Execution Version
CREDIT AGREEMENT
DATED AS OF
JANUARY 31, 2006
AMONG
▇▇▇▇▇▇ ▇▇▇▇▇▇ NORTH, L.L.C.,
AS BORROWER,
AURORA ENERGY, LTD. AND
CADENCE RESOURCES CORPORATION,
AS GUARANTORS
BNP PARIBAS,
AS ADMINISTRATIVE AGENT,
AND
THE LENDERS PARTY HERETO
SOLE LEAD ARRANGER AND SOLE BOOKRUNNER
BNP PARIBAS
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above....................................................................1
Section 1.02 Certain Defined Terms..................................................................1
Section 1.03 Types of Loans and Borrowings.........................................................20
Section 1.04 Terms Generally; Rules of Construction................................................20
Section 1.05 Accounting Terms and Determinations; GAAP.............................................21
ARTICLE II
THE CREDITS
Section 2.01 Commitments...........................................................................21
Section 2.02 Loans and Borrowings..................................................................21
Section 2.03 Requests for Borrowings...............................................................22
Section 2.04 Interest Elections....................................................................23
Section 2.05 Funding of Borrowings.................................................................24
Section 2.06 Termination and Reduction of Aggregate Maximum Credit Amounts.........................25
Section 2.07 Borrowing Base........................................................................25
Section 2.08 Letters of Credit.....................................................................28
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
Section 3.01 Repayment of Loans....................................................................32
Section 3.02 Interest..............................................................................32
Section 3.03 Alternate Rate of Interest............................................................33
Section 3.04 Prepayments...........................................................................34
Section 3.05 Fees..................................................................................35
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs...........................36
Section 4.02 Presumption of Payment by the Borrower................................................37
Section 4.03 Certain Deductions by the Administrative Agent........................................38
Section 4.04 Disposition of Proceeds...............................................................38
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
Section 5.01 Increased Costs.......................................................................38
Section 5.02 Break Funding Payments................................................................39
Section 5.03 Taxes.................................................................................40
Section 5.04 Mitigation Obligations................................................................41
Section 5.05 Illegality............................................................................41
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ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Effective Date........................................................................41
Section 6.02 Each Credit Event.....................................................................45
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01 Organization; Powers.........................................................46
Section 7.02 Authority; Enforceability.............................................................46
Section 7.03 Approvals; No Conflicts...............................................................46
Section 7.04 Financial Condition; No Material Adverse Change.......................................46
Section 7.05 Litigation............................................................................47
Section 7.06 Environmental Matters.................................................................47
Section 7.07 Compliance with the Laws and Agreements; No Defaults..................................48
Section 7.08 Investment Company Act................................................................48
Section 7.09 Public Utility Holding Company Act....................................................49
Section 7.10 Taxes.................................................................................49
Section 7.11 ERISA.................................................................................49
Section 7.12 Disclosure; No Material Misstatements.................................................50
Section 7.13 Insurance.............................................................................51
Section 7.14 Restriction on Liens..................................................................51
Section 7.15 Subsidiaries..........................................................................51
Section 7.16 Location of Business and Offices......................................................51
Section 7.17 Properties; Titles, Etc...............................................................51
Section 7.18 Maintenance of Properties.............................................................52
Section 7.19 Gas Imbalances, Prepayments...........................................................53
Section 7.20 Marketing of Production...............................................................53
Section 7.21 Swap Agreements.......................................................................53
Section 7.22 Use of Loans and Letters of Credit....................................................53
Section 7.23 Solvency..............................................................................54
Section 7.24 Specified Senior Indebtedness.........................................................54
Section 7.25 Acquisition Documents.................................................................54
ARTICLE VIII
AFFIRMATIVE COVENANTS
Section 8.01 Financial Statements; Ratings Change; Other Information...............................54
Section 8.02 Notices of Material Events............................................................57
Section 8.03 Existence; Conduct of Business........................................................58
Section 8.04 Payment of Obligations................................................................58
Section 8.05 Performance of Obligations under Loan Documents.......................................58
Section 8.06 Operation and Maintenance of Properties...............................................58
Section 8.07 Insurance.............................................................................59
Section 8.08 Books and Records; Inspection Rights..................................................59
Section 8.09 Compliance with Laws..................................................................59
Section 8.10 Environmental Matters.................................................................59
Section 8.11 Further Assurances....................................................................60
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Section 8.12 Reserve Reports.......................................................................61
Section 8.13 Title Information.....................................................................62
Section 8.14 Additional Collateral; Additional Guarantors..........................................63
Section 8.15 ERISA Compliance......................................................................64
Section 8.16 Marketing Activities..................................................................64
ARTICLE IX
NEGATIVE COVENANTS
Section 9.01 Financial Covenants...................................................................65
Section 9.02 Debt..................................................................................65
Section 9.03 Liens.................................................................................66
Section 9.04 Dividends, Distributions and Redemptions; Repayment of Second Lien Documents..........67
Section 9.05 Investments, Loans and Advances.......................................................68
Section 9.06 Nature of Business; International Operations..........................................69
Section 9.07 Limitation on Leases..................................................................69
Section 9.08 Proceeds of Notes.....................................................................69
Section 9.09 ERISA Compliance......................................................................70
Section 9.10 Sale or Discount of Receivables.......................................................71
Section 9.11 Mergers, Etc..........................................................................71
Section 9.12 Sale of Properties....................................................................72
Section 9.13 Environmental Matters.................................................................72
Section 9.14 Transactions with Affiliates..........................................................72
Section 9.15 Subsidiaries..........................................................................72
Section 9.16 Negative Pledge Agreements; Dividend Restrictions.....................................73
Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments......................................73
Section 9.18 Swap Agreements.......................................................................73
Section 9.19 Acquisition Documents.................................................................73
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 Events of Default.....................................................................74
Section 10.02 Remedies..............................................................................76
ARTICLE XI
THE AGENTS
Section 11.02 Duties and Obligations of Administrative Agent........................................77
Section 11.03 Action by Administrative Agent........................................................78
Section 11.04 Reliance by Administrative Agent......................................................79
Section 11.05 Subagents.............................................................................79
Section 11.06 Resignation or Removal of Administrative Agent........................................79
Section 11.07 Agents as Lenders.....................................................................80
Section 11.08 No Reliance...........................................................................80
Section 11.09 Administrative Agent May File Proofs of Claim.........................................80
Section 11.10 Authority of Administrative Agent to Release Collateral and Liens.....................81
Section 11.11 The Arranger and other Agents.........................................................81
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ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices...............................................................................81
Section 12.02 Waivers; Amendments...................................................................82
Section 12.03 Expenses, Indemnity; Damage Waiver....................................................83
Section 12.04 Successors and Assigns................................................................86
Section 12.05 Survival; Revival; Reinstatement......................................................88
Section 12.06 Counterparts; Integration; Effectiveness..............................................89
Section 12.07 Severability..........................................................................90
Section 12.08 Right of Setoff.......................................................................90
Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS............................90
Section 12.10 Headings..............................................................................91
Section 12.11 Confidentiality.......................................................................91
Section 12.12 Interest Rate Limitation..............................................................92
Section 12.13 EXCULPATION PROVISIONS................................................................93
Section 12.14 Collateral Matters; Swap Agreements...................................................93
Section 12.15 No Third Party Beneficiaries..........................................................94
Section 12.16 USA Patriot Act Notice................................................................94
iv
ANNEXES, EXHIBITS AND SCHEDULES
Annex I .........List of Maximum Credit Amounts
Exhibit A.........Form of Note
Exhibit B.........Form of Borrowing Request
Exhibit C.........Form of Interest Election Request
Exhibit D.........Form of Compliance Certificate
Exhibit E-1.......Security Instruments
Exhibit E-2.......Form of Guaranty and Collateral Agreement
Exhibit F.........Form of Assignment and Assumption
Schedule 7.05.....Litigation
Schedule 7.15.....Subsidiaries and Partnerships
Schedule 7.19.....Gas Imbalances
Schedule 7.20.....Marketing Contracts
Schedule 7.21.....Swap Agreements
Schedule 9.05.....Investments
v
THIS CREDIT AGREEMENT dated as of January 31, 2006, is among: ▇▇▇▇▇▇
▇▇▇▇▇▇ North, L.L.C., a limited liability company duly formed and existing under
the laws of the State of Michigan (the "Borrower"); Aurora Energy, Ltd., a
corporation duly formed and existing under the laws of the State of Nevada
("Aurora")and Cadence Resources Corporation, a corporation duly formed and
existing under the laws of the State of Utah ("Cadence"), as guarantors; each of
the Lenders from time to time party hereto; BNP Paribas, as administrative agent
for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative 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.
"Acquisition" means the acquisition of certain oil, gas and mineral
Properties pursuant to the terms and conditions of the Acquisition Documents.
"Acquisition Documents" means (a) the Asset Purchase Agreement by and
among NorAm Energy, LLC, ▇▇▇▇▇▇▇ Family, LLC and O.I.L. Energy Corp., as
Sellers, and Borrower, as Buyer, dated January 10, 2006, to be effective January
31, 2006, and (b) all bills of sale, assignments, agreements, instruments and
documents executed and delivered in connection therewith, as amended.
"Acquisition Properties" means the Oil and Gas Properties and other
properties acquired by the Borrower or any Guarantor pursuant to the Acquisition
Documents.
"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.
1
"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.
"Agents" means, collectively, the Administrative Agent and any syndication
agent, documentation agent or similar agent that hereafter becomes a party
hereto and "Agent" shall mean either the Administrative Agent or such other
agent, as the context requires.
"Aggregate Maximum Credit Amounts" at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be reduced 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 and (b) 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 or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, for any day, with respect to any ABR Loan or
Eurodollar Loan, as the case may be, the rate per annum set forth in the
Borrowing Base Utilization Grid below based upon the Borrowing Base Utilization
Percentage then in effect:
--------------------------------------------------------------------------------
Borrowing Base Utilization Grid
--------------------------------------------------------------------------------
Borrowing Base <25.0% =>25.0% <50.0% =>50.0% <75.0% =>75.0%
Utilization Percentage
---------------------- --------- ----------------- ----------------- -----------
Eurodollar Loans 1.250% 1.500% 1.750% 2.000%
---------------------- --------- ----------------- ----------------- -----------
ABR Loans 0.000% 0.000% 0.000% 0.000%
---------------------- --------- ----------------- ----------------- -----------
Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change, provided,
however, that if at any time the Borrower fails to deliver a Reserve Report
pursuant to Section 8.12(a), then the "Applicable Margin" means the rate per
annum set forth on the grid when the Borrowing Base Utilization Percentage is at
its highest level.
2
"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
or (b) any other Person whose long term senior unsecured debt rating is A-/A3 by
S&P or ▇▇▇▇▇'▇ (or their equivalent) or higher.
"Approved Fund" means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.
"Approved Petroleum Engineers" means (a) Netherland, ▇▇▇▇▇▇ & Associates,
Inc., (b) ▇▇▇▇▇ ▇▇▇▇▇ Company Petroleum Consultants, L.P., (c) Schlumberger
Holditch Reservoir Technology and (d) any other independent petroleum engineers
reasonably acceptable to the Administrative Agent.
"Arranger" means BNP Paribas, in its capacities as the sole lead arranger
and sole bookrunner hereunder.
"Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit F or any other form approved by the Administrative Agent.
"Aurora" has the meaning assigned such term in the preamble to this
Agreement.
"Availability Period" means the period from and including the Effective
Date to but excluding the Termination Date.
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America or any successor Governmental Authority.
"Borrowing" means Loans of the same Type, made, converted or continued on
the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Base" means at any time an amount equal to the amount
determined in accordance with Section 2.07, as the same may be adjusted from
time to time pursuant to Section 8.13(c) or Section 9.12(e).
3
"Borrowing Base Deficiency" occurs if at any time the total Revolving
Credit Exposures exceeds the Borrowing Base then in effect.
"Borrowing Base Utilization Percentage" means, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of the Revolving
Credit Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day
on which commercial banks in 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.
"Cadence" has the meaning assigned such term in the preamble to this
Agreement.
"Capital Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.
"Casualty Event" means any loss, casualty or other insured damage to, or
any nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of its Subsidiaries
having a fair market value in excess of $500,000.
"Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof) other than Aurora, of Equity
Interests representing more than 25% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower, (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who were neither (i) nominated by the board
of directors of the Borrower nor (ii) appointed by directors so nominated or (c)
the acquisition of direct or indirect Control of the Borrower by any Person or
group other than Aurora.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 5.01(b)), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a)
modified from time to time pursuant to Section 2.06 and (b) modified from time
to time pursuant to assignments by or to such Lender pursuant to Section
12.04(b). The amount representing each Lender's Commitment shall at any time be
the lesser of such Lender's Maximum Credit Amount and such Lender's Applicable
Percentage of the then effective Borrowing Base.
4
"Consolidated Net Income" means with respect to the Borrower and the
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and the Consolidated Subsidiaries after allowances for
taxes for such period determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (a) the net income of any Person in
which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of the Borrower and the Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in cash during such period by such other Person to
the Borrower or to a Consolidated Subsidiary, as the case may be; (b) the net
income (but not loss) during such period of any Consolidated Subsidiary to the
extent that the declaration or payment of dividends or similar distributions or
transfers or loans by that Consolidated Subsidiary is not at the time permitted
by operation of the terms of its charter or any agreement, instrument or
Governmental Requirement applicable to such Consolidated Subsidiary or is
otherwise restricted or prohibited, in each case determined in accordance with
GAAP; (c) the net income (or loss) of any Person acquired in a
pooling-of-interests transaction for any period prior to the date of such
transaction; (d) any extraordinary gains or losses during such period, (e)
non-cash gains or losses under FAS 133 resulting from the net change in
Borrower's ▇▇▇▇-to-market portfolio of commodity price risk management
activities during that period and (f) any gains or losses attributable to
writeups or writedowns of assets, including ceiling test writedowns; and
provided further that if the Borrower or any Consolidated Subsidiary shall
acquire or dispose of any Property during such period, then Consolidated Net
Income shall be calculated after giving pro forma effect to such acquisition or
disposition as if such acquisition or disposition had occurred on the first day
of such period.
"Consolidated Subsidiaries" means each Subsidiary of the Borrower (whether
now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to "control" such other Person. "Controlling" and
"Controlled" have meanings correlative thereto.
5
"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 and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services; (d) all
obligations under Capital Leases; (e) all obligations under Synthetic Leases;
(f) all Debt (as defined in the other clauses of this definition) of others
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) a Lien on any Property of such
Person, whether or not such Debt is assumed by such Person; (g) all Debt (as
defined in the other clauses of this definition) of others guaranteed by such
Person or in which such Person otherwise assures a creditor against loss of 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 even
if such goods or services are not actually received or utilized by such Person;
(k) any Debt of a partnership for which such Person is liable either by
agreement, by operation of law or by a Governmental Requirement but only to the
extent of such liability; (l) Disqualified Capital Stock; 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.
"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 one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.
"dollars" or "$" refers to lawful money of the United States of America.
"Domestic Subsidiary" means any Subsidiary that is organized under the
laws of the United States of America or any state thereof or the District of
Columbia.
"EBITDAX" means, for any period, the sum of Consolidated Net Income for
such period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, income taxes, depreciation,
depletion, amortization, exploration expenses and other similar noncash charges,
minus all noncash income added to Consolidated Net Income.
6
"Effective Date" means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).
"Engineering Reports" has the meaning assigned such term in Section
2.07(c)(i).
"Environmental Laws" means any and all Governmental Requirements
pertaining in any way to health, safety the environment or the preservation or
reclamation of natural resources, in effect in any and all jurisdictions in
which the Borrower or any Subsidiary is conducting or at any time has conducted
business, or where any Property of the Borrower or any Subsidiary is located,
including without limitation, the Oil Pollution Act of 1990 ("OPA"), as amended,
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection Governmental Requirements.
The term "oil" shall have the meaning specified in OPA, the terms "hazardous
substance" and "release" (or "threatened release") have the meanings specified
in CERCLA, the terms "solid waste" and "disposal" (or "disposed") have the
meanings specified in RCRA and the term "oil and gas waste" shall 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 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.
7
"Eurodollar", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned such term in Section 10.01.
"Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) statutory landlord's
liens, operators', vendors', carriers', warehousemen's, repairmen's, mechanics',
suppliers', workers', materialmen's, construction or other like Liens arising by
operation of law in the ordinary course of business or incident to the
exploration, development, operation and maintenance of Oil and Gas Properties
each of which is in respect of obligations that are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (d) contractual Liens
which arise in the ordinary course of business under operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements, overriding royalty agreements,
marketing agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Subsidiary or materially impair the
value of such 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 Subsidiaries to provide collateral to the depository
institution; (f) easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations in any Property of the Borrower or any
Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal or
other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, that do not secure
any monetary obligations and which in the aggregate do not materially impair the
use of such Property for the purposes of which such Property is held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (g) Liens on cash or securities pledged to secure performance
of tenders, surety and appeal bonds, government contracts, performance and
return of money bonds, bids, trade contracts, leases, statutory obligations,
regulatory obligations and other obligations of a like nature incurred in the
ordinary course of business and (h) judgment and attachment Liens not giving
rise to an Event of Default, provided that any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall not
have been finally terminated or the period within which such proceeding may be
initiated shall not have expired and no action to enforce such Lien has been
commenced; provided, further that Liens described in clauses (a) through (e)
shall remain "Excepted Liens" only for so long as no action to enforce such Lien
has been commenced and no intention to subordinate the first priority Lien
granted in favor of the Administrative Agent and the Lenders is to be hereby
implied or expressed by the permitted existence of such Excepted Liens.
8
"Excess Availability" means at any time the excess of: (a) the aggregate
Commitments over (b) the sum of (i) the aggregate Revolving Credit Exposure,
(ii) Debt under Section 9.02(c) or in violation of Section 9.02(c) and (iii) any
income or franchise taxes of the Borrower that are unpaid and past due.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America or such other jurisdiction
under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower or any Guarantor is located and (c) in the case of a Foreign Lender,
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).
"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.
9
"Financial Officer" means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.
"Financial Statements" means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time subject to the terms and conditions
set forth in Section 1.05.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Borrower, any Subsidiary, any of their Properties, any
Agent, the Issuing Bank or any Lender.
"Governmental Requirement" means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
"Guarantors" means:
(a) Aurora,
(b) Cadence Resources Corporation, and
(c) each other Material Domestic Subsidiary or other Domestic
Subsidiary that guarantees the Indebtedness pursuant to Section 8.14(b).
"Guaranty Agreement" means an agreement executed by the Guarantors in
substantially the form of Exhibit E-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.
10
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.
"Hydrocarbon Interests" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests and production
payment interests, including any reserved or residual interests of whatever
nature.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
"Indebtedness" means any and all amounts owing or to be owing by the
Borrower, any Subsidiary or any Guarantor (whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising): (a) to the Administrative Agent, the Issuing
Bank or any Lender under any Loan Document; (b) to any Lender or any Affiliate
of a Lender under any Swap Agreement between the Borrower or any Subsidiary and
such Lender or Affiliate of a Lender while such Person (or in the case of its
Affiliate, the Person affiliated therewith) is a Lender hereunder and (c) all
renewals, extensions and/or rearrangements of any of the above.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Initial Reserve Report" means the report of Schlumberger Holditch
Reservoir Technology dated as of August, 2005, with respect to certain Oil and
Gas Properties of the Borrower and its Subsidiaries as of August 1, 2005.
"Intercreditor Agreement" means that certain Intercreditor and
Subordination Agreement by and among the Borrower, the Administrative Agent and
the lenders or agents party to the Second Lien Documents, dated as of the date
hereof, as the same may from time to time be amended, modified, supplemented or
restated in accordance with the provisions of Section 9.04(b).
"Interest Election Request" means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.
"Interest Expense" means, for any period, the sum (determined without
duplication) of (a) all cash dividends paid on the Borrower's preferred Equity
Interests and (b) the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such period, including to the extent included in
interest expense under GAAP: (i) amortization of debt discount, (ii) capitalized
interest and (iii) the portion of any payments or accruals under Capital Leases
allocable to interest expense, plus the portion of any payments or accruals
under Synthetic Leases allocable to interest expense whether or not the same
constitutes interest expense under GAAP.
11
"Interest Payment Date" means (a) with respect to any ABR Loan, the last
day of each March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, with the consent of each Lender, nine or twelve months) thereafter, as the
Borrower may elect; provided, that (a) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (b) any Interest Period pertaining to a
Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Interim Redetermination" has the meaning assigned such term in Section
2.07(b).
"Interim Redetermination Date" means the date on which a Borrowing Base
that has been redetermined pursuant to an Interim Redetermination becomes
effective as provided in Section 2.07(d).
"Investment" means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale); (b) the
making of any deposit with, or advance, loan or capital contribution to,
assumption of Debt of, purchase or other acquisition of any other Debt or equity
participation or interest in, or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person, but excluding any such advance, loan or extension of credit having
a term not exceeding ninety (90) days representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business);
(c) the purchase or acquisition (in one or a series of transactions) of Property
of another Person that constitutes a business unit or (d) the entering into of
any guarantee of, or other contingent obligation (including the deposit of any
Equity Interests to be sold) with respect to, Debt or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person.
"Issuing Bank" means BNP Paribas, in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity as provided in Section
2.08(i). The Issuing Bank may, in its discretion, arrange for one or more
Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case
the term "Issuing Bank" shall include any such Affiliate with respect to Letters
of Credit issued by such Affiliate.
12
"LC Commitment" at any time means five million dollars ($5,000,000).
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Annex I and any Person that shall
have become a party hereto pursuant to an Assignment and Assumption, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"Letter of Credit Agreements" means all letter of credit applications and
other agreements (including any amendments, modifications or supplements
thereto) submitted by the Borrower, or entered into by the Borrower, with the
Issuing Bank relating to any Letter of Credit.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow ▇▇▇▇▇ 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 (rounded
upwards, if necessary, to the next 1/16th of 1%) at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties. The term "Lien" shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed to
be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.
"Loan Documents" means this Agreement, the Notes, the Letter of Credit
Agreements, the Letters of Credit, the Security Instruments and the
Intercreditor Agreement.
13
"Loan Parties" means Aurora, the Borrower, Cadence and each Subsidiary of
the Borrower.
"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)).
"Material Adverse Effect" means a material adverse change in, or material
adverse effect on (a) the business, operations, Property, condition (financial
or otherwise) or prospects of the Borrower and the Subsidiaries taken as a
whole, (b) the ability of the Borrower, any Subsidiary or any Guarantor to
perform any of its obligations under any Loan Document, (c) the validity or
enforceability of any Loan Document or (d) the rights and remedies of or
benefits available to the Administrative Agent, any other Agent, the Issuing
Bank or any Lender under any Loan Document.
"Material Domestic Subsidiary" means, as of any date, any Domestic
Subsidiary that (a) is a Wholly-Owned Subsidiary and (b) together with its
Subsidiaries, owns Property having a fair market value of $500,000 or more.
"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 Subsidiaries in an aggregate principal amount
exceeding $500,000. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Borrower or any Subsidiary in
respect of any Swap Agreement at any time shall be the Swap Termination Value.
"Maturity Date" means January 31, 2010.
"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) or (b) modified from time to time pursuant
to any assignment permitted by Section 12.04(b).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor thereto
that is a nationally recognized rating agency.
14
"Mortgaged Property" means any Property owned by the Borrower or any
Guarantor which is subject to the Liens existing and to exist under the terms of
the Security Instruments.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in section 3(37) or 4001 (a)(3) of ERISA.
"New Borrowing Base Notice" has the meaning assigned such term in Section
2.07(d).
"Notes" means the promissory notes of the Borrower described in Section
2.02(d) and being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.
"Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c)
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, injection ▇▇▇▇▇
or other ▇▇▇▇▇, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.
"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.
15
"Permitted Refinancing Debt" means Debt (for purposes of this definition,
"new Debt") incurred in exchange for, or proceeds of which are used to
refinance, all of any other Debt (the "Refinanced Debt"); provided that (a) such
new Debt is in an aggregate principal amount not in excess of the sum of (i) the
aggregate principal amount then outstanding of the Refinanced Debt (or, if the
Refinanced Debt is exchanged or acquired for an amount less than the principal
amount thereof to be due and payable upon a declaration of acceleration thereof,
such lesser amount) and (ii) an amount necessary to pay any fees and expenses,
including premiums, related to such exchange or refinancing; (b) such new Debt
has a stated maturity no earlier than the stated maturity of the Refinanced Debt
and an average life no shorter than the average life of the Refinanced Debt; (c)
such new Debt does not have a stated interest rate in excess of the stated
interest rate of the Refinanced Debt; (d) such new Debt does not contain any
covenants which are materially more onerous to the Borrower and its Subsidiaries
than those imposed by the Refinanced Debt and (e) such new Debt (and any
guarantees thereof) is subordinated in right of payment to the Indebtedness (or,
if applicable, the Guaranty Agreement) to at least the same extent as the
Refinanced Debt and is otherwise subordinated on terms substantially reasonably
satisfactory to the Administrative Agent.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan, as defined in section 3(2)
of ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at
any time during the six calendar years preceding the date hereof, sponsored,
maintained or contributed to by the Borrower or a Subsidiary or an ERISA
Affiliate.
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective. Such rate is set by the Administrative Agent as a general reference
rate of interest, taking into account such factors as the Administrative Agent
may deem appropriate; it being understood that many of the Administrative
Agent's commercial or other loans are priced in relation to such rate, that it
is not necessarily the lowest or best rate actually charged to any customer and
that the Administrative Agent may make various commercial or other loans at
rates of interest having no relationship to such rate.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.
"Proposed Borrowing Base" has the meaning assigned to such term in Section
2.07(c)(i).
"Proposed Borrowing Base Notice" has the meaning assigned to such term in
Section 2.07(c)(ii).
16
"Redemption" means with respect to any Debt, the repurchase, redemption,
prepayment, repayment, defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the foregoing) of such
Debt. "Redeem" has the correlative meaning thereto.
"Redetermination Date" means, with respect to any Scheduled
Redetermination or any Interim Redetermination, the date that the redetermined
Borrowing Base related thereto becomes effective pursuant to Section 2.07(d).
"Refinanced Debt" has the meaning assigned such term in the definition of
"Permitted Refinancing Debt".
"Register" has the meaning assigned such term in Section 12.04(b)(iv).
"Regulation D" means Regulation D of the Board, as the same may be
amended, supplemented or replaced from time to time.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors (including attorneys, accountants and experts) of such Person and
such Person's Affiliates.
"Remedial Work" has the meaning assigned such term in Section 8.10(a).
"Required Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least sixty-six and two-thirds percent (66-2/3%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure is outstanding, Lenders holding at least sixty-six and two-thirds
percent (66-2/3%)of the outstanding aggregate principal amount of the Loans or
participation interests in such Letters of Credit (without regard to any sale by
a Lender of a participation in any Loan under Section 12.04(c)).
"Reserve Report" means a report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, as of each January 1st
or July 1st (or such other date in the event of an Interim Redetermination) the
oil and gas reserves attributable to the Oil and Gas Properties of the Borrower
and the Subsidiaries, together with a projection of the rate of production and
future net income, taxes, operating expenses and capital expenditures with
respect thereto as of such date, based upon the economic assumptions consistent
with the Administrative Agent's lending requirements at the time.
"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President, any Financial Officer or any Vice President of such
Person. Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of the Borrower.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other Property) with respect to any Equity Interests in the
Borrower or any of its Subsidiaries, or any payment (whether in cash, securities
or other Property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such Equity Interests in the Borrower or any of its Subsidiaries or any
option, warrant or other right to acquire any such Equity Interests in the
Borrower or any of its Subsidiaries.
17
"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.
"Second Lien Agreement" means that certain First Amended and Restated Note
Purchase Agreement dated as of December 8, 2005 among the Borrower, as issuer,
Aurora Energy, Ltd., and TCW Asset Management Company, as the Second Lien
Administrative Agent, and the purchasers party thereto, together with all
amendments, modifications and supplements thereto permitted by Section 9.04(b).
"Second Lien Documents" means the Second Lien Agreement, the Second Lien
Notes and any "Loan Documents" (as defined therein), in each case, together with
all amendments, modifications and supplements thereto permitted by Section
9.04(b).
"Second Lien Notes" means the $50,000,000 Senior Secured Amortizing Term
Notes issued pursuant to the Second Lien Agreement, together with all
amendments, modifications, replacements, extensions and rearrangements thereof
permitted by Section 9.04(b).
"Security Instruments" means the Guaranty Agreement, mortgages, deeds of
trust and other agreements, instruments or certificates described or referred to
in Exhibit E-1, and any and all other agreements, instruments, consents or
certificates now or hereafter executed and delivered by the Borrower or any
other Person (other than Swap Agreements with the Lenders or any Affiliate of a
Lender or participation or similar agreements between any Lender and any other
lender or creditor with respect to any Indebtedness pursuant to this Agreement)
in connection with, or as security for the payment or performance of the
Indebtedness, the Notes, this Agreement, or reimbursement obligations under the
Letters of Credit, as such agreements may be amended, modified, supplemented or
restated from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
18
"Subsidiary" means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner. Unless otherwise indicated herein, each reference to the term
"Subsidiary" shall mean a Subsidiary of the Borrower or Aurora, or both, as the
context requires.
"Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement, whether
exchange traded, "over-the-counter" or otherwise, involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.
"Swap Termination Value" means, in respect of any one or more Swap
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Agreements, (a) for any date on or after
the date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
▇▇▇▇-to-market value(s) for such Swap Agreements, as determined by the
counterparties to such Swap Agreements.
"Synthetic Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, treated as operating
leases on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.
"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 earliest of (a) the Maturity Date, (b) the
date of termination of the Commitments and (c) 91 days prior to the maturity of
the Second Lien Notes.
19
"Transactions" means, with respect to (a) the Borrower, the execution,
delivery and performance by the Borrower of this Agreement, each other Loan
Document and Acquisition Document to which it is a party, the Acquisition, 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 Acquisition Document to which it is a party, the
Acquisition, the guaranteeing of the Indebtedness and the other obligations
under the Guaranty Agreement by such Guarantor and such Guarantor's grant of the
security interests and provision of collateral under the Security Instruments,
and the grant of Liens by such Guarantor on Mortgaged Properties and other
Properties pursuant to the Security Instruments.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.
"Wholly-Owned Subsidiary" means any Subsidiary of which all of the
outstanding Equity Interests (other than any directors' qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries or are owned by the Borrower and
one or more of the Wholly-Owned Subsidiaries.
Section 1.03 Types of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings, respectively, may be classified and referred to
by Type (e.g., a "Eurodollar Loan" or a "Eurodollar Borrowing").
Section 1.04 Terms Generally; Rules of Construction. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The word "will" shall be construed to have the same meaning and
effect as the word "shall". Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth in the
Loan Documents), (b) any reference herein to any law shall be construed as
referring to such law as amended, modified, codified or reenacted, in whole or
in part, and in effect from time to time, (c) any reference herein to any Person
shall be construed to include such Person's successors and assigns (subject to
the restrictions contained in the Loan Documents), (d) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (e) with respect to the determination of any time period, the word
"from" means "from and including" and the word "to" means "to and including" and
(f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Annexes, Exhibits
and Schedules to, this Agreement. No provision of this Agreement or any other
Loan Document shall be interpreted or construed against any Person solely
because such Person or its legal representative drafted such provision.
20
Section 1.05 Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which Borrower's independent
certified public accountants concur and which are disclosed to Administrative
Agent on the next date on which financial statements are required to be
delivered to the Lenders pursuant to Section 8.01(a); provided that, unless the
Borrower and the Majority Lenders shall otherwise agree in writing, no such
change shall modify or affect the manner in which compliance with the covenants
contained herein is computed such that all such computations shall be conducted
utilizing financial information presented consistently with prior periods.
ARTICLE II
The Credits
Section 2.01 Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the
total Revolving Credit Exposures exceeding the total Commitments. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, repay and reborrow the Loans.
Section 2.02 Loans and Borrowings.
(a) Borrowings; Several Obligations. Each Loan shall be made
as part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments are several and no Lender
shall be responsible for any other Lender's failure to make Loans as required.
(b) Types of Loans. Subject to Section 3.03, each Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.
(c) Minimum Amounts; Limitation on Number of Borrowings. At
the commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $1,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $1,000,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.08(e).
Borrowings of more than one Type may be outstanding at the same time, provided
that there shall not at any time be more than a total of six (6) Eurodollar
Borrowings outstanding. Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.
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(d) Notes. The Loans made by each Lender shall be evidenced by
a single promissory note of the Borrower in substantially the form of Exhibit A,
dated, in the case of (i) any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement, or (ii) any Lender that becomes a
party hereto pursuant to an Assignment and Assumption, as of the effective date
of the Assignment and Assumption, payable to the order of such Lender in a
principal amount equal to its Maximum Credit Amount as in effect on such date,
and otherwise duly completed. In the event that any Lender's Maximum Credit
Amount increases or decreases for any reason (whether pursuant to Section 2.06,
Section 12.04(b) or otherwise), the Borrower shall deliver or cause to be
delivered on the effective date of such increase or decrease, a new Note payable
to the order of such Lender in a principal amount equal to its Maximum Credit
Amount after giving effect to such increase or decrease, and otherwise duly
completed. 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 11:00 a.m., Houston, Texas time,
three Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing, not later than 12:00 noon, Houston, Texas time, on the
Business Day of the proposed Borrowing; provided that no such notice shall be
required for any deemed request of an ABR Borrowing to finance the reimbursement
of an LC Disbursement as provided in Section 2.08(e). Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in substantially the form of Exhibit B and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
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";
22
(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 substantially the form of Exhibit C 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 information to be specified pursuant to Section
2.04(c)(iii) and (iv) shall be specified for each resulting
Borrowing);
23
(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 and Borrowing Base Deficiencies on Interest
Election. If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
or a Borrowing Base Deficiency has occurred and is continuing: (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
(and 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) 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, Houston, Texas time, to the account
of the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower 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. Nothing herein shall be deemed to
obligate any Lender to obtain the funds for its Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for its Loan in any particular place or manner.
(b) Presumption of Funding by the Lenders. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.05(a) and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with 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.
24
Section 2.06 Termination and Reduction 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. Each reduction of the
Aggregate Maximum Credit Amounts shall be made ratably among
the Lenders in accordance with each Lender's Applicable
Percentage.
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 $40,000,000. Notwithstanding the foregoing, the
Borrowing Base may be subject to further adjustments from time to time pursuant
to Section 6.01(p), Section 8.13(c) or Section 9.12.
25
(b) Scheduled and Interim Redeterminations. The Borrowing Base
shall be redetermined semi-annually in accordance with this Section 2.07 (a
"Scheduled Redetermination"), and, subject to Section 2.07(d), such redetermined
Borrowing Base shall become effective and applicable to the Borrower, the
Agents, the Issuing Bank and the Lenders on April 1st and October 1st of each
year, commencing April 1, 2006. In addition, the Borrower may, by notifying the
Administrative Agent thereof, and the Administrative Agent may, at the direction
of the Required 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
its reasonable discretion, propose a new Borrowing Base (the
"Proposed Borrowing Base") based upon such information and
such other information (including, without limitation, the
status of title information with respect to the Oil and Gas
Properties as described in the Engineering Reports and the
existence of any other Debt) as the Administrative Agent deems
appropriate in its sole discretion and consistent with its
normal oil and gas lending criteria as it exists at the
particular time. In no event shall the Proposed Borrowing Base
exceed the Aggregate Maximum Credit Amounts.
(ii) The Administrative Agent shall notify the Borrower
and the Lenders of the Proposed Borrowing Base (the "Proposed
Borrowing Base Notice"):
(A) in the case of a Scheduled Redetermination (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 March 15th and September 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.
26
(iii) Any Proposed Borrowing Base that would
increase the Borrowing Base then in effect must be
approved or deemed to have been approved by all of the
Lenders as provided in this Section 2.07(c)(iii); and
any Proposed Borrowing Base that would decrease or
maintain the Borrowing Base then in effect must be
approved or be deemed to have been approved by the
Required Lenders as provided in this Section
2.07(c)(iii). Upon receipt of the Proposed Borrowing
Base Notice, each Lender shall have fifteen (15) days to
agree with the Proposed Borrowing Base or disagree with
the Proposed Borrowing Base by proposing an alternate
Borrowing Base. If at the end of such fifteen (15) days,
any Lender has not communicated its approval or
disapproval in writing to the Administrative Agent, such
silence shall be deemed to be an approval of the
Proposed Borrowing Base. If, at the end of such 15-day
period, all of the Lenders, in the case of a Proposed
Borrowing Base that would increase the Borrowing Base
then in effect, or the Required Lenders, in the case of
a Proposed Borrowing Base that would decrease or
maintain the Borrowing Base then in effect, have
approved or deemed to have approved, as aforesaid, then
the Proposed Borrowing Base shall become the new
Borrowing Base, effective on the date specified in
Section 2.07(d). If, however, at the end of such 15-day
period, all of the Lenders or the Required Lenders, as
applicable, have not approved or deemed to have
approved, as aforesaid, then the Administrative Agent
shall poll the Lenders to ascertain the highest
Borrowing Base then acceptable to a number of Lenders
sufficient to constitute the Required Lenders and, so
long as such amount does not increase the Borrowing Base
then in effect, such amount shall become the new
Borrowing Base, effective on the date specified in
Section 2.07(d).
(d) Effectiveness of a Redetermined Borrowing Base. After a
redetermined Borrowing Base is approved or is deemed to have been approved by
all of the Lenders or the Required Lenders, as applicable, pursuant to Section
2.07(c)(iii), the Administrative Agent shall notify the Borrower and the Lenders
of the amount of the redetermined Borrowing Base (the "New Borrowing Base
Notice"), and such amount shall become the new Borrowing Base, effective and
applicable to the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders:
(i) in the case of a Scheduled Redetermination,
(A) if the Administrative Agent shall have received the
Engineering Reports required to be delivered by the
Borrower pursuant to Section 8.12(a) and (c) in a timely
and complete manner, then on the April 1st or October
1st, as applicable, following such notice, or (B) if the
Administrative Agent shall not have received the
Engineering Reports required to be delivered by the
Borrower pursuant to Section 8.12(a) and (c) in a timely
and complete manner, then on the Business Day next
succeeding delivery of such notice; and
(ii) in the case of an Interim Redetermination, on
the Business Day next succeeding delivery of such
notice.
Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 8.13(c) or Section 9.12,
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.
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Section 2.08 Letters of Credit.
(a) General. Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of dollar denominated Letters of
Credit for its own account or for the account of any of its Subsidiaries, in a
form reasonably acceptable to the Administrative Agent and the Issuing Bank, at
any time and from time to time during the Availability Period; provided that the
Borrower may not request the issuance, amendment, renewal or extension of
Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time
or would exist as a result thereof. In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of any
form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (not less than five (5) Business Days in
advance of the requested date of issuance, amendment, renewal or extension) a
notice:
(i) requesting the issuance of a Letter of Credit or
identifying the Letter of Credit to be amended, renewed or
extended;
(ii) specifying the date of issuance, amendment, renewal
or extension (which shall be a Business Day);
(iii) specifying the date on which such Letter of Credit
is to expire (which shall comply with Section 2.08(c));
(iv) specifying the amount of such Letter of Credit;
(v) specifying the name and address of the beneficiary
thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit; and
(vi) specifying the amount of the then effective
Borrowing Base and whether a Borrowing Base Deficiency exists
at such time, the current total Revolving Credit Exposures
(without regard to the requested Letter of Credit or the
requested amendment, renewal or extension of an outstanding
Letter of Credit) and the pro forma total Revolving Credit
Exposures (giving effect to the requested Letter of Credit or
the requested amendment, renewal or extension of an
outstanding Letter of Credit).
Each notice shall constitute a representation that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the LC
Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing Base).
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If requested by the Issuing Bank, the Borrower also shall submit a letter of
credit application on the Issuing Bank's standard form in connection with any
request for a Letter of Credit.
(c) Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or
an amendment to a Letter of Credit increasing the amount thereof) and without
any further action on the part of the Issuing Bank or the Lenders, the Issuing
Bank hereby grants to each Lender, and each Lender hereby acquires from the
Issuing Bank, a participation in such Letter of Credit equal to such Lender's
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage
of each LC Disbursement made by the Issuing Bank and not reimbursed by the
Borrower on the date due as provided in Section 2.08(e), or of any reimbursement
payment required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this Section 2.08(d) in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default, the existence of a Borrowing Base
Deficiency or reduction or termination of the Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, Houston, Texas time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., Houston, Texas time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, Houston, Texas time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., Houston, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
if such LC Disbursement is not less than $1,000,000, the Borrower shall, subject
to the conditions to Borrowing set forth herein, be deemed to have requested,
and the Borrower does hereby request under such circumstances, that such payment
be financed with an ABR Borrowing in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Borrowing. If the Borrower fails to make such
payment when due, the Administrative Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender's Applicable Percentage thereof. Promptly following
receipt of such notice, each Lender shall pay to the Administrative Agent its
Applicable Percentage of the payment then due from the Borrower, in the same
manner as provided in Section 2.05 with respect to Loans made by such Lender
(and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of
the Lenders), and the Administrative Agent shall promptly pay to the Issuing
Bank the amounts so received by it from the Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Borrower pursuant to this
Section 2.08(e), the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Lenders have made payments pursuant to this
Section 2.08(e) to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this Section 2.08(e) to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Loans as contemplated above) shall
not constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.
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(f) Obligations Absolute. The Borrower's obligation to
reimburse LC Disbursements as provided in Section 2.08(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit, any Letter of Credit Agreement or this Agreement, or any term or
provision therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment by
the Issuing Bank under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or
any Letter of Credit Agreement, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section 2.08(f), constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank,
nor any of their Related Parties shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised all
requisite care in each such determination. In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.
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(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section
2.08(e)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse
the Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of the
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 3.05(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to Letters
of Credit to be issued thereafter and (ii) references herein to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of the Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of the Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.
(j) Cash Collateralization. If (i) any Event of Default shall
occur and be continuing and the Borrower receives notice from the Administrative
Agent or the Majority Lenders demanding the deposit of cash collateral pursuant
to this Section 2.08(j), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower or any Subsidiary described in
Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to the
Administrative Agent, for the benefit of the Issuing Bank and the Lenders, an
exclusive first priority and continuing perfected security interest in and Lien
on such account and all cash, checks, drafts, certificates and instruments, if
any, from time to time deposited or held in such account, all deposits or wire
transfers made thereto, any and all investments purchased with funds deposited
in such account, all interest, dividends, cash, instruments, financial assets
and other Property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any or all of the foregoing, and all
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proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor. The Borrower's obligation to
deposit amounts pursuant to this Section 2.08(j) shall be absolute and
unconditional, without regard to whether any beneficiary of any such Letter of
Credit has attempted to draw down all or a portion of such amount under the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower or any of its Subsidiaries may now
or hereafter have against any such beneficiary, the Issuing Bank, the
Administrative Agent, the Lenders or any other Person for any reason whatsoever.
Such deposit shall be held as collateral securing the payment and performance of
the Borrower's and the Guarantor's obligations under this Agreement and the
other Loan Documents. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Administrative Agent and
at the Borrower's risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated, be applied to
satisfy other obligations of the Borrower and the Guarantors under this
Agreement or the other Loan Documents. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, and the Borrower is not otherwise required to pay to the Administrative
Agent the excess attributable to an LC Exposure in connection with any
prepayment pursuant to Section 3.04(c), then such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived.
ARTICLE III
Payments of Principal and Interest; Prepayments; Fees
Section 3.01 Repayment of Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date.
Section 3.02 Interest.
(a) ABR Loans. The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Margin, but in no
event to exceed the Highest Lawful Rate.
(b) Eurodollar Loans. The Loans comprising each Eurodollar
Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period
in effect for such Borrowing plus the Applicable Margin, but in no event to
exceed the Highest Lawful Rate.
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(c) Post-Default Rate and Borrowing Base Deficiency Rate.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing, or 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, and including any payments in respect of a Borrowing
Base Deficiency under Section 3.04(c), then all Loans outstanding, in the case
of an Event of Default, and such overdue amount, in the case of a failure to pay
amounts when due, shall bear interest, after as well as before judgment, at a
rate per annum equal to two percent (2%) plus the rate applicable to ABR Loans
as provided in Section 3.02(a), but in no event to exceed the Highest Lawful
Rate, and during any Borrowing Base Deficiency, all Loans outstanding at such
time shall bear interest, after as well as before judgment, at the rate then
applicable to such Loans, plus the Applicable Margin, if any, plus an additional
two percent (2%), 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.
(e) Interest Rate Computations. All interest hereunder shall
be computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall
be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.
Section 3.03 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such
Interest Period; or
(b) the Administrative Agent is advised by the Majority
Lenders that the Adjusted LIBO Rate or LIBO Rate, as applicable, for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
of making or maintaining their Loans included in such Borrowing for such
Interest Period;
33
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, Houston, Texas time, three Business Days
before the date of prepayment, or (ii) in the case of prepayment of an ABR
Borrowing, not later than 12:00 noon, Houston, Texas time, one Business Day
before the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid. Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 3.02.
(c) Mandatory Prepayments.
(i) If, after giving effect to any termination or
reduction of the Aggregate Maximum Credit Amounts pursuant to
Section 2.06(b), the total Revolving Credit Exposures exceeds
the total Commitments, then the Borrower shall (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 three, equal
monthly installments within 90 days following the receipt of
the New Borrowing Base Notice in accordance with Section
2.07(d) or the date the adjustment occurs, 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 ninety (90) days following the later of 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.
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(iii) Upon any adjustments to the Borrowing Base
pursuant to Section 9.12, 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 or any Subsidiary 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.
(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 rate per annum of 0.375% on the average daily amount of the
unused amount of the Commitment of such Lender during the period from and
including the date of this Agreement to but excluding the Termination Date.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the Termination Date,
commencing on the first such date to occur after the date hereof. All commitment
fees shall be computed on the basis of a year of 360 days, unless such
computation would exceed the Highest Lawful Rate, in which case interest shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).
35
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to
the Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender's Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate of 0.125% per annum on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the date of
this Agreement to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC Exposure, provided
that in no event shall such fee be less than $500 during any quarter, and (iii)
to the Issuing Bank, for its own account, its standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the date of this Agreement; provided that all
such fees shall be payable on the Termination Date and any such fees accruing
after the Termination Date shall be payable on demand. Any other fees payable to
the Issuing Bank pursuant to this Section 3.05(b) shall be payable within 10
days after demand. All participation fees and fronting fees shall be computed on
the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
(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.
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, Houston,
Texas time, on the date when due, in immediately available funds, without
defense, deduction, recoupment, set-off or counterclaim. Fees, once paid, shall
be fully earned and shall not be refundable under any circumstances. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices specified in Section
12.01, except payments to be made directly to the Issuing Bank as expressly
provided herein and except that payments pursuant to Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
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(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 any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this Section 4.01(c) shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
Section 4.02 Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
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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
Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to
take such actions as may be necessary to cause such proceeds to be paid to the
Borrower and/or such Subsidiaries.
ARTICLE V
Increased Costs; Break Funding Payments; Taxes; Illegality
Section 5.01 Increased Costs.
(a) Eurodollar Changes in Law. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by,
any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market
any other condition affecting this Agreement or Eurodollar
Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
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(b) Capital Requirements. If any Lender or the Issuing Bank
determines in good faith that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender's or
the Issuing Bank's capital or on the capital of such Lender's or the Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender, or the
Letters of Credit issued by the Issuing Bank, to a level below that which such
Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding
company could have achieved but for such Change in Law (taking into
consideration such Lender's or the Issuing Bank's policies and the policies of
such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(c) Certificates. A certificate of a Lender or the Issuing
Bank setting forth in good faith the amount or amounts necessary to compensate
such Lender or the Issuing Bank or its holding company, as the case may be, as
specified in Section 5.01(a) or (b) shall be delivered to the Borrower and shall
be conclusive absent manifest error. The Borrower shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Effect of Failure or Delay in Requesting Compensation.
Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation pursuant to this Section 5.01 shall not constitute a waiver of such
Lender's or the Issuing Bank's right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section 5.01 for any increased costs or reductions incurred
more than 365 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 365-day period referred to above shall be extended to include the period of
retroactive effect thereof.
Section 5.02 Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto or (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of
such period, for dollar deposits of a comparable amount and period from other
banks in the eurodollar market.
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A certificate of any Lender setting forth in good faith 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 or any Guarantor
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 or such
Guarantor shall make such deductions and (iii) the Borrower or such Guarantor
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) Payment of Other Taxes by the Borrower. The Borrower shall
pay any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
(c) Indemnification by the Borrower. The Borrower shall
indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10
days after written demand therefor, for the full amount of any Indemnified Taxes
or Other Taxes paid by the Administrative Agent, such Lender or the Issuing
Bank, as the case may be, on or with respect to any payment by or on account of
any obligation of the Borrower hereunder (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section 5.03) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate of the Administrative Agent, a Lender or
the Issuing Bank as to the amount of such payment or liability under this
Section 5.03 shall be delivered in good faith to the Borrower and shall be
conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
(e) 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.
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Section 5.04 Mitigation Obligations. If any Lender requests compensation
under Section 5.01, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 5.03, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
5.01 or Section 5.03, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
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.
ARTICLE VI
Conditions Precedent
Section 6.01 Effective Date. The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 12.02):
(a) The Administrative Agent, the Arranger and the Lenders
shall have received all commitment, facility and agency fees and all other fees
and amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder (including, without
limitation, the fees and expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel to the
Administrative Agent).
41
(b) The Administrative Agent shall have received a certificate
of the Secretary or an Assistant Secretary of the Borrower and each Guarantor
setting forth (i) resolutions of its board of directors with respect to the
authorization of the Borrower or such Guarantor to execute and deliver the Loan
Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the officers of the Borrower or such Guarantor (y) who
are authorized to sign the Loan Documents to which the Borrower or such
Guarantor is a party and (z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for the
purposes of signing documents and giving notices and other communications in
connection with this Agreement and the transactions contemplated hereby, (iii)
specimen signatures of such authorized officers, and (iv) the articles or
certificate of incorporation and bylaws of the Borrower and such Guarantor,
certified as being true and complete. The Administrative Agent and the Lenders
may conclusively rely on such certificate until the Administrative Agent
receives notice in writing from the Borrower to the contrary.
(c) The Administrative Agent shall have received certificates
of the appropriate State agencies with respect to the existence, qualification
and good standing of the Borrower and each Guarantor.
(d) The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit D, 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 described on Exhibit E-1. In
connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall:
(i) be reasonably satisfied that the Security
Instruments create first priority, perfected Liens (subject
only to Excepted Liens identified in clauses (a) to (d) and
(f) of the definition thereof, but subject to the provisos at
the end of such definition) on at least 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.
(iii) be reasonably satisfied that all Property
constituting security for the Second Lien Agreement is subject
to a first priority, perfected Lien in favor of the
Administrative Agent under the Security Instruments.
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(h) The Administrative Agent shall have received an opinion of
Fraser, Trebilcock, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., special counsel to the Borrower, in
form and substance acceptable to the Administrative Agent.
(i) The Administrative Agent shall have received a certificate
of insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.13.
(j) The Administrative Agent shall have received title
information as the Administrative Agent may reasonably require satisfactory to
the Administrative Agent setting forth the status of title to at least 80% of
the total value of the Oil and Gas Properties evaluated in the Initial Reserve
Report.
(k) The Administrative Agent shall be reasonably satisfied
with the environmental condition of the Oil and Gas Properties of the Borrower
and its Subsidiaries (including the Acquisition Properties).
(l) The Administrative Agent shall have received a certificate
of a Responsible Officer of the Borrower certifying that the Borrower has
received all consents and approvals required by Section 7.03.
(m) The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a) and the Initial Reserve Report
accompanied by a certificate covering the matters described in Section 8.12(c).
(n) The Administrative Agent shall be satisfied with the terms, conditions and
documentation of the Acquisition and any other matters as the Administrative
Agent deems necessary.
(o) The Administrative Agent shall have received appropriate
UCC search certificates reflecting no prior Liens encumbering the Properties of
the Borrower and the Subsidiaries for each of the following jurisdictions:
Michigan 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.
(p) The Administrative Agent shall have received (i) a
certificate of a Responsible Officer of the Borrower certifying: (A) that the
Borrower is concurrently consummating the Acquisition in accordance with the
terms of the Acquisition Documents (with all of the material conditions
precedent thereto having been satisfied in all material respects by the parties
thereto) and acquiring substantially all of the Acquisition Properties
contemplated by the Acquisition Documents; (B) as to the final purchase price
for the Acquisition Properties after giving effect to all adjustments as of the
closing date contemplated by the Acquisition Documents and specifying, by
category, the amount of such adjustment; (C) that attached thereto is a true and
complete list of the Acquisition Properties which have been excluded from the
Acquisition pursuant to the terms of the Acquisition Documents, specifying with
respect thereto the basis of exclusion as (1) title defect, (2) preferential
purchase right, (3) environmental or (4) casualty loss; (D) that attached
thereto is a true and complete list of all Acquisition Properties for which any
seller has elected to cure a title defect, (E) that attached thereto is a true
and complete list of all Acquisition Properties for which any seller has elected
to remediate an adverse environmental condition, and (F) that attached thereto
is a true and complete list of all Acquisition Properties which are currently
pending final decision by a third party regarding purchase of such property in
accordance with any preferential right; (ii) a true and complete executed copy
of each of the Acquisition Documents; (iii) original counterparts or copies,
certified as true and complete, of the assignments, deeds and leases for all of
the Acquisition Properties; and (iv) such other related documents and
information as the Administrative Agent shall have reasonably requested.
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The Borrower recognizes and agrees that (a) it shall have delivered to the
Administrative Agent a preliminary draft of the certificate described herein not
less than three (3) days prior to the Effective Date identifying which
Acquisition Properties will be excluded from the Acquisition on the Effective
Date, and (b) if the aggregate value as reflected in the Initial Reserve Report
of the Acquisition Properties excluded under clause (i)(C) above is greater than
$1,000,000 or any Acquisition Properties are excluded for other reasons or any
seller in respect thereof makes any adjustment to the purchase price under the
Acquisition Documents, then Administrative Agent shall suggest to the Lenders a
Borrowing Base value for each such excluded Property or such Property subject of
such adjustment and the Required Lenders shall reach a consensus as to all
allocation of value for such Property. Promptly upon the making by the Required
Lenders of such allocation, the Administrative Agent shall notify the Borrower
and each Lender of such allocation.
(q) The Administrative Agent shall be satisfied that there is
no litigation seeking to enjoin or prevent the Acquisition or the financing
contemplated hereby or by the Second Lien Agreement.
(r) The Administrative Agent shall have received evidence
satisfactory to it that all Liens on the Acquisition Properties associated with
any credit facilities and funded Debt have been released or terminated and that
arrangements satisfactory to the Administrative Agent have been made for
recording and filing of such releases.
(s) The Administrative Agent shall have received (i) evidence
of the payment in full of all amounts due under any existing credit agreement,
the termination of all commitments to lend thereunder and the release of all
Liens securing such obligations and any other obligations secured thereby.
(t) The Intercreditor Agreement, in form and content
satisfactory to the Administrative Agent shall be in full force and effect.
(u) The Administrative Agent shall have received such other
documents as the Administrative Agent or special counsel to the Administrative
Agent may reasonably request.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 12.02)
at or prior to 2:00 p.m., Houston, Texas time, on January 31, 2006 (and, in the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).
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Section 6.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding), and of
the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:
(a) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no event, development or circumstance has occurred or
shall then exist that has resulted in, or could reasonably be expected to have,
a Material Adverse Effect.
(c) The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, such representations and warranties shall
continue to be true and correct as of such specified earlier date.
(d) The making of such Loan or the issuance, amendment,
renewal or extension of such Letter of Credit, as applicable, would not conflict
with, or cause any Lender or the Issuing Bank to violate or exceed, any
applicable Governmental Requirement, and no Change in Law shall have occurred,
and no litigation shall be pending or threatened, which does or, with respect to
any threatened litigation, seeks to, enjoin, prohibit or restrain, the making or
repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.
(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 request for a Borrowing and each request for the issuance, amendment,
renewal or extension of any Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the
matters specified in Section 6.02(a) through (e).
ARTICLE VII
Representations and Warranties
The Borrower and Aurora hereby jointly represent and warrant to the
Lenders that:
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Section 7.01 Organization; Powers. Each Loan Party is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority, 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 each
Loan Party's corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action (including, without limitation,
any action required to be taken by any class of directors of such Loan Party or
any other Person, whether interested or disinterested, in order to ensure the
due authorization of the Transactions). Each Loan Document and Acquisition
Document to which each Loan Party is a party has been duly executed and
delivered by such Loan Party and constitutes a legal, valid and binding
obligation of such Loan Party, enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
Section 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 (including shareholders or
any class of directors, whether interested or disinterested, of any Loan Party
or any other 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 the
recording and filing of the Security Instruments as required by this Agreement,
(b) will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of any Loan Party or any Subsidiary or any order
of any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon any Loan Party or any
Subsidiary or its Properties, or give rise to a right thereunder to require any
payment to be made by such Loan Party or such Subsidiary and (d) will not result
in the creation or imposition of any Lien on any Property of any Loan Party or
any Subsidiary (other than the Liens created by the Loan Documents).
Section 7.04 Financial Condition; No Material Adverse Change.
(a) The Loan Parties have heretofore furnished to the Lenders
their consolidated balance sheet and statements of income, stockholders' equity
and cash flows (i) as of and for the fiscal year ended December 31, 2004,
reported on by independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended September 30, 2005, 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.
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(b) (i) There has been no event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect
and (ii) the business of Aurora, the Borrower and its Subsidiaries has been
conducted only in the ordinary course consistent with past business practices.
(c) Neither Aurora, the Borrower nor any Subsidiary has on the
date hereof any material Debt (including Disqualified Capital Stock) or any
contingent liabilities, off-balance sheet liabilities or partnerships,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in the Financial Statements.
Section 7.05 Litigation.
(a) Except as set forth on Schedule 7.05, there are no
actions, suits, investigations or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Loan Parties,
threatened against or affecting the Loan Parties or any Subsidiary or involving
the Acquisition (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 Acquisition Document or the Transactions or
(iii) that could impair the consummation of the Acquisition on the time and in
the manner contemplated by the Acquisition 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 could not be reasonably
expected to have a Material Adverse Effect (or with respect to (c), (d) and (e)
below, where the failure to take such actions could not be reasonably expected
to have a Material Adverse Effect):
(a) neither any Property of any Loan Party nor the operations
conducted thereon violate any order or requirement of any court or Governmental
Authority or any Environmental Laws.
(b) no Property of any Loan Party nor the operations currently
conducted thereon or, to the knowledge of the Loan Parties, 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 Loan Parties,
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 Loan Parties are in
compliance with the terms and conditions of all such notices, permits, licenses
and similar authorizations.
47
(d) all hazardous substances, solid waste and oil and gas
waste, if any, generated at any and all Property of the Loan Parties 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 Loan Parties,
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 Loan Parties have 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 Loan Parties or any Subsidiary except
in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment.
(f) to the extent applicable, all Property of the Loan Parties
currently satisfies all design, operation, and equipment requirements imposed by
the OPA, and the Loan Parties do 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) no Loan Party has any known contingent liability or
Remedial Work in connection with any release or threatened release of any oil,
hazardous substance, solid waste or oil and gas waste into the environment.
Section 7.07 Compliance with the Laws and Agreements; No Defaults.
(a) Each Loan Party is in compliance with all Governmental
Requirements applicable to it or its Property and all agreements and other
instruments binding upon it or its Property, and possesses all licenses,
permits, franchises, exemptions, approvals and other governmental authorizations
necessary for the ownership of its 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) No Loan Party 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 a Loan Party to Redeem or make any offer to Redeem all or any portion of
any Debt outstanding under any indenture, note, credit agreement or instrument
pursuant to which any Material Indebtedness is outstanding or by which a Loan
Party or any of their Properties is bound.
(c) No Default has occurred and is continuing.
Section 7.08 Investment Company Act. No Loan Party 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.
48
Section 7.09 Public Utility Holding Company Act. No Loan Party 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 Loan Party 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 each Loan
Party, 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 Loan Parties 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 Loan Parties, no claim
is being asserted with respect to any such Tax or other such governmental
charge.
Section 7.11 ERISA.
(a) The Loan Parties and each ERISA Affiliate have complied in
all material respects with ERISA and, where applicable, the Code regarding each
Plan.
(b) Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could
result in imposition on any Loan Party or any ERISA Affiliate (whether directly
or indirectly) of (i) either a civil penalty assessed pursuant to subsections
(c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant to Chapter 43
of Subtitle D of the Code or (ii) breach of fiduciary duty liability damages
under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any
trust created under any such Plan has been terminated since September 2, 1974.
No liability to the PBGC (other than for the payment of current premiums which
are not past due) by any Loan Party or any ERISA Affiliate has been or is
expected by any Loan Party or any ERISA Affiliate to be incurred with respect to
any Plan. No ERISA Event with respect to any Plan has occurred.
(e) Full payment when due has been made of all amounts which
any Loan Party or any ERISA Affiliate is required under the terms of each Plan
or applicable law to have paid as contributions to such Plan as of the date
hereof, and no accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists with respect
to any Plan.
(f) The actuarial present value of the benefit liabilities
under each Plan which is subject to Title IV of ERISA does not, as of the end of
the most recently ended fiscal year of each Loan Party, exceed the current value
of the assets (computed on a plan termination basis in accordance with Title IV
of ERISA) of such Plan allocable to such benefit liabilities. The term
"actuarial present value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA.
49
(g) Neither any Loan Party nor any ERISA Affiliate sponsors,
maintains, or contributes to an employee welfare benefit plan, as defined in
section 3(1) of ERISA, including, without limitation, any such plan maintained
to provide benefits to former employees of such entities, that may not be
terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its sole
discretion at any time without any material liability.
(h) Neither any Loan Party nor any ERISA Affiliate sponsors,
maintains or contributes to, or has at any time in the six-year period preceding
the date hereof sponsored, maintained or contributed to, any Multiemployer Plan.
(i) Neither any Loan Party nor any ERISA Affiliate is required
to provide security under section 401(a)(29) of the Code due to a Plan amendment
that results in an increase in current liability for the Plan.
Section 7.12 Disclosure; No Material Misstatements. The Loan Parties have
disclosed to the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which they or any of their
Subsidiaries are subject, and all other matters known to them, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the other reports, financial statements,
certificates or other information furnished by or on behalf of the Loan Parties
to the Administrative Agent or any Lender or any of their Affiliates in
connection with the negotiation of this Agreement or any other Loan Document or
delivered hereunder or under any other Loan Document (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower and Aurora represent 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 Loan Parties which could reasonably be
expected to have a Material Adverse Effect or in the future is reasonably likely
to have a Material Adverse Effect and which has not been set forth in this
Agreement or the Loan Documents or the other documents, certificates and
statements furnished to the Administrative Agent or the Lenders by or on behalf
of the Loan Parties 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.
50
Section 7.13 Insurance. The Loan Parties 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 Loan
Parties. The Administrative Agent 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. No Loan Party is a party to any
material agreement or arrangement (other than Capital Leases creating Liens
permitted by Section 9.03(c), but then only on the Property subject of such
Capital Lease), or subject to any order, judgment, writ or decree, which either
restricts or purports to restrict its ability to grant Liens to the
Administrative Agent and the Lenders on or in respect of their Properties to
secure the Indebtedness and the Loan Documents.
Section 7.15 Subsidiaries. Except as set forth on Schedule 7.15 or as
disclosed in writing to the Administrative Agent (which shall promptly furnish a
copy to the Lenders), which shall be a supplement to Schedule 7.15, the Borrower
has no Subsidiaries and the Borrower has no Foreign Subsidiaries. Schedule 7.15
identifies each Subsidiary as either Restricted or Unrestricted, and each
Subsidiary on such schedule is a Wholly-Owned Subsidiary.
Section 7.16 Location of Business and Offices. Cadence's jurisdiction of
organization is Utah; the name of Cadence as listed in the public records of its
jurisdiction of organization is Cadence Resources Corporation; and the
organizational identification number of Cadence in its jurisdiction of
organization is 608892-0142 (or, in each case, as set forth in a notice
delivered to the Administrative Agent pursuant to Section 8.01(n) in accordance
with Section 12.01). Aurora's jurisdiction of organization is Nevada; the name
of Aurora as listed in the public records of its jurisdiction of organization is
Aurora Energy Ltd.; and the organizational identification number of Aurora in
its jurisdiction of organization is C7051-1991 (or, in each case, as set forth
in a notice delivered to the Administrative Agent pursuant to Section 8.01(n) in
accordance with Section 12.01). The Borrower's jurisdiction of organization is
Michigan; the name of the Borrower as listed in the public records of its
jurisdiction of organization is ▇▇▇▇▇▇ ▇▇▇▇▇▇ North, L.L.C.; and the
organizational identification number of the Borrower in its jurisdiction of
organization is B80030 (or, in each case, as set forth in a notice delivered to
the Administrative Agent pursuant to Section 8.01(n) in accordance with Section
12.01). Aurora's and the Borrower's principal place of business and chief
executive offices are located at the address specified in Section 12.01 (or as
set forth in a notice delivered pursuant to Section 8.01(n) and Section
12.01(c)). Each Subsidiary's jurisdiction of organization, name as listed in the
public records of its jurisdiction of organization, organizational
identification number in its jurisdiction of organization, and the location of
its principal place of business and chief executive office is stated on Schedule
7.15 (or as set forth in a notice delivered pursuant to Section 8.01(n)).
Section 7.17 Properties; Titles, Etc.
51
(a) Each of the Loan Parties 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. After giving full
effect to the Excepted Liens, the Loan Parties 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 such Loan Party 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 such Loan Party's
net revenue interest in such Property.
(b) All material leases and agreements necessary for the
conduct of the business of the Loan Parties are valid and subsisting, in full
force and effect, and there exists no default or event or circumstance which
with the giving of notice or the passage of time or both would give rise to a
default under any such lease or leases, which could reasonably be expected to
have a Material Adverse Effect.
(c) The rights and Properties presently owned, leased or
licensed by the Loan Parties, including, without limitation, all easements and
rights of way, include all rights and Properties necessary to permit the Loan
Parties 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 Loan Parties which are
reasonably necessary for the operation of their businesses are in good working
condition and are maintained in accordance with prudent business standards.
(e) Each Loan Party owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual Property
material to its business, and the use thereof by such Loan Party 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 Loan Parties 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) of the Loan
Parties have been maintained, operated and developed in a good and workmanlike
manner and in conformity with all Governmental 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 of the Borrower and its Subsidiaries.
Specifically in connection with the foregoing, except for those as could not be
reasonably expected to have a Material Adverse Effect, (i) no Oil and Gas
Property of any Loan Party 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
52
permissible at the time) and (ii) none of the ▇▇▇▇▇ comprising a part of the Oil
and Gas Properties (or Properties unitized therewith) of the Loan Parties is
deviated from the vertical more than the maximum permitted by Governmental
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) of such Loan Party. All pipelines, ▇▇▇▇▇, gas processing plants,
platforms and other material improvements, fixtures and equipment owned in whole
or in part by any Loan Party 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 Loan Parties, in a
manner consistent with the Loan Parties' past practices (other than those the
failure of which to maintain in accordance with this Section 7.18 could not
reasonably be expected to have a Material Adverse Effect).
Section 7.19 Gas Imbalances, Prepayments. 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 any Loan Party to deliver Hydrocarbons produced from the Oil and
Gas Properties at some future time without then or thereafter receiving full
payment therefor exceeding 50,000 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 and Aurora
represent that they or their Subsidiaries are receiving a price for all
production sold thereunder which is computed substantially in accordance with
the terms of the relevant contract and are not having deliveries curtailed
substantially below the subject Property's delivery capacity), no material
agreements exist which are not cancelable on 60 days notice or less without
penalty or detriment for the sale of production from the Loan Parties'
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 Loan Parties
pursuant to Section 8.01(e), sets forth, a true and complete list of all Swap
Agreements of the Loan Parties, 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 refinance existing debt, to provide
funding in connection with the Acquisition related expenses, the acquisition,
exploration and development of additional Oil and gas Properties, and for
general corporate purposes. The Loan Parties 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.
53
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 Loan Parties, taken as a
whole, will exceed the aggregate Debt of the Loan Parties on a consolidated
basis, as the Debt becomes absolute and matures, (b) each of the Loan Parties
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 Loan Parties 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 Loan Parties 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 Specified Senior Indebtedness. The Indebtedness of the
Borrower constitutes "Senior Indebtedness" as defined in the Intercreditor
Agreement.
Section 7.25 Acquisition Documents. The copies of the Acquisition
Documents previously delivered by the Borrower to the Administrative Agent are
true, accurate and complete and have 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 Acquisition 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 and Aurora covenant and agree with the Lenders that:
Section 8.01 Financial Statements; Ratings Change; Other Information. The
Borrower and Aurora will furnish to the Administrative Agent and each Lender:
(a) Annual Financial Statements. As soon as available, but in
any event in accordance with then applicable law and not later than 90 days
after the end of each fiscal year of the Loan Parties, their audited
consolidated balance sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on by independent public accountants of recognized national standing (without a
"going concern" or like qualification or exception and without any qualification
or exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Loan Parties on a consolidated basis
in accordance with GAAP consistently applied.
54
(b) Quarterly Financial Statements. As soon as available, but
in any event in accordance with then applicable law and not later than 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Loan Parties, their consolidated balance sheet and related statements of
operations, consolidating financial statements for each of the Loan Parties,
stockholders' equity and cash flows as of the end of and for such fiscal quarter
and the then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Loan Parties
on a consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes.
(c) Certificate of Financial Officer -- Compliance.
Concurrently with any delivery of financial statements under Section 8.01(a) or
Section 8.01(b), a certificate of a Financial Officer in substantially the form
of Exhibit D 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 8.13(b) and Section
9.01 and (iii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the audited financial statements referred to in
Section 7.04 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 - Swap Agreements.
Concurrently with any delivery of financial statements under Section 8.01(a) and
Section 8.01(b) a certificate of a Financial Officer, in form and substance
satisfactory to the Administrative Agent, setting forth as of the last Business
Day of such fiscal quarter or fiscal year, a true and complete list of all Swap
Agreements of the Borrower and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net ▇▇▇▇-to-market value therefor, any new credit support
agreements relating thereto not listed on Schedule 7.20, any margin required or
supplied under any credit support document, and the counterparty to each such
agreement.
(f) 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.
55
(g) Other Accounting Reports. Promptly upon receipt thereof, a
copy of each other report or letter submitted to any Loan Party by independent
accountants in connection with any annual, interim or special audit made by them
of the books of such Loan Party, and a copy of any response by such Loan Party,
or the Board of Directors of such Loan Party, to such letter or report.
(h) 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 any Loan Party with the
SEC, or with any national securities exchange, or distributed by the Borrower or
Aurora to their shareholders generally, as the case may be.
(i) Notices Under Material Instruments. Promptly after the
furnishing thereof, copies of any financial statement, report or notice
furnished to or by any Person pursuant to the terms of any preferred stock
designation, indenture, loan or credit or other similar agreement, other than
this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.
(j) 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 any Loan Party.
(k) Notice of Sales of Oil and Gas Properties. In the event
any Loan Party intends to sell, transfer, assign or otherwise dispose of any Oil
or Gas Properties or any Equity Interests in any Subsidiary in accordance with
Section 9.12, prior written notice of such disposition, the price thereof and
the anticipated date of closing and any other details thereof requested by the
Administrative Agent or any Lender.
(l) 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.
(m) Issuance of Permitted Refinancing Debt. In the event the
Borrower intends to refinance any Debt with the proceeds of Permitted
Refinancing Debt as contemplated by Section 9.02(h), prior written notice of
such intended offering therefor, the amount thereof and the anticipated date of
closing and will furnish a copy of the preliminary offering memorandum (if any)
and the final offering memorandum (if any).
(n) Information Regarding Borrower and Guarantors. Prompt
written notice (and in any event within thirty (30) days prior thereto) of any
change (i) any Loan Party's corporate name or in any trade name used to identify
such Person in the conduct of its business or in the ownership of its
Properties, (ii) in the location of any Loan Party's chief executive office or
principal place of business, (iii) in any Loan Party's identity or corporate
structure or in the jurisdiction in which such Person is incorporated or formed,
(iv) in any Loan Party's jurisdiction of organization or such Person's
organizational identification number in such jurisdiction of organization, and
(v) in any Loan Party's federal taxpayer identification number.
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(o) Production Report and Lease Operating Statements. Within
60 days after the end of each fiscal quarter, a report setting forth, for each
calendar month during the then current fiscal year to date, the volume of
production and sales attributable to production (and the prices at which such
sales were made and the revenues derived from such sales) for each such calendar
month from the Oil and Gas Properties, and setting forth the related ad valorem,
severance and production taxes and lease operating expenses attributable thereto
and incurred for each such calendar month.
(p) Notices of Certain Changes. Promptly, but in any event
within five (5) Business Days after the execution thereof, copies of any
amendment, modification or supplement to the certificate or articles of
incorporation, by-laws, any preferred stock designation or any other organic
document of any Loan Party.
(q) Notices Relating to Acquisition. In the event that after
the Effective Date: (i) the Borrower is required or elects to purchase any of
the Acquisition Properties which had been excluded from, or return any of the
Acquisition Properties which had been included in, the Acquisition Properties in
accordance with the terms of the Acquisition Documents, (ii) the Borrower is
required to honor any preferential purchase right in respect of any Acquisition
Property which has not been waived, (iii) any matter being disputed in
accordance with the terms of the Acquisition Documents is resolved or (iv) the
Borrower and the seller(s) calculate and agree upon any "Post-Closing
Adjustments" as defined in Section 3.03 of the Asset Purchase Agreement, then,
in each such case, the Borrower shall promptly give the Administrative Agent
notice in reasonable detail of such circumstances.
(r) Other Requested Information. Promptly following any
request therefor, such other information regarding the operations, business
affairs and financial condition of any Loan Party (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 and Aurora will
furnish to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of, or the threat in writing
of, any action, suit, proceeding, investigation or arbitration by or before any
arbitrator or Governmental Authority against or affecting any Loan Party thereof
not previously disclosed in writing to the Lenders or any material adverse
development in any action, suit, proceeding, investigation or arbitration
(whether or not previously disclosed to the Lenders) that, in either case, if
adversely determined, could reasonably be expected to result in liability in
excess of $250,000, 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 Loan Parties in an aggregate amount exceeding
$500,000; and
(d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
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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 and Aurora will,
and will cause each Subsidiary to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.11.
Section 8.04 Payment of Obligations. The Borrower and Aurora will, and
will cause each Subsidiary to, pay its obligations, including Tax liabilities of
the Loan Parties 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 Loan Parties have 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 any Loan Party.
Section 8.05 Performance of Obligations under Loan Documents. The Borrower
and Aurora will pay the Notes according to the reading, tenor and effect
thereof, and the Borrower and Aurora will, and will cause each Subsidiary to, do
and perform every act and discharge all of the obligations to be performed and
discharged by them under the Loan Documents, including, without limitation, this
Agreement, at the time or times and in the manner specified.
Section 8.06 Operation and Maintenance of Properties. The Borrower and
Aurora, at their own expense, will, and will cause each Subsidiary to:
(a) operate their 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
their 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.
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(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 their 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 their Oil and Gas Properties
and other material Properties.
(e) operate their 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 or Aurora is not the operator
of any Property, the Borrower and Aurora shall use reasonable efforts to cause
the operator to comply with this Section 8.06.
Section 8.07 Insurance. The Borrower and Aurora will, and will cause each
Subsidiary to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans shall
be endorsed in favor of and made payable to the Administrative Agent as its
interests may appear and such policies shall name the Administrative Agent and
the Lenders as "additional insureds" and provide that the insurer will endeavor
to give at least 30 days prior notice of any cancellation to the Administrative
Agent.
Section 8.08 Books and Records; Inspection Rights. The Borrower and Aurora
will, and will cause each Subsidiary to, keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower and Aurora
will, and will cause each Subsidiary to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice, to
visit and inspect its Properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.
Section 8.09 Compliance with Laws. The Borrower and Aurora will, and will
cause each Subsidiary to, comply with all laws, rules, regulations and orders of
any Governmental Authority applicable to them or their 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.
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(a) The Borrower and Aurora shall at their sole expense: (i)
comply, and shall cause their 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
Aurora's, the Borrower's or its Subsidiaries' Properties or any other Property
to the extent caused by Aurora's, 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 Aurora's, 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 Aurora's, 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 Aurora's, the Borrower's and its Subsidiaries' obligations under
this Section 8.10(a) are timely and fully satisfied, which failure to establish
and implement could reasonably be expected to have a Material Adverse Effect.
(b) The Borrower and Aurora 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 Aurora, the Borrower or
its Subsidiaries or their Properties of which the Borrower or Aurora has
knowledge in connection with any Environmental Laws (excluding routine testing
and corrective action) if the Borrower or Aurora reasonably anticipates that
such action will result in liability (whether individually or in the aggregate)
in excess of $500,000, not fully covered by insurance, subject to normal
deductibles.
(c) The Borrower and Aurora 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.
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(a) The Borrower and Aurora at their sole expense will, and
will cause each Subsidiary to, promptly execute and deliver to the
Administrative Agent all such other documents, agreements and instruments
reasonably requested by the Administrative Agent to comply with, cure any
defects or accomplish the conditions precedent, covenants and agreements of any
Loan Party, 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 and Aurora hereby authorize 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 Aurora, 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.
Section 8.12 Reserve Reports.
(a) On or before March 1st and September 1st of each year,
commencing March 1, 2006, the Borrower and Aurora shall furnish to the
Administrative Agent and the Lenders a Reserve Report evaluating the Oil and Gas
Properties of the Borrower and its Subsidiaries as of the immediately preceding
January 1st and July 1st. The Reserve Report as of January 1 of each year shall
be prepared by one or more Approved Petroleum Engineers, and the July 1 Reserve
Report of each year shall be prepared by or under the supervision of the chief
engineer of the Borrower who shall certify such Reserve Report to be true and
accurate 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
and Aurora 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 and
Aurora shall provide to the Administrative Agent and the Lenders a certificate
from a Responsible Officer certifying that in all material respects: (i) the
information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct, (ii) the Borrower or its
Subsidiaries owns good and defensible title to the Oil and Gas Properties
evaluated in such Reserve Report and such Properties are free of all Liens
except for Liens permitted by Section 9.03, (iii) except as set forth on an
exhibit to the certificate, on a net basis there are no gas imbalances, take or
pay or other prepayments in excess of the volume specified in Section 7.19 with
respect to its Oil and Gas Properties evaluated in such Reserve Report which
would require the Borrower or any Subsidiary to deliver Hydrocarbons either
generally or produced from such Oil and Gas Properties at some future time
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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 in compliance with
Section 8.14(a).
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 and
Aurora 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 and Aurora 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 in good faith with title to any Mortgaged Property
after the 60-day period has elapsed, such unacceptable Mortgaged Property shall
not count towards the 80% requirement, and the Administrative Agent may send a
notice to the Borrower and the Lenders that the then outstanding Borrowing Base
shall be reduced by an amount as determined by the Required Lenders to cause the
Borrower to be in compliance with the requirement to provide acceptable title
information on 80% of the value of the Oil and Gas Properties. 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, Aurora and 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 Aurora and
the Borrower shall, and shall cause its Subsidiaries to, grant, within thirty
(30) days of delivery of the certificate required under Section 8.12(c), to the
Administrative Agent as security for the Indebtedness a first-priority Lien
interest (provided that Excepted Liens of the type described in clauses (a) to
(d) and (f) of the definition thereof may exist, but subject to the provisos at
the end of such definition) on additional Oil and Gas Properties not already
subject to a Lien of the Security Instruments such that after giving effect
thereto, the Mortgaged Properties will represent at least 80% of such total
value. All such Liens will be created and perfected by and in accordance with
the provisions of deeds of trust, security agreements and financing statements
or other Security Instruments, all in form and substance reasonably satisfactory
to the Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes. In order to
comply with the foregoing, if any Subsidiary places a Lien on its Oil and Gas
Properties and such Subsidiary is not a Guarantor, then it shall become a
Guarantor and comply with Section 8.14(b).
(b) In the event that (i) the Borrower determines that any
Subsidiary is a Material Domestic Subsidiary or (ii) any Domestic Subsidiary
incurs or guarantees any Debt, the Borrower shall promptly cause such Subsidiary
to guarantee the Indebtedness pursuant to the Guaranty Agreement. In connection
with any such guaranty, the Borrower and Aurora shall, or shall cause such
Domestic Subsidiary to, promptly, but in any event no later than 15 days after
the formation or acquisition (or similar event) of such Domestic Subsidiary to,
(A) execute and deliver a supplement to the Guaranty Agreement executed by such
Subsidiary, (B) pledge all of the Equity Interests of such new Subsidiary
(including, without limitation, delivery of original stock certificates
evidencing the Equity Interests of such Subsidiary, together with an appropriate
undated stock powers for each certificate duly executed in blank by the
registered owner thereof) and (C) execute and deliver such other additional
closing documents, certificates and legal opinions as shall reasonably be
requested by the Administrative Agent.
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(c) The Borrower and Aurora shall cause any Person that must
guarantee the Indebtedness in order for the Borrower to be in compliance with
Section 9.04(b)(ii)(D) to guarantee the Indebtedness pursuant to the Guaranty
Agreement. In connection with any such guaranty, the Borrower and Aurora shall,
or shall cause such Person to, promptly, but in any event no later than 15 days
after the date required thereby, (i) execute and deliver a supplement to the
Guaranty Agreement executed by such Person and (ii) 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 Second Lien 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
(d) The Borrower and Aurora agree that they will not, and will
not permit any Subsidiary to, ▇▇▇▇▇ ▇ ▇▇▇▇ on any Property to secure the Second
Lien Notes without first (i) giving fifteen (15) days' prior written notice to
the Administrative Agent thereof and (ii) granting to the Administrative Agent
to secure the Indebtedness a first-priority, perfected Lien on this same
Property pursuant to Security Instruments in form and substance satisfactory to
the Administrative Agent. In connection therewith, the Borrower and Aurora
shall, or shall cause the Subsidiaries to, execute and deliver such other
additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent.
Section 8.15 ERISA Compliance. The Borrower and Aurora 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 and Aurora 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 Marketing Activities.
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(a) The Borrower and Aurora will not, and will not permit any
Subsidiary to, engage in marketing activities for any Hydrocarbons or enter into
any contracts related thereto other than (i) contracts for the sale of
Hydrocarbons scheduled or reasonably estimated to be produced from their proved
Oil and Gas Properties during the period of such contract, (ii) contracts for
the sale of Hydrocarbons scheduled or reasonably estimated to be produced from
proved Oil and Gas Properties of third parties during the period of such
contract associated with the Oil and Gas Properties of the Borrower and its
Subsidiaries that the Borrower or one of its Subsidiaries has the right to
market pursuant to joint operating agreements, unitization agreements or other
similar contracts that are usual and customary in the oil and gas business and
(iii) other contracts for the purchase and/or sale of Hydrocarbons of third
parties (A) which have generally offsetting provisions (i.e. corresponding
pricing mechanics, delivery dates and points and volumes) such that no
"position" is taken and (B) for which appropriate credit support has been taken
to alleviate the material credit risks of the counterparty thereto.
(b) The Borrower and Aurora will not, and will not permit any
Subsidiary to, amend in any material respect the written Hydrocarbon Marketing
Policy delivered to the Lenders pursuant to Section 8.16(c) without the prior
written consent of the Administrative Agent and the Required Lenders.
(c) The Borrower shall, within 60 days of the Effective Date,
furnish to the Administrative Agent a written policy regarding the Borrower's
and its Subsidiaries' marketing activities for Hydrocarbons and such policy
shall be in form and substance reasonably satisfactory to the Required Lenders.
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 and Aurora covenant and agree with the Lenders that:
Section 9.01 Financial Covenants.
(a) Interest Coverage Ratio. Aurora and the Borrower, on a
consolidated basis, will not, as of the last day of any fiscal quarter, permit
their ratio of EBITDAX for the period of four fiscal quarters then ending to
Interest Expense for such period to be less than 2.5 to 1.0.
(b) Current Ratio. Aurora and the Borrower, on a consolidated
basis, will not permit, as of the last day of any fiscal quarter, their ratio of
(i) consolidated current assets (including the unused amount of the total
Commitments, but excluding non-cash assets under FAS 133) to (ii) consolidated
current liabilities (excluding non-cash obligations under FAS 133 and current
maturities under this Agreement) to be less than 1.0 to 1.0.
Section 9.02 Debt. The Loan Parties will not, and will not permit any
Subsidiary to, incur, create, assume or suffer to exist any Debt, except:
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(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 Cadence, Aurora, the Borrower and its Subsidiaries
existing on the date hereof that is reflected in the Financial Statements, and
any Permitted Refinancing Debt in respect thereof.
(c) accounts payable and accrued expenses, liabilities or
other obligations to pay the deferred purchase price of Property or services,
from time to time incurred in the ordinary course of business which are not
greater than sixty (60) days past the date of invoice or 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) Debt under Capital Leases not to exceed $1,000,000.
(e) Debt associated with bonds or surety obligations required
by Governmental Requirements in connection with the operation of the Oil and Gas
Properties.
(f) intercompany Debt by and among Cadence, Aurora, the
Borrower and any Subsidiary or between Subsidiaries to the extent permitted by
Section 9.05(g); provided that such Debt is not held, assigned, transferred,
negotiated or pledged to any Person other than Cadence, Aurora, the Borrower or
one of their Wholly-Owned Subsidiaries, and, provided further, that any such
Debt owed by either Cadence, Aurora, the Borrower or a Guarantor shall be
subordinated to the Indebtedness on terms set forth in the Guaranty Agreement.
(g) endorsements of negotiable instruments for collection in
the ordinary course of business.
(h) Debt under the Second Lien Notes and any guarantees
thereof and any Permitted Refinancing Debt, the principal amount of which Debt
does not exceed $50,000,000 in the aggregate.
(i) Debt associated with the mortgage in Section 9.03(e),
which Debt shall not exceed $3,000,000.
(j) other Debt of the Borrower not to exceed $1,000,000 in the
aggregate at any one time outstanding.
(k) other Debt of Cadence or Aurora or any of Aurora's
Subsidiaries (other than the Borrower) not to exceed $5,000,000 in the aggregate
at any one time outstanding.
Section 9.03 Liens. The Borrower and Aurora will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Lien on any of
its Properties (now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness.
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(b) Excepted Liens.
(c) Liens securing Capital Leases permitted by Section 9.02(d)
but only on the Property under lease.
(d) Liens securing any Permitted Refinancing Debt provided
that any such Permitted Refinancing Debt is not secured by any additional or
different Property not securing the Refinanced Debt.
(e) the Lien securing the mortgage dated September 19, 2005,
filed for record in Grand Traverse County, Michigan on 9/23/05 and record number
2005R-21793, provided that such Lien shall not exceed $3,000,000.
(f) 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(f) shall not exceed $500,000 at any time.
(g) Liens on Property securing the Second Lien Notes and any
guaranties thereof as permitted by Section 9.02(h); provided, however, that (i)
such Liens securing such Debt are subordinate to the Liens securing the
Indebtedness, this Agreement and the other Loan Documents pursuant to the
Intercreditor Agreement and (ii) both before and after giving effect to the
incurrence of any such Lien, the Borrower is in compliance with Section 8.14(d).
Section 9.04 Dividends, Distributions and Redemptions; Repayment of Second
Lien Documents.
(a) Restricted Payments. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, return any capital to its
stockholders or make any distribution of its Property to its Equity Interest
holders, except (a) the Borrower may declare and pay dividends with respect to
its Equity Interests payable solely in additional shares of its Equity Interests
(other than Disqualified Capital Stock), (b) Subsidiaries may declare and pay
dividends ratably with respect to their Equity Interests and (c) the Borrower
may make Restricted Payments pursuant to and in accordance with stock option
plans or other benefit plans for management or employees of the Borrower and its
Subsidiaries.
(b) Redemption of Second Lien Notes; Amendment of Second Lien
Documents. The Borrower will not, and will not permit any Subsidiary to: (i)
prior to the date that is ninety-one (91) days after the Maturity Date, call,
make or offer to make any optional or voluntary Redemption of or otherwise
optionally or voluntarily Redeem (whether in whole or in part) the Second Lien
Notes, provided that the Borrower may make scheduled payments in accordance with
the terms of the Intercreditor Agreement; amend, modify, waive or otherwise
change, consent or agree to any amendment, modification, waiver or other change
to, any of the terms of any Second Lien Document if the effect thereof would be
to shorten the maturity of the Second Lien Notes or shorten the average life or
increase the amount of any payment of principal thereof or increase the rate or
add call or pre-payment premiums or shorten any period for payment of interest
thereon, (B) such action requires the payment of a consent fee (howsoever
described), (C) such action adds additional Property as collateral to secure the
Second Lien Notes unless the Borrower complies with Section 8.14(d) or such
action adds any covenants or defaults without this Agreement being
contemporaneously amended to add substantially similar covenants or defaults,
provided that the foregoing shall not prohibit the execution of supplemental
agreements to add guarantors if required by the terms thereof provided that any
such guarantor also guarantees the Indebtedness pursuant to the Guaranty
Agreement and each of the Borrower and such guarantor otherwise complies with
Section 8.14, and (iii) designate any Debt (other than obligations of the
Borrower and the Restricted Subsidiaries pursuant to the Loan Documents) as
"Senior Indebtedness" or give any such other Debt any other similar designation.
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Section 9.05 Investments, Loans and Advances. The Borrower and Aurora will
not, and will not permit any Subsidiary to, make or permit to remain outstanding
any Investments in or to any Person, except that the foregoing restriction shall
not apply to:
(a) Investments reflected in the Financial Statements or which
are disclosed to the Lenders in Schedule 9.05.
(b) accounts receivable arising in the ordinary course of
business.
(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 deposit rating of no lower than A2 or P2, as such rating is set
forth from time to time, by S&P or ▇▇▇▇▇'▇, respectively or, in the case of any
Foreign Subsidiary, a bank organized in a jurisdiction in which the Foreign
Subsidiary conducts operations having assets in excess of $500,000,000 (or its
equivalent in another currency).
(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 Aurora or the Borrower in or to
the Guarantors, (ii) made by any Subsidiary in or to the Borrower or any
Guarantor and (iii) made by Aurora or the Borrower or any Subsidiary in or to
all other Subsidiaries which are not Guarantors in an aggregate amount at any
one time outstanding not to exceed $500,000.
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(h) subject to the limits in Section 9.06, Investments
(including, without limitation, capital contributions) in general or limited
partnerships or other types of entities (each a "venture") entered into by
Aurora, the Borrower or a Subsidiary with others in the ordinary course of
business; provided that (i) any such venture is engaged exclusively in oil and
gas exploration, development, production, processing and related activities,
including transportation, (ii) the interest in such venture is acquired in the
ordinary course of business and on fair and reasonable terms and (iii) such
venture interests acquired and capital contributions made (valued as of the date
such interest was acquired or the contribution made) do not exceed, in the
aggregate at any time outstanding an amount equal to $250,000.
(i) Investments in direct ownership interests in additional
Oil and Gas Properties and gas gathering systems related thereto or related to
farm-out, farm-in, joint operating, joint venture or area of mutual interest
agreements, gathering systems, pipelines or other similar arrangements which are
usual and customary in the oil and gas exploration and production business
located within the geographic boundaries of the United States of America.
(j) loans or advances to employees, officers or directors in
the ordinary course of business of the Borrower or any of its Subsidiaries, in
each case only as permitted by applicable law, including Section 402 of the
Sarbanes Oxley Act of 2002, but in any event not to exceed $100,000 in the
aggregate at any time.
(k) Investments in stock, obligations or securities received
in settlement of debts arising from Investments permitted under this Section
9.05 owing to Aurora, the Borrower or any Subsidiary as a result of a bankruptcy
or other insolvency proceeding of the obligor in respect of such debts or upon
the enforcement of any Lien in favor of Aurora, the Borrower or any of its
Subsidiaries; provided that the Borrower or Aurora shall give the Administrative
Agent prompt written notice in the event that the aggregate amount of all
Investments held at any one time under this Section 9.05(k) exceeds $250,000.
(l) other Investments not to exceed $250,000 in the aggregate
at any time.
Section 9.06 Nature of Business; International Operations. The Borrower
and Aurora will not, and will not permit any Subsidiary to, allow any material
change to be made in the character of its business as an independent oil and gas
exploration and production company. From and after the date hereof, Aurora, the
Borrower and its Domestic Subsidiaries will not acquire or make any other
expenditure (whether such expenditure is capital, operating or otherwise) in or
related to, any Oil and Gas Properties not located within the geographical
boundaries of the United States.
Section 9.07 Limitation on Leases. The Borrower and Aurora will not, and
will not permit any Subsidiary to, create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal but excluding Capital Leases and leases of Hydrocarbon
Interests), under leases or lease agreements which would cause the aggregate
amount of all payments made by the Borrower, Aurora and the Subsidiaries
pursuant to all such leases or lease agreements, including, without limitation,
any residual payments at the end of any lease, to exceed $500,000 in any period
of twelve consecutive calendar months during the life of such leases.
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Section 9.08 Proceeds of Notes. The Borrower and Aurora 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, Aurora nor any Person acting on behalf of
the Borrower or Aurora 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 and Aurora 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 9.09 ERISA Compliance. The Borrower and Aurora will not, and will
not permit any Subsidiary to, at any time:
(a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which Aurora, the Borrower, a Subsidiary or any
ERISA Affiliate could be subjected to either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by
Chapter 43 of Subtitle D of the Code.
(b) terminate, or permit any ERISA Affiliate to terminate, any
Plan in a manner, or take any other action with respect to any Plan, which could
result in any liability of Aurora, the Borrower, a Subsidiary or any ERISA
Affiliate to the PBGC.
(c) fail to make, or permit any ERISA Affiliate to fail to
make, full payment when due of all amounts which, under the provisions of any
Plan, agreement relating thereto or applicable law, Aurora, the Borrower, a
Subsidiary or any ERISA Affiliate is required to pay as contributions thereto.
(d) permit to exist, or allow any ERISA Affiliate to permit to
exist, any accumulated funding deficiency within the meaning of section 302 of
ERISA or section 412 of the Code, whether or not waived, with respect to any
Plan.
(e) permit, or allow any ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any Plan maintained by
Aurora, the Borrower, a Subsidiary or any ERISA Affiliate which is regulated
under Title IV of ERISA to exceed the current value of the assets (computed on a
plan termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities. The term "actuarial present value of the
benefit liabilities" shall have the meaning specified in section 4041 of ERISA.
(f) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan.
(g) acquire, or permit any ERISA Affiliate to acquire, an
interest in any Person that causes such Person to become an ERISA Affiliate with
respect to Aurora, the Borrower or a Subsidiary or with respect to any ERISA
Affiliate of Aurora, 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.
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(h) incur, or permit any ERISA Affiliate to incur, a liability
to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA.
(i) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability.
(j) amend, or permit any ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that Aurora, the Borrower, a
Subsidiary or any ERISA Affiliate is required to provide security to such Plan
under section 401(a)(29) of the Code.
Section 9.10 Sale or Discount of Receivables. Except for receivables
obtained by Aurora, the Borrower or any Subsidiary out of the ordinary course of
business or the settlement of joint interest billing accounts in the ordinary
course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of
business in connection with the compromise or collection thereof and not in
connection with any financing transaction, the Borrower and Aurora will not, and
will not permit any Subsidiary to, discount or sell (with or without recourse)
any of its notes receivable or accounts receivable.
Section 9.11 Mergers, Etc. The Borrower and Aurora will not, and will not
permit any Subsidiary to, merge into or with or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its Property to any other
Person (whether now owned or hereafter acquired) (any such transaction, a
"consolidation"), or liquidate or dissolve; provided that the Borrower or any
Subsidiary may participate in a consolidation with any other Person; provided
that:
(a) (i) no Default is continuing, (ii) any such consolidation
would not cause a Default hereunder, (iii) if the Borrower consolidates with any
Person, the Borrower shall be the surviving Person, (iv) if any Subsidiary
consolidates with any Person (other than Aurora, the Borrower or a Subsidiary)
and such Subsidiary is not the surviving Person, such surviving Person shall
expressly assume in writing (in form and substance satisfactory to the
Administrative Agent) all obligations of such Subsidiary under the Loan
Documents and (v) the Borrowing Base will be redetermined using the procedures
for an Interim Redetermination in accordance with Section 2.07; and
(b) any Subsidiary (including a Foreign Subsidiary) may
participate in a consolidation with the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or any other Subsidiary that
is a Domestic Subsidiary (provided that if one of such parties to the
consolidation is a Foreign Subsidiary, such Domestic Subsidiary shall be the
continuing or surviving Person) and if one of such Subsidiaries is a
Wholly-Owned Subsidiary, then the surviving Person shall be a Wholly-Owned
Subsidiary.
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Section 9.12 Sale of Properties. The Borrower and Aurora will not, and
will not permit any Subsidiary to, sell, assign, farm-out, convey or otherwise
transfer any Property except for (a) the sale of Hydrocarbons in the ordinary
course of business; (b) farmouts in the ordinary course of business of
undeveloped acreage or undrilled depths and assignments in connection with such
farmouts; (c) the sale or transfer of equipment that is no longer necessary for
the business of Aurora or the Borrower or such Subsidiary or is replaced by
equipment of at least comparable value and use; the sale or other disposition
(including Casualty Events) of any Oil and Gas Property or any interest therein
or any Subsidiary owning Oil and Gas Properties; provided that (i) 100% the
consideration received in respect of such sale or other disposition shall be
cash, (ii) the consideration received in respect of such sale or other
disposition shall be equal to or greater than the fair market value of the Oil
and Gas Property, interest therein or Subsidiary subject of such sale or other
disposition (as reasonably determined by the board of directors of the Borrower
or Aurora, as applicable, and, if requested by the Administrative Agent, the
Borrower or Aurora, as applicable, shall deliver a certificate of a Responsible
Officer of the Borrower or Aurora certifying to that effect), (iii) if such sale
or other disposition of Oil and Gas Property or Subsidiary owning Oil and Gas
Properties included in the most recently delivered Reserve Report during any
period between two successive Scheduled Redetermination Dates has a fair market
value in excess of $1,000,000 (as determined by the Administrative Agent,
individually or in the aggregate, the Borrowing Base shall be reduced, effective
immediately upon such sale or disposition, by an amount equal to the value, if
any, assigned such Property in the most recently delivered Reserve Report and
(iv) if any such sale or other disposition is of a Subsidiary owning Oil and Gas
Properties, such sale or other disposition shall include all the Equity
Interests of such Subsidiary; and sales and other dispositions of Properties not
regulated by Section 9.12(a) to (e) having a fair market value not to exceed
$1,000,000 during any 6-month period.
Section 9.13 Environmental Matters. The Borrower and Aurora will not, and
will not permit any Subsidiary to, 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 9.14 Transactions with Affiliates. The Borrower and Aurora will
not, and will not permit any Subsidiary to, enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of Property
or the rendering of any service, with any Affiliate (other than the Guarantors
and Wholly-Owned Subsidiaries of the Borrower) 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 9.15 Subsidiaries. The Borrower and Aurora will not, and will not
permit any Subsidiary to, create or acquire any additional Subsidiary unless the
Borrower or Aurora gives written notice to the Administrative Agent of such
creation or acquisition and complies with Section 8.14(b). The Borrower and
Aurora shall not, and shall not permit any Subsidiary to, sell, assign or
otherwise dispose of any Equity Interests in any Subsidiary except in compliance
with Section 9.12(d). Neither Aurora, the Borrower nor any Subsidiary shall have
any Foreign Subsidiaries.
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Section 9.16 Negative Pledge Agreements; Dividend Restrictions. The
Borrower and Aurora will not, and will not permit any Subsidiary to, create,
incur, assume or suffer to exist any contract, agreement or understanding (other
than this Agreement, the Security Instruments or Capital Leases creating Liens
permitted by Section 9.03(c)) which in any way prohibits or restricts the
granting, conveying, creation or imposition of any Lien on any of its Property
in favor of the Administrative Agent and the Lenders or restricts any Subsidiary
from paying dividends or making distributions to Aurora, the Borrower or any
Guarantor, or which requires the consent of or notice to other Persons in
connection therewith.
Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments. The
Borrower and Aurora will not, and will not permit any Subsidiary to, allow gas
imbalances, take-or-pay or other prepayments with respect to the Oil and Gas
Properties of Aurora, the Borrower or any Subsidiary that would require Aurora,
the Borrower or such Subsidiary to deliver Hydrocarbons at some future time
without then or thereafter receiving full payment therefor to exceed one half
bcf of gas (on an mcf equivalent basis) in the aggregate.
Section 9.18 Swap Agreements. The Borrower and Aurora will not, and will
not permit any Subsidiary to, enter into any Swap Agreements with any Person
other than (a) Swap Agreements in respect of commodities (i) with an Approved
Counterparty and (ii) the notional volumes for which (when aggregated with other
commodity Swap Agreements then in effect other than basis differential swaps on
volumes already hedged pursuant to other Swap Agreements) do not exceed, as of
the date such Swap Agreement is executed, 75% of the reasonably anticipated
projected production from proved, developed, producing 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 which
effectively convert interest rates from floating to fixed, the notional amounts
of which (when aggregated with all other Swap Agreements of the Borrower and its
Subsidiaries then in effect effectively converting interest rates from floating
to fixed) do not exceed 75% of the then outstanding principal amount of the
Borrower's Debt for borrowed money which bears interest at a floating rate. In
no event shall any Swap Agreement contain any requirement, agreement or covenant
for the Borrower or any Subsidiary to post collateral or margin to secure their
obligations under such Swap Agreement or to cover market exposures.
Section 9.19 Acquisition Documents. The Borrower and Aurora will not, and
will not permit any of its Subsidiaries to, amend, modify or supplement any of
the Acquisition Documents if the effect thereof could reasonably be expected to
have a Material Adverse Effect (and provided that Aurora or the Borrower
promptly furnishes to the Administrative Agent a copy of such amendment,
modification or supplement).
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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, by acceleration or otherwise.
(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in Section
10.01(a)) payable under any Loan Document, when and as the same shall become due
and payable, and such failure shall continue unremedied for a period of five
Business Days.
(c) any representation or warranty made or deemed made by or
on behalf of any Loan Party 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 or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, shall prove to have been incorrect
when made or deemed made.
(d) Aurora, the Borrower or any Subsidiary shall fail to
observe or perform any covenant, condition or agreement contained in Section
8.01(i), Section 8.01(n), Section 8.02, Section 8.03, Section 8.15 or in ARTICLE
IX.
(e) Aurora, the Borrower or any Subsidiary shall fail to
observe or perform any covenant, condition or agreement contained in this
Agreement (other than those specified in Section 10.01(a), Section 10.01(b) or
Section 10.01(d)) or any other Loan Document, and such failure shall continue
unremedied for a period of 30 days after the earlier to occur of (A) notice
thereof from the Administrative Agent to the Borrower and Aurora (which notice
will be given at the request of any Lender) or (B) a Responsible Officer of
Aurora, the Borrower or such Subsidiary otherwise becoming aware of such
default.
(f) the Borrower or any Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable.
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
Redemption thereof or any offer to Redeem to be made in respect thereof, prior
to its scheduled maturity or require the Borrower or any Subsidiary to make an
offer in respect thereof.
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(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of Aurora, the Borrower or any Subsidiary or its debts,
or of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Aurora, the Borrower or any Subsidiary or
for a substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered.
(i) Aurora, the Borrower or any Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in Section 10.01(h), (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Aurora, the Borrower or any Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing; or any stockholder of Aurora or the
Borrower shall make any request or take any action for the purpose of calling a
meeting of the stockholders of Aurora or the Borrower to consider a resolution
to dissolve and wind-up Aurora or the Borrower's affairs.
(j) Aurora, the Borrower or any Subsidiary shall become
unable, admit in writing its inability or fail generally to pay its debts as
they become due.
(k) (i) one or more judgments for the payment of money in an
aggregate amount in excess of $500,000 (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) or (ii) any one or more non-monetary
judgments that have, or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any Subsidiary to
enforce any such judgment.
(l) the Loan Documents after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in full
force and effect and valid, binding and enforceable in accordance with their
terms against the Borrower or a Guarantor party thereto or shall be repudiated
by any of them, or cease to create a valid and perfected Lien of the priority
required thereby on any of the collateral purported to be covered thereby,
except to the extent permitted by the terms of this Agreement, or the Borrower
or any 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 (i) $250,000 in any year
or (ii) $500,000 for all periods.
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(n) the Intercreditor Agreement, after delivery thereof shall
for any reason, except to the extent permitted by the terms thereof, cease to be
in full force and effect and valid, binding and enforceable in accordance with
its terms against the Borrower or any party thereto or holder of the Debt
subordinated thereby or shall be repudiated by any of them, or cause the payment
of the obligations of the Second Lien Notes to be senior or pari passu in right
to the payment of obligations of this Agreement, or any payment by the Borrower
or any Guarantor in violation of the terms of the Intercreditor Agreement.
(o) 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.
(c) All proceeds realized from the liquidation or other
disposition of collateral or otherwise received after maturity of the Notes,
whether by acceleration or otherwise, shall be applied:
(i) first, to payment or reimbursement of that portion
of the Indebtedness constituting fees, expenses and
indemnities payable to the Administrative Agent in its
capacity as such;
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(ii) second, pro rata to payment or reimbursement of
that portion of the Indebtedness constituting fees, expenses
and indemnities payable to the Lenders;
(iii) third, pro rata to payment of accrued interest on
the Loans;
(iv) fourth, pro rata to payment of principal
outstanding on the Loans and Indebtedness referred to in
Clause (b) of the definition of Indebtedness owing to a Lender
or an Affiliate of a Lender;
(v) fifth, pro rata to any other Indebtedness;
(vi) sixth, to serve as cash collateral to be held by
the Administrative Agent to secure the LC Exposure; and
(vii) seventh, any excess, after all of the Indebtedness
shall have been indefeasibly paid in full in cash, shall be
paid to the Borrower or as otherwise required by any
Governmental Requirement.
ARTICLE XI
The Agents
(a) Appointment; Powers. Each of the Lenders and the Issuing
Bank hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof and the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto.
Section 11.02 Duties and Obligations of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing (the use of the term "agent" herein and in the other Loan
Documents with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law; rather, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties), (b) the Administrative
Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (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,
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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 or as to those conditions precedent
expressly required to be to the Administrative Agent's satisfaction, (vi) the
existence, value, perfection or priority of any collateral security or the
financial or other condition of the Borrower and its Subsidiaries or any other
obligor or guarantor, or (vii) any failure by the Borrower or any other Person
(other than itself) to perform any of its obligations hereunder or under any
other Loan Document or the performance or observance of any covenants,
agreements or other terms or conditions set forth herein or therein. For
purposes of determining compliance with the conditions specified in ARTICLE VI,
each Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the
Administrative Agent shall have received written notice from such Lender prior
to the proposed closing date specifying its objection thereto.
Section 11.03 Action by Administrative Agent. The Administrative Agent
shall have no duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise in writing as directed by the Majority Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02) and in all cases the Administrative
Agent shall be fully justified in failing or refusing to act hereunder or under
any other Loan Documents unless it shall (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, no Agent other than the Administrative Agent shall have any
obligation to perform any act in respect thereof. The Administrative Agent shall
not be liable for any action taken or not taken by it with the consent or at the
request of the Majority Lenders or the Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02), and otherwise the Administrative Agent shall not be
liable for any action taken or not taken by it hereunder or under any other Loan
Document or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith INCLUDING ITS OWN
ORDINARY NEGLIGENCE, except for its own gross negligence or willful misconduct.
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Section 11.04 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower, the Lenders and the Issuing Bank hereby waives the right to dispute
the Administrative Agent's record of such statement, except in the case of gross
negligence or willful misconduct by the Administrative Agent. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts. The Administrative Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof permitted
hereunder shall have been filed with the Administrative Agent.
Section 11.05 Subagents. The Administrative Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding Sections of this ARTICLE XI shall apply to any such sub-agent
and to the Related Parties of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
Section 11.06 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
in this Section 11.06, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrower, and the Administrative
Agent may be removed at any time with or without cause by the Majority Lenders.
Upon any such resignation or removal, the Majority Lenders shall have the right,
in consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation or removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders and the Issuing Bank, appoint a successor Agent. 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.
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Section 11.07 Agents as Lenders. Each bank serving as an Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not an Agent hereunder.
Section 11.08 No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Loan Document to which it is a party. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document, any related agreement or any
document furnished hereunder or thereunder. The Agents shall not be required to
keep themselves informed as to the performance or observance by the Borrower or
any of its Subsidiaries of this Agreement, the Loan Documents or any other
document referred to or provided for herein or to inspect the Properties or
books of the Borrower or its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent or the Arranger shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of such Agent or any of
its Affiliates. In this regard, each Lender acknowledges that ▇▇▇▇▇▇ & ▇▇▇▇▇▇
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 Administrative Agent May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans and all other
Indebtedness that are owing and unpaid and to file such other documents as may
be necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent
and their respective agents and counsel and all other amounts due the Lenders
and the Administrative Agent under Section 12.03) allowed in such judicial
proceeding; and
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(b) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.
Section 11.10 Authority of Administrative Agent to Release Collateral and Liens.
Each Lender and the Issuing Bank hereby authorizes the Administrative Agent to
release any collateral that is permitted to be sold or released pursuant to the
terms of the Loan Documents. Each Lender and the Issuing Bank hereby authorizes
the Administrative Agent to execute and deliver to the Borrower, at the
Borrower's sole cost and expense, any and all releases of Liens, termination
statements, assignments or other documents reasonably requested by the Borrower
in connection with any sale or other disposition of Property to the extent such
sale or other disposition is permitted by the terms of Section 9.12 or is
otherwise authorized by the terms of the Loan Documents.
Section 11.11 The Arranger and other Agents. The Arranger and all other
Agents other than the Administrative Agent shall have no duties,
responsibilities or liabilities under this Agreement and the other Loan
Documents other than their duties, responsibilities and liabilities in their
capacity as Lenders hereunder.
ARTICLE XII
Miscellaneous
Section 12.01 Notices.
(a) Except in the case of notices and other communications
expressly permitted to be given by telephone (and subject to Section 12.01(b)),
all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief Financial
Officer;
(ii) if to the Administrative Agent, to it at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Loan Assistant (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
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(iii) if to the Issuing Bank, to it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Loan
Assistant (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇; and
(iv) if to any other Lender, to it at its address (or
telecopy number) set forth in its Administrative
Questionnaire.
(b) Notices and other communications to the Lenders hereunder
may be delivered or furnished by electronic communications pursuant to
procedures approved by the Administrative Agent; provided that the foregoing
shall not apply to notices pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and
ARTICLE V unless otherwise agreed by the Administrative Agent and the applicable
Lender. The Administrative Agent or the Borrower may, in its discretion, agree
to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of
such procedures may be limited to particular notices or communications.
(c) Any party hereto may change its address or telecopy number
for notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 12.02 Waivers; Amendments.
(a) No failure on the part of the Administrative Agent, any
other Agent, the Issuing Bank or any Lender to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege, or any abandonment or discontinuance of steps to enforce such right,
power or privilege, under any of the Loan Documents shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under any of the Loan Documents preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies of the Administrative Agent, any other Agent, the Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by Section 12.02(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any other Agent, any
Lender or the Issuing Bank may have had notice or knowledge of such Default at
the time.
(b) 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 Maximum Credit Amount of any Lender without the written
consent of such Lender, (ii) increase the Borrowing Base without the written
consent of all Lenders, decrease or maintain the Borrowing Base without the
consent of the Required Lenders, or modify Section 2.07 in any manner without
the consent of each Lender, (iii) reduce the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce any fees payable
hereunder, or reduce any other Indebtedness hereunder or under any other Loan
Document, without the written consent of each Lender affected thereby, (iv)
postpone the scheduled date of payment or prepayment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or any other Indebtedness hereunder or under any other Loan Document,
or reduce the amount of, waive or excuse any such payment, or postpone or extend
the Termination Date without the written consent of each Lender affected
thereby, (v) change Section 4.01(b) or Section 4.01(c) in a manner that would
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alter the pro rata sharing of payments required thereby, without the written
consent of each Lender, (vi) waive or amend Section 3.04(c), Section 6.01,
Section 8.14, Section 10.02(c) or Section 12.14 or change the definition of the
terms "Domestic Subsidiary", "Foreign Subsidiary", "Material Domestic
Subsidiary" or "Subsidiary", without the written consent of each Lender, (vii)
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
11.10), or reduce the percentage set forth in Section 8.14(a) to less than 80%,
without the written consent of each Lender, or (viii) change any of the
provisions of this Section 12.02(b) or the definitions of "Required Lenders" or
"Majority Lenders" or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
under any other Loan Documents or make any determination or grant any consent
hereunder or any other Loan Documents, without the written consent of each
Lender; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, any other Agent, or the
Issuing Bank hereunder or under any other Loan Document without the prior
written consent of the Administrative Agent, such other Agent or the Issuing
Bank, as the case may be. Notwithstanding the foregoing, any supplement to
Schedule 7.15 (Subsidiaries) shall be effective simply by delivering to the
Administrative Agent a supplemental schedule clearly marked as such and, upon
receipt, the Administrative Agent will promptly deliver a copy thereof to the
Lenders.
Section 12.03 Expenses, Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates, including,
without limitation, the reasonable fees, charges and disbursements of counsel
and other outside consultants for the Administrative Agent, the reasonable
travel, photocopy, mailing, courier, telephone and other similar expenses,
including all Intralinks expenses, and the cost of environmental audits and
surveys and appraisals, in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration (both before and after the execution hereof and
including advice of counsel to the Administrative Agent as to the rights and
duties of the Administrative Agent and the Lenders with respect thereto) of this
Agreement and the other Loan Documents and any amendments, modifications or
waivers of or consents related to the provisions hereof or thereof (whether or
not the transactions contemplated hereby or thereby shall be consummated), (ii)
all costs, expenses, Taxes, assessments and other charges incurred by any Agent
or any Lender in connection with any filing, registration, recording or
perfection of any security interest contemplated by this Agreement or any
Security Instrument or any other document referred to therein, (iii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder, (iv) all out-of-pocket expenses incurred by
any Agent, the Issuing Bank or any Lender, including the fees, charges and
disbursements of any counsel for any Agent, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement or any other Loan Document, including its rights under this
Section 12.03, or in connection with the Loans made or Letters of Credit issued
hereunder, including, without limitation, all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.
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(b) THE BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGER, THE
ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING
PERSONS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND
RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL
FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT
OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY
OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN
DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE
TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL
REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY
WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE
LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN
CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE
PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY THE
ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE
DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH
THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT OF A DRAWING UNDER ANY
LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER
IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v)
ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF
THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii)
ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS
RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW
APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES,
INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE, RELEASE,
THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR
TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON
ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR
ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY
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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, the Arranger or the Issuing Bank under
Section 12.03(a) or (b), each Lender severally agrees to pay to such Agent, the
Arranger or the Issuing Bank, as the case may be, such Lender's Applicable
Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against such Agent, the
Arranger or the Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the Transactions, any Loan or Letter
of Credit or the use of the proceeds thereof.
85
(e) All amounts due under this Section 12.03 shall be payable
promptly after written demand therefor.
Section 12.04 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit), except that (i) the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void) and (ii) no Lender may
assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section 12.04. Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), Participants
(to the extent provided in Section 12.04(c)) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in Section
12.04(b)(ii), any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the
Borrower shall be required if such assignment is to a Lender, an Affiliate of a
Lender, an Approved Fund or, if an Event of Default has occurred and is
continuing, is to any other assignee; and
(B) the Administrative Agent, provided that no
consent of the Administrative Agent shall be required for an assignment to an
assignee that is a Lender immediately prior to giving effect to such assignment.
(ii) Assignments shall be subject to the following
additional conditions:
(A) except in the case of an assignment to a
Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Commitment or Loans, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$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;
86
(C) the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500; and
(D) the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire.
(iii) Subject to Section 12.04(b)(iv) and the acceptance
and recording thereof, from and after the effective date
specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and
the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in
the case of an Assignment and Assumption covering all of the
assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Section 5.01,
Section 5.02, Section 5.03 and Section 12.03). Any assignment
or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this Section 12.04 shall
be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in
accordance with Section 12.04(c).
(iv) The Administrative Agent, acting for this purpose
as an agent of the Borrower, shall maintain at one of its
offices a copy of each Assignment and Assumption delivered to
it and a register for the recordation of the names and
addresses of the Lenders, and the Maximum Credit Amount of,
and principal amount of the Loans and LC Disbursements owing
to, each Lender pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the
Issuing Bank and the Lenders may treat each Person whose name
is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank and
any Lender, at any reasonable time and from time to time upon
reasonable prior notice. In connection with any changes to the
Register, if necessary, the Administrative Agent will reflect
the revisions on Annex I and forward a copy of such revised
Annex I to the Borrower, the Issuing Bank and each Lender.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee,
the assignee's completed Administrative Questionnaire and, if
required hereunder, applicable tax forms (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).
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(c) (i) Any Lender may, without the consent of the Borrower,
the Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender's
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Administrative Agent, the Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in 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, without limitation, any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section
12.04(d) shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.
(e) Notwithstanding any other provisions of this Section
12.04, no transfer or assignment of the interests or obligations of any Lender
or any grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower and the Guarantors to file a
registration statement with the SEC or to qualify the Loans under the "Blue Sky"
laws of any state.
Section 12.05 Survival; Revival; Reinstatement.
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(a) All covenants, agreements, representations and warranties
made by the Borrower herein and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans and issuance of any Letters of Credit, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, any other Agent, the Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 and ARTICLE XI shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement, any other
Loan Document or any provision hereof or thereof.
(b) To the extent that any payments on the Indebtedness or
proceeds of any collateral are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver or other Person under any bankruptcy law, common
law or equitable cause, then to such extent, the Indebtedness so satisfied shall
be revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.
Section 12.06 Counterparts; Integration; Effectiveness.
(a) This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.
(b) This Agreement, the other Loan Documents and any separate
letter agreements with respect to fees payable to the Administrative Agent
constitute the entire contract among the parties relating to the subject matter
hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof and
thereof. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
(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.
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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 Subsidiary against any of and all the obligations of the
Borrower or any Subsidiary owed to such Lender now or hereafter existing under
this Agreement or any other Loan Document, irrespective of whether or not such
Lender shall have made any demand under this Agreement or any other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 12.08 are in addition to other rights and remedies
(including other rights of setoff) which such Lender or its Affiliates may have.
Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS(a) . THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT
THAT UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE,
RECEIVE, RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE
WHERE SUCH LENDER IS LOCATED. CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH
REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY
ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF
AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE
AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN
ANY COURT OTHERWISE HAVING JURISDICTION.
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(c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS
SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH
SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN
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 OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.
Section 12.10 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 12.11 Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement or any other
Loan Document, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section 12.11, to (i) any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any Swap Agreement relating to the Borrower and its
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obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 12.11 or (ii) becomes available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis from a source other than
the Borrower. For the purposes of this Section 12.11, "Information" means all
information received from the Borrower or any Subsidiary relating to the
Borrower or any Subsidiary and their businesses, other than any such information
that is available to the Administrative Agent, the Issuing Bank or any Lender on
a nonconfidential basis prior to disclosure by the Borrower or a Subsidiary;
provided that, in the case of information received from the Borrower or any
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Section 12.12 Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Lender may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or otherwise shall be canceled automatically by such Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and
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(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.12. To the extent that Chapter 303 of
the Texas Finance Code is relevant for the purpose of determining the Highest
Lawful Rate applicable to a Lender, such Lender elects to determine the
applicable rate ceiling under such Chapter by the weekly ceiling from time to
time in effect. Chapter 346 of the Texas Finance Code does not apply to the
Borrower's obligations hereunder.
Section 12.13 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING 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 Collateral Matters; Swap Agreements. The benefit of the
Security Instruments and of the provisions of this Agreement relating to any
collateral securing the Indebtedness shall also extend to and be available to
those Lenders or their Affiliates which are counterparties to any Swap Agreement
with the Borrower or any of its Subsidiaries on a pro rata basis in respect of
any obligations of the Borrower or any of its Subsidiaries which arise under any
such Swap Agreement while such Person or its Affiliate is a Lender, but only
while such Person or its Affiliate is a Lender, including any Swap Agreements
between such Persons in existence prior to the date hereof. No Lender or any
Affiliate of a Lender shall have any voting rights under any Loan Document as a
result of the existence of obligations owed to it under any such Swap
Agreements.
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Section 12.15 No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or
materialsman) shall have any rights, claims, remedies or privileges hereunder or
under any other Loan Document against the Administrative Agent, any other Agent,
the Issuing Bank or any Lender for any reason whatsoever. There are no third
party beneficiaries.
Section 12.16 USA Patriot Act Notice. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the Act.
[SIGNATURES BEGIN NEXT PAGE]
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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: ▇▇▇▇▇▇ ▇▇▇▇▇▇ NORTH, L.L.C.
BY: Aurora Energy, Ltd., its sole manager
By:
----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
GUARANTORS: AURORA ENERGY, LTD.
By:
----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
CADENCE RESOURCES CORPORATION
By:
----------------------------------------------
Name:
Title:
Signature Page - Credit Agreement - 1
ADMINISTRATIVE AGENT: BNP PARIBAS,
as Administrative Agent
By:
----------------------------------------------
Name:
Title:
By:
----------------------------------------------
Name:
Title:
Signature Page - Credit Agreement - 2
LENDERS: BNP PARIBAS
By:
----------------------------------------------
Name:
Title:
By:
----------------------------------------------
Name:
Title:
Signature Page - Credit Agreement - 3
ANNEX I
LIST OF MAXIMUM CREDIT AMOUNTS
Aggregate Maximum Credit Amounts
---------------------- ------------------------- -----------------------------
Name of Lender Applicable Percentage Maximum Credit Amount
---------------------- ------------------------- -----------------------------
BNP Paribas 100% $100,000,000
---------------------- ------------------------- -----------------------------
TOTAL 100.00% $100,000,000
---------------------- ------------------------- -----------------------------
Annex I-1
EXHIBIT A
FORM OF NOTE
$[ ] [ ], 200[ ]
FOR VALUE RECEIVED, ▇▇▇▇▇▇ ▇▇▇▇▇▇ North, L.L.C., a Michigan limited
liability company (the "Borrower") hereby promises to pay to the order of [ ]
(the "Lender"), at the principal office of BNP Paribas (the "Administrative
Agent"), the principal sum of [ ] Dollars ($[ ]) (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Loans made by the Lender to
the Borrower under the Credit Agreement, as hereinafter defined), in lawful
money of the United States of America and in immediately available funds, on the
dates and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of such Loan until
such Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of
each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, may be endorsed by the Lender on the
schedules attached hereto or any continuation thereof or on any separate record
maintained by the Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender's or the Borrower's rights or obligations
in respect of such Loans or affect the validity of such transfer by any Lender
of this Note.
This Note is one of the Notes referred to in the Credit Agreement dated as
of January 31, 2006 among the Borrower, Cadence, Aurora, the Administrative
Agent, and the other agents and lenders signatory thereto (including the
Lender), and evidences Loans made by the Lender thereunder (such Credit
Agreement as the same may be amended, supplemented or restated from time to
time, the "Credit Agreement"). Capitalized terms used in this Note have the
respective meanings assigned to them in the Credit Agreement.
This Note is issued pursuant to, and is subject to the terms and
conditions set forth in, the Credit Agreement and is entitled to the benefits
provided for in the Credit Agreement and the other Loan Documents. The Credit
Agreement provides for the acceleration of the maturity of this Note upon the
occurrence of certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.
Exhibit A-1
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS.
▇▇▇▇▇▇ ▇▇▇▇▇▇ NORTH, L.L.C.
BY: Aurora Energy, Ltd., its sole manager
By:
------------------------------------
Name:
Title:
Exhibit A-2
EXHIBIT B
FORM OF BORROWING REQUEST
[ ], 200[ ]
▇▇▇▇▇▇ ▇▇▇▇▇▇ North, L.L.C., a Michigan limited liability company (the
"Borrower"), pursuant to Section 2.03 of the Credit Agreement dated as of
January 31, 2006 (together with all amendments, restatements, supplements or
other modifications thereto, the "Credit Agreement") among the Borrower,
Cadence, Aurora, BNP Paribas, as Administrative Agent and the other agents and
lenders (the "Lenders") which are or become parties thereto (unless otherwise
defined herein, each capitalized term used herein is defined in the Credit
Agreement), hereby requests a Borrowing as follows:
(i) Aggregate amount of the requested Borrowing is $[ ];
(ii) Date of such Borrowing is [ ], 200[ ];
(iii) Requested Borrowing is to be [an ABR Borrowing] [a
Eurodollar Borrowing];
(iv) In the case of a Eurodollar Borrowing, the initial
Interest Period applicable thereto is [ ];
(v) Amount of Borrowing Base in effect on the date hereof is
$[ ];
(vi) Total Revolving Credit Exposures on the date hereof
(i.e., outstanding principal amount of Loans and total LC Exposure) is $[ ]; and
(vii) Pro forma total Revolving Credit Exposures (giving
effect to the requested Borrowing) is $[ ]; and
(viii) Location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of Section
2.05 of the Credit Agreement, is as follows:
[ ______________________________ ]
[ ______________________________ ]
[ ______________________________ ]
[ ______________________________ ]
[ ______________________________ ]
Exhibit B-1
The undersigned certifies that he/she is the [ ] of the Borrower, and that
as such he/she is authorized to execute this certificate on behalf of the
Borrower. The undersigned further certifies, represents and warrants on behalf
of the Borrower that the Borrower is entitled to receive the requested Borrowing
under the terms and conditions of the Credit Agreement.
▇▇▇▇▇▇ ▇▇▇▇▇▇ NORTH, L.L.C.
BY: Aurora Energy, Ltd., its sole manager
By:
------------------------------------
Name:
Title:
Exhibit B-2
EXHIBIT C
FORM OF INTEREST ELECTION REQUEST
[ ], 200[ ]
▇▇▇▇▇▇ ▇▇▇▇▇▇ North, L.L.C., a Michigan limited liability company (the
"Borrower"), pursuant to Section 2.04 of the Credit Agreement dated as of
January 31, 2006 (together with all amendments, restatements, supplements or
other modifications thereto, the "Credit Agreement") among the Borrower,
Cadence, Aurora, BNP Paribas, as Administrative Agent and the other agents and
lenders (the "Lenders") which are or become parties thereto (unless otherwise
defined herein, each capitalized term used herein is defined in the Credit
Agreement), hereby makes an Interest Election Request as follows:
(i) The Borrowing to which this Interest Election Request applies, and if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information specified pursuant to (iii) and (iv) below shall be specified
for each resulting Borrowing) is [ ];
(ii) The effective date of the election made pursuant to this Interest
Election Request is [ ], 200[ ];[and]
(iii) The resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar
Borrowing][; and]
[(iv) [If the resulting Borrowing is a Eurodollar Borrowing] The Interest
Period applicable to the resulting Borrowing after giving effect to such
election is [ ]].
The undersigned certifies that he/she is the [ ] of the Borrower, and that
as such he/she is authorized to execute this certificate on behalf of the
Borrower. The undersigned further certifies, represents and warrants on behalf
of the Borrower that the Borrower is entitled to receive the requested
continuation or conversion under the terms and conditions of the Credit
Agreement.
▇▇▇▇▇▇ ▇▇▇▇▇▇ NORTH, L.L.C.
BY: Aurora Energy, Ltd., its sole manager
By:
------------------------------------
Name:
Title:
Exhibit C-1
EXHIBIT D
FORM OF
COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he/she is the [ ] of ▇▇▇▇▇▇ ▇▇▇▇▇▇
North, L.L.C., a Michigan limited liability company (the "Borrower"), and that
as such he/she is authorized to execute this certificate on behalf of the
Borrower. With reference to the Credit Agreement dated as of January 31, 2006
(together with all amendments, restatements, supplements or other modifications
thereto being the "Agreement") among the Borrower, Cadence, Aurora, BNP Paribas,
as Administrative Agent, and the other agents and lenders (the "Lenders") which
are or become a party thereto, and such Lenders, the undersigned represents and
warrants as follows (each capitalized term used herein having the same meaning
given to it in the Agreement unless otherwise specified):
(a) The representations and warranties of the Borrower contained in
Article VII of the Agreement and in the Loan Documents and otherwise made in
writing by or on behalf of the Borrower pursuant to the Agreement and the Loan
Documents were true and correct when made, and are repeated at and as of the
time of delivery hereof and are true and correct in all material respects at and
as of the time of delivery hereof, except to the extent such representations and
warranties are expressly limited to an earlier date or the Majority Lenders have
expressly consented in writing to the contrary.
(b) The Borrower has performed and complied with all agreements and
conditions contained in the Agreement and in the Loan Documents required to be
performed or complied with by it prior to or at the time of delivery hereof [or
specify default and describe].
(c) Since [same date as audited financials in Section 7.04(a)], no change
has occurred, either in any case or in the aggregate, in the condition,
financial or otherwise, of the Borrower or any Subsidiary which could reasonably
be expected to have a Material Adverse Effect [or specify event].
(d) There exists no Default or Event of Default [or specify Default and
describe].
(e) Attached hereto are the detailed computations necessary to determine
whether the Borrower is in compliance with Section 9.01 and Section 8.14 as of
the end of the [fiscal quarter][fiscal year] ending [ ].
EXECUTED AND DELIVERED this [ ] day of [ ].
▇▇▇▇▇▇ ▇▇▇▇▇▇ NORTH, L.L.C.
BY: Aurora Energy, Ltd., its sole manager
By:
------------------------------------
Name:
Title:
Exhibit D-1
EXHIBIT E-1
SECURITY INSTRUMENTS
1) Guaranty and Collateral Agreement dated as of January 31, 2006 by the
Borrower and Aurora Energy, Ltd., Cadence Resources Corporation, as the
Guarantors, in favor of the Administrative Agent and the Lenders.
2) Financing Statements in respect of item 1, by
a) the Borrower
b) Aurora Energy, Ltd.
c) Cadence Resources Corporation
3) Stock Powers delivered in respect of item 1.
a) Aurora Energy, Ltd.
4) Deed of Trust, Mortgage, Assignment of As-Extracted Collateral,
Security Agreement and Financing Statement dated as of January 31, 2006 by the
Borrower, as mortgagor, in favor of ▇▇▇▇▇ ▇▇▇▇▇▇, as Trustee, for the benefit
the Administrative Agent, the Lenders and others.
5) Financing Statement in respect of item 4.
6) Fee Letter with Administrative Agent
Exhibit E-1-1
EXHIBIT E-2
FORM OF GUARANTY AND COLLATERAL AGREEMENT
Exhibit E-2-1
EXHIBIT F
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the "Assignment and
Assumption") is dated as of the Effective Date set forth below and is entered
into by and between [Insert name of Assignor] (the "Assignor") and [Insert name
of Assignee] (the "Assignee"). Capitalized terms used but not defined herein
shall have the meanings given to them in the Credit Agreement identified below
(as amended, the "Credit Agreement"), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.
For an agreed consideration, the Assignor hereby irrevocably
sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases
and assumes from the Assignor, subject to and in accordance with the Standard
Terms and Conditions and the Credit Agreement, as of the Effective Date inserted
by the Administrative Agent as contemplated below (i) all of the Assignor's
rights and obligations in its capacity as a Lender under the Credit Agreement
and any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit and guarantees
included in such facilities) and (ii) to the extent permitted to be assigned
under applicable law, all claims, suits, causes of action and any other right of
the Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the "Assigned Interest"). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.
1. Assignor: ______________________________
2. Assignee: ______________________________
[and is an Affiliate/Approved Fund of [identify Lender]]
3. Borrower: ▇▇▇▇▇▇ ▇▇▇▇▇▇ North, L.L.C.
4. Administrative Agent: BNP Paribas, as the
administrative agent under the Credit
Agreement
5. Credit Agreement: The Credit Agreement dated
as of January 31, 2006 among ▇▇▇▇▇▇ ▇▇▇▇▇▇
North, L.L.C., Cadence, Aurora, the Lenders
parties thereto, BNP Paribas, as
Administrative Agent, and the other agents
parties thereto
Exhibit F-1
6. Assigned Interest:
------------------------------ ----------------------------- ----------------------------- ---------------------------
Commitment Assigned Aggregate Amount of Amount of Commitment/Loans Percentage Assigned of
Commitment/Loans for all Assigned Commitment/Loans
Lenders
------------------------------ ----------------------------- ----------------------------- ---------------------------
$ $ %
------------------------------ ----------------------------- ----------------------------- ---------------------------
$ $ %
------------------------------ ----------------------------- ----------------------------- ---------------------------
$ $ %
------------------------------ ----------------------------- ----------------------------- ---------------------------
Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:______________________________
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:______________________________
Title:
Exhibit F-2
Consented to and Accepted:
BNP Paribas, as
Administrative Agent
By_________________________________
Title:
By_________________________________
Title:
Consented to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ NORTH, L.L.C.
BY: Aurora Energy, Ltd., its sole manager
By:
------------------------------------
Name:
Title:
Exhibit ▇-▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT AGREEMENT
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that
(i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it satisfies the requirements, if any, specified in the Credit
Agreement that are required to be satisfied by it in order to acquire the
Assigned Interest and become a Lender, (iii) from and after the Effective Date,
it shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 8.01 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to
the terms of the Credit Agreement, duly completed and executed by the Assignee;
and (b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
2. Payments. From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignor for amounts which have accrued to but excluding the Effective Date and
to the Assignee for amounts which have accrued from and after the Effective
Date.
3. General Provisions. This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the law
of the State of Texas.
Exhibit F-4
SCHEDULE 7.05
LITIGATION
None
Schedule 7.05-1
SCHEDULE 7.15
SUBSIDIARIES AND PARTNERSHIPS
See Attached
Schedule 7.15-1
SCHEDULE 7.19
GAS IMBALANCES
None
Schedule 7.19-1
SCHEDULE 7.20
MARKETING CONTRACTS
1. Base Contract for Sale and Purchase of Natural Gas dated April 1, 2005 by and
between CIMA Energy, Ltd. and ▇▇▇▇▇▇ ▇▇▇▇▇▇ North, L.L.C.
2. Addendum No. 1 to Base Contract for Sale and Purchase of Natural Gas dated
February 23, 2004 by and between Aurora Energy, L.L.C. and Charlevoix Energy
Trading, LLC.
3. Addendum and Attachement A: Special Provisions to the NAESB Base Contract for
Sale and Purchase of Natural Gas dated January 3, 2005 by and between CMS Energy
Resource Management Company and Aurora Energy Ltd.
Schedule 7.20-1
SCHEDULE 7.21
SWAP AGREEMENTS
None
Schedule 7.21-1
SCHEDULE 9.05
INVESTMENTS
None
Schedule 9.05-1