings if reserves adequate under
GAAP shall have been established therefor; provided that in the event that the
foregoing
7
conditions are not met, such accounts payable, accrued expenses or other
liabilities shall constitute Debt.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disqualified Capital Stock" means any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is 91 days after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.
"dollars" or "$" refers to lawful money of the United States of America.
"Domestic Subsidiary" means any Restricted Subsidiary that is organized
under the laws of the United States of America or any state thereof or the
District of Columbia.
"EBITDAX" means, for any period, the sum of Consolidated Net Income for
such period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, taxes, the aggregate amount of
Letter of Credit fees paid during such period, depreciation, depletion,
amortization, exploration and abandonment expenses and other noncash charges and
expenses, minus all noncash income added to Consolidated Net Income.
"Effective Date" means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).
"Engineering Reports" has the meaning assigned such term in Section
2.07(c)(i).
"Environmental Laws" means any and all Governmental Requirements pertaining
in any way to health, safety the environment or the preservation or reclamation
of natural resources, in effect in any and all jurisdictions in which the
Borrower or any Restricted Subsidiary is conducting or at any time has conducted
business, or where any Property of the Borrower or any Restricted Subsidiary is
located, including without limitation, the Oil Pollution Act of 1990 ("OPA"), as
amended, the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection Governmental Requirements.
The term "oil" shall have the meaning specified in OPA, the terms "hazardous
substance" and "release" (or "threatened release") have the meanings specified
in CERCLA, the terms "solid waste" and "disposal" (or "disposed") have the
meanings specified in
8
RCRA and the term "oil and gas waste" shall have the meaning specified in
Section 91.1011 of the Texas Natural Resources Code ("Section 91.1011");
provided, however, that (a) in the event either OPA, CERCLA, RCRA or Section
91.1011 is amended so as to broaden the meaning of any term defined thereby,
such broader meaning shall apply subsequent to the effective date of such
amendment and (b) to the extent the laws of the state or other jurisdiction in
which any Property of the Borrower or any Restricted Subsidiary is located
establish a meaning for "oil," "hazardous substance," "release," "solid waste,"
"disposal" or "oil and gas waste" which is broader than that specified in either
OPA, CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Borrower or a Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" means (a) a "Reportable Event" described in section 4043 of
ERISA and the regulations issued thereunder, (b) the withdrawal of the Borrower,
a Subsidiary or any ERISA Affiliate from a Plan during a plan year in which it
was a "substantial employer" as defined in section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC, (e) receipt of a notice of
withdrawal liability pursuant to Section 4202 of ERISA or (f) any other event or
condition which might constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned such term in Section 10.01.
"Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens incurred or deposits
made in connection with workers' compensation, unemployment insurance or other
social security, old age pension or public liability obligations which are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP; (c)
statutory landlord's Liens, operators', vendors', carriers', warehousemen's,
repairmen's, mechanics',
9
suppliers', workers', materialmen's and construction Liens, Liens on pipelines
and pipeline facilities that arise by operation of law or other like Liens
arising by operation of law in the ordinary course of business or incident to
the exploration, development, operation and maintenance of Oil and Gas
Properties each of which is in respect of obligations that are not delinquent or
which are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP; (d) contractual
Liens under lease agreements or which arise in the ordinary course of business
under operating agreements, joint venture agreements, oil and gas partnership
agreements, oil and gas leases, farm-out and farm-in agreements, division
orders, contracts for the sale, transportation or exchange of oil and natural
gas, unitization and pooling declarations and agreements, area of mutual
interest agreements, overriding royalty agreements, marketing agreements,
processing agreements, net profits agreements, development agreements, gas
balancing or deferred production agreements, injection, repressuring and
recycling agreements, salt water or other disposal agreements, seismic or other
geophysical permits or agreements, and other agreements which are usual and
customary in the oil and gas business and are for claims which are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Restricted Subsidiary or materially
impair the value of such Property subject thereto; (e) Liens arising solely by
virtue of any statutory or common law provision relating to banker's liens,
rights of set-off or similar rights and remedies and burdening only deposit
accounts or other funds maintained with a creditor depository institution,
provided that no such deposit account is a dedicated cash collateral account or
is subject to restrictions against access by the depositor in excess of those
set forth by regulations promulgated by the Board and no such deposit account is
intended by Borrower or any of its Restricted Subsidiaries to provide collateral
to the depository institution; (f) easements, restrictions, zoning restrictions
servitudes, permits, conditions, covenants, exceptions or reservations in any
Property of the Borrower or any Restricted Subsidiary for the purpose of roads,
pipelines, transmission lines, transportation lines, distribution lines for the
removal of gas, oil, coal or other minerals or timber, and other like purposes,
or for the joint or common use of real estate, rights of way, facilities and
equipment, which in the aggregate do not materially impair the use of such
Property for the purposes of which such Property is held by the Borrower or any
Restricted Subsidiary or materially impair the value of such Property subject
thereto; (g) Liens on cash or securities pledged to secure performance of
tenders, surety and appeal bonds, government contracts, performance and return
of money bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations and other obligations of a like nature incurred in the ordinary
course of business, (h) judgment and attachment Liens not giving rise to an
Event of Default, provided that any appropriate legal proceedings which may have
been duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated shall not
have expired and no action to enforce such Lien has been commenced, and (i)
Liens arising from Uniform Commercial Code financing statement filings regarding
operating leases entered into by the Borrower and the Restricted Subsidiaries in
the ordinary course of business covering only the Property under lease;
provided, further that Liens described in clauses (a) through (e) shall remain
"Excepted Liens" only for so long as no action to enforce such Lien has been
commenced and no intention to subordinate the first priority
10
Lien granted in favor of the Administrative Agent and the Lenders is to be
hereby implied or expressed by the permitted existence of such Excepted Liens.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, any Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document, (a) income or franchise taxes imposed on (or measured
by) its income, receipts, total assets, net worth, and capital by the United
States of America or such other jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower or any Guarantor is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 5.04(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender's failure to comply with Section 5.03(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts with respect to such withholding tax pursuant to
Section 5.03(a) or Section 5.03(c).
"Existing Credit Agreement" means the Fifth Amended and Restated Credit
Agreement dated as of October 5, 2001 among PLX, as borrower, JPMorgan Chase
Bank (f/k/a The Chase Manhattan Bank), as Co-Agent, Wachovia National Bank
(f/k/a First Union National Bank), as agent, and the other lenders party
thereto.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
"Financial Statements" means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Restricted Subsidiary that is not a Domestic
Subsidiary.
11
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time subject to the terms and conditions
set forth in Section 1.05.
"General Partner" means ▇▇▇▇▇▇▇ Resources, Inc., a California corporation,
in its capacity as the General Partner of the Borrower.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Borrower, any Restricted Subsidiary, any of their
Properties, any Agent, any Issuing Bank or any Lender.
"Governmental Requirement" means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
"Guarantors" means:
(a) Plains Illinois Inc., a Delaware corporation;
(b) ▇▇▇▇▇▇▇▇ Inc., a Delaware corporation;
(c) Plains E&P Company, a Delaware corporation;
(d) PMCT Inc., a Delaware corporation;
(e) Plains Resources International Inc., a Delaware corporation;
(f) each Domestic Subsidiary that guarantees the Indebtedness pursuant
to Section 8.14(b); and
(g) any other Person that must guarantee the Indebtedness in order for
the Borrower to comply with Section 9.04(b)(ii)(C).
"Guaranty Agreement" means an agreement executed by the Guarantors in
substantially the form of Exhibit D-2 unconditionally guarantying on a joint and
several basis, payment of the Indebtedness, as the same may be amended, modified
or supplemented from time to time.
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.
12
"Hydrocarbon Interests" means all rights, titles, interests and estates now
or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases,
or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
"Indebtedness" means any and all amounts owing or to be owing by the
Borrower, any of its Restricted Subsidiaries or any Guarantor: (a) to the
Administrative Agent, any Issuing Bank or any Lender under any Loan Document;
(b) to any Lender or any Affiliate of a Lender under any Swap Agreement entered
into with the Borrower or any of its Restricted Subsidiaries while such Lender
is a Lender hereunder and so long as such Lender remains a party hereto; (c) to
BoA under Swap Agreements existing on the date hereof (but only those Swap
Agreements) that are set forth on Schedule 1.02; and (d) in the case of clauses
(a) and (b), all renewals, extensions and/or rearrangements thereof.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Index Debt" means senior, unsecured, long-term indebtedness for borrowed
money of the Borrower that is not guaranteed by any other Person (other than a
Guarantor) or subject to any other credit enhancement.
"Initial Reserve Report" means, collectively, (i) the report of ▇▇▇▇▇ ▇▇▇▇▇
Company Petroleum Consultants, L.P. with respect to the value of the Oil and Gas
Properties of Plains Illinois Inc. as of December 31, 2001, (ii) the report of
▇▇▇▇▇ ▇▇▇▇▇ Company Petroleum Consultants, L.P. with respect to the value of the
▇▇▇▇▇▇ Grande Field Oil and Gas Properties of PLX as of December 31, 2001, (iii)
the report of ▇▇▇▇▇ ▇▇▇▇▇ Company Petroleum Consultants, L.P. with respect to
the value of the Mount Poso Field Oil and Gas Properties of PLX as of December
31, 2001, (iv) the report of Netherland, ▇▇▇▇▇▇ & Associates, Inc. with respect
to the value of certain Oil and Gas Properties of the General Partner located in
Los Angeles County California as of January 1, 2002, (v) the report of
Netherland, ▇▇▇▇▇▇ & Associates, Inc. with respect to the value of certain Oil
and Gas Properties of PLX located in Louisiana as of December 31, 2001, and (vi)
the report of Netherland, ▇▇▇▇▇▇ & Associates, Inc. with respect to the value of
the Oil and Gas Properties of ▇▇▇▇▇▇▇▇ Inc. as of January 1, 2002.
"Interest Election Request" means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.
"Interest Payment Date" means (a) with respect to any ABR Loan, the last
day of each March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.
13
"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 (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (b) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
"Interim Redetermination" has the meaning assigned such term in Section
2.07(b).
"Interim Redetermination Date" means the date on which a Borrowing Base
that has been redetermined pursuant to an Interim Redetermination becomes
effective as provided in Section 2.07(d).
"Investment" means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale); (b) the
making of any deposit with, or advance, loan or other extension of credit to,
any other Person (including the purchase of Property from another Person subject
to an understanding or agreement, contingent or otherwise, to resell such
Property to such Person, but excluding any such advance, loan or extension of
credit having a term not exceeding ninety (90) days representing the purchase
price of inventory or supplies sold by such Person in the ordinary course of
business) or (c) the entering into of any guarantee of, or other contingent
obligation (including the deposit of any Equity Interests to be sold) with
respect to, Debt or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.
"Issuing Bank" means JPMorgan and each Lender that agrees to act as an
issuer of Letters of Credit hereunder at the request of the Borrower, in each
case, in its capacity as an issuer of Letters of Credit hereunder, and its
successors in such capacity as provided in Section 2.08(i). Any Issuing Bank
may, in its discretion, arrange for one or more Letters of Credit to be issued
by Affiliates of such Issuing Bank, in which case the term "Issuing Bank" shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.
"LC Commitment" at any time means Thirty Million dollars ($30,000,000).
"LC Disbursement" means a payment made by any Issuing Bank pursuant to a
Letter of Credit issued by such Issuing Bank.
14
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn and
unexpired stated amount of all outstanding Letters of Credit at such time plus
(b) the aggregate amount of all LC Disbursements that have not yet been
reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any
Lender at any time shall be its Applicable Percentage of the total LC Exposure
at such time.
"Lenders" means the Persons listed on Annex I, any Person that shall have
become a party hereto pursuant to an Assignment and Assumption, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption, and any Person that shall have become a party hereto pursuant to
Section 2.06(c).
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"Letter of Credit Agreements" means all letter of credit applications and
other agreements (including any amendments, modifications or supplements
thereto) submitted by the Borrower, or entered into by the Borrower, with any
Issuing Bank relating to any Letter of Credit issued by such Issuing Bank.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow ▇▇▇▇▇ Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties. The term "Lien" shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Restricted Subsidiaries shall
be deemed to be the owner of any Property which it has acquired or holds subject
to a conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.
15
"Loan Documents" means this Agreement, the Notes, all Letter of Credit
Agreements, the Letters of Credit and the Security Instruments.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Majority Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least fifty and one tenth percent (50.1%) of the
Aggregate Maximum Credit Amounts; and at any time while any Loans or LC Exposure
is outstanding, Lenders holding at least fifty and one tenth percent (50.1%) of
the outstanding aggregate principal amount of the Loans or participation
interests in Letters of Credit (without regard to any sale by a Lender of a
participation in any Loan under Section 12.04(c)).
"Master Separation Agreement" means the Master Separation Agreement dated
as of the date hereof between the Borrower and PLX.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, Property or financial condition of the Borrower and the
Restricted Subsidiaries taken as a whole, (b) the validity or enforceability of
any of the Loan Documents taken as a whole or the ability of the Borrower, any
Restricted Subsidiary or any Guarantor to perform any of its obligations under
any Loan Document or (c) the rights and remedies of or benefits available to the
Administrative Agent, any Issuing Bank or any Lender under any Loan Document.
"Material Indebtedness" means Debt (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrower and its Restricted Subsidiaries in an aggregate principal
amount exceeding $7,500,000. For purposes of determining Material Indebtedness,
the "principal amount" of the obligations of the Borrower or any Restricted
Subsidiary 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 Subsidiary would be required to pay if such Swap Agreement were terminated
at such time.
"Maturity Date" means July 3, 2005.
"Maximum Credit Amount" means, as to each Lender, the amount set forth
opposite such Lender's name on Annex I under the caption "Maximum Credit
Amounts", as the same may be (a) reduced or terminated from time to time in
connection with a reduction or termination of the Aggregate Maximum Credit
Amounts pursuant to Section 2.06(b), (b) increased from time to time pursuant to
Section 2.06(c) or (c) modified from time to time pursuant to any assignment
permitted by Section 12.04(b).
"Maximum Credit Amount Increase Certificate" has the meaning assigned to
such term in Section 2.06(c)(ii)(E).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor thereto
that is a nationally recognized rating agency.
"Mortgaged Property" means any Property owned by the Borrower or any
Guarantor which is subject to the Liens existing and to exist under the terms of
the Security Instruments.
16
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in section 3(37) or 4001 (a)(3) of ERISA.
"New Borrowing Base Notice" has the meaning assigned such term in Section
2.07(d).
"Non-Recourse Debt" means any Debt of any Unrestricted Subsidiary or other
Person in which the Borrower or a Restricted Subsidiary made an Investment
permitted by Section 9.05(j), in each case in respect of which: (a) the holder
or holders thereof (i) shall have recourse only to, and shall have the right to
require the obligations of such Unrestricted Subsidiary or such Person to be
performed, satisfied, and paid only out of, the Property of such Unrestricted
Subsidiary or such Person and/or one or more of its Subsidiaries (but only to
the extent that such Subsidiaries are Unrestricted Subsidiaries or not
Subsidiaries of the Borrower) and/or any other Person (other than Borrower
and/or any Restricted Subsidiary) and (ii) shall have no direct or indirect
recourse (including by way of guaranty, support or indemnity) to the Borrower or
any Restricted Subsidiary or to any of the Property of Borrower or any
Restricted Subsidiary, whether for principal, interest, fees, expenses or
otherwise; and (b) the terms and conditions relating to the non-recourse nature
of such Debt are in form and substance reasonably acceptable to the
Administrative Agent.
"Notes" means the promissory notes of the Borrower described in Section
2.02(d) and being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.
"Offering Memorandum" means the Offering Memorandum dated June 28, 2002
related to the 2002 Senior Subordinated Notes.
"Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c)
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, transportation,
exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests; (e) all Hydrocarbons in and under and which may be produced and saved
or attributable to the Hydrocarbon Interests, including all oil in tanks, and
all rents, issues, profits, proceeds, products, revenues and other incomes from
or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, injection ▇▇▇▇▇
or other ▇▇▇▇▇, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings,
17
machinery and parts, engines, boilers, meters, apparatus, equipment, appliances,
tools, implements, cables, wires, towers, casing, tubing and rods, surface
leases, rights-of-way, easements and servitudes together with all additions,
substitutions, replacements, accessions and attachments to any and all of the
foregoing.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.
"Participant" has the meaning set forth in Section 12.04(c)(i).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Holders" means (i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and his spouse and lineal
descendants, their respective estates or legal representatives, (ii) trusts
created for the benefit of such Persons and (iii) entities of which 80% or more
of the Equity Interest having ordinary voting power is directly or indirectly
owned by an of the preceding Persons.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plains E&P Company" means Plains E&P Company, a Delaware corporation.
"PLX" means Plains Resources Inc., a Delaware corporation.
"PLX Senior Subordinated Indentures" means collectively: (i) that certain
Indenture dated as of March 15, 1996 among PLX, as issuer, "Subsidiary
Guarantors" (as defined therein) and JPMorgan Chase Bank (f/k/a The Chase
Manhattan Bank, Chase Bank of Texas National Association and Texas Commerce Bank
National Association), as Trustee, (ii) that certain Indenture dated as of July
21, 1997 among PLX, as issuer, "Subsidiary Guarantors" (as defined therein) and
JPMorgan Chase Bank (f/k/a The Chase Manhattan Bank, Chase Bank of Texas,
National Association and Texas Commerce Bank National Association), as Trustee,
and (iii) that certain Indenture dated as of September 15, 1999 among PLX, as
issuer, "Subsidiary Guarantors" (as defined therein) and JPMorgan Chase Bank
(f/k/a The Chase Manhattan Bank and Chase Bank of Texas, National Association),
as Trustee, in each case as amended or modified from time to time in compliance
with Section 9.04.(b).
"PLX Senior Subordinated Notes" means collectively (i) the 10 1/4% senior
subordinated notes due 2006 in the original aggregate principal amount of
$150,000,000 issued by PLX pursuant to the Senior Subordinated Indenture dated
as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) the 10 1/4% senior subordinated notes due 2006 in the
original aggregate principal amount of $50,000,000 issued by PLX pursuant to the
Senior Subordinated Indenture dated as of July 21, 1997, and (iii) the 10 1/4%
senior subordinated notes due 2006 in the original aggregate principal amount of
$75,000,000 dated on or about September 22, 1999 issued by PLX pursuant to the
Senior Subordinated Indenture dated as of September 15, 1999.
18
"Plan" means any employee pension benefit plan, as defined in section 3(2)
of ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at
any time during the six calendar years preceding the date hereof, sponsored,
maintained or contributed to by the Borrower or a Subsidiary or an ERISA
Affiliate.
"Point ▇▇▇▇▇▇▇▇ Partnerships" means the following partnerships of which
▇▇▇▇▇▇▇▇ Inc. is a managing general partner: (i) Gaviota Gas Plant Company, (ii)
Point ▇▇▇▇▇▇▇▇ Natural Gas Line Company, (iii) Point ▇▇▇▇▇▇▇▇ Pipeline Company
and (iv) Point ▇▇▇▇▇▇▇▇ Terminal Company.
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by JPMorgan as its prime rate in effect at its principal office in
New York City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective. Such
rate is set by the Administrative Agent as a general reference rate of interest,
taking into account such factors as the Administrative Agent may deem
appropriate; it being understood that many of the Administrative Agent's
commercial or other loans are priced in relation to such rate, that it is not
necessarily the lowest or best rate actually charged to any customer and that
the Administrative Agent may make various commercial or other loans at rates of
interest having no relationship to such rate.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.
"Proposed Borrowing Base" has the meaning assigned to such term in Section
2.07(c)(i).
"Proposed Borrowing Base Notice" has the meaning assigned to such term in
Section 2.07(c)(ii).
"Redemption" means the repurchase, redemption, prepayment, repayment,
defeasance or any other acquisition or retirement for value (or the segregation
of funds with respect to any of the foregoing) of the PLX Senior Subordinated
Notes, the 2002 Senior Subordinated Notes or Material Indebtedness, as the
context requires. "Redeem" has the correlative meaning thereto.
"Redetermination Date" means, with respect to any Scheduled Redetermination
or any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.07(d).
"Register" has the meaning assigned such term in Section 12.04(b)(iv).
"Regulation D" means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and attorneys, accountants and experts of such Person and such Person's
Affiliates.
19
"Remedial Work" has the meaning assigned such term in Section 8.10(a).
"Required Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least seventy-five percent (75%) of the Aggregate
Maximum Credit Amounts; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding at least seventy-five percent (75%) of the
outstanding aggregate principal amount of the Loans or participation interests
in such Letters of Credit (without regard to any sale by a Lender of a
participation in any Loan under Section 12.04(c)).
"Reserve Report" means a report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, as of each January 1st
or July 1st (or such other date in the event of an Interim Redetermination) the
oil and gas reserves attributable to the Oil and Gas Properties of the Borrower
and the Restricted Subsidiaries, together with a projection of the rate of
production and future net income, taxes, operating expenses and capital
expenditures with respect thereto as of such date, based upon the pricing
assumptions consistent with SEC reporting requirements at the time.
"Responsible Officer" means, as to any Person, the Chief Executive Officer,
the President, any Financial Officer or any Vice President of such Person.
Unless otherwise specified, all references to a Responsible Officer herein shall
mean a Responsible Officer of the General Partner while the Borrower is a
limited partnership, and upon conversion into a corporation, the Borrower.
"Restricted Payment" means (a) any dividend or other distribution (whether
in cash, securities or other Property) with respect to any Equity Interests in
the Borrower, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any option, warrant or other right to
acquire any such Equity Interests in the Borrower or (b) any payment or other
distribution in respect of any indemnity obligation of the Borrower or any of
its Subsidiaries under the Master Separation Agreement, the Tax Allocation
Agreement or any other Spin-off Document.
"Restricted Subsidiary" means any Subsidiary of the Borrower that is not an
Unrestricted Subsidiary.
"Revolving Credit Exposure" means, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender's Loans and its LC
Exposure at such time.
"Scheduled Redetermination" has the meaning assigned such term in Section
2.07(b).
"Scheduled Redetermination Date" means the date on which a Borrowing Base
that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).
"SEC" means the Securities and Exchange Commission or any successor
Governmental Authority.
20
"Security Instruments" means the Guaranty Agreement, mortgages, deeds of
trust and other agreements, instruments or certificates described or referred to
in Exhibit D-1, and any and all other agreements, instruments or certificates
now or hereafter executed and delivered by the Borrower or any other Person
(other than Swap Agreements with the Lenders or any Affiliate of a Lender or
participation or similar agreements between any Lender and any other lender or
creditor with respect to any Indebtedness pursuant to this Agreement) in
connection with, or as security for the payment or performance of the
Indebtedness, the Notes, this Agreement, or reimbursement obligations under the
Letters of Credit, as such agreements may be amended, modified, supplemented or
restated from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
"Spin-off" means the following transactions:
Step I: the name change of the Borrower from ▇▇▇▇▇▇▇ Resources, L.P.
to Plains Exploration & Production Company, L.P.;
Step II: the incorporation of Plains E&P Company as a Subsidiary of
the Borrower;
Step III: the contribution by PLX of all of the Equity Interests in
Plains Resources Illinois Inc., ▇▇▇▇▇▇▇▇ Inc., PMCT Inc., Plains Resources
International Inc. and the contribution by PLX and the General Partner of
certain other assets to the Borrower and its Restricted Subsidiaries;
Step IV: the issuance of the 2002 Senior Subordinated Notes and the
subsequent Redemption of all of the outstanding PLX Senior Subordinated
Notes with the proceeds of such issuance;
Step V: the conversion of the Borrower into a Delaware limited
partnership and the subsequent conversion of the Borrower into a Delaware
corporation, the merger of the General Partner into PLX, the contribution
by PLX of certain assets to the Borrower and its Restricted Subsidiaries
that were not contributed or transferred in Step III due to transfer
restrictions or consents which had not been obtained at such time and/or a
registered public offering of Equity Interests of the Borrower; and
Step VI: the declaration and payment by PLX of a dividend to its
shareholders of all or a portion of the Equity Interests of the Borrower
then owned by PLX;
in each case, as described in the Offering Memorandum and pursuant to the
Spin-off Documents.
"Spin-off Documents" means the Transition Agreements and all other
agreements, instruments and documents executed in connection with the Spin-off.
"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
21
reserves) expressed as a decimal established by the Board to which the
Administrative Agent is subject (a) with respect to the Base CD Rate, for new
negotiable nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or
any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Subsidiary" means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner other than the Point ▇▇▇▇▇▇▇▇ Partnerships. Unless otherwise indicated
herein, each reference to the term "Subsidiary" shall mean a Subsidiary of the
Borrower.
"Super-majority Lenders" means, at any time while no Loans or LC Exposure
is outstanding, Lenders having at least sixty-six and two thirds percent
(66-2/3%) of the Aggregate Maximum Credit Amounts; and at any time while any
Loans or LC Exposure is outstanding, Lenders holding at least sixty-six and two
thirds percent (66-2/3%) of the outstanding aggregate principal amount of the
Loans or participation interests in such Letters of Credit (without regard to
any sale by a Lender of a participation in any Loan under Section 12.04(c)).
"Swap Agreement" means any agreement with respect to any swap, cap, collar,
forward, future or derivative transaction or option or similar agreement,
whether exchange traded, "over-the-counter" or otherwise, involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.
"Synthetic Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, treated as operating
leases on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.
22
"Tax Allocation Agreement" means the Tax Allocation Agreement dated as of
the date hereof between the Borrower and PLX.
"Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Termination Date" means the earlier of the Maturity Date and the date of
termination of the Commitments.
"Three-Month Secondary CD Rate" means, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day is not a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day) or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Debt" means, at any date, all Debt of the Borrower and the
Consolidated Restricted Subsidiaries on a consolidated basis other than Debt
described under Section 9.02(d) and Section 9.02(g) and stand-by letters of
credit in respect of performance obligations.
"Transactions" means, with respect to (a) the Borrower, the execution,
delivery and performance by the Borrower of this Agreement, each other Loan
Document and Spin-off Document to which it is a party, the Spin-off, the
borrowing of Loans, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder, and the grant of Liens by the Borrower on Mortgaged
Properties and other Properties pursuant to the Security Instruments and (b)
each Guarantor, the execution, delivery and performance by such Guarantor of
each Loan Document and Spin-off Document to which it is a party, the Spin-off,
the guaranteeing of the Indebtedness and the other obligations under the
Guaranty Agreement by such Guarantor and such Guarantor's grant of the security
interests and provision of collateral thereunder, and the grant of Liens by such
Guarantor on Mortgaged Properties and other Properties pursuant to the Security
Instruments.
"Transition Agreements" means the Master Separation Agreement, the Employee
Matters Agreement, between the Borrower and PLX, dated as of the date hereof,
the Plains Resources Inc. Transition Services Agreement, between the Borrower
and PLX, dated as of the date hereof, the Plains Exploration & Production
Company, L.P. Transition Services Agreement, between the Borrower and PLX, dated
as of the date hereof, the Technical Services Agreement, among the Borrower, PLX
and Calumet Florida, L.L.C., dated as of the date hereof, the Intellectual
Property Agreement, between the Borrower and PLX, dated as of the date hereof,
and the Tax Allocation Agreement, each as amended or supplemented from time to
time in compliance with the terms of the 2002 Senior Subordinated Indenture.
23
"2002 Senior Subordinated Indenture" means that certain Indenture dated as
of July 3, 2002, among the Borrower and Plains E&P Company, as co-issuers, the
Subsidiary Guarantors party thereto and JPMorgan, as trustee, pursuant to which
the 2002 Senior Subordinated Notes are issued, as hereafter amended or
supplemented pursuant to Section 9.04(b).
"2002 Senior Subordinated Notes" means the $200,000,000 8-3/4% senior
subordinated notes due 2012 issued by the Borrower and Plains E&P Company, as
co-issuers.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.
"Unrestricted Subsidiary" means any Subsidiary of the Borrower designated
as such on Schedule 7.15 or which the Borrower has designated in writing to the
Administrative Agent to be an Unrestricted Subsidiary pursuant to Section 9.06.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary of which all of
the outstanding Equity Interests (other than any directors' qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries or by the Borrower and one or
more of the Wholly-Owned Subsidiaries.
Section 1.03 Types of Loans and Borrowings. For purposes of this Agreement,
Loans and Borrowings, respectively, may be classified and referred to by Type
(e.g., a "Eurodollar Loan" or a "Eurodollar Borrowing").
Section 1.04 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns (subject to the restrictions contained herein), (c) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof and (d) all references herein to Articles, Sections, Annexes, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Annexes, Exhibits and Schedules to, this Agreement.
Section 1.05 Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which Borrower's independent
24
certified public accountants concur and which are disclosed to Administrative
Agent on the next date on which financial statements are required to be
delivered to the Lenders pursuant to Section 8.01(a); provided that, unless the
Borrower and the Majority Banks shall otherwise agree in writing, no such change
shall modify or affect the manner in which compliance with the covenants
contained herein is computed such that all such computations shall be conducted
utilizing financial information presented consistently with prior periods.
ARTICLE II
The Credits
Section 2.01 Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the
total Revolving Credit Exposures exceeding the total Commitments. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, repay and reborrow the Loans.
Section 2.02 Loans and Borrowings.
(a) Borrowings; Several Obligations. Each Loan shall be made as part
of a Borrowing consisting of Loans made by the Lenders ratably in accordance
with their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.
(b) Types of Loans. Subject to Section 3.03, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. No such designation or transfer shall result in any liability on
the part of the Borrower for increased costs or expenses resulting solely from
such designation or transfer (except any such transfer which is made by a Lender
pursuant to Section 5.04 or Section 5.05, or otherwise for the purpose of
complying with any Governmental Requirement). Increased costs for expenses
resulting from a change in law occurring subsequent to any such designation or
transfer shall be deemed not to result solely from such designation or transfer.
(c) Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $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 total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.08(e).
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of eight (8) Eurodollar
25
Borrowings outstanding. Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.
(d) Notes. The Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A,
dated, in the case of (i) any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement, (ii) any Lender that becomes a
party hereto pursuant to an Assignment and Assumption, as of the effective date
of the assignment and assumption, or (iii) any Lender that becomes a party
hereto in connection with an increase in the Aggregate Maximum Credit Amounts
pursuant to Section 2.06(c), as of the effective date of such increase, payable
to the order of such Lender in a principal amount equal to its Maximum Credit
Amount as in effect on such date, and otherwise duly completed. In the event
that any Lender's Maximum Credit Amount increases or decreases for any reason
(whether pursuant to Section 2.06, Section 12.04(b) or otherwise), the Borrower
shall deliver or cause to be delivered on the effective date of such increase or
decrease, a new Note payable to the order of such Lender in a principal amount
equal to its Maximum Credit Amount after giving effect to such increase or
decrease, and otherwise duly completed. The date, amount, Type, interest rate
and, if applicable, Interest Period of each Loan made by each Lender, and all
payments made on account of the principal thereof, shall be recorded by such
Lender on its books for its Note, and, prior to any transfer, may be endorsed by
such Lender on a schedule attached to such Note or any continuation thereof or
on any separate record maintained by such Lender. Failure to make any such
notation or to attach a schedule shall not affect any Lender's or the Borrower's
rights or obligations in respect of such Loans or affect the validity of such
transfer by any Lender of its Note.
Section 2.03 Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time,
three Business Days before the date of the proposed Borrowing or (b) in the case
of a ABR Borrowing, not later than 12:00 noon, New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(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";
26
(v) the amount of the then effective Borrowing Base, the current
total Revolving Credit Exposures (without regard to the requested
Borrowing) and the pro forma total Revolving Credit Exposures (giving
effect to the requested Borrowing); and
(vi) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Each Borrowing
Request shall constitute a representation that the amount of the requested
Borrowing shall not cause the total Revolving Credit Exposures to exceed the
total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and
the then effective Borrowing Base).
Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
Section 2.04 Interest Elections.
(a) Conversion and Continuance. Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.04. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) Interest Election Requests. To make an election pursuant to this
Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Interest Election Request in a form approved by the Administrative Agent
and signed by the Borrower.
(c) Information in Interest Election Requests. Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the
27
information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall
be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Notice to Lenders by the Administrative Agent. Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender's portion of each
resulting Borrowing.
(e) Effect of Failure to Deliver Timely Interest Election Request and
Events of Default on Interest Election. If the Borrower fails to deliver a
timely Interest Election Request with respect to a Eurodollar Borrowing prior to
the end of the Interest Period applicable thereto, then, unless such Borrowing
is repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing: (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
Section 2.05 Funding of Borrowings.
(a) Funding by Lenders. Each Lender shall make each Loan to be made by
it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 12:00 noon, New York City time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in Houston,
Texas and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.08(e) shall be remitted by the Administrative Agent to
the Issuing Bank that made such LC Disbursement.
(b) Presumption of Funding by the Lenders. Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
Section 2.05(a) and may, in reliance upon such
28
assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender's Loan included in such Borrowing.
Section 2.06 Termination, Reduction and Increase of Aggregate Maximum
Credit Amounts.
(a) Scheduled Termination of Commitments. Unless previously
terminated, the Commitments shall terminate on the Maturity Date. If at any time
the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or
reduced to zero, then the Commitments shall terminate on the effective date of
such termination or reduction.
(b) Optional Termination and Reduction of Aggregate Credit Amounts.
(i) The Borrower may at any time terminate, or from time to time
reduce, the Aggregate Maximum Credit Amounts; provided that (A) each
reduction of the Aggregate Maximum Credit Amounts shall be in an amount
that is an integral multiple of $1,000,000 and not less than $5,000,000 and
(B) the Borrower shall not terminate or reduce the Aggregate Maximum Credit
Amounts if, after giving effect to any concurrent prepayment of the Loans
in accordance with Section 3.04(c), the total Revolving Credit Exposures
would exceed the total Commitments.
(ii) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.06(b)(i) at least three Business Days prior to the effective date
of such termination or reduction, specifying such election and the
effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall
be irrevocable. Any termination or reduction of the Aggregate Maximum
Credit Amounts shall be permanent and may not be reinstated except pursuant
to Section 2.06(c). Each reduction of the Aggregate Maximum Credit Amounts
shall be made ratably among the Lenders in accordance with each Lender's
Applicable Percentage.
(c) Optional Increase in Aggregate Maximum Credit Amounts.
(i) Subject to the conditions set forth in Section 2.06(c)(ii),
the Borrower may increase the Aggregate Maximum Credit Amounts then in
effect with the prior written consent of the Administrative Agent by
increasing the Maximum Credit Amount of a Lender or by causing a Person
that at such time is not a Lender to become a
29
Lender (an "Additional Lender"); provided that the Aggregate Maximum Credit
Amounts shall not exceed $300,000,000.
(ii) Any increase in the Aggregate Maximum Credit Amounts shall
be subject to the following additional conditions:
(A) such increase shall not be less than $20,000,000 unless
the Administrative Agent otherwise consents, and no such increase shall be
permitted if after giving effect thereto the Aggregate Maximum Credit Amounts
would exceed $300,000,000;
(B) no Default shall have occurred and be continuing at the
effective date of such increase;
(C) on the effective date of such increase, no Eurodollar
Borrowings shall be outstanding (or if any Eurodollar Borrowings are
outstanding, then the effective date of such increase shall be the last day of
the Interest Period in respect of such Eurodollar Borrowings unless the Borrower
pays any compensation required by Section 5.02);
(D) no Lender's Maximum Credit Amount may be increased
without the consent of such Lender;
(E) if the Borrower elects to increase the Aggregate Maximum
Credit Amounts by increasing the Maximum Credit Amount of a Lender, the Borrower
and such Lender shall execute and deliver to the Administrative Agent a
certificate substantially in the form of Exhibit F-1 (a "Maximum Credit Amount
Increase Certificate"), and the Borrower shall deliver a new Note payable to the
order of such Lender in a principal amount equal to its Maximum Credit Amount
after giving effect to such increase, and otherwise duly completed; and
(F) If the Borrower elects to increase the Aggregate Maximum
Credit Amounts by causing an Additional Lender to become a party to this
Agreement, then the Borrower and such Additional Lender shall execute and
deliver to the Administrative Agent a certificate substantially in the form of
Exhibit F-2 (an "Additional Lender Certificate"), together with an
Administrative Questionnaire, and the Borrower shall deliver a Note payable to
the order of such Additional Lender in a principal amount equal to its Maximum
Credit Amount, and otherwise duly completed.
(iii) Subject to acceptance and recording thereof pursuant to
Section 2.06(c)(iv), from and after the effective date specified in the
Maximum Credit Amount Increase Certificate or the Additional Lender
Certificate (or if any Eurodollar Borrowings are outstanding, then the last
day of the Interest Period in respect of such Eurodollar Borrowings): (A)
the amount of the Aggregate Maximum Credit Amounts shall be increased as
set forth therein, and (B) in the case of an Additional Lender Certificate,
any Additional Lender party thereto shall be a party to this Agreement and
the other Loan Documents and have the rights and obligations of a Lender
under this Agreement and the other Loan Documents. In addition, the Lender
or the Additional Lender, as applicable, shall purchase a pro rata portion
of the outstanding Loans (and participation interests in Letters of Credit)
of each of the other Lenders (and such Lenders hereby agree to sell and to
take all such further action to effectuate such sale) such that each Lender
(including
30
any Additional Lender, if applicable) shall hold its Applicable Percentage
of the outstanding Loans (and participation interests) after giving effect
to the increase in the Aggregate Maximum Credit Amounts.
(iv) Upon its receipt of a duly completed Maximum Credit Amount
Increase Certificate or an Additional Lender Certificate, executed by the
Borrower and the Lender or the Borrower and the Additional Lender party
thereto, as applicable, the processing and recording fee referred to in
Section 2.06(c)(ii), the Administrative Questionnaire referred to in
Section 2.06(c)(ii), if applicable, and the written consent of the
Administrative Agent to such increase required by Section 2.06(c)(i), the
Administrative Agent shall accept such Maximum Credit Amount Increase
Certificate or Additional Lender Certificate and record the information
contained therein in the Register required to be maintained by the
Administrative Agent pursuant to Section 12.04(b)(iv). No increase in the
Aggregate Maximum Credit Amounts shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
Section 2.06(c)(iv).
Section 2.07 Borrowing Base.
(a) Initial Borrowing Base. For the period from and including the
Effective Date to but excluding the first Redetermination Date, the amount of
the Borrowing Base shall be $225,000,000. Notwithstanding the foregoing, the
Borrowing Base shall be subject to further adjustments from time to time
pursuant to Section 8.13(c) or Section 9.13.
(b) Scheduled and Interim Redeterminations. Subject to Section
2.07(d), the Borrowing Base shall be redetermined (a "Scheduled
Redetermination") on May 1st and November 1st of each year, commencing November
1, 2002. In addition, the Borrower may, by notifying the Administrative Agent
thereof, and the Administrative Agent may, at the direction of the
Super-majority Lenders, by notifying the Borrower thereof, one time during any
12-month period, each elect to cause the Borrowing Base to be redetermined
between Scheduled Redeterminations (an "Interim Redetermination") in accordance
with this Section 2.07.
(c) Scheduled and Interim Redetermination Procedure.
(i) Each Scheduled Redetermination and each Interim
Redetermination shall be effectuated as follows: Upon receipt by the
Administrative Agent of (A) the Reserve Report and the certificate required
to be delivered by the Borrower to the Administrative Agent, in the case of
a Scheduled Redetermination, pursuant to Section 8.12(a) and (c), and, in
the case of an Interim Redetermination, pursuant to Section 8.12(b) and
(c), and (B) such other reports, data and supplemental information,
including, without limitation, the information provided pursuant to Section
8.12(c), as may, from time to time, be reasonably requested by the Majority
Lenders (the Reserve Report, such certificate and such other reports, data
and supplemental information being the "Engineering Reports"), the
Administrative Agent shall evaluate the information contained in the
Engineering Reports and shall, in good faith, propose a new Borrowing Base
(the "Proposed Borrowing Base") based upon such information and such other
information (including, without limitation, the status of title information
31
with respect to the Oil and Gas Properties as described in the Engineering
Reports and the existence of any other Debt) as the Administrative Agent
deems appropriate and consistent with its normal oil and gas lending
criteria as it exists at the particular time.
(ii) The Administrative Agent shall notify the Borrower and the
Lenders of the Proposed Borrowing Base (the "Proposed Borrowing Base
Notice"):
(A) in the case of a Scheduled Redetermination (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on or before the April 15th and October 15th of such year
following the date of delivery or (2) if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then
promptly after the Administrative Agent has received complete Engineering
Reports from the Borrower and has had a reasonable opportunity to determine the
Proposed Borrowing Base in accordance with Section 2.07(c)(i); and
(B) in the case of an Interim Redetermination, promptly, and
in any event, within fifteen (15) days after the Administrative Agent has
received the required Engineering Reports.
(iii) Any Proposed Borrowing Base that would increase the
Borrowing Base then in effect must be approved or deemed to have been
approved by the Required Lenders as provided in this Section 2.07(c)(iii);
and any Proposed Borrowing Base that would decrease or maintain the
Borrowing Base then in effect must be approved or be deemed to have been
approved by the Super-majority Lenders as provided in this Section
2.07(c)(iii). Upon receipt of the Proposed Borrowing Base Notice, each
Lender shall have fifteen (15) days to agree with the Proposed Borrowing
Base or disagree with the Proposed Borrowing Base by proposing an alternate
Borrowing Base. If at the end of such fifteen (15) days, any Lender has not
communicated its approval or disapproval in writing to the Administrative
Agent, such silence shall be deemed to be an approval of the Proposed
Borrowing Base. If, at the end of such 15-day period, the Required Lenders,
in the case of a Proposed Borrowing Base that would increase the Borrowing
Base then in effect, or the Super-majority Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base
then in effect, have approved or deemed to have approved, as aforesaid,
then the Proposed Borrowing Base shall become the new Borrowing Base,
effective on the date specified in Section 2.07(d). If, however, at the end
of such 15-day period, the Required Lenders or the Super-majority Lenders,
as applicable, have not approved or deemed to have approved, as aforesaid,
then the Administrative Agent shall poll the Lenders to ascertain the
highest Borrowing Base then acceptable to a number of Lenders sufficient to
constitute the Required Lenders or the Super-majority Lenders, as
applicable, and such amount shall become the new Borrowing Base, effective
on the date specified in Section 2.07(d).
(d) Effectiveness of a Redetermined Borrowing Base. After a
redetermined Borrowing Base is approved or is deemed to have been approved by
the Required Lenders or the Super-majority Lenders, as applicable, pursuant to
Section 2.07(c)(iii), the Administrative Agent
32
shall notify the Borrower and the Lenders of the amount of the redetermined
Borrowing Base (the "New Borrowing Base Notice"), and such amount shall become
the new Borrowing Base, effective and applicable to the Borrower, the Agents,
each Issuing Bank and the Lenders:
(A) in the case of a Scheduled Redetermination, (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on the May 1st or November 1st, as applicable following
such notice, or (2) if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrower pursuant to Section
8.12(a) and (c) in a timely and complete manner, then on the Business Day next
succeeding delivery of such notice; and
(B) in the case of an Interim Redetermination, on the
Business Day next succeeding delivery of such notice.
Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 8.13(c) or Section 9.13,
whichever occurs first. Notwithstanding the foregoing, no Scheduled
Redetermination or Interim Redetermination shall become effective until the New
Borrowing Base Notice related thereto is received by the Borrower.
Section 2.08 Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein, the
Borrower may request any Issuing Bank to issue Letters of Credit for its own
account or for the account of any of its Restricted Subsidiaries, in a form
reasonably acceptable to the Administrative Agent and such 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, an Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to any Issuing
Bank and the Administrative Agent (not less than three (3) Business Days in
advance of the requested date of issuance, amendment, renewal or extension) a
notice:
(i) requesting the issuance of a Letter of Credit or identifying
the Letter of Credit issued by such Issuing Bank to be amended, renewed or
extended;
(ii) specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day);
(iii) specifying the date on which such Letter of Credit is to
expire (which shall comply with Section 2.08(c));
33
(iv) specifying the amount of such Letter of Credit;
(v) specifying the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew
or extend such Letter of Credit; and
(vi) specifying the amount of the then effective Borrowing Base,
the current total Revolving Credit Exposures (without regard to the
requested Letter of Credit or the requested amendment, renewal or extension
of an outstanding Letter of Credit) and the pro forma total Revolving
Credit Exposures (giving effect to the requested Letter of Credit or the
requested amendment, renewal or extension of an outstanding Letter of
Credit).
Each notice shall constitute a representation that, after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the LC
Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing Base).
If requested by any Issuing Bank, the Borrower also shall submit a letter of
credit application on such Issuing Bank's standard form in connection with any
request for a Letter of Credit.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank that issues such Letter of Credit
or the Lenders, each Issuing Bank that issues a Letter of Credit hereunder
hereby grants to each Lender, and each Lender hereby acquires from such 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 any Issuing Bank that issues a Letter of Credit hereunder, such
Lender's Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by the Borrower on the date due as provided in Section
2.08(e), or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this Section 2.08(d) in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If any Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit issued by such Issuing Bank, the Borrower shall
reimburse such LC
34
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
if such LC Disbursement is not less than $1,000,000, the reimbursement shall be
automatically made as an ABR Borrowing to the extent permitted by this Agreement
at that time. For purposes of the first sentence of Section 2.01, the amount of
the ABR Borrowing shall be considered, but the amount of the LC Disbursement to
be concurrently reimbursed shall not be considered. If the Borrower has not made
the relevant reimbursement, the Administrative Agent shall notify each Lender of
the applicable LC Disbursement, the payment then due from the Borrower in
respect thereof and such Lender's Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower, in
the same manner as provided in Section 2.05 with respect to Loans made by such
Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Issuing Bank that issued such Letter of Credit the amounts so received by it
from the Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to this Section 2.08(e), the Administrative
Agent shall distribute such payment to the Issuing Bank that issued such Letter
of Credit or, to the extent that Lenders have made payments pursuant to this
Section 2.08(e) to reimburse such Issuing Bank, then to such Lenders and such
Issuing Bank as their interests may appear.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in Section 2.08(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by any Issuing Bank under a
Letter of Credit issued by such Issuing Bank against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or
any Letter of Credit Agreement, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section 2.08(f), constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder. Neither the Administrative Agent, the Lenders nor any 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 any Issuing Bank; provided that the foregoing shall not be
construed to excuse any Issuing Bank from liability to
35
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
such 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 any Issuing Bank (as finally
determined by a court of competent jurisdiction), such Issuing Bank shall be
deemed to have exercised all requisite care in each such determination. In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank that issued such Letter of Credit 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. Each Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit issued by such Issuing Bank. Such
Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether such
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 such Issuing Bank and the Lenders with
respect to any such LC Disbursement.
(h) Interim Interest. If any Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed such Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section
2.08(e)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall
be for the account of such Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse
such Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of an Issuing Bank. Any Issuing Bank may be replaced
or resign at any time by written agreement among the Borrower, the
Administrative Agent, such retiring or replaced Issuing Bank and, in the case of
a replacement, the successor Issuing Bank. The Administrative Agent shall notify
the Lenders of any such resignation or replacement of an Issuing Bank. At the
time any such resignation or replacement shall become effective, the Borrower
shall pay all unpaid fees accrued for the account of the retiring or replaced
Issuing Bank pursuant to Section 3.05(b). In the case of the replacement of an
Issuing Bank, from and after the effective date of such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of the replaced
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to "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 resignation or
replacement of an Issuing Bank hereunder, the retiring or replaced Issuing Bank
shall remain a party hereto and shall
36
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
resignation or replacement, but shall not be required to issue additional
Letters of Credit.
(j) Cash Collateralization. If (i) any Event of Default shall occur
and be continuing and the Borrower receives notice from the Administrative Agent
or the Majority Lenders demanding the deposit of cash collateral pursuant to
this Section 2.08(j), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower or any Restricted Subsidiary
described in Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to
the Administrative Agent, for the benefit of each Issuing Bank and the Lenders,
an exclusive first priority and continuing perfected security interest in and
Lien on such account and all cash, checks, drafts, certificates and instruments,
if any, from time to time deposited or held in such account, all deposits or
wire transfers made thereto, any and all investments purchased with funds
deposited in such account, all interest, dividends, cash, instruments, financial
assets and other Property from time to time received, receivable or otherwise
payable in respect of, or in exchange for, any or all of the foregoing, and all
proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor. The Borrower's obligation to
deposit amounts pursuant to this Section 2.08(j) shall be absolute and
unconditional, without regard to whether any beneficiary of any such Letter of
Credit has attempted to draw down all or a portion of such amount under the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower or any of its Subsidiaries may now
or hereafter have against any such beneficiary, any Issuing Bank, the
Administrative Agent, the Lenders or any other Person for any reason whatsoever.
Such deposit shall be held as collateral securing the payment and performance of
the Borrower's and the Guarantor's obligations under this Agreement and the
other Loan Documents. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Administrative Agent and
at the Borrower's risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse, on a pro rata basis, each Issuing Bank for LC Disbursements for which
it has not been reimbursed or, if the maturity of the Loans has been
accelerated, be applied to satisfy other obligations of the Borrower and the
Guarantors under this Agreement or the other Loan Documents. In the event of any
such payment by the Borrower of amounts contingently owing under outstanding
Letters of Credit and in the event that thereafter drafts or other demands for
payment complying with the terms of such Letters of Credit are not made on or
prior to the respective expiration dates thereof, the Administrative Agent
agrees, if no Event of Default is then continuing or if no other amounts are
then
37
outstanding under this Agreement, the Notes or the Loan Documents, to remit to
the Borrower amounts for which the contingent obligations evidenced by the
Letters of Credit have ceased. If the Borrower is required to provide an amount
of cash collateral hereunder as a result of the occurrence of an Event of
Default, and the Borrower is not otherwise required to pay to the Administrative
Agent the excess attributable to an LC Exposure in connection with any
prepayment pursuant to Section 3.04(c), then such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived.
ARTICLE III
Payments of Principal and Interest; Prepayments; Fees
Section 3.01 Repayment of Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date.
Section 3.02 Interest.
(a) ABR Loans. The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.
(b) Eurodollar Loans. The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.
(c) Post-Default Rate. Notwithstanding the foregoing, if any principal
of or interest on any Loan or any fee or other amount payable by the Borrower or
any Guarantor hereunder or under any other Loan Document is not paid when due,
whether at stated maturity, upon acceleration or otherwise, such overdue amount
shall bear interest, after as well as before judgment, at a rate per annum equal
to two percent (2%) plus the rate applicable to ABR Loans as provided in Section
3.02(a), but in no event to exceed the Highest Lawful Rate.
(d) Interest Payment Dates. Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and on the
Termination Date; provided that (i) interest accrued pursuant to Section 3.02(c)
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than an optional prepayment of an ABR Loan prior to the
Termination Date), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment, and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion (but only to the extent so converted).
(e) Interest Rate Computations. All interest hereunder shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate shall be computed on the basis of a year of
365
38
days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall
be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.
Section 3.03 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest
Period; or
(b) the Administrative Agent is advised by the Majority Lenders that
the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
Section 3.04 Prepayments.
(a) Optional Prepayments. The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with Section 3.04(b).
(b) Notice and Terms of Optional Prepayment. The Borrower shall notify
the Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 12:00 noon, New York City time, three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later
than 12:00 noon, New York City time, on the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid. Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent
shall advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 3.02.
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(c) Mandatory Prepayments.
(i) If, after giving effect to any termination or reduction of
the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), the total
Revolving Credit Exposures exceeds the total Commitments, then the Borrower
shall (A) prepay the Borrowings on the date of such termination or
reduction in an aggregate principal amount equal to such excess, and (B) if
any excess remains after prepaying all of the Borrowings as a result of an
LC Exposure, pay to the Administrative Agent on behalf of the Lenders an
amount equal to such excess to be held as cash collateral as provided in
Section 2.08(j).
(ii) Upon any redetermination of or adjustment to the amount of
the Borrowing Base in accordance with Section 2.07 or Section 8.13(c), if
the total Revolving Credit Exposures exceeds the redetermined or adjusted
Borrowing Base, then the Borrower shall (A) prepay the Borrowings in an
aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Borrowings as a result of an LC
Exposure, pay to the Administrative Agent on behalf of the Lenders an
amount equal to such excess to be held as cash collateral as provided in
Section 2.08(j). The Borrower shall be obligated to make such prepayment
and/or deposit of cash collateral within sixty (60) days following its
receipt of the New Borrowing Base Notice in accordance with Section 2.07(d)
or the date the adjustment occurs; provided that all payments required to
be made pursuant to this Section 3.04(c)(ii) must be made on or prior to
the Termination Date.
(iii) Upon any adjustments to the Borrowing Base pursuant to
Section 9.13, if the total Revolving Credit Exposures exceeds the Borrowing
Base as adjusted, then the Borrower shall (A) prepay the Borrowings in an
aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Borrowings as a result of an LC
Exposure, pay to the Administrative Agent on behalf of the Lenders an
amount equal to such excess to be held as cash collateral as provided in
Section 2.08(j). The Borrower shall be obligated to make such prepayment
and/or deposit of cash collateral on the date it receives cash proceeds as
a result of such disposition; provided that all payments required to be
made pursuant to this Section 3.04(c)(iii) must be made on or prior to the
Termination Date.
(iv) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied, first, ratably to any ABR Borrowings then
outstanding, and, second, to any Eurodollar Borrowings then outstanding,
and if more than one Eurodollar Borrowing is then outstanding, to each such
Eurodollar Borrowing in order of priority beginning with the Eurodollar
Borrowing with the least number of days remaining in the Interest Period
applicable thereto and ending with the Eurodollar Borrowing with the most
number of days remaining in the Interest Period applicable thereto.
(v) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied ratably to the Loans included in the prepaid
Borrowings. Prepayments pursuant to this Section 3.04(c) shall be
accompanied by accrued interest to the extent required by Section 3.02.
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(d) No Premium or Penalty. Prepayments permitted or required under
this Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.
Section 3.05 Fees.
(a) Commitment Fees. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at the
applicable Commitment Fee Rate on the daily average amount of the daily unused
amount of the Commitment of such Lender during the period from and including the
date of this Agreement to but excluding the Termination Date. Accrued commitment
fees shall be payable in arrears on the last day of March, June, September and
December of each year and on the Termination Date, commencing on the first such
date to occur after the date hereof. All commitment fees shall be computed on
the basis of a year of 365 days (or 366 days in a leap year), and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender's Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to each Issuing Bank a
fronting fee, which shall accrue at the rate of 0.125% per annum on the average
daily amount of that portion of the LC Exposure attributable to such Issuing
Bank (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the date of this Agreement
to but excluding the later of the date of termination of the Commitments and the
date on which there ceases to be any LC Exposure attributable to such Issuing
Bank, provided that in no event shall such fee be less than $125 during any
quarter, and (iii) to each Issuing Bank, for its own account, its standard fees
with respect to the issuance, amendment, renewal or extension of any Letter of
Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and
December of each year, shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the date of this
Agreement; provided that all such fees shall be payable on the Termination Date
and any such fees accruing after the Termination Date shall be payable on
demand. Any other fees payable to an Issuing Bank pursuant to this Section
3.05(b) shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 365 days (or 366 days
in a leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(c) Administrative Agent Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.
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ARTICLE IV
Payments; Pro Rata Treatment; Sharing of Set-offs.
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Payments by the Borrower. The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 12:00 noon, New York City
time, on the date when due (for purposes of computing interest and fees, each
such payment made after such time on such due date to be deemed to have been
made on the next succeeding Business Day), in immediately available funds,
without defense, deduction, recoupment, set-off or counterclaim. Fees, once
paid, shall not be refundable under any circumstances. Any amounts received
after such time on any date may, in the discretion of the Administrative Agent,
be deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices specified in Section 12.01, except payments
to be made directly to an Issuing Bank as expressly provided herein and except
that payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section
12.03 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in dollars.
(b) Application of Insufficient Payments. If at any time insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal and unreimbursed LC Disbursements then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such parties.
(c) Sharing of Payments by Lenders. If any Lender shall, by exercising
any right of set-off or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of its Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Loans and participations in LC Disbursements and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Loans and participations in LC Disbursements of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Loans and
participations in LC Disbursements; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to
42
any payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this Section 4.01(c) shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
Section 4.02 Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or any Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or such Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or such 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 such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
Section 4.03 Certain Deductions by the Administrative Agent. If any Lender
shall fail to make any payment required to be made by it pursuant to Section
2.05(b), Section 2.08(d), Section 2.08(e) or Section 4.02 then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
Section 4.04 Disposition of Proceeds. The Security Instruments contain an
assignment by the Borrower and/or the Guarantors unto and in favor of the
Administrative Agent for the benefit of the Lenders of all of the Borrower's or
each Guarantor's interest in and to production and all proceeds attributable
thereto which may be produced from or allocated to the Mortgaged Property. The
Security Instruments further provide in general for the application of such
proceeds to the satisfaction of the Indebtedness and other obligations described
therein and secured thereby. Notwithstanding the assignment contained in such
Security Instruments, until the occurrence of an Event of Default, (a) the
Administrative Agent and the Lenders agree that they will neither notify the
purchaser or purchasers of such production nor take any other action to cause
such proceeds to be remitted to the Administrative Agent or the Lenders, but the
Lenders will instead permit such proceeds to be paid to the Borrower and its
Restricted Subsidiaries and (b) the Lenders hereby authorize the Administrative
Agent to take such actions as may be necessary to cause such proceeds to be paid
to the Borrower and/or such Restricted Subsidiaries.
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ARTICLE V
Increased Costs; Break Funding Payments; Taxes; Illegality
Section 5.01 Increased Costs.
(a) Eurodollar Changes in Law. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such
Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise, but not
including Excluded Taxes), then the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or any 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 such Issuing Bank's
capital or on the capital of such Lender's or such 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 such Issuing Bank, to a level below that which such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding company could
have achieved but for such Change in Law (taking into consideration such
Lender's or such Issuing Bank's policies and the policies of such Lender's or
such Issuing Bank's holding company with respect to capital adequacy), then from
time to time the Borrower will pay to such Lender or such Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding company for
any such reduction suffered.
(c) Certificates. A certificate of a Lender or any Issuing Bank
setting forth the amount or amounts necessary to compensate such Lender or such
Issuing Bank or its holding company, as the case may be, as specified in Section
5.01(a) or (b) shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or such Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.
(d) Effect of Failure or Delay in Requesting Compensation. Failure or
delay on the part of any Lender or any Issuing Bank to demand compensation
pursuant to this Section 5.01 shall not constitute a waiver of such Lender's or
such Issuing Bank's right to demand such compensation; provided that the
Borrower shall not be required to compensate a Lender or an Issuing Bank
pursuant to this Section 5.01 for any increased costs or reductions incurred
more
44
than 180 days prior to the date that such Lender or such 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 such Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
Section 5.02 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to Section 5.04(b), then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event (exclusive of any lost profits or opportunity costs).
In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall
be deemed to include an amount determined by such Lender to be the excess, if
any, of (i) the amount of interest which would have accrued on the principal
amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that
would have been applicable to such Loan, for the period from the date of such
event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert or continue, for the period that would have
been the Interest Period for such Loan), over (ii) the amount of interest which
would accrue on such principal amount for such period at the interest rate which
such Lender would bid were it to bid, at the commencement of such period, for
dollar deposits of a comparable amount and period from other banks in the
eurodollar market.
A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
Section 5.03 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower or any Guarantor under any Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 5.03(a)),
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) Payment of Other Taxes by the Borrower. The Borrower shall pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.
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(c) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, each Lender and each 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 such Issuing Bank, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section
5.03) and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority;
provided that the Borrower shall not be required to indemnify the Administrative
Agent, any Lender or any Issuing Bank for any amounts under this Section 5.03(c)
to the extent that such Person fails to notify the Borrower of its intent to
make a claim for indemnification under this Section 5.03(c) within 180 days
after a claim is asserted against such Person by the relevant Governmental
Authority. A certificate of the Administrative Agent, a Lender or an Issuing
Bank as to the amount of such payment or liability under this Section 5.03 shall
be delivered to the Borrower and shall be conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
(f) Refunds. Should any Lender or the Administrative Agent receive any
refund, credit or deduction from any taxing authority to which such Lender or
the Administrative Agent would not be entitled but for the indemnification or
payment of additional amounts pursuant to this Section 5.03 (it being understood
that the decision as to whether or not to claim, and if claimed, as to the
amount of any such refund, deduction or credit shall be made by such Lender or
the Administrative Agent, as the case may be, in its sole discretion), such
Lender or the Administrative Agent, as the case may be, thereupon shall repay to
the Borrower an amount with respect to such refund, credit or deduction equal to
any net reduction in taxes actually obtained by such Lender or the
Administrative Agent as is attributable to such refund, credit or deduction.
Section 5.04 Mitigation Obligations; Replacement of Lenders.
(a) Designation of Different Lending Office. If any Lender requests
compensation under Section 5.01, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section
46
5.03, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 5.01 or
Section 5.03, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender solely as a result of such designation
or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under
Section 5.01, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 5.03, or if any Lender defaults in its obligation to fund Loans
hereunder or if any Lender has asserted that any adoption or change of the type
described in Section 5.05 has occurred, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in Section 12.04(b)), all its
interests, rights and obligations under this Agreement to an assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) if such assignee is not a Lender,
the Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans and participations in LC Disbursements, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 5.01 or
payments required to be made pursuant to Section 5.03, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.
Section 5.05 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender's obligation to make such Eurodollar Loans shall be
suspended (the "Affected Loans") until such time as such Lender may again make
and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans on the date specified by such Lender in such notice)
and, to the extent that Affected Loans are so made as (or converted into) ABR
Loans, all payments of principal which would otherwise be applied to such
Lender's Affected Loans shall be applied instead to its ABR Loans.
47
ARTICLE VI
Conditions Precedent
Section 6.01 Effective Date. The obligations of the Lenders to make Loans
and of any Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 12.02):
(a) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses for
which invoices have been presented required to be reimbursed or paid by the
Borrower hereunder.
(b) The Administrative Agent shall have received a certificate of the
Secretary or an Assistant Secretary of the General Partner and of each Guarantor
setting forth (i) resolutions of its board of directors with respect to the
authorization of the Borrower or such Guarantor to execute and deliver the Loan
Documents to which the Borrower or such Guarantor is a party and to enter into
the transactions contemplated in those documents, (ii) the officers of the
General Partner or such Guarantor (y) who are authorized to sign the Loan
Documents to which the Borrower or such Guarantor is a party and (z) who will,
until replaced by another officer or officers duly authorized for that purpose,
act as its representative for the purposes of signing documents and giving
notices and other communications in connection with this Agreement and the
transactions contemplated hereby, (iii) specimen signatures of such authorized
officers, and (iv) the articles or certificate of incorporation and bylaws of
the General Partner and such Guarantor and the certificate of limited
partnership and limited partnership agreement of the Borrower, certified as
being true and complete. The Administrative Agent and the Lenders may
conclusively rely on such certificate until the Administrative Agent receives
notice in writing from the Borrower to the contrary.
(c) The Administrative Agent shall have received certificates of the
appropriate State agencies with respect to the existence, qualification and good
standing of the General Partner, the Borrower and each Guarantor.
(d) The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit B, duly and
properly executed by a Responsible Officer and dated as of the date of Effective
Date.
(e) The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.
(f) The Administrative Agent shall have received duly executed Notes
payable to the order of each Lender in a principal amount equal to its Maximum
Credit Amount dated as of the date hereof.
(g) The Administrative Agent shall have received from each party
thereto duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Security Instruments, including the Guaranty
Agreement and the other Security Instruments
48
described on Exhibit D-1. In connection with the execution and delivery of the
Security Instruments, the Administrative Agent shall:
(i) be reasonably satisfied that the Security Instruments create
first priority, perfected Liens (subject only to Excepted Liens identified
in clauses (a) to (d) and (f) of the definition thereof, but subject to the
provisos at the end of such definition and the Liens described on Schedule
9.03) on all Properties of the Borrower and its Restricted Subsidiaries
currently securing the Existing Credit Agreement, but in no event on less
than 80% of the total value of the Oil and Gas Properties evaluated in the
Initial Reserve Report; and
(ii) have received certificates, together with undated, blank
stock powers for each such certificate, representing all of the issued and
outstanding Equity Interests of each of the Guarantors.
(h) The Administrative Agent shall have received an opinion of (i)
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., special counsel to the Borrower,
substantially in the form of Exhibit C-1 hereto, and (ii) local counsel in each
of the following states: Illinois, California and any other jurisdictions
requested by the Administrative Agent, substantially in the form of Exhibit C-2.
(i) The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.13.
(j) The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has received
all consents and approvals required by Section 7.03.
(k) The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a) and the Initial Reserve Report
accompanied by a certificate covering the matters described in Section 8.12(c).
(l) The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens encumbering the Properties the
Borrower and the Restricted Subsidiaries for each of the following
jurisdictions: Delaware, Texas, California, Illinois, Louisiana and any other
jurisdiction requested by the Administrative Agent; other than those being
assigned or released on or prior to the Effective Date or Liens permitted by
Section 9.03.
(m) The Administrative Agent shall be reasonably satisfied with the
terms. conditions, documentation and treatment for purposes of United States
Federal income tax of the Spin-off and the Spin-off Documents and shall have
received true and correct copies of all SEC filings made by the Borrower or PLX
in connection with Steps I, II, III and V of the Spin-off.
(n) The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that: (i) the Borrower has
completed Steps I, II, III and IV of the Spin-off (other than the Redemption of
the PLX Senior Subordinated Notes) and received gross proceeds from the issuance
of the 2002 Senior Subordinated Notes of not less
49
than $200,000,000, in each case, in accordance with the terms of the Spin-off
Documents, (ii) that the Borrower has irrevocably been instructed by PLX to
deposit on behalf of PLX with the trustees, paying agents for the PLX Senior
Subordinated Notes or other escrow agents pursuant to documents in form and
substance reasonably satisfactory to the Administrative Agent a sum of cash
and/or securities sufficient to Redeem in full the PLX Senior Subordinated Notes
on the date called for Redemption to ensure application thereof as contemplated
by this Agreement, (iii) PLX has irrevocably called the PLX Senior Subordinated
Notes for Redemption and attached are copies of such call notices, and (iv)
attached thereto is a true and complete copy of the certificate of limited
partnership of the Borrower filed with the California Secretary of State
reflecting the Borrower's change of name.
(o) The Administrative Agent shall have received a copy, certified by
a Responsible Officer as true and complete, of the Affiliate Agreements and the
Transition Agreements (together with all amendments, if any), the PLX Senior
Subordinated Indentures pursuant to which the PLX Senior Subordinated Notes have
been issued and the 2002 Senior Subordinated Indenture pursuant to which the
2002 Senior Subordinated Notes have been issued; and the terms and conditions of
the 2002 Senior Subordinated Note shall be reasonably satisfactory to the
Administrative Agent.
(p) The Administrative Agent shall have received a certificate, signed
by a Responsible Officer, stating that the Borrower or PLX are repaying in full
and terminating the Existing Credit Agreement contemporaneously with the initial
Loans under this Agreement. The Administrative Agent shall have received
evidence satisfactory to it that all Liens associated with the Existing Credit
Agreement have been released or terminated contemporaneously with the making of
such payments and that arrangements satisfactory to the Administrative Agent has
been made for recording and filing of such releases.
(q) The Administrative Agent shall have received a letter from CT
Corporation evidencing the appointment of CT Corporation as authorized agent for
service of process on each of the Borrower and each Obligor (as defined in the
Guaranty Agreement) under each Loan Document to which it is a party.
(r) The Administrative Agent shall have received such other documents
as the Administrative Agent or special counsel to the Administrative Agent may
reasonably request.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of any Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 12.02)
at or prior to 3:00 p.m., New York City time on July 15, 2002 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate
at such time).
50
Section 6.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding) (excluding
any Loan made pursuant to Section 2.08(e)), and of any Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Material Adverse Effect shall have occurred.
(c) The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct in all material respects on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, except to the extent any such representations
and warranties are expressly limited to an earlier date, in which case, on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, such representations and
warranties shall continue to be true and correct in all material respects as of
such specified earlier date.
(d) The making of such Loan or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, would not conflict with, or
cause any Lender or any Issuing Bank to violate or exceed, any applicable
Governmental Requirement, and no Change in Law shall have occurred, and no
litigation shall be pending or threatened, which does or, with respect to any
threatened litigation, seeks to, enjoin, prohibit or restrain, the making or
repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.
(e) The receipt by the Administrative Agent of a Borrowing Request in
accordance with Section 2.03 or a request for a Letter of Credit in accordance
with Section 2.08(b), as applicable.
Each Borrowing (excluding any Borrowing made pursuant to Section
2.08(e))and each issuance, amendment, renewal or extension of any Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in Section 6.02(a)
through (e).
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
Section 7.01 Organization; Powers. Each of the Borrower, the General
Partner (so long as the Borrower is a partnership) and the Restricted
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all
51
requisite power and authority, and has all material governmental licenses,
authorizations, consents and approvals necessary, to own its assets and to carry
on its business as now conducted, and is qualified to do business in, and is in
good standing in, every jurisdiction where such qualification is required,
except where failure to have such power, authority, licenses, authorizations,
consents, approvals and qualifications could not reasonably be expected to have
a Material Adverse Effect.
Section 7.02 Authority; Enforceability. The Transactions are within the
Borrower's and each Guarantor's corporate or partnership (as the case may be)
powers and have been duly authorized by all necessary, partnership or corporate
and, if required, stockholder action. Each Loan Document and Spin-off Document
to which the Borrower and each Guarantor is a party has been duly executed and
delivered by the Borrower and such Guarantor and constitutes a legal, valid and
binding obligation of the Borrower and such Guarantor, as applicable,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent transfer or conveyance, 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 and an implied covenant of good faith and fair dealing.
Section 7.03 Approvals; No Conflicts. The Transactions (a) do not require
any consent or approval of, registration or filing with, or any other action by,
any Governmental Authority or any other third Person, nor is any such consent,
approval, registration, filing or other action necessary for the validity or
enforceability of any Loan Document or the consummation of the transactions
contemplated thereby, except such as have been obtained or made and are in full
force and effect other than (i) filings with, and approvals from, the SEC and
other Governmental Authorities necessary to accomplish Steps V and VI of the
Spin-off, (ii) the recording and filing of the Security Instruments as required
by this Agreement, (iii) filings, consents or approvals required for the
exercise by the Administrative Agent of its rights under the Security
Instruments, (iv) filings under the Securities and Exchange Act of 1934, as
amended, and filings of releases with respect to the collateral securing the
Existing Credit Agreement, (v) routine filings to be made after the date hereof
to maintain "good standing" in such jurisdictions and to maintain licenses and
permits, (vi) those filings, approvals and consents disclosed in Schedule 7.03,
and (vii) those third party approvals or consents which, if not made or
obtained, would not cause a Default hereunder, could not reasonably be expected
to have a Material Adverse Effect or do not have an adverse effect on the
enforceability of the Loan Documents, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of the
Borrower, the General Partner (so long as the Borrower is a partnership) 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, including the 2002 Senior Subordinated Indenture, binding upon the
Borrower or any Restricted Subsidiary or its Properties, or give rise to a right
thereunder to require any payment to be made by the Borrower, the General
Partner (so long as the Borrower is a partnership) or such Restricted Subsidiary
except as disclosed in Schedule 7.03 and (d) will not result in the creation or
imposition of any Lien on any Property of the Borrower, the General Partner (so
long as the Borrower is a partnership) or any Restricted Subsidiary (other than
the Liens created by the Loan Documents).
52
Section 7.04 Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders its combined
balance sheet and statements of income, combined owners equity and cash flows
(i) as of and for the fiscal years ended December 31, 2000 and December 31,
2001, reported on by PricewaterhouseCoopers LLP, independent public accountants,
and (ii) as of and for the fiscal quarter and the portion of the fiscal year
ended March 31, 2002, certified by its chief financial officer. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Borrower and its Consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the case
of the unaudited quarterly financial statements.
(b) Since December 31, 2001, (i) there has been no material adverse
change in the business, operations, Property or financial condition, of the
Borrower and its Restricted Subsidiaries, taken as a whole and (ii) the business
of the Borrower and its Restricted Subsidiaries has been conducted only in the
ordinary course consistent with past business practices.
(c) Neither the Borrower nor any Restricted Subsidiary has on the date
hereof any material Debt (including Disqualified Capital Stock) or any
contingent liabilities, off-balance sheet liabilities or partnerships,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in the Financial Statements and except for the 2002
Senior Subordinated Notes.
(d) On the date of this Agreement, neither the Borrower nor any
Restricted Subsidiary is a party to any material agreement with PLX or any
Affiliate of PLX except for the Affiliate Agreements and the Transition
Agreements.
Section 7.05 Litigation.
(a) Except as set forth on Schedule 7.05, there are no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Restricted Subsidiary (i) not fully
covered by insurance (except for normal deductibles) as to which there is a
reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect, (ii) that involve any Loan Document, any
Spin-off Document or the Transactions or (iii) that could impair the
consummation of the Spin-off on the time and in the manner contemplated by the
Spin-off Documents.
(b) Since the date of this Agreement, there has been no change in the
status of the matters disclosed in Schedule 7.05 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
Section 7.06 Environmental Matters. Except as disclosed on Schedule 7.06
and as could not be reasonably expected to have a Material Adverse Effect (or
with respect to (c), (d)
53
and (e) below, where the failure to take such actions could not be reasonably
expected to have a Material Adverse Effect):
(a) neither any Property of the Borrower or any Restricted Subsidiary
nor the operations conducted thereon violate any order or requirement of any
court or Governmental Authority or any Environmental Laws.
(b) no Property of the Borrower or any Restricted Subsidiary nor the
operations currently conducted thereon or, to the knowledge of the Borrower, by
any prior owner or operator of such Property or operation, are in violation of
or subject to any existing, pending or threatened action, suit, investigation,
inquiry or proceeding by or before any court or Governmental Authority or to any
remedial obligations under Environmental Laws.
(c) all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of the Borrower and each Restricted
Subsidiary, including, without limitation, past or present treatment, storage,
disposal or release of a hazardous substance, oil and gas waste or solid waste
into the environment, have been duly obtained or filed, and the Borrower and
each Restricted Subsidiary are in compliance with the terms and conditions of
all such notices, permits, licenses and similar authorizations.
(d) all hazardous substances, solid waste and oil and gas waste, if
any, generated at any and all Property of the Borrower or any Restricted
Subsidiary have in the past been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and, to
the knowledge of the Borrower, all such transport carriers and treatment and
disposal facilities have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment, and are not the subject of any existing,
pending or threatened action, investigation or inquiry by any Governmental
Authority in connection with any Environmental Laws.
(e) the Borrower has taken all steps reasonably necessary to determine
and has determined that no oil, hazardous substances, solid waste or oil and gas
waste, have been disposed of or otherwise released and there has been no
threatened release of any oil, hazardous substances, solid waste or oil and gas
waste on or to any Property of the Borrower or any Restricted Subsidiary except
in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment.
(f) to the extent applicable, all Property of the Borrower and each
Restricted Subsidiary currently satisfies all design, operation, and equipment
requirements imposed by the OPA, and the Borrower does not have any reason to
believe that such Property, to the extent subject to the OPA, will not be able
to maintain compliance with the OPA requirements during the term of this
Agreement.
(g) neither the Borrower nor any Restricted Subsidiary has any known
contingent liability or Remedial Work in connection with any release or
threatened release of any oil, hazardous substance, solid waste or oil and gas
waste into the environment.
54
Section 7.07 Compliance with the Laws and Agreements; No Defaults.
(a) Each of the Borrower and each Restricted Subsidiary is in
compliance with all Governmental Requirements applicable to it or its Property
and all agreements and other instruments binding upon it or its Property, and
possesses (or in the case of the Borrower, the General Partner possesses for the
benefit and use of the Borrower and such use by the Borrower does not violate
the terms thereof) all licenses, permits, franchises, exemptions, approvals and
other governmental authorizations necessary for the ownership of its Property
and the conduct of its business, except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
(b) Neither the Borrower nor any Restricted Subsidiary is in default
nor has any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default or would require the Borrower or a Restricted Subsidiary to Redeem or
make any offer to Redeem under any indenture, note, credit agreement or
instrument pursuant to which any Material Indebtedness is outstanding or by
which the Borrower or any Restricted Subsidiary or any of their Properties is
bound, except as described on Schedule 7.03.
(c) No Default has occurred and is continuing.
Section 7.08 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of, or subject to regulation under, the
Investment Company Act of 1940, as amended.
Section 7.09 Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of, or subject
to regulation under, the Public Utility Holding Company Act of 1935, as amended.
Section 7.10 Taxes. Each of the Borrower and its Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves in accordance with GAAP or (b) to the
extent that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of Taxes and other governmental charges
are, in the reasonable opinion of the Borrower, adequate. No Tax Lien has been
filed and, to the knowledge of the Borrower, no claim is being asserted with
respect to any such Tax or other such governmental charge.
Section 7.11 ERISA. The Borrower and the ERISA Affiliates have fulfilled
their respective obligations under the minimum funding standards of ERISA and
the Code with respect to each Plan and are in compliance in all material
respects with the presently applicable provisions of ERISA and the Code, and
have not incurred any liability to the PBGC or any Plan or Multiemployer Plan
(other than to make contributions in the ordinary course of business).
55
Section 7.12 Disclosure; No Material Misstatements. None of the reports,
financial statements, certificates or other written information furnished by or
on behalf of the Borrower or any Restricted Subsidiary to the Administrative
Agent or any Lender or any of their Affiliates in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder
or under any other Loan Document (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading (other than
omissions that pertain to matters of a general economic nature or matters of
public knowledge that generally affect any of the industry segments of the
Borrower or its Subsidiaries); provided that, with respect to projected
financial information, the Borrower represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time. There is no fact peculiar to the Borrower or any Restricted Subsidiary
which could reasonably be expected to have a Material Adverse Effect or in the
future is reasonably likely to have a Material Adverse Effect and which has not
been set forth in this Agreement or the Loan Documents or the other documents,
certificates and written statements furnished to the Administrative Agent or the
Lenders by or on behalf of the Borrower or any Restricted Subsidiary prior to,
or on, the date hereof in connection with the transactions contemplated hereby.
There are no statements or conclusions in any Reserve Report which are based
upon or include misleading information or fail to take into account material
information regarding the matters reported therein, it being understood that
projections concerning volumes attributable to the Oil and Gas Properties and
production and cost estimates contained in each Reserve Report are necessarily
based upon professional opinions, estimates and projections and that the
Borrower and the Restricted Subsidiaries do not warrant that such opinions,
estimates and projections will ultimately prove to have been accurate.
Section 7.13 Insurance. The Borrower has, and has caused all its Restricted
Subsidiaries to have, (a) all insurance policies sufficient for the compliance
by each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in at least amounts and against such risk
(including, without limitation, public liability) that are usually insured
against by companies similarly situated and engaged in the same or a similar
business for the assets and operations of the Borrower and its Restricted
Subsidiaries. The Agents and the Lenders have been named as additional insureds
in respect of such liability insurance policies and the Administrative Agent has
been named as loss payee with respect to Property loss insurance.
Section 7.14 Restriction on Liens. Except as disclosed on Schedule 7.14 and
as permitted by Section 9.17, neither the Borrower nor any of the Restricted
Subsidiaries is a party to any material agreement or arrangement, or subject to
any order, judgment, writ or decree, which either restricts or purports to
restrict its ability to grant Liens to the Administrative Agent and the Lenders
on or in respect of their Properties to secure the Indebtedness and the Loan
Documents.
Section 7.15 Subsidiaries. Except as set forth on Schedule 7.15 or as
disclosed in writing to the Administrative Agent (which shall promptly furnish a
copy to the Lenders), which shall be a supplement to Schedule 7.15, the Borrower
has no Subsidiaries. Schedule 7.15 identifies each Subsidiary as either
Restricted or Unrestricted, and each Restricted Subsidiary on such schedule is a
Wholly-Owned Subsidiary. The Borrower has no Foreign Subsidiaries.
56
Section 7.16 Location of Business and Offices. The Borrower's jurisdiction
of organization is California; the name of the Borrower as listed in the public
records of its jurisdiction of organization is Plains Exploration & Production
Company, L.P.; and the organizational identification number of the Borrower in
its jurisdiction of organization is 9027100014 (or as set forth in a notice
delivered pursuant to Section 8.01(n) or Section 12.01(c)). The Borrower's
principal place of business and chief executive offices are located at the
address specified in Section 12.01 (or as set forth in a notice delivered
pursuant to Section 8.01(n) and Section 12.01(c)). Each Restricted Subsidiary's
jurisdiction of organization, name as listed in the public records of its
jurisdiction of organization, organizational identification number in its
jurisdiction of organization, and the location of its principal place of
business and chief executive office is stated on Schedule 7.15 (or as set forth
in a notice delivered pursuant to Section 8.01(n)).
Section 7.17 Properties; Titles, Etc.
(a) Except as disclosed in Schedule 7.17, each of the Borrower and the
Restricted Subsidiaries has good and defensible title to the Oil and Gas
Properties evaluated in the most recently delivered Reserve Report and good
title to all its personal Properties, in each case, free and clear of all Liens
except Liens permitted by Section 9.03 and Liens securing the Existing Credit
Agreement that are being contemporaneously extinguished on the date hereof.
After giving full effect to the Excepted Liens, the Borrower or the Restricted
Subsidiary specified as the owner owns the net interests in production
attributable to the Hydrocarbon Interests as reflected in the most recently
delivered Reserve Report, and the ownership of such Properties shall not in any
material respect obligate the Borrower or such Restricted Subsidiary to bear the
costs and expenses relating to the maintenance, development and operations of
each such Property in an amount in excess of the working interest of each
Property set forth in the most recently delivered Reserve Report that is not
offset by a corresponding proportionate increase in the Borrower's or such
Restricted Subsidiary's net revenue interest in such Property.
(b) All material leases and agreements necessary for the conduct of
the business of the Borrower and the Restricted Subsidiaries are valid and
subsisting, in full force and effect, and there exists no default or event or
circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or leases, which would affect
in any material respect the conduct of the business of the Borrower and the
Restricted Subsidiaries, taken as a whole.
(c) The rights and Properties presently owned, leased or licensed by
the Borrower and the Restricted Subsidiaries (or the General Partner for the
benefit and use of the Borrower and the Restricted Subsidiaries) including,
without limitation, all easements and rights of way, include all rights and
Properties necessary to permit the Borrower and the Restricted Subsidiaries to
conduct their business in all material respects in the same manner as its
business has been conducted prior to the date hereof.
(d) All of the Properties of the Borrower and the Restricted
Subsidiaries which are reasonably necessary for the operation of their
businesses are in good working condition and are maintained in accordance with
prudent business standards.
57
(e) The Borrower and each Restricted Subsidiary owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other intellectual
Property material to its business, and the use thereof by the Borrower and such
Restricted Subsidiary does not infringe upon the rights of any other Person,
except for any such infringements that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect. The Borrower
and its Restricted Subsidiaries either own or have valid licenses or other
rights to use all databases, geological data, geophysical data, engineering
data, seismic data, maps, interpretations and other technical information used
in their businesses as presently conducted, subject to the limitations contained
in the agreements governing the use of the same, which limitations are customary
for companies engaged in the business of the exploration and production of
Hydrocarbons, with such exceptions as could not reasonably be expected to have a
Material Adverse Effect.
Section 7.18 Maintenance of Properties. Except for such acts or failures to
act as could not be reasonably expected to have a Material Adverse Effect, the
Oil and Gas Properties (and Properties unitized therewith) have been maintained,
operated and developed in a good and workmanlike manner and in conformity with
all Government Requirements and in conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon Interests and
other contracts and agreements forming a part of the Oil and Gas Properties.
Specifically in connection with the foregoing, except for those as could not be
reasonably expected to have a Material Adverse Effect, (i) no Oil and Gas
Property is subject to having allowable production reduced below the full and
regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and (ii)
none of the ▇▇▇▇▇ comprising a part of the Oil and Gas Properties (or Properties
unitized therewith) is deviated from the vertical more than the maximum
permitted by Government Requirements, and such ▇▇▇▇▇ are, in fact, bottomed
under and are producing from, and the well bores are wholly within, the Oil and
Gas Properties (or in the case of ▇▇▇▇▇ located on Properties unitized
therewith, such unitized Properties). All pipelines, ▇▇▇▇▇, gas processing
plants, platforms and other material improvements, fixtures and equipment owned
in whole or in part by the Borrower or any of its Restricted Subsidiaries that
are necessary to conduct normal operations are being maintained in a state
adequate to conduct normal operations, and with respect to such of the foregoing
which are operated by the Borrower or any of its Restricted Subsidiaries, in a
manner consistent with the Borrower's or its Restricted Subsidiaries' past
practices (other than those the failure of which to maintain in accordance with
this Section 7.07 could not reasonably be expect to have a Material Adverse
Effect).
Section 7.19 Gas Imbalances, Prepayments. As of the date hereof, except as
set forth on Schedule 7.19 or on the most recent certificate delivered pursuant
to Section 8.12(c), on a net basis there are no gas imbalances, take or pay or
other prepayments which would require the Borrower or any of its Restricted
Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor
exceeding one-half million mcf of gas (on an mcf equivalent basis) in the
aggregate.
Section 7.20 Marketing of Production. Except for contracts listed and in
effect on the date hereof on Schedule 7.20, and thereafter either disclosed in
writing to the Administrative Agent or included in the most recently delivered
Reserve Report (with respect to all of which contracts the Borrower represents
that it or its Restricted Subsidiaries are receiving a price for all
58
production sold thereunder which is computed substantially in accordance with
the terms of the relevant contract and are not having deliveries curtailed
substantially below the subject Property's delivery capacity), no material
agreements exist which are not cancelable on 90 days notice or less without
penalty or detriment for the sale of production from the Borrower's or its
Restricted Subsidiaries' Hydrocarbons (including, without limitation, calls on
or other rights to purchase, production, whether or not the same are currently
being exercised) that (a) pertain to the sale of production at a fixed price and
(b) have a maturity or expiry date of longer than six (6) months from the date
hereof.
Section 7.21 Swap Agreements. Schedule 7.21, as of the date hereof, and
after the date hereof, each report required to be delivered by the Borrower
pursuant to Section 8.01(f), sets forth, a true and complete list of all Swap
Agreements of the Borrower and each Restricted Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net ▇▇▇▇ to market value thereof, all credit support
agreements relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.
Section 7.22 Use of Loans and Letters of Credit. The proceeds of the Loans
and the Letters of Credit shall be used to provide working capital for
exploration and production operations, to provide funds to PLX to refinance Debt
under the Existing Credit Agreement and the PLX Senior Subordinated Indentures
and for general corporate purposes. The Borrower and its Subsidiaries are not
engaged principally, or as one of its or their important activities, in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock (within the meaning of Regulation
T, U or X of the Board). No part of the proceeds of any Loan or Letter of Credit
will be used for any purpose which violates the provisions of Regulations T, U
or X of the Board.
Section 7.23 Solvency. After giving effect to the transactions contemplated
hereby, (a) the aggregate assets (after giving effect to amounts that could
reasonably be received by reason of indemnity, offset, insurance or any similar
arrangement), at a fair valuation, of the Borrower and the Guarantors, taken as
a whole, will exceed the aggregate Debt of the Borrower and the Guarantors on a
consolidated basis, as the Debt becomes absolute and matures, (b) each of the
Borrower and the Guarantors will not have incurred or intended to incur, and
will not believe that it will incur, Debt beyond its ability to pay such Debt
(after taking into account the timing and amounts of cash to be received by each
of the Borrower and the Guarantors and the amounts to be payable on or in
respect of its liabilities, and giving effect to amounts that could reasonably
be received by reason of indemnity, offset, insurance or any similar
arrangement) as such Debt becomes absolute and matures and (c) each of the
Borrower and the Guarantors will not have (and will have no reason to believe
that it will have thereafter) unreasonably small capital for the conduct of its
business.
Section 7.24 Designated Senior Indebtedness. The Indebtedness of the
Borrower constitutes "Senior Indebtedness" and "Designated Senior Indebtedness,"
and the Indebtedness of each Guarantor under the Loan Documents to which it is a
party constitutes "Guarantor Senior Indebtedness", in each case, under and as
defined in the PLX Senior Subordinated Indentures and the 2002 Senior
Subordinated Indenture.
59
Section 7.25 Spin-off. The copy of the Master Separation Agreement
previously delivered by the Borrower to the Administrative Agent is complete and
accurate and has not been amended or modified in any manner, other than pursuant
to amendments or modifications previously delivered to the Administrative Agent.
No party to any Spin-off Document is in default in respect of any material term
or obligation thereunder.
ARTICLE VIII
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 8.01 Financial Statements; Ratings Change; Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) Annual Financial Statements. Within 120 days after the end of each
fiscal year of the Borrower, its audited consolidated balance sheet and related
statements of operations, stockholders' equity, partnership equity and cash
flows as of the end of and for such year (provided that prior to the conversion
of the Borrower into a corporation as contemplated by Step V of the Spin-off,
such balance sheet and related statements shall be presented on a combined
basis), setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by PricewaterhouseCoopers LLP or other
independent public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements or combined financial statements, as the case may be,
present fairly in all material respects the financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries on a consolidated
basis or a combined basis, as the case may be, in accordance with GAAP
consistently applied.
(b) Quarterly Financial Statements. Within 60 days after the end of
each of the first three fiscal quarters of each fiscal year of the Borrower, its
consolidated balance sheet and related statements of operations, stockholders'
equity, partnership equity and cash flows as of the end of and for such fiscal
quarter and the then elapsed portion of the fiscal year (provided that prior to
the conversion of the Borrower into a corporation as contemplated by Step V of
the Spin-off, such balance sheet and related statements shall be presented on a
combined basis), 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 or a combined basis, as the case may be, in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.
(c) Certificate of Financial Officer -- Compliance. Concurrently with
any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a
certificate of a
60
Financial Officer in substantially the form of Exhibit B hereto (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 9.01 and (iii) stating whether any change in GAAP or in
the application thereof has occurred since the date of the audited financial
statements referred to in Section 7.04 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate.
(d) Certificate of Accounting Firm -- Defaults. Concurrently with any
delivery of financial statements under Section 8.01(a), a certificate of the
accounting firm that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the extent
required by accounting rules or guidelines).
(e) Certificate of Financial Officer -- Consolidating Information. If,
at any time, all of the Consolidated Subsidiaries of the Borrower are not
Consolidated Restricted Subsidiaries, then concurrently with any delivery of
financial statements under Section 8.01(a) or Section 8.01(b), a certificate of
a Financial Officer setting forth consolidating spreadsheets that show all
Consolidated Unrestricted Subsidiaries and the eliminating entries, in such form
as would be presentable to the auditors of the Borrower.
(f) Certificate of Financial Officer - Swap Agreements. Concurrently
with any delivery of financial statements under Section 8.01(a) and Section
8.01(b), a certificate of a Financial Officer, in form and substance
satisfactory to the Administrative Agent, setting forth as of the last Business
Day of such fiscal quarter or fiscal year, a true and complete list of all Swap
Agreements of the Borrower and each Restricted Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net ▇▇▇▇ to market value therefor, any new credit
support agreements relating thereto not listed on Schedule 7.21, any margin
required or supplied under any credit support document, and the counterparty to
each such agreement.
(g) Certificate of Insurer -- Insurance Coverage. Concurrently with
any delivery of financial statements under Section 8.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required by
Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the
applicable policies.
(h) Other Accounting Reports. Promptly upon receipt thereof, a copy of
each other report or letter submitted to the Borrower or any of its Subsidiaries
by independent accountants in connection with any annual, interim or special
audit made by them of the books of the Borrower or any such Subsidiary, and a
copy of any response by the Borrower or any such Subsidiary, or the Board of
Directors of the Borrower or any such Subsidiary, to such letter or report.
(i) SEC and Other Filings; Reports to Shareholders. Promptly after the
same become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by PLX, but only prior to the completion of
the Spin-off, the Borrower or any
61
Subsidiary with the SEC or with any national securities exchange, or distributed
by the Borrower to its shareholders generally, as the case may be.
(j) Notices Under Material Instruments. Promptly after the furnishing
thereof, copies of any financial statement, report or notice furnished to or by
any Person pursuant to the terms of any preferred stock designation or
indenture, loan or credit or other similar agreement in respect of Material
Indebtedness, other than this Agreement and not otherwise required to be
furnished to the Lenders pursuant to any other provision of this Section 8.01,
including all notices regarding the call for Redemption and Redemption of the
PLX Senior Subordinated Notes.
(k) Lists of Purchasers. Concurrently with the delivery of any Reserve
Report to the Administrative Agent pursuant to Section 8.12 a list of all
Persons purchasing Hydrocarbons from the Borrower or any Restricted Subsidiary.
(l) Notice of Sales of Oil and Gas Properties. In the event the
Borrower or any Restricted Subsidiary intends to sell, transfer, assign or
otherwise dispose of any Oil or Gas Properties or any Equity Interests in any
Subsidiary in accordance with Section 9.13, prior written notice of such
disposition, the price thereof and the anticipated date of closing.
(m) Notice of Casualty Events. Prompt written notice, and in any event
within three Business Days, of the occurrence of any Casualty Event or the
commencement of any action or proceeding that could reasonably be expected to
result in a Casualty Event.
(n) Information Regarding Borrower and Guarantors. Prompt written
notice (and in any event within ten (10) days prior thereto) of any change (i)
in the Borrower or any Guarantor's corporate name, (ii) in the location of the
Borrower or any Guarantor's chief executive office or principal place of
business, (iii) in the Borrower or any Guarantor's identity or corporate
structure or in the jurisdiction in which such Person is incorporated or formed,
(iv) in the Borrower or any Guarantor's jurisdiction of organization or such
Person's organizational identification number in such jurisdiction of
organization, and (v) in the Borrower or any Guarantor's federal taxpayer
identification number.
(o) Ratings Change. Promptly after ▇▇▇▇▇'▇ or S&P shall have announced
a change in the rating established or deemed to have been established for the
Index Debt or any other Material Indebtedness, written notice of such rating
change.
(p) Other Requested Information. Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of the Borrower or any Subsidiary (including, without
limitation, any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA), or compliance with the terms of this
Agreement or any other Loan Document, as the Administrative Agent or any Lender
may reasonably request.
Section 8.02 Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
62
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in liability in excess of $2,500,000 per claim
not fully covered by insurance, subject to normal deductibles;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$2,500,000; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
Section 8.03 Existence; Conduct of Business. The Borrower will, and will
cause each Restricted Subsidiary to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.12. The
Borrower will promptly, but in no event later than 60 days after the date
hereof, or 90 days after the date hereof if the Borrower is diligently
prosecuting its efforts to, obtain the filings, approvals and consents listed in
Part I of Schedule 7.03 other than filings, approvals and consents required to
(a) transfer Oil and Gas Properties listed on Schedule 7.17 and (b) transfer the
Los Angeles City Franchise and the SBC Ordinance #4453 (as described in Part I
of Schedule 7.03), which filings, approvals and consents described in this
clause (b) shall in any event be obtained prior to the completion of Step VI of
the Spin-off.
Section 8.04 Payment of Obligations; Redemption of PLX Senior Subordinated
Notes. The Borrower will, and will cause each Restricted Subsidiary to, pay its
obligations, including Tax liabilities of the Borrower and all its Subsidiaries,
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such 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 or result in the seizure or levy of any
Property of the Borrower or any Subsidiary. On or before August 15, 2002, the
Borrower will (or will cause PLX to) Redeem all of the issued and outstanding
PLX Senior Subordinated Notes.
Section 8.05 Performance of Obligations under Loan Documents. The Borrower
will pay the Notes according to the reading, tenor and effect thereof, and the
Borrower will and will cause each Restricted Subsidiary to do and perform every
act and discharge all of the obligations
63
to be performed and discharged by them under the Loan Documents, including,
without limitation, this Agreement, at the time or times and in the manner
specified.
Section 8.06 Operation and Maintenance of Properties. The Borrower, at its
own expense, will, and will cause each Restricted Subsidiary to:
(a) operate its Oil and Gas Properties and other material Properties
or cause such Oil and Gas Properties and other material Properties to be
operated in a careful and efficient manner in accordance with the practices of
the industry and in compliance with all applicable contracts and agreements and
in compliance with all Governmental Requirements, including, without limitation,
applicable pro ration requirements and Environmental Laws, and all applicable
laws, rules and regulations of every other Governmental Authority from time to
time constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
(b) keep and maintain all Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted
preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its material Oil and Gas Properties and
other material Properties, including, without limitation, all equipment,
machinery and facilities.
(c) promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties and will do all other
things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.
(d) promptly perform or make reasonable and customary efforts to cause
to be performed, in accordance with industry standards, the obligations required
by each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas Properties and other
material Properties.
(e) operate its Oil and Gas Properties and other material Properties
or cause or make reasonable and customary efforts to cause such Oil and Gas
Properties and other material Properties to be operated in accordance with the
practices of the industry and in material compliance with all applicable
contracts and agreements and in compliance in all material respects with all
Governmental Requirements.
(f) to the extent the Borrower is not the operator of any Property,
the Borrower shall use reasonable efforts to cause the operator to comply with
this Section 8.06.
Section 8.07 Insurance. The Borrower will, and will cause each Restricted
Subsidiary to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans shall
be endorsed in favor of and made payable to the Administrative Agent as its
interests may appear
64
and such policies shall name the Administrative Agent and the Lenders as
"additional insureds" and provide that the insurer will endeavor to give at
least 30 days prior notice of any cancellation to the Administrative Agent.
Section 8.08 Books and Records; Inspection Rights. The Borrower will, and
will cause each Restricted Subsidiary to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each Restricted Subsidiary to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice, to
visit and inspect its Properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.
Section 8.09 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 8.10 Environmental Matters.
(a) The Borrower shall at its sole expense: (i) comply, and shall
cause its Properties and operations and each Subsidiary and each Subsidiary's
Properties and operations to comply, with all applicable Environmental Laws, the
breach of which could be reasonably expected to have a Material Adverse Effect;
(ii) not dispose of or otherwise release, and shall cause each Subsidiary not to
dispose of or otherwise release, any oil, oil and gas waste, hazardous
substance, or solid waste on, under, about or from any of the Borrower's or its
Subsidiaries' Properties or any other Property to the extent caused by the
Borrower's or any of its Subsidiaries' operations except in compliance with
applicable Environmental Laws, the disposal or release of which could reasonably
be expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each Subsidiary to timely obtain or file, all notices, permits,
licenses, exemptions, approvals, registrations or other authorizations, if any,
required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of the Borrower's or its Subsidiaries'
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; (iv) promptly commence and diligently prosecute to
completion, and shall cause each Subsidiary to promptly commence and diligently
prosecute to completion, any assessment, evaluation, investigation, monitoring,
containment, cleanup, removal, repair, restoration, remediation or other
remedial obligations (collectively, the "Remedial Work") in the event any
Remedial Work is required or reasonably necessary under applicable Environmental
Laws because of or in connection with the actual or suspected past, present or
future disposal or other release of any oil, oil and gas waste, hazardous
substance or solid waste on, under, about or from any of the Borrower's or its
Subsidiaries' Properties, which failure to commence and diligently prosecute to
completion could reasonably be expected to have a Material Adverse Effect; and
(v) establish and implement, and shall cause each Subsidiary to establish and
implement, such procedures as may be necessary to continuously determine and
assure that the Borrower's and its Subsidiaries' obligations under
65
this Section 8.10(a) are timely and fully satisfied, which failure to establish
and implement could reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will promptly, but in no event later than five days
of the occurrence of a triggering event, notify the Administrative Agent and the
Lenders in writing of any threatened action, investigation or inquiry by any
Governmental Authority or any threatened demand or lawsuit by any landowner or
other third party against the Borrower or its Subsidiaries or their Properties
of which the Borrower has knowledge in connection with any Environmental Laws
(excluding routine testing and corrective action) if the Borrower reasonably
anticipates that such action will result in liability (whether individually or
in the aggregate) in excess of $2,500,000 per claim, not fully covered by
insurance, subject to normal deductibles.
(c) The Borrower will and will cause each Subsidiary to provide
environmental audits and tests in accordance with American Society of Testing
Materials standards upon request by the Administrative Agent and the Lenders and
no more than once per year in the absence of any Event of Default (or as
otherwise required to be obtained by the Administrative Agent or the Lenders by
any Governmental Authority), in connection with any future acquisitions of Oil
and Gas Properties or other Properties.
Section 8.11 Further Assurances.
(a) The Borrower at its expense will, and will cause each Restricted
Subsidiary to, promptly execute and deliver to the Administrative Agent all such
other documents, agreements and instruments reasonably requested by the
Administrative Agent to comply with, cure any defects or accomplish the
conditions precedent, covenants and agreements of the Borrower or any Restricted
Subsidiary, as the case may be, in the Loan Documents, including the Notes, or
to further evidence and more fully describe the collateral intended as security
for the Indebtedness, or to correct any omissions in this Agreement or the
Security Instruments, or to state more fully the obligations secured therein, or
to perfect, protect or preserve any Liens created pursuant to this Agreement or
any of the Security Instruments or the priority thereof, or to make any
recordings, file any notices or obtain any consents, all as may be reasonably
necessary or appropriate, in the sole discretion of the Administrative Agent, in
connection therewith.
(b) The Borrower hereby authorizes the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Mortgaged Property without the signature of
the Borrower or any other Guarantor where permitted by law. A carbon,
photographic or other reproduction of the Security Instruments or any financing
statement covering the Mortgaged Property or any part thereof shall be
sufficient as a financing statement where permitted by law. The Administrative
Agent will promptly send the Borrower any financing or continuation statements
it files without the signature of the Borrower or any other Guarantor and the
Administrative Agent will promptly send the Borrower the filing or recordation
information with respect thereto.
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Section 8.12 Reserve Reports.
(a) On or before April 1st and October 1st of each year, commencing
October 1, 2002, the Borrower shall furnish to the Administrative Agent and the
Lenders a Reserve Report. The January 1 Reserve Report of each year shall be
prepared by or under the supervision of the chief engineer of the Borrower who
shall certify such Reserve Report to be true and accurate and be audited by one
or more Approved Petroleum Engineers, and the July 1 Reserve Report of each year
shall be prepared by or under the supervision of the chief engineer of the
Borrower who shall certify such Reserve Report to be true and accurate and to
have been prepared in accordance with the procedures used in the immediately
preceding January 1 Reserve Report.
(b) In the event of an Interim Redetermination, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report prepared by
or under the supervision of the chief engineer of the Borrower who shall certify
such Reserve Report to be true and accurate and to have been prepared in
accordance with the procedures used in the immediately preceding January 1
Reserve Report. For any Interim Redetermination requested by the Administrative
Agent or the Borrower pursuant to Section 2.07(b), the Borrower shall provide
such Reserve Report with an "as of" date as required by the Administrative Agent
as soon as possible, but in any event no later than thirty (30) days following
the receipt of such request.
(c) With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material respects: (i) to the best of
his knowledge the information contained in the Reserve Report and any other
information delivered in connection therewith is true and correct, except that
with respect to the projections in the Reserve Report, the Borrower only
represents that such projections were prepared in good faith based upon
assumptions believed to be reasonable at this time (ii) except as set forth in
Schedule 7.17, the Borrower or its Restricted Subsidiaries owns good and
defensible title to the Oil and Gas Properties evaluated in such Reserve Report
and such Properties are free of all Liens except for Liens permitted by Section
9.03, (iii) except as set forth on an exhibit to the certificate, on a net basis
there are no gas imbalances, take or pay or other prepayments in excess of the
volume specified in Section 7.19 with respect to its Oil and Gas Properties
evaluated in such Reserve Report which would require the Borrower or any
Restricted Subsidiary to deliver Hydrocarbons either generally or produced from
such Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor, (iv) none of their Oil and Gas Properties have
been sold since the date of the last Borrowing Base determination except as set
forth on an exhibit to the certificate, which certificate shall list all of its
Oil and Gas Properties sold and in such detail as reasonably required by the
Administrative Agent, (v) attached to the certificate is a list of all marketing
agreements entered into subsequent to the later of the date hereof or the most
recently delivered Reserve Report which the Borrower could reasonably be
expected to have been obligated to list on Schedule 7.20 had such agreement been
in effect on the date hereof and attached thereto is a schedule of the Oil and
Gas Properties evaluated by such Reserve Report that are Mortgaged Properties
and demonstrating the percentage of the Borrowing Base that the value of such
Mortgaged Properties represent.
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Section 8.13 Title Information.
(a) On or before the delivery to the Administrative Agent and the
Lenders of each Reserve Report required by Section 8.12(a), the Borrower will
deliver title information in form and substance acceptable to the Administrative
Agent covering enough of the Oil and Gas Properties evaluated by such Reserve
Report that were not included in the immediately preceding Reserve Report, so
that the Administrative Agent shall have received together with title
information previously delivered to the Administrative Agent, satisfactory title
information on at least 80% of the total value of the Oil and Gas Properties
evaluated by such Reserve Report.
(b) If the Borrower has provided title information for additional
Properties under Section 8.13(a), the Borrower shall, within 60 days of notice
from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute acceptable
Mortgaged Properties with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such
definition) having an equivalent value or (iii) deliver title information in
form and substance acceptable to the Administrative Agent so that the
Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 80% of the value of the Oil and Gas Properties evaluated by such
Reserve Report.
(c) If the Borrower is unable to cure any title defect requested by
the Administrative Agent or the Lenders to be cured within the 60-day period or
the Borrower does not comply with the requirements to provide acceptable title
information covering 80% of the value of the Oil and Gas Properties evaluated in
the most recent Reserve Report, such default shall not be a Default, but instead
the Administrative Agent and/or the Majority Lenders shall have the right to
exercise the following remedy in their sole discretion from time to time, and
any failure to so exercise this remedy at any time shall not be a waiver as to
future exercise of the remedy by the Administrative Agent or the Lenders. To the
extent that the Administrative Agent or the Majority Lenders are not satisfied
with title to any Mortgaged Property after the 60-day period has elapsed, such
unacceptable Mortgaged Property, shall not count towards the 80% requirement,
and the Administrative Agent may send a notice to the Borrower and the Lenders
that the then outstanding Borrowing Base shall be reduced by an amount as
determined by the Majority Lenders to cause the Borrower to be in compliance
with the requirement to provide acceptable title information on 80% of the value
of the Oil and Gas Properties. This new Borrowing Base shall become effective
immediately after receipt of such notice. If the Oil and Gas Properties listed
on Schedule 7.17 are not transferred to the Borrower or a Guarantor within 60
days after the date hereof, then such default shall not be a Default, but
instead the Borrowing Base shall be reduced by an amount equal to the value
attributable to such Oil and Gas Properties as evaluated in the most recently
delivered Reserve Report (provided that any failure to so exercise this remedy
at any time shall not be a waiver as to future exercise of the remedy by the
Administrative Agent or the Lenders). This new Borrowing Base shall become
effective immediately after receipt of such notice.
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Section 8.14 Additional Collateral; Additional Guarantors.
(a) In connection with each redetermination of the Borrowing Base, the
Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(c)(vi)) to ascertain whether the
Mortgaged Properties represent at least 80% of the total value of the Oil and
Gas Properties evaluated in the most recently completed Reserve Report after
giving effect to exploration and production activities, acquisitions,
dispositions and production. In the event that the Mortgaged Properties do not
represent at least 80% of such total value, then the Borrower shall, and shall
cause its Restricted Subsidiaries to, grant to the Administrative Agent as
security for the Indebtedness a first-priority Lien interest (subject only to
Excepted Liens of the type described in clauses (a) to (d) and (f) of the
definition thereof, but subject to the provisos at the end of such definition)
on additional Oil and Gas Properties not already subject to a Lien of the
Security Instruments such that after giving effect thereto, the Mortgaged
Properties will represent at least 80% of such total value. All such Liens will
be created and perfected by and in accordance with the provisions of deeds of
trust, security agreements and financing statements or other Security
Instruments, all in form and substance reasonably satisfactory to the
Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes. In order to
comply with the foregoing, if any Restricted Subsidiary other than a Foreign
Subsidiary places a Lien on its Oil and Gas Properties and such Restricted
Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with
Section 8.14(b). Upon any transfer of any Oil and Gas Properties listed in
Schedule 7.17 to the Borrower or any Guarantor, the Borrower shall, and cause
such Guarantor to, grant to the Administrative Agent as security for the
Indebtedness a first-priority Lien interest (subject only to Excepted Liens of
the type described in clauses (a) to (d) and (f) of the definition thereof, but
subject to the provisos at the end of such definition) on such additional Oil
and Gas Properties. All such Liens will be created and perfected by and in
accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance
reasonably satisfactory to the Administrative Agent and in sufficient executed
(and acknowledged where necessary or appropriate) counterparts for recording
purposes.
(b) The Borrower shall cause each Domestic Subsidiary to guarantee the
Indebtedness pursuant to the Guaranty Agreement. In connection with any such
guaranty, the Borrower shall, or shall cause such Domestic Subsidiary to, (i)
execute and deliver a supplement to the Guaranty Agreement executed by such
Domestic Subsidiary, (ii) pledge all of the Equity Interests of such Domestic
Subsidiary (including, without limitation, delivery of original stock
certificates evidencing the Equity Interests of such Domestic Subsidiary,
together with an appropriate undated stock powers for each certificate duly
executed in blank by the registered owner thereof) and (iii) execute and deliver
such other additional closing documents, certificates and legal opinions as
shall reasonably be requested by the Administrative Agent.
(c) In the event that any Domestic Subsidiary becomes the owner of a
Foreign Subsidiary, then the Borrower shall promptly cause such Domestic
Subsidiary to (i) pledge 65% of all the Equity Interests of such Foreign
Subsidiary (including, without limitation, delivery of original stock
certificates evidencing such Equity Interests of such Foreign Subsidiary,
together with appropriate stock powers for each certificate duly executed in
blank by the registered owner
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thereof) and (ii) execute and deliver such other additional closing documents,
certificates and legal opinions as shall reasonably be requested by the
Administrative Agent.
(d) Any Person that must guarantee the Indebtedness in order for the
Borrower to be in compliance with Section 9.04(b)(ii)(C) shall guarantee the
Indebtedness pursuant to the Guaranty Agreement. In connection with any such
guaranty, the Borrower shall, or shall cause such Person to, (A) execute and
deliver a supplement to the Guaranty Agreement executed by such Person, and (B)
execute and deliver such other additional closing documents, certificates and
legal opinions as shall reasonably be requested by the Administrative Agent. If
at any time such Person is not otherwise required to guarantee the Indebtedness
hereunder (whether pursuant to the other provisions of this Section 8.14 or
otherwise) or under any other Loan Document, then upon receipt by the
Administrative Agent of evidence satisfactory to it that such Person has been
fully and finally released from its guarantee obligations in respect of the 2002
Senior Subordinated Notes, such Person shall be released from its guarantee
obligations with respect to the Indebtedness and the Administrative Agent shall,
at the sole cost and expense of the Borrower, execute such further documents and
do all such further acts so as to reasonably evidence such release.
Section 8.15 ERISA Compliance. The Borrower will promptly furnish and will
cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the
Administrative Agent (i) promptly after the filing thereof with the United
States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of
each annual and other report with respect to each Plan or any trust created
thereunder, (ii) immediately upon becoming aware of the occurrence of any ERISA
Event or of any "prohibited transaction," as described in section 406 of ERISA
or in section 4975 of the Code, in connection with any Plan or any trust created
thereunder, a written notice signed by the President or the principal Financial
Officer, the Subsidiary or the ERISA Affiliate, as the case may be, specifying
the nature thereof, what action the Borrower, the Subsidiary or the ERISA
Affiliate is taking or proposes to take with respect thereto, and, when known,
any action taken or proposed by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto, and (iii) immediately upon receipt
thereof, copies of any notice of the PBGC's intention to terminate or to have a
trustee appointed to administer any Plan. With respect to each Plan (other than
a Multiemployer Plan), the Borrower will, and will cause each Subsidiary and
ERISA Affiliate to, (i) satisfy in full and in a timely manner, without
incurring any late payment or underpayment charge or penalty and without giving
rise to any lien, all of the contribution and funding requirements of section
412 of the Code (determined without regard to subsections (d), (e), (f) and (k)
thereof) and of section 302 of ERISA (determined without regard to sections 303,
304 and 306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a
timely manner, without incurring any late payment or underpayment charge or
penalty, all premiums required pursuant to sections 4006 and 4007 of ERISA.
Section 8.16 Unrestricted Subsidiaries. The Borrower:
(a) will cause the management, business and affairs of each of the
Borrower and its Restricted Subsidiaries to be conducted in such a manner
(including, without limitation, by keeping separate books of account, furnishing
separate financial statements of Unrestricted Subsidiaries to creditors and
potential creditors thereof and by not permitting Properties of the Borrower and
its respective Restricted Subsidiaries to be commingled) so that each
Unrestricted
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Subsidiary that is a corporation will be treated as a corporate entity separate
and distinct from Borrower and the Restricted Subsidiaries.
(b) will not, and will not permit any of the Restricted Subsidiaries
to, incur, assume, guarantee or be or become liable for any Debt of any of the
Unrestricted Subsidiaries.
(c) will not permit any Unrestricted Subsidiary to hold any Equity
Interest in, or any Debt of, the Borrower or any Restricted Subsidiary.
ARTICLE IX
Negative Covenants
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 9.01 Financial Covenants.
(a) Ratio of Total Debt to EBITDAX. The Borrower will not, at any
time, permit its ratio of Total Debt as of such time to EBITDAX for the four
fiscal quarters ending on the last day of the fiscal quarter immediately
preceding the date of determination for which financial statements are available
to be greater than 4.5 to 1.0; provided that for purposes of this covenant, so
long as the net cash proceeds of the 2002 Senior Subordinated Notes have been
irrevocably escrowed as contemplated by Section 6.01(n), then the aggregate
principal amount of such notes will not be included in the calculation of "Total
Debt" until such net cash proceeds have been applied to repay the PLX Senior
Subordinated Notes.
(b) Current Ratio. The Borrower will not permit, as of the last day of
any fiscal quarter, its ratio of consolidated current assets (including the
unused amount of the total Commitments but excluding all cash and current assets
that are deposited to redeem the PLX Senior Subordinated Notes and all non-cash
assets under FAS 133) of the Borrower and its Restricted Subsidiaries to (ii)
consolidated current liabilities (excluding non-cash obligations under FAS 133
and the PLX Senior Subordinated Notes) of the Borrower and its Restricted
Subsidiaries to be less than 1.0 to 1.0.
Section 9.02 Debt. Neither the Borrower nor any Restricted Subsidiary will
incur, create, assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan Documents
or any guaranty of or suretyship arrangement for the Notes or other Indebtedness
arising under the Loan Documents.
(b) Debt of the Borrower and its Restricted Subsidiaries existing on
the date hereof that is reflected in the Financial Statements, including one or
more guarantees of the PLX Senior Subordinated Notes and the other obligations
of PLX under the PLX Senior Subordinated
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Indentures; provided that such obligations are extinguished on or prior to the
date set forth in Section 8.04.
(c) purchase money Debt and Debt under Capital Leases not to exceed
$15,000,000 in the aggregate.
(d) Debt associated with workers' compensation claims, performance,
bid, surety or similar bonds or surety obligations required by Governmental
Requirements or third parties in connection with the operation of the Oil and
Gas Properties.
(e) intercompany Debt between the Borrower and any Restricted
Subsidiary or between Restricted Subsidiaries to the extent permitted by Section
9.05(g); provided that such Debt is not held, assigned, transferred, negotiated
or pledged to any Person other than the Borrower or one of its Wholly-Owned
Subsidiaries, and, provided further, that any such Debt owed by either the
Borrower or a Guarantor shall be subordinated to the Indebtedness on terms set
forth in the Guaranty Agreement.
(f) Debt secured by Liens permitted by Section 9.03(d) and Section
9.03(e), the principal amount of which does not exceed $5,000,000 in the
aggregate at any one time.
(g) endorsements of negotiable instruments for collection in the
ordinary course of business.
(h) Debt under the 2002 Senior Subordinated Notes and any guarantees
thereof by the Guarantors, the principal amount of which does not exceed
$200,000,000 in the aggregate.
(i) other Debt not to exceed $10,000,000 in the aggregate at any one
time outstanding.
Section 9.03 Liens. Neither the Borrower nor any Restricted Subsidiary will
create, incur, assume or permit to exist any Lien on any of its Properties (now
owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness.
(b) Excepted Liens.
(c) Liens securing Debt permitted by Section 9.02(c) or (i) but only
on the Property and improvements and accessions thereof and proceeds thereof
acquired or under lease; provided that such Liens are created within 180 days of
construction, acquisition or lease of such Property.
(d) Liens (other than Liens under ERISA or Environmental Laws) on
Property of any Person that becomes a Restricted Subsidiary of the Borrower
after the date of this Agreement; provided that (i) such Liens are in existence
at the time such Person becomes a Restricted Subsidiary of the Borrower and were
not created in anticipation thereof and (ii) no such Liens shall extend to or
cover any Property of such Person other than such Property.
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(e) Liens (other than Liens under ERISA or Environmental Laws) upon
real and/or tangible personal Property acquired after the date of this Agreement
(by purchase, construction or otherwise) by the Borrower or its Restricted
Subsidiaries, each of which Liens either (i) existed on such Property before the
time of its acquisition and was not created in anticipation thereof or (ii) was
created solely for the purpose of securing Debt representing, or incurred to
finance, refinance or refund, the cost (including the cost of construction) of
such Property; provided that no such Lien shall extend to or cover any Property
of the Borrower or such Restricted Subsidiary other than the Property so
acquired and improvements thereon and accessions and proceeds thereof.
(f) (i) Liens on Letters of Credit issued hereunder pledged to secure
obligations under any Swap Agreement permitted by Section 9.19 in an aggregate
amount at any time not to exceed $30,000,000 (other than as permitted by clause
(ii) of this Section 9.03(f)), and Liens on cash, letters of credit and other
financial assets pledged to secure obligations under any Swap Agreement
permitted by Section 9.19 in an aggregate amount at any time not to exceed
$10,000,000 (other than as permitted by clause (i) of this Section 9.03(f)).
(g) Liens on Property not constituting collateral for the Indebtedness
and not otherwise permitted by the foregoing clauses of this Section 9.03;
provided that the aggregate principal or face amount of all Debt secured under
this Section 9.03(g) shall not exceed $2,500,000 at any time.
(h) Liens disclosed on Schedule 9.03.
Section 9.04 Dividends, Distributions and Redemptions; Repayment of 2002
Senior Subordinated Notes.
(a) Restricted Payments. The Borrower will not, and will not permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, return any capital to its stockholders or
make any distribution of its Property to its Equity Interest holders, except the
Borrower may declare and pay dividends with respect to its Equity Interests
payable solely in additional shares of its Equity Interests (other than
Disqualified Capital Stock), (ii) Subsidiaries may declare and pay dividends
ratably with respect to their Equity Interests, (iii) the Borrower may make
Restricted Payments pursuant to and in accordance with stock option plans or
other benefit plans for management or employees of the Borrower and its
Subsidiaries, (iv) the Borrower may declare and pay dividends in cash on the
Effective Date to PLX in an amount not to exceed $312,000,000 for the purpose of
(A) Redeeming the PLX Senior Subordinated Notes and (B) paying principal,
interest, fees and other amounts owing in connection with the termination of the
Existing Credit Agreement, (v) the Borrower may declare and pay cash dividends
to PLX and the General Partner (so long as the Borrower is a limited
partnership) in any fiscal year to pay the Borrower's allocated share of Taxes
(as defined in the Tax Allocation Agreement as it exists on the date hereof) due
in the fiscal year such dividend is declared under the Tax Allocation Agreement
as it exists on the date hereof, (vi) payments contemplated by the Transition
Agreements as in effect on the date hereof and the transactions contemplated
thereby; provided that payments made pursuant to the Transition Agreements
(other than the Tax Allocation Agreement and payments permitted by clause (iv)
and clause (vii)) shall be limited in an aggregate amount not to exceed
$30,000,000, (vii) payments in
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respect of indemnity obligations under Transition Agreements in an aggregate
amount not to exceed $10,000,000, and (viii) to the extent not permitted by
clauses (i) to (vii) above, the Borrower may make Restricted Payments in respect
of Equity Interests of the Borrower in an amount not to exceed $2,500,000 in the
aggregate minus the aggregate principal amount of 2002 Senior Subordinated Notes
Redeemed under Section 9.04(b)(i).
(b) Repayment of 2002 Senior Subordinated Notes; Amendment of 2002
Senior Subordinated Indenture. The Borrower will not, and will not permit any
Restricted Subsidiary to, prior to the Termination Date: (i) call, make or offer
to make any optional or voluntary Redemption (whether in whole or in part) of
the 2002 Senior Subordinated Notes, provided that the Borrower may Redeem 2002
Senior Subordinated Notes to the extent that it could make a Restricted Payment
under Section 9.04(a)(viii), (ii) amend, modify, waive or otherwise change,
consent or agree to any amendment, modification, waiver or other change to, any
of the terms of the 2002 Senior Subordinated Notes or the 2002 Senior
Subordinated Indenture if (A) the effect thereof would be to shorten its
maturity or average life or increase the amount of any payment of principal
thereof or increase the rate or shorten any period for payment of interest
thereon, (B) such action requires the payment of a consent fee or the effect
thereof would be to add any guarantor or surety, unless such guarantor or surety
also guarantees the Indebtedness pursuant to the Guaranty Agreement and each of
the Borrower and such guarantor or surety otherwise complies with Section
8.14(d), or (iii) designate any Debt (other than obligations of the Borrower and
the Restricted Subsidiaries pursuant to the Loan Documents) as "Designated
Senior Indebtedness" or "Designated Guarantor Senior Indebtedness" or give any
such other Debt any other similar designation for the purposes of the 2002
Senior Subordinated Indenture.
Section 9.05 Investments, Loans and Advances. Neither the Borrower nor any
Restricted Subsidiary will make or permit to remain outstanding any Investments
in or to any Person, except that the foregoing restriction shall not apply to:
(a) Investments reflected in the Financial Statements or which are
disclosed to the Lenders in Schedule 9.05.
(b) accounts receivable arising in the ordinary course of business.
(c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within one year from the date of creation thereof.
(d) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by S&P or ▇▇▇▇▇'▇.
(e) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000 (as of the date
of such bank or trust company's most recent financial reports) and has a short
term
74
deposit rating of no lower than A2 or P2, as such rating is set forth from time
to time, by S&P or ▇▇▇▇▇'▇, respectively.
(f) deposits in money market funds investing exclusively in
Investments described in Section 9.05(c), Section 9.05(d) or Section 9.05(e).
(g) Investments (i) made by the Borrower in or to the Guarantors, (ii)
made by any Restricted Subsidiary in or to the Borrower or any Guarantor and
(iii) made by the Borrower or any Restricted Subsidiary in or to all other
Restricted Subsidiaries which are not Guarantors in an aggregate amount at any
one time outstanding not to exceed $5,000,000.
(h) Investments (including, without limitation, capital contributions)
in general or limited partnerships or other types of entities (each a "venture")
entered into by the Borrower or a Restricted Subsidiary with others in the
ordinary course of business; provided that (i) any such venture is engaged
exclusively in oil and gas exploration, development, production, processing and
related activities, including transportation, (ii) the interest in such venture
is acquired in the ordinary course of business and on fair and reasonable terms
and (iii) such venture interests acquired and capital contributions made (valued
as of the date such interest was acquired or the contribution made) do not
exceed, in the aggregate at any time outstanding an amount equal to $2,000,000.
(i) Investments received in settlement of amounts owing to the
Borrower or any Restricted Subsidiary as a result of a bankruptcy or other
insolvency proceeding of the obligor in respect of such amounts or upon the
enforcement of any Lien in favor of the Borrower or any of its Restricted
Subsidiaries; provided that the Borrower shall give the Administrative Agent
prompt written notice in the event that the aggregate amount of all Investments
held at any one time under this Section 9.05(i) exceeds $2,000,000.
(j) entry into operating agreements, working interests, royalty
interests, mineral leases, processing agreements, farm-out agreements, contracts
for the sale, transportation or exchange of oil and natural gas, unitization
agreements, pooling arrangements, area of mutual interest agreements, production
sharing agreements or other similar or customary agreements, transactions,
properties, interests or arrangements, and Investments and expenditures in
connection therewith or pursuant thereto, in each case made or entered into in
the ordinary course of the oil and gas business, excluding, however, Investments
in other Persons other than joint ventures; provided, however, that none of the
foregoing shall involve the incurrence of any Debt not permitted by Section
9.02, and provided further that this Section 9.05(j) shall not be construed to
permit Investments by the Borrower or any Restricted Subsidiary in any Person
which maintains or incurs in the future any Debt other than Non-Recourse Debt;
(k) loans and advances to directors, officers and employees not to
exceed $1,000,000 in the aggregate at any time.
(l) Investments in Unrestricted Subsidiaries, provided that (i) the
aggregate amount of all such Investments at any one time shall not exceed
$5,000,000 (or its equivalent in other currencies as of the date of Investment)
and (ii) the Borrowing Base Utilization Percentage is less than 80% immediately
before and immediately after giving effect to such Investment.
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(m) Guarantees by the Borrower and the Restricted Subsidiaries of Debt
permitted by Section 9.02(a), Section 9.02(c), Section 9.02(h), and Section
9.02(i).
(n) other Investments not to exceed $1,000,000 in the aggregate at any
time.
Section 9.06 Designation and Conversion of Restricted and Unrestricted
Subsidiaries; Debt of Unrestricted Subsidiaries.
(a) Unless designated as an Unrestricted Subsidiary on Schedule 7.15
as of the date hereof or thereafter, assuming compliance with Section 9.06(b),
any Person that becomes a Subsidiary of the Borrower or any of its Restricted
Subsidiaries shall be classified as a Restricted Subsidiary.
(b) The Borrower may designate by written notification thereof to the
Administrative Agent, any Restricted Subsidiary, including a newly formed or
newly acquired Subsidiary, as an Unrestricted Subsidiary if (i) prior, and after
giving effect, to such designation, neither a Default nor a Borrowing Base
deficiency would exist and (ii) such designation is deemed to be an Investment
in an Unrestricted Subsidiary in an amount equal to the fair market value of the
Borrower's direct and indirect ownership interest in such Subsidiary and such
Investment would be permitted to be made at the time of such designation under
Section 9.05(l). Except as provided in this Section 9.06(b), no Restricted
Subsidiary may be redesignated as an Unrestricted Subsidiary.
(c) The Borrower may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary if after giving effect to such designation, (i) the
representations and warranties of the Borrower and its Restricted Subsidiaries
contained in each of the Loan Documents are true and correct on and as of such
date as if made on and as of the date of such redesignation (or, if stated to
have been made expressly as of an earlier date, were true and correct as of such
date), (ii) no Default would exist and (iii) the Borrower complies with the
requirements of Section 8.14, Section 8.16 and Section 9.16. Any such
designation shall be treated as a cash dividend in an amount equal to the lesser
of the fair market value of the Borrower's direct and indirect ownership
interest in such Subsidiary or the amount of the Borrower's cash investment
previously made for purposes of the limitation on Investments under Section
9.05(l).
(d) The Borrower shall not permit the aggregate principal amount of
all Non-Recourse Debt outstanding at any one time to exceed $25,000,000.
Section 9.07 Nature of Business. Neither the Borrower nor any Restricted
Subsidiary will allow any material change to be made in the character of its
business as an independent oil and gas exploration and production company.
Notwithstanding the foregoing, this Section 9.07 shall not prohibit the Borrower
and its Restricted Subsidiaries from holding and developing the Properties
described on Schedule 9.07.
Section 9.08 Limitation on Leases. Neither the Borrower nor any Restricted
Subsidiary will create, incur, assume or suffer to exist any obligation for the
payment of rent or hire of Property of any kind whatsoever (real or personal but
excluding Capital Leases and leases of Hydrocarbon Interests), under leases or
lease agreements which would cause the aggregate
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amount of all payments made by the Borrower and the Restricted Subsidiaries
pursuant to all such leases or lease agreements, including, without limitation,
any residual payments at the end of any lease, to exceed $1,500,000 in any
period of twelve consecutive calendar months during the life of such leases.
Section 9.09 Proceeds of Notes. The Borrower will not permit the proceeds
of the Notes to be used for any purpose other than those permitted by Section
7.22. Neither the Borrower nor any Person acting on behalf of the Borrower has
taken or will take any action which might cause any of the Loan Documents to
violate Regulations T, U or X or any other regulation of the Board or to violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
effect. If requested by the Administrative Agent, the Borrower will furnish to
the Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 or such other form referred to
in Regulation U, Regulation T or Regulation X of the Board, as the case may be.
Section 9.10 ERISA Compliance. The Borrower and the Subsidiaries will not
at any time:
(a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Borrower, a Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by Chapter
43 of Subtitle D of the Code, if either of which would have a Material Adverse
Effect.
(b) terminate, or permit any ERISA Affiliate to terminate, any Plan in
a manner, or take any other action with respect to any Plan, which could result
in any liability of the Borrower, a Subsidiary or any ERISA Affiliate to the
PBGC which could reasonably be expected to have a Material Adverse Effect.
(c) fail to make, or permit any ERISA Affiliate to fail to make, full
payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Borrower, a Subsidiary or any
ERISA Affiliate is required to pay as contributions thereto if such failure
could reasonably be expected to have a Material Adverse Effect.
(d) permit to exist, or allow any ERISA Affiliate to permit to exist,
any accumulated funding deficiency within the meaning of section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect to any Plan which
exceeds $5,000,000.
(e) except as permitted in Section 9.10(f), permit, or allow any ERISA
Affiliate to permit, the actuarial present value of the benefit liabilities
under any Plan maintained by the Borrower, a Subsidiary or any ERISA Affiliate
which is regulated under Title IV of ERISA to exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities by more than
$5,000,000. The term "actuarial present value of the benefit liabilities" shall
have the meaning specified in section 4041 of ERISA.
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(f) acquire, or permit any ERISA Affiliate to acquire, an interest in
any Person that causes such Person to become an ERISA Affiliate with respect to
the Borrower or a Subsidiary or with respect to any ERISA Affiliate of the
Borrower or a Subsidiary if such Person sponsors, maintains or contributes to,
or at any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (1) any Multiemployer Plan, or (2) any other Plan
that is subject to Title IV of ERISA under which the actuarial present value of
the benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities by an amount in excess of
$5,000,000.
(g) incur, or permit any ERISA Affiliate to incur, a liability to or
on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA.
(h) amend, or permit any ERISA Affiliate to amend, a Plan resulting in
an increase in current liability such that the Borrower, a Subsidiary or any
ERISA Affiliate is required to provide security to such Plan under section
401(a)(29) of the Code.
Section 9.11 Sale or Discount of Receivables. Except for receivables
obtained by the Borrower or any Restricted Subsidiary out of the ordinary course
of business or the settlement of joint interest billing accounts in the ordinary
course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of
business in connection with the compromise or collection thereof and not in
connection with any financing transaction, neither the Borrower nor any
Restricted Subsidiary will discount or sell (with or without recourse) any of
its notes receivable or accounts receivable.
Section 9.12 Mergers, Etc. Neither the Borrower nor any Restricted
Subsidiary will merge into or with or consolidate with any other Person, or
sell, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its Property to any other Person
(any such transaction, a "consolidation"); provided that any Restricted
Subsidiary may participate in a consolidation with the Borrower (provided that
the Borrower shall be the continuing or surviving corporation) or any other
Restricted Subsidiary (provided that if a Guarantor is a party to such
transaction, the survivor is such Guarantor or becomes a party to the Guaranty
Agreement) or transfer all or substantially all of its assets to a Guarantor or
a Person that becomes a party to the Guaranty Agreement. Notwithstanding the
foregoing, the Borrower shall be permitted to reorganize as a corporation in
accordance with the procedures established in the 2002 Senior Subordinated
Indenture, and may merge or consolidate with an Affiliate for such purpose,
provided that the Borrower shall have delivered to the Administrative Agent an
opinion of counsel reasonably acceptable to the Administrative Agent confirming
that (i) the Lenders will not recognize income, gain or loss for federal income
tax purposes as a result of such reorganization, (ii) the obligations of the
Borrower, the Guarantors and the Liens and the priority thereof will not be
impaired and (iii) such other matters as may be reasonably requested by the
Administrative Agent.
Section 9.13 Sale of Properties. The Borrower will not, and will not permit
any Restricted Subsidiary to, sell, assign, farm-out, convey or otherwise
transfer any Property except for (a) the sale of Hydrocarbons in the ordinary
course of business; (b) farmouts of undeveloped acreage and assignments in
connection with such farmouts or the abandonment, farm-out,
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exchange, lease or sublease of Oil and Gas Properties not containing proved
reserves capable of being produced in economic quantities and which are not
included in the most recently delivered Reserve Report in the ordinary course of
business; (c) the sale or transfer of equipment that is no longer necessary for
the business of the Borrower or such Restricted Subsidiary or is replaced by
equipment of at least comparable value and use; (d) the sale, transfer or other
disposition of Equity Interests in Unrestricted Subsidiaries; sales or other
dispositions (including Casualty Events) of Oil and Gas Properties or any
interest therein or Restricted Subsidiaries owning Oil and Gas Properties;
provided that (i) if such sales or other dispositions of Oil and Gas Properties
or Restricted Subsidiaries owning Oil and Gas Properties included in the most
recently delivered Reserve Report during any period between two successive
Scheduled Redetermination Dates has a fair market value in excess of $5,000,000,
individually or in the aggregate, the Borrowing Base shall be reduced, effective
immediately upon such sale or disposition, by an amount equal to the value, if
any, assigned such Property in the most recently delivered Reserve Report and
(ii) if any such sale or other disposition is of a Restricted Subsidiary owning
Oil and Gas Properties, such sale or other disposition shall include all the
Equity Interests of such Restricted Subsidiary; (f) the sale of Oil and Gas
Properties in connection with tax credit transactions complying with (S)29 of
the Code or any other analogous provision whether now existing or hereafter
enacted, which sale does not result in a reduction in the Borrower's or its
Restricted Subsidiaries', as the case may be, right to receive the cash flow
from such Oil and Gas Properties and which sale is on terms reasonably
acceptable to the Administrative Agent; (g) dispositions of Investments
(including cash and cash equivalents) the proceeds of which are used in
accordance with Section 9.03 or as otherwise permitted hereunder; (h) sales and
other dispositions of Properties not regulated by Section 9.13(a) to (j) having
a fair market value not to exceed $1,000,000 during any 6-month period; (i)
transfers and other dispositions among the Borrower and the Restricted
Subsidiaries subject to the limitations set forth in Section 9.05(g)(iii); and
(j) transfers permitted by Section 9.11 and Section 9.12.
Section 9.14 Environmental Matters. Neither the Borrower nor any Restricted
Subsidiary will cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to
any Remedial Work under any Environmental Laws, assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations could reasonably be expected to have a Material Adverse
Effect.
Section 9.15 Transactions with Affiliates. Except for transactions
contemplated by the Transition Agreements and the Affiliate Agreements, neither
the Borrower nor any Restricted Subsidiary will enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of Property
or the rendering of any service, with any Affiliate (other than the Guarantors
and Wholly-Owned Subsidiaries of the Borrower) unless such transactions are
otherwise permitted under this Agreement and are upon fair and reasonable terms
no less favorable to it than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.
Section 9.16 Subsidiaries. The Borrower shall not, and shall not permit any
Restricted Subsidiary to, create or acquire any additional Restricted Subsidiary
or redesignate an Unrestricted Subsidiary as a Restricted Subsidiary unless the
Borrower gives written notice to
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the Administrative Agent of such creation or acquisition and complies with
Section 8.14(b). The Borrower shall not, and shall not permit any Restricted
Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any
Restricted Subsidiary except in compliance with Section 9.13(e). Plains E&P
Company will not hold any material assets, become liable for any material
obligations, other than its guaranty of the Indebtedness and the 2002 Senior
Subordinated Notes, or engage in any significant business activities; provided
that Plains E&P Company may be a co-obligor with respect to Debt if the Borrower
is the primary obligor of such Debt and the net proceeds of such Debt are
received by the Borrower or one or more Restricted Subsidiary other than Plains
E&P Company.
Section 9.17 Negative Pledge Agreements; Dividend Restrictions. Neither the
Borrower nor any Restricted Subsidiary will create, incur, assume or suffer to
exist any contract, agreement or understanding which in any way prohibits or
restricts the granting, conveying, creation or imposition of any Lien on any of
its Property in favor of the Administrative Agent and the Lenders or restricts
any Restricted Subsidiary from paying dividends or making distributions to the
Borrower or any Guarantor, or which requires the consent of or notice to other
Persons in connection therewith; provided, however, that the preceding
restrictions will not apply to encumbrances or restrictions arising under or by
reason of (i) this Agreement or the Security Instruments, (ii) Debt securing
Liens permitted by Section 9.03(c) or Section 9.03(g) or any contract, agreement
or understanding creating Liens permitted by Section 9.03(d) and Section 9.03(e)
or Section 9.03(g) (but only to the extent related to the Property on which such
Liens were created), (iii) any leases or licenses or similar contracts as they
affect any Property or Lien subject to a lease or license, (iv) any restriction
with respect to a Restricted Subsidiary imposed pursuant to an agreement entered
into for the direct or indirect sale or disposition of all or substantially all
the equity or Property of such Restricted Subsidiary (or the Property that is
subject to such restriction) pending the closing of such sale or disposition, or
(v) customary provisions with respect to the distribution of Property in joint
venture agreements.
Section 9.18 Gas Imbalances, Take-or-Pay or Other Prepayments. The Borrower
will not allow gas imbalances, take-or-pay or other prepayments with respect to
the Oil and Gas Properties of the Borrower or any Restricted Subsidiary that
would require the Borrower or such Restricted Subsidiary to deliver Hydrocarbons
at some future time without then or thereafter receiving full payment therefor
to exceed one and one-half million mcf of gas (on an mcfe equivalent basis) in
the aggregate.
Section 9.19 Swap Agreements. Neither the Borrower nor any Restricted
Subsidiary will enter into any Swap Agreements with any Person other than (a)
Swap Agreements in respect of commodities (i) with an Approved Counterparty and
(ii) the notional volumes for which (when aggregated with other commodity Swap
Agreements then in effect other than basis differential swaps on volumes already
hedged pursuant to other Swap Agreements) do not exceed, as of the date such
Swap Agreement is executed, 85% of the reasonably anticipated projected
production from proved, developed, producing Oil and Gas Properties for each
month during the period during which such Swap Agreement is in effect for each
of crude oil and natural gas, calculated separately, and (b) Swap Agreements in
respect of interest rates with an Approved Counterparty, as follows: (i) Swap
Agreements effectively converting interest rates from fixed to floating, the
notional amounts of which (when aggregated with all other Swap Agreements of the
Borrower and its Restricted Subsidiaries then in effect effectively converting
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interest rates from fixed to floating) do not exceed 50% of the then outstanding
principal amount of the Borrower's Debt for borrowed money which bears interest
at a fixed rate and (ii) Swap Agreements effectively converting interest rates
from floating to fixed, the notional amounts of which (when aggregated with all
other Swap Agreements of the Borrower and its Restricted Subsidiaries then in
effect effectively converting interest rates from floating to fixed) do not
exceed 75% of the then outstanding principal amount of the Borrower's Debt for
borrowed money which bears interest at a floating rate. In no event shall any
Swap Agreement contain any requirement, agreement or covenant for the Borrower
or any Restricted Subsidiary to post collateral or margin to secure their
obligations under such Swap Agreement or to cover market exposures except to the
extent permitted by Section 9.03(a) and Section 9.03(f).
Section 9.20 Spin-off Documents. The Borrower will not, and will not permit
any of its Subsidiaries to, amend, modify or supplement any of the Spin-off
Documents if the effect thereof could reasonably be expected to have a Material
Adverse Effect (and provided that the Borrower promptly furnish to the
Administrative Agent a copy of such amendment, modification or supplement).
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default. One or more of the following events shall
constitute an "Event of Default":
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise.
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days.
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Restricted Subsidiary in or in connection with any Loan
Document or any amendment or modification of any Loan Document or waiver under
such Loan Document, or in any report, certificate, financial statement or other
document furnished pursuant to the provisions hereof or any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have been
incorrect when made or deemed made.
(d) the Borrower or any Restricted Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in Section 8.01(j),
Section 8.01(n), Section 8.01(o), Section 8.02, Section 8.15 or in ARTICLE IX.
(e) the Borrower or any Restricted Subsidiary shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement (other
than those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d))
or any other Loan Document, and such failure shall continue unremedied for a
period of 30 days after the earlier to occur of (A) notice
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thereof from the Administrative Agent to the Borrower (which notice will be
given at the request of any Lender) or (B) a Responsible Officer of the Borrower
or such Restricted Subsidiary otherwise becoming aware of such default.
(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.
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
Redemption thereof or any offer to Redeem to be made in respect thereof, prior
to its scheduled maturity or require the Borrower or any Restricted Subsidiary
to make an offer in respect thereof.
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the General Partner (so long as the Borrower is a partnership),
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 General Partner, 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 30 days or an order or decree approving
or ordering any of the foregoing shall be entered.
(i) the General Partner (so long as the Borrower is a partnership),
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 Section 10.01(h), (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the General Partner (so long as the Borrower is a
partnership), 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 foregoing.
(j) the General Partner (so long as the Borrower is a partnership),
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 (to the extent not covered by independent third
party insurance provided by insurers of the highest claims paying rating or
financial strength as to which the insurer does not dispute coverage and is not
subject to an insolvency proceeding) shall be rendered against the General
Partner (so long as the Borrower is a partnership), the Borrower, any Restricted
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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) the Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and generally valid, binding and enforceable in accordance with their
terms against the Borrower or a Guarantor party thereto, or cease to create a
valid and perfected Lien of the priority required thereby on any of the
collateral purported to be covered thereby, except to the extent permitted by
the terms of this Agreement, or the Borrower or any Restricted Subsidiary or any
of their Affiliates shall so state in writing.
(m) an ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding $5,000,000.
(n) a Change in Control shall occur.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may,
and at the request of the Majority Lenders, shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Notes and the Loans then outstanding to be due
and payable in whole (or in part, in which case any principal not so declared to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower
and the Guarantors accrued hereunder and under the Notes and the other Loan
Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in Section 2.08(j)), shall become due and
payable immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor; and in case of an Event of
Default described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), the
Commitments shall automatically terminate and the Notes and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
the other obligations of the Borrower and the Guarantors accrued hereunder and
under the Notes and the other Loan Documents (including, without limitation, the
payment of cash collateral to secure the LC Exposure as provided in Section
2.08(j)), shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower and each Guarantor.
(b) In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.
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(c) All proceeds realized from the liquidation or other disposition of
collateral or otherwise received after maturity of the Notes, whether by
acceleration or otherwise, shall be applied: first, to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second, to accrued interest on the Notes; third, to fees; fourth, pro rata to
principal outstanding on the Notes; fifth, to Indebtedness owing to a Lender or
an Affiliate of a Lender under any Swap Agreement permitted hereby or to any
amounts owing to BoA under the Swap Agreements listed on Schedule 1.02; sixth,
to any other Indebtedness; seventh, to serve as cash collateral to be held by
the Administrative Agent to secure the LC Exposure; and any excess shall be paid
to the Borrower or as otherwise required by any Governmental Requirement.
ARTICLE XI
The Agents
Section 11.01 Appointment; Powers. Each of the Lenders and each Issuing
Bank hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof and the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto.
Section 11.02 Duties and Obligations of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except as
provided in Section 11.03, and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
under any other Loan Document or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or in any other Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, (v) the satisfaction of
any condition set forth in ARTICLE VI or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent,
(vi) the existence, value, perfection or priority of any collateral security or
the financial or other condition of the Borrower and its Subsidiaries or any
other obligor or guarantor, or (vii) any failure by the Borrower or any other
Person (other than itself) to perform any of its obligations hereunder or under
any other Loan Document or the performance or observance of any covenants,
agreements or other terms or conditions set forth herein or therein.
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Section 11.03 Action by Administrative Agent. The Administrative Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing as directed by the Majority Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 12.02) and in all cases the Administrative Agent shall be fully
justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Majority
Lenders or the Lenders, as applicable, (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in Section
12.02) specifying the action to be taken and (b) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The
instructions as aforesaid and any action taken or failure to act pursuant
thereto by the Administrative Agent shall be binding on all of the Lenders. If a
Default has occurred and is continuing, then the Administrative Agent shall take
such action with respect to such Default as shall be directed by the requisite
Lenders in the written instructions (with indemnities) described in this Section
11.03, provided that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interests of the Lenders.
In no event, however, shall the Administrative Agent be required to take any
action which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement, the Loan Documents or applicable law. If a Default
has occurred and is continuing, neither the Syndication Agents nor the
Documentation Agents shall have any obligation to perform any act in respect
thereof. No Agent shall be liable for any action taken or not taken by it with
the consent or at the request of the Majority Lenders or the Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02), and otherwise no Agent shall be
liable for any action taken or not taken by it hereunder or under any other Loan
Document or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith INCLUDING ITS OWN
ORDINARY NEGLIGENCE, except for its own gross negligence or willful misconduct.
Section 11.04 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower, the Lenders and each Issuing Bank hereby waives the right to dispute
the Administrative Agent's record of such statement, except in the case of gross
negligence or willful misconduct by the Administrative Agent. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts. The Agents may deem and treat the
payee of any Note as the holder thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof permitted hereunder shall
have been filed with the Administrative Agent.
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Section 11.05 Subagents. The Administrative Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding Sections of this ARTICLE XI shall apply to any such sub-agent
and to the Related Parties of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
Section 11.06 Resignation or Removal of Agents. Subject to the appointment
and acceptance of a successor Agent as provided in this Section 11.06, any Agent
may resign at any time by notifying the Lenders, each Issuing Bank and the
Borrower, and any Agent may be removed at any time with or without cause by the
Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall have the right, in consultation with the Borrower, to appoint a successor.
If no successor shall have been so appointed by the Majority Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation or removal of the retiring Agent, then the retiring
Agent may, on behalf of the Lenders and each Issuing Bank, appoint a successor
Agent which shall be a bank with an office in New York, New York, or an
Affiliate of any such bank. Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
The fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Agent's resignation hereunder, the provisions of this
ARTICLE XI and Section 12.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Agent.
Section 11.07 Agents as Lenders. Each bank serving as an Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not an Agent hereunder.
Section 11.08 No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Loan Document to which it is a party. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document, any related agreement or any
document furnished hereunder or thereunder. The Agents shall not be required to
keep themselves informed as to the performance or observance by the Borrower or
any of its Subsidiaries of this Agreement, the Loan Documents or any other
document referred to or provided for herein or to inspect the Properties or
books of the Borrower or its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be
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furnished to the Lenders by the Administrative Agent hereunder, no Agent or
Arranger shall have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of the Borrower (or any of its Affiliates) which may come into the
possession of such Agent or any of its Affiliates. In this regard, each Lender
acknowledges that ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. is acting in this transaction as
special counsel to the Administrative Agent only, except to the extent otherwise
expressly stated in any legal opinion or any Loan Document. Each other party
hereto will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.
Section 11.09 Authority of Administrative Agent to Release Collateral and
Liens. Each Lender and each Issuing Bank hereby authorizes the Administrative
Agent to release any collateral that is permitted to be sold or released
pursuant to the terms of the Loan Documents. Each Lender and each Issuing Bank
hereby authorizes the Administrative Agent to execute and deliver to the
Borrower, at the Borrower's sole cost and expense, any and all releases of
Liens, termination statements, assignments or other documents reasonably
requested by the Borrower in connection with any sale or other disposition of
Property to the extent such sale or other disposition is permitted by the terms
of Section 9.13 or is otherwise authorized by the terms of the Loan Documents.
Section 11.10 The Syndication Agents and Documentation Agents. The
Syndication Agents and the Documentation Agents shall have no duties,
responsibilities or liabilities under this Agreement and the other Loan
Documents other than their duties, responsibilities and liabilities in their
capacity as Lenders hereunder.
ARTICLE XII
Miscellaneous
Section 12.01 Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇▇▇ (Telecopy No. (713)
654-1523);
(ii) if to the Administrative Agent, to it at One Chase ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of Loan and Agency
Services, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention of June Brand (Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇, and for all other correspondence other than borrowings,
continuation, conversion and Letter of Credit requests ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ (Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇); and
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(iii) if to any other Lender, in its capacity as such, or any
other Lender in its capacity as an Issuing Bank, to it at its address (or
telecopy number) set forth in its Administrative Questionnaire.
(b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V
unless otherwise agreed by the Administrative Agent and the applicable Lender.
The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.
(c) Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 12.02 Waivers; Amendments.
(a) No failure on the part of the Administrative Agent, any Issuing
Bank or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege, or any abandonment or
discontinuance of steps to enforce such right, power or privilege, under any of
the Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any of the Loan
Documents preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies of the Administrative
Agent, each Issuing Bank and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by Section
12.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Majority Lenders or by the Borrower and the Administrative Agent with
the consent of the Majority Lenders; provided that no such agreement shall (i)
increase the Commitment or the Maximum Credit Amount of any Lender without the
written consent of such Lender, (ii) increase the Borrowing Base without the
written consent of the Required Lenders, decrease or maintain the Borrowing Base
without the consent of Super-majority Lenders or modify Section 2.07 without the
written consent of each Lender, (iii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, or reduce any other Indebtedness
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hereunder or under any other Loan Document, without the written consent of each
Lender affected thereby, (iv) postpone the scheduled date of payment of the
principal amount of any Loan or LC Disbursement, or any interest thereon, or any
fees payable hereunder, or any other Indebtedness hereunder or under any other
Loan Document, or reduce the amount of, waive or excuse any such payment, or
postpone or extend the Termination Date without the written consent of each
Lender affected thereby, (v) change Section 4.01(b) or Section 4.01(c) in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (vi) release any Guarantor (except
as set forth in the Guaranty Agreement), release all or substantially all of the
collateral (other than as provided in Section 11.09), or reduce the percentage
set forth in Section 8.14 to less than 80%, without the written consent of each
Lender, or (vii) change any of the provisions of this Section 12.02(b) or the
definitions of "Required Lenders", "Super-majority Lenders" or "Majority
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or under any
other Loan Documents or make any determination or grant any consent hereunder or
any other Loan Documents, without the written consent of each Lender and BoA to
the extent BoA is entitled to such rights pursuant to this Section 12.02(b);
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent or any Issuing Bank hereunder
or under any other Loan Document without the prior written consent of the
Administrative Agent or such Issuing Bank, as the case may be; provided further
that the consent of BoA shall be required for any waiver, amendment or
modification to Section 10.02(c) or any Security Instrument to the extent that
BoA is adversely affected thereby. Notwithstanding the foregoing, any supplement
to Schedule 7.15 (Subsidiaries) shall be effective simply by delivering to the
Administrative Agent a supplemental schedule clearly marked as such and, upon
receipt, the Administrative Agent will promptly deliver a copy thereof to the
Lenders.
(c) Unless BoA has become a Lender hereunder pursuant to the other
provisions of this Agreement (and in such case, BoA shall be entitled to all of
the rights of a Lender hereunder), BoA shall not be deemed to be a Lender
hereunder, and BoA shall not have any voting, waiver, consent or any other
rights with respect to any matter under or in connection with this Agreement or
any other Loan Document, except as specifically set forth in Section 12.04(b).
Section 12.03 Expenses, Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including, without
limitation, the reasonable fees, charges and disbursements of counsel and other
outside consultants for the Administrative Agent, the reasonable travel,
photocopy, mailing, courier, telephone and other similar expenses, and the cost
of environmental audits and surveys and appraisals, in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the
execution hereof and including advice of counsel to the Administrative Agent as
to the rights and duties of the Administrative Agent and the Lenders with
respect thereto) of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments and
other charges incurred by any Agent or any Lender in
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connection with any filing, registration, recording or perfection of any
security interest contemplated by this Agreement or any Security Instrument or
any other document referred to therein, (iii) all reasonable out-of-pocket
expenses incurred by each Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit issued by such Issuing
Bank or any demand for payment thereunder, (iv) all out-of-pocket expenses
incurred by any Agent, any Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for any Agent, any Issuing Bank or any
Lender, in connection with the enforcement or protection of its rights in
connection with this Agreement or any other Loan Document, including its rights
under this Section 12.03, or in connection with the Loans made or Letters of
Credit issued hereunder, including, without limitation, all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit.
(b) THE BORROWER SHALL INDEMNIFY EACH AGENT, EACH ISSUING BANK AND
EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH
PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH INDEMNITEE HARMLESS
FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES,
INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE,
INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION
WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR
THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN
DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN
DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY RESTRICTED SUBSIDIARY TO
COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH
ANY GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY
BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN
ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS
DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE
OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY ANY
ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT ISSUED BY
SUCH ISSUING BANK IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO
NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT
OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE,
NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN
CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE
OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER
AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO
RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR
PROPERTIES, INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION,
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STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF
DISPOSAL OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE
BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER
OR ANY SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF
ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH,
THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL,
GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR
ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR
ANY SUBSIDIARY OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF
ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE
BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH
OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL
OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF
THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY
SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE,
WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL
TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL
NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF SUCH INDEMNITEE.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to any Agent or any Issuing Bank under Section 12.03(a) or (b),
each Lender severally agrees to pay to such Agent or such Issuing Bank, as the
case may be, such Lender's Applicable Percentage (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against such Agent or such Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out
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of, in connection with, or as a result of, this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section 12.03 shall be payable not
later than 10 days after written demand therefor.
(f) Notwithstanding any other provisions of this Section 12.03, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower and the Guarantors to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of any
state.
Section 12.04 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 any Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section 12.04. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in Section 12.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, each Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) (i) Subject to the conditions set forth in Section 12.04(b)(ii),
any Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the Borrower
shall be required for an assignment to a Lender, an Affiliate of a Lender, an
Approved Fund or, if an Event of Default has occurred and is continuing, any
other assignee; and
(B) the Administrative Agent, provided that no consent of
the Administrative Agent shall be required for an assignment to an assignee that
is a Lender immediately prior to giving effect to such assignment.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment, the amount of the Commitment of the assigning
Lender subject to each such
92
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
under this Agreement;
(C) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500;
(D) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire; and
(E) in the case of an assignment to a CLO, the assigning
Lender shall retain the sole right to approve any amendment, modification or
waiver of any provision of this Agreement, provided that the Assignment and
Assumption between such Lender and such CLO may provide that such Lender will
not, without the consent of such CLO, agree to any amendment, modification or
waiver described in the first proviso to Section 12.02 that affects such CLO.
(iii) Subject to Section 12.04(b)(iv) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Section 5.01, Section
5.02, Section 5.03 and Section 12.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply
with this Section 12.04 shall be treated for purposes of this Agreement as
a sale by such Lender of a participation in such rights and obligations in
accordance with Section 12.04(c).
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Maximum
Credit Amount of, and principal amount of the Loans and LC Disbursements
owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and the
Borrower, the Administrative Agent, each Issuing Bank and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, any Issuing Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice. In
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connection with any changes to the Register, if necessary, the
Administrative Agent will reflect the revisions on Annex I and forward a
copy of such revised Annex I to the Borrower, each Issuing Bank and each
Lender.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already
be a Lender hereunder), the processing and recordation fee referred to in
Section 12.04(b) and any written consent to such assignment required by
Section 12.04(b), the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has
been recorded in the Register as provided in this Section 12.04(b).
(c) (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or any 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, each 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 proviso to Section
12.02 that affects such Participant. In addition such agreement must provide
that the Participant be bound by the provisions of Section 12.03. Subject to
Section 12.04(c)(ii), the Borrower agrees that each Participant shall be
entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 12.04(b). To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 12.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 4.01(c) as
though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 5.01 or Section 5.03 than the applicable Lender would
have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant
is made with the Borrower's prior written consent. A Participant that would
be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 5.03 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 5.03(e) as though it were a
Lender.
(d) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section 12.04
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shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release
a Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.
Section 12.05 Survival; Revival; Reinstatement.
(a) All covenants, agreements, representations and warranties made by
the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, any Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Section 5.01, Section 5.02, Section 5.03 and
Section 12.03 and ARTICLE XI shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement, any other Loan
Document or any provision hereof or thereof.
(b) To the extent that any payments on the Indebtedness or proceeds of
any collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.
Section 12.06 Counterparts; Integration; Effectiveness.
(a) This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.
(b) This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. This Agreement
and the other Loan Documents (other than the Letters of Credit and the Letter of
Credit Agreements) represent the final agreement among the parties hereto and
thereto
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and may not be contradicted by evidence of prior, contemporaneous or subsequent
oral agreements of the parties. There are no unwritten oral agreements between
the parties.
(c) Except as provided in Section 6.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
Section 12.07 Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
Section 12.08 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitations obligations under Swap Agreements) at any
time owing by such Lender or Affiliate to or for the credit or the account of
the Borrower or any Restricted Subsidiary against any of and all the obligations
of the Borrower or any Restricted Subsidiary owed to such Lender now or
hereafter existing under this Agreement or any other Loan Document, irrespective
of whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations may be unmatured. The
rights of each Lender under this Section 12.08 are in addition to other rights
and remedies (including other rights of setoff) which such Lender or its
Affiliates may have.
Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT TO THE EXTENT THAT
UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE,
RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH
LENDER IS LOCATED.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS
SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT
PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
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JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT
PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY COURT
OTHERWISE HAVING JURISDICTION.
(c) THE BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS
AND HEREBY CONFERS AN IRREVOCABLE SPECIAL POWER, AMPLE AND SUFFICIENT, TO CT
CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ AS ITS DESIGNEE, APPOINTEE AND AGENT
WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING IN NEW YORK TO RECEIVE, ACCEPT AND
ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF
ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN
ANY SUCH PROCEEDING AND AGREES THAT THE FAILURE OF SUCH AGENT TO GIVE ANY ADVICE
OF ANY SUCH SERVICE OF PROCESS TO THE BORROWER SHALL NOT IMPAIR OR AFFECT THE
VALIDITY OF SUCH SERVICE OR OF ANY CLAIM BASED THEREON. IF FOR ANY REASON SUCH
DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE
BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK
CITY REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT ON THE TERMS AND FOR
THE PURPOSES OF THIS PROVISION. EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS
AS IS SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION),
SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.
(d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR
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OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.
Section 12.10 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 12.11 Confidentiality. Each of the Administrative Agent, each
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement or any other
Loan Document, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section 12.11, to (i) any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement (provided that such Person agrees in writing to
be bound by the provisions of this Section 12.11) or (ii) any actual or
prospective counterparty (or its advisors) to any Swap Agreement relating to the
Borrower and its obligations (provided that such Person agrees in writing to be
bound by the provisions of this Section 12.11), (g) with the consent of the
Borrower or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section 12.11 or (ii) becomes
available to the Administrative Agent, any Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrower. For the purposes of
this Section 12.11, "Information" means all information received from the
Borrower or any Restricted Subsidiary relating to the Borrower or any Restricted
Subsidiary and their businesses, other than any such information that is
available to the Administrative Agent, any Issuing Bank or any Lender on a
nonconfidential basis prior to disclosure by the Borrower or a Restricted
Subsidiary; provided that, in the case of information received from the Borrower
or any Restricted Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section 12.11
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Section 12.12 Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America and the State of New York or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions
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of this Agreement), then, in that event, notwithstanding anything to the
contrary in any of the Loan Documents or any agreement entered into in
connection with or as security for the Notes, it is agreed as follows: (i) the
aggregate of all consideration which constitutes interest under law applicable
to any Lender that is contracted for, taken, reserved, charged or received by
such Lender under any of the Loan Documents or agreements or otherwise in
connection with the Notes shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be canceled automatically
and if theretofore paid shall be credited by such Lender on the principal amount
of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower); and (ii) in the event that the maturity of the Notes is
accelerated by reason of an election of the holder thereof resulting from any
Event of Default under this Agreement or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under law applicable to any Lender may never include more than the
maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically by
such Lender as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited by such Lender on the principal amount of
the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower). All sums paid or agreed to be paid to any Lender for
the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the actual full term of the Loans evidenced by the Notes
until payment in full so that the rate or amount of interest on account of any
Loans hereunder does not exceed the maximum amount allowed by such applicable
law. If at any time and from time to time (i) the amount of interest payable to
any Lender on any date shall be computed at the Highest Lawful Rate applicable
to such Lender pursuant to this Section 12.12 and (ii) in respect of any
subsequent interest computation period the amount of interest otherwise payable
to such Lender would be less than the amount of interest payable to such Lender
computed at the Highest Lawful Rate applicable to such Lender, then the amount
of interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.12.
Section 12.13 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE
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LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER
PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND
COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY
EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE
BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE
PROVISION IS NOT "CONSPICUOUS."
Section 12.14 Specified Senior Indebtedness. The Parties acknowledge and
agree that the Indebtedness hereunder is specifically designated "Designated
Senior Indebtedness" as required by the 2002 Senior Subordinated Indenture
pursuant to which the 2002 Senior Subordinated Notes have been issued.
Section 12.15 Limitation of Liability of the General Partner. The General
Partner shall have no liability for any obligations of the Borrower or any
Restricted Subsidiary under the Notes, the Credit Agreement or any other Loan
Document or for any claim based on, in respect of, or by reason of, such
obligations or their creation. The Administrative Agent, each Lender and each
Issuing Bank waives and releases all such liability.
[SIGNATURES BEGIN NEXT PAGE]
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The parties hereto have caused this Agreement to be duly executed as of the
day and year first above written.
BORROWER: PLAINS EXPLORATION & PRODUCTION
COMPANY, L.P.
By: ▇▇▇▇▇▇▇ Resources, Inc., its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Vice President and Treasurer
[Signature Page- Credit Agreement]
ADMINISTRATIVE AGENT: JPMORGAN CHASE BANK, as a Lender and as
Administrative Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Managing Director
[Signature Page- Credit Agreement]
LENDERS: BANK ONE, NA (MAIN OFFICE CHICAGO)
as a Lender and as a Syndication Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Director
[Signature Page- Credit Agreement]
LENDERS: FLEET NATIONAL BANK, as a Lender and as a
Syndication Agent
By: /s/ ▇▇▇▇▇▇▇ Brochett
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Name: ▇▇▇▇▇▇▇ Brochett
Title: Vice President
[Signature Page- Credit Agreement]
LENDERS: BNP PARIBAS, as a Lender and as a
Documentation Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
[Signature Page- Credit Agreement]
LENDERS: FORTIS CAPITAL CORP., as a Lender and as a
Documentation Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
[Signature Page- Credit Agreement]