Exhibit 10.3
$50,000,000
SUBORDINATED CREDIT AGREEMENT
Among
ABRAXAS ENERGY PARTNERS, L.P.
as Borrower,
THE LENDERS PARTY HERETO FROM TIME TO TIME
as Lenders,
SOCIETE GENERALE
as Administrative Agent,
and
THE ROYAL BANK OF CANADA
as Syndication Agent
January 31, 2008
SG Americas Securities, LLC as Sole Bookrunner and Arranger
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...........................................................1
Section 1.01 Certain Defined Terms.................................................................1
Section 1.02 Computation of Time Periods..........................................................22
Section 1.03 Accounting Terms; Changes in GAAP....................................................22
Section 1.04 Types of Advances....................................................................22
Section 1.05 Miscellaneous........................................................................23
ARTICLE II CREDIT FACILITIES.........................................................................23
Section 2.01 Commitment for Advances..............................................................23
Section 2.02 Borrowing Base.......................................................................24
Section 2.03 Method of Borrowing..................................................................27
Section 2.04 Reduction of the Commitments.........................................................30
Section 2.05 Prepayment of Advances...............................................................30
Section 2.06 Repayment of Advances................................................................33
Section 2.07 Letters of Credit....................................................................33
Section 2.08 Fees.................................................................................37
Section 2.09 Interest.............................................................................37
Section 2.10 Payments and Computations............................................................39
Section 2.11 Sharing of Payments, Etc.............................................................40
Section 2.12 Breakage Costs.......................................................................40
Section 2.13 Increased Costs......................................................................40
Section 2.14 Taxes................................................................................42
ARTICLE III CONDITIONS OF LENDING.....................................................................44
Section 3.01 Conditions Precedent to Initial Borrowings and
the Initial Letter of Credit.........................................................44
Section 3.02 Conditions Precedent to All Borrowings...............................................47
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................48
Section 4.01 Existence; Subsidiaries..............................................................48
Section 4.02 Power................................................................................48
Section 4.03 Authorization and Approvals..........................................................49
Section 4.04 Enforceable Obligations..............................................................49
Section 4.05 Financial Statements.................................................................49
Section 4.06 True and Complete Disclosure.........................................................50
Section 4.07 Litigation; Compliance with Laws.....................................................50
Section 4.08 Use of Proceeds......................................................................50
Section 4.09 Investment Company Act...............................................................51
Section 4.10 Federal Power Act....................................................................51
Section 4.11 Taxes................................................................................51
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Section 4.12 Pension Plans........................................................................51
Section 4.13 Condition of Property; Casualties....................................................52
Section 4.14 No Burdensome Restrictions; No Defaults..............................................52
Section 4.15 Environmental Condition..............................................................52
Section 4.16 Permits, Licenses, Etc...............................................................53
Section 4.17 Gas Contracts........................................................................54
Section 4.18 Liens; Titles, Leases, Etc...........................................................54
Section 4.19 Solvency and Insurance...............................................................54
Section 4.20 Hedging Agreements...................................................................54
Section 4.21 Material Agreements..................................................................54
ARTICLE V AFFIRMATIVE COVENANTS.....................................................................55
Section 5.01 Compliance with Laws, Etc............................................................55
Section 5.02 Maintenance of Insurance.............................................................55
Section 5.03 Preservation of Existence, Etc.......................................................56
Section 5.04 Payment of Taxes, Etc................................................................56
Section 5.05 Visitation Rights....................................................................57
Section 5.06 Reporting Requirements...............................................................57
Section 5.07 Maintenance of Property..............................................................61
Section 5.08 Agreement to Pledge..................................................................61
Section 5.09 Use of Proceeds......................................................................61
Section 5.10 Title Opinions.......................................................................61
Section 5.11 Further Assurances; Cure of Title Defects............................................62
Section 5.12 Hedging Arrangements.................................................................62
Section 5.13 Deposit Accounts.....................................................................62
ARTICLE VI NEGATIVE COVENANTS........................................................................63
Section 6.01 Liens, Etc...........................................................................63
Section 6.02 Debts, Guaranties, and Other Obligations.............................................65
Section 6.03 Agreements Restricting Liens and Distributions.......................................66
Section 6.04 Merger or Consolidation; Asset Sales.................................................66
Section 6.05 Restricted Payments..................................................................66
Section 6.06 Investments..........................................................................67
Section 6.07 Affiliate Transactions...............................................................68
Section 6.08 Compliance with ERISA................................................................68
Section 6.09 Sale-and-Leaseback...................................................................69
Section 6.10 Change of Business...................................................................69
Section 6.11 Organizational Documents, Name Change................................................69
Section 6.12 Use of Proceeds; Letters of Credit...................................................69
Section 6.13 Gas Imbalances, Take-or-Pay or Other Prepayments.....................................69
Section 6.14 Limitation on Hedging................................................................70
Section 6.15 Additional Subsidiaries..............................................................70
Section 6.16 Account Payables.....................................................................70
Section 6.17 Current Ratio........................................................................70
Section 6.18 Interest Coverage Ratio..............................................................71
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Section 6.19 Initial Acquisition Instruments/Private Placement Documents..........................71
ARTICLE VII EVENTS OF DEFAULT; REMEDIES...............................................................71
Section 7.01 Events of Default....................................................................71
Section 7.02 Optional Acceleration of Maturity....................................................73
Section 7.03 Automatic Acceleration of Maturity...................................................74
Section 7.04 Right of Setoff......................................................................74
Section 7.05 Non-exclusivity of Remedies..........................................................75
Section 7.06 Application of Proceeds..............................................................75
ARTICLE VIII THE ADMINISTRATIVE AGENT..................................................................76
Section 8.01 Appointment and Authority............................................................76
Section 8.02 Rights as a Lender...................................................................76
Section 8.03 Exculpatory Provisions...............................................................76
Section 8.04 Reliance by Administrative Agent.....................................................77
Section 8.05 Delegation of Duties.................................................................77
Section 8.06 Successor Administrative Agent.......................................................78
Section 8.07 Non-Reliance on Administrative Agent and Other Lenders...............................79
Section 8.08 No Other Duties, etc.................................................................79
Section 8.09 Collateral Matters...................................................................79
ARTICLE IX MISCELLANEOUS.............................................................................80
Section 9.01 Amendments, Etc......................................................................80
Section 9.02 Notices, Etc.........................................................................80
Section 9.03 No Waiver; Cumulative Remedies.......................................................82
Section 9.04 Costs and Expenses...................................................................82
Section 9.05 Indemnification......................................................................83
Section 9.06 Reimbursement by Lenders.............................................................83
Section 9.07 Waiver of Damages....................................................................84
Section 9.08 Successors and Assigns...............................................................84
Section 9.09 Confidentiality......................................................................87
Section 9.10 Counterparts; Effectiveness..........................................................87
Section 9.11 Survival of Representations, etc.....................................................87
Section 9.12 Severability.........................................................................88
Section 9.13 Interest Rate Limitation.............................................................88
Section 9.14 Governing Law........................................................................88
Section 9.15 Submission to Jurisdiction; Waiver of Venue; Service of Process......................88
Section 9.16 Waiver of Jury Trial.................................................................89
Section 9.17 USA Patriot Act......................................................................89
Section 9.18 Integration..........................................................................89
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EXHIBITS:
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Guaranty
Exhibit D - Form of Intercreditor Agreement
Exhibit E - Form of Mortgage
Exhibit F - Form of Note
Exhibit G - Form of Notice of Borrowing
Exhibit H - Form of Notice of Conversion or Continuation
Exhibit I - Form of Pledge Agreement
Exhibit J - Form of Security Agreement
Exhibit K - Form of Transfer Letters
SCHEDULES:
Schedule I - Addresses and Commitments
Schedule 3.01(p) - Hydrocarbon Hedge Agreements
Schedule 4.01 - Subsidiaries
Schedule 4.05 - Existing Debt
Schedule 4.07 - Litigation
Schedule 4.17 - Gas Imbalances
Schedule 4.21 - Material Agreements
Schedule 6.07 - Affiliate Transactions
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SUBORDINATED CREDIT AGREEMENT
This Subordinated Credit Agreement dated as of January 31, 2008 is
among ABRAXAS ENERGY PARTNERS, L.P., a Delaware limited partnership
("Borrower"), the lenders party hereto from time to time as Lenders (as defined
below), and SOCIETE GENERALE, as Administrative Agent (as defined below).
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Certain Defined Terms. As used in this Agreement, the term
defined above shall have the meaning set forth therein and the following terms
shall have the following meanings:
"APC" means Abraxas Petroleum Corporation, a Nevada corporation.
"Acceptable Security Interest" in any Property means a Lien which (a)
exists in favor of the Administrative Agent for the benefit of the Secured
Parties, (b) is superior to all Liens or rights of any other Person in the
Property encumbered thereby other than Permitted Subject Liens, (c) secures the
Obligations, and (d) is perfected and enforceable.
"Acquisition" means the purchase by the Borrower or any of its
Subsidiaries of any business, including the purchase of associated assets or
operations or of stock (or other ownership interests) of a Person.
"Acquisition Assets" means the assets and other Property being sold by
the Sellers and being acquired by the Borrower pursuant to the Purchase and Sale
Agreement.
"Act" is defined in Section 9.17.
"Adjusted Reference Rate" means, for any day, the fluctuating rate per
annum of interest equal to the greater of (a) the Reference Rate in effect on
such day and (b) the Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Administrative Agent" means Societe Generale, in its capacity as
agent pursuant to Article VIII, and any successor agent pursuant to Section
8.06.
"Administrative Questionnaire" means an administrative questionnaire
in a form supplied by the Administrative Agent.
"Advance" means the advance by a Lender to the Borrower of such
Lender's Pro Rata Share of the Loan pursuant to Section 2.01(a).
"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.
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"Agreement" means this Subordinated Credit Agreement, as the same may
be amended, supplemented, restated, extended, substituted, increased, replaced,
renewed, refinanced or otherwise modified from time to time.
"Applicable Lending Office" means (a) with respect to any Lender, the
office, branch, subsidiary, affiliate or correspondent bank of such Lender
specified in its Administrative Questionnaire or such other office, branch,
subsidiary, affiliate or correspondent bank as such Lender may from time to time
specify to the Borrower and the Administrative Agent from time to time and (b)
with respect to the Administrative Agent, the address specified for such Person
on Schedule I or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such party in a notice to
the other parties.
"Applicable Margin" means, with respect to any Advance, (a) during
such times as any Event of Default exists, 3% per annum plus the rate per annum
set forth below for the relevant Type of such Advance based on the applicable
date, and (b) at all other times, the rate per annum set forth below for the
relevant Type of such Advance based on the applicable date. The Applicable
Margin for any Advance shall change when and as the relevant date changes and
when and as any such Event of Default commences or terminates.
----------------------------------------------- ----------------------------------- -------------------------------
Date Eurodollar Rate Advances Base Rate Advances
----------------------------------------------- ----------------------------------- -------------------------------
Closing Date to April 30, 2008 5.00% 4.00%
----------------------------------------------- ----------------------------------- -------------------------------
April 30, 2008 to July 31, 2008 5.50% 4.50%
----------------------------------------------- ----------------------------------- -------------------------------
July 31, 2008 or any date thereafter 6.50% 5.50%
----------------------------------------------- ----------------------------------- -------------------------------
"Approved Fund" means any Fund 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.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Administrative
Agent, in substantially the form of the attached Exhibit A or any other form
approved by the Administrative Agent.
"Available Cash" means, with respect to any fiscal quarter:
(a) the sum of (i) all cash and cash equivalents of the Borrower on
hand (other than Cash Security) at the end of such fiscal quarter and (ii) all
additional cash and cash equivalents the Borrower has on hand (other than Cash
Security) on the date of determination of Available Cash with respect to such
fiscal quarter resulting from working capital borrowings made subsequent to the
end of such fiscal quarter, less
(b) the amount of all cash reserves established by the board of
managers of, or the equivalent governing body of, the General Partner in their
reasonable discretion to (i) provide for the proper conduct of the business of
the Borrower and its Subsidiaries (including reserves for future maintenance and
capital expenditures including drilling and for anticipated future credit needs
of the Borrower and its Subsidiaries, if necessary), (ii) comply with applicable
2
law or any loan agreement, security agreement, mortgage, debt instrument or
other agreement or obligation to which the Borrower or any Subsidiary is a party
or bound by which it is bound or its assets are subject, and (iii) provide funds
for Restricted Payments with respect to any one or more of the next four fiscal
quarters.
"Borrower" shall have the meaning set forth in the preamble hereof.
"Borrowing" means, subject to Section 2.03(c)(ii), a borrowing
consisting of simultaneous Advances of the same Type made by each Lender
pursuant to Section 2.03(a), continued by each Lender pursuant to Section
2.03(b), or Converted by each Lender to Advances of a different Type pursuant to
Section 2.03(b).
"Borrowing Base" shall have the definition given to such term in the
Senior Credit Agreement.
"Borrowing Base Deficiency" shall have the definition given to such
term in the Senior Credit Agreement.
"Business Day" means a day of the year on which banks are not required
or authorized to close in Houston, Texas and New York, New York, and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on by banks in the London interbank market.
"Capital Leases" means, as applied to any Person, any lease of any
Property by such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on the balance
sheet of such Person.
"Cash Collateral Account" shall have the definition given to such term
in the Senior Credit Agreement.
"Cash Security" means (a) all cash and cash equivalents securing
obligations of Borrower or any Subsidiary, including obligations under Hedging
Contracts and obligations with respect to letters of credit but excluding
Obligations, and (b) all cash and cash equivalents held in the Cash Collateral
Account pursuant to the Senior Credit Agreement.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, state and local analogs, and all rules
and regulations and requirements thereunder in each case as now or hereafter in
effect.
"Change in Control" shall mean the occurrence of any of the following
events:
(a) the occurrence of any transaction, the result of which is that (i)
the General Partner is no longer the sole general partner of the Borrower, or
(ii) the Borrower ceases to own, either directly or indirectly, 100% of the
Equity Interest in any Subsidiary;
(b) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) other than a Permitted Holder becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person or group shall be deemed to have "beneficial ownership" of
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all securities that such person or group has the right to acquire (such right,
an "option right"), whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of 25% or more of the Equity
Interest of the Borrower; provided, that a "group of persons" shall not include
the underwriter in any firm underwriting undertaken in connection with any
public offering of the Borrower; or
(c) during any period of 12 consecutive months, a majority of the
members of the board of managers or other equivalent governing body of the
General Partner cease to be composed of individuals (i) who were members of that
board or equivalent governing body on the first day of such period, (ii) whose
election or nomination to that board or equivalent governing body was approved
by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body.
"Change in Law" means the occurrence, after the date of this
Agreement, of any of the following: (a) the adoption or taking effect of any
law, rule, regulation or treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, guideline
or directive (whether or not having the force of law) with regard to any law,
regulation or treaty by any Governmental Authority.
"Closing Date" means the date on which all of the conditions in
Section 3.01 have been met or waived in writing as permitted herein.
"Closing Date Acquisition" means the acquisition by the Borrower of
the Acquisition Assets pursuant to the Purchase and Sale Agreement.
"Closing Date Acquisition Instruments" means, collectively, the
Purchase and Sale Agreement and all other documents executed and delivered by
the Sellers and the Borrower in connection with the Closing Date Acquisition.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Collateral" means (a) all "Collateral", "Pledged Collateral" and
"Mortgaged Properties" (as defined in each of the Mortgages, the Security
Agreements, and the Pledge Agreement, as applicable) or similar terms used in
the Security Instruments, and (b) all amounts contained in the Borrower's and
its Subsidiaries' bank accounts.
"Commitment" means, for any Lender, the amount set opposite such
Lender's name on the Schedule I as its Commitment, or if such Lender has entered
into any Assignment and Acceptance, as set forth for such Lender as its
Commitment in the Register maintained by the Administrative Agent pursuant to
Section 9.08(c), as such amount may be reduced or terminated pursuant to Section
2.04 or Article VII or otherwise under this Agreement. The amount of the
aggregate Commitments is $50,000,000.
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"Company Group" shall mean Borrower, General Partner and each of their
respective Subsidiaries.
"Compliance Certificate" means a compliance certificate in the form of
the attached Exhibit B signed by a Responsible Officer of the Borrower.
"Contribution Agreement" means that certain Contribution, Conveyance
and Assumption Agreement, dated as of May 25, 2007, entered into by and among
APC, the General Partner, the Borrower, Abraxas Energy Investments, LLC, a Texas
limited liability company, and the Operating Company, as amended in accordance
with the terms hereof.
"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.
"Controls", "Controlled by", "Controlling" and "Controlled" have meanings
correlative thereto. Without limiting the generality of the foregoing, a Person
shall be deemed to be Controlled by another Person if such other Person
possesses, directly or indirectly, the power to vote 10% or more of the
securities having ordinary voting power for the election of directors, managing
general partners or the equivalent.
"Controlled Group" means all members of a controlled group of
corporations and all businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a single employer
under Section 414 of the Code.
"Convert," "Conversion," and "Converted" each refers to a conversion
of Advances of one Type into Advances of another Type pursuant to Section
2.03(b).
"Debt," for any Person, means without duplication: (a) indebtedness of
such Person for borrowed money; (b) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) obligations of such
Person to pay the deferred purchase price of Property or services (including
obligations that are non-recourse to the credit of such Person but are secured
by the assets of such Person, but excluding trade accounts payable); (d)
obligations of such Person as lessee under Capital Leases; (e) obligations of
such Person under letters of credit and agreements relating to the issuance of
letters of credit or acceptance financing; (f) obligations of such Person under
any Hedge Contract; (g) obligations of such Person owing in respect of
redeemable preferred stock or other preferred equity interest of such Person;
(h) any obligations of such Person owing in connection with any volumetric or
production prepayments; (i) obligations of such Person under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) of such
Person to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (a) through (h) above; (j) indebtedness or obligations of
others of the kinds referred to in clauses (a) through (i) secured by any Lien
on or in respect of any Property of such Person; and (k) all liabilities of such
Person in respect of unfunded vested benefits under any Plan.
"Default" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would become an Event of Default.
5
"Disposition" means a sale, lease, transfer, assignment, Farmout,
conveyance, release, surrender, or other disposition of Property (including any
working interest, overriding royalty interest, production payment, net profits
interest, royalty interest, or mineral fee interest) in any transaction or
series of transactions.
"Dollars" and "$" means lawful money of the United States of America.
"EBITDA" means, for any period, without duplication, (a) consolidated
Net Income for such period plus (b) to the extent deducted in determining
consolidated Net Income, Interest Expense, taxes, depreciation, amortization,
depletion, and other non-cash charges for such period (including any provision
for the reduction in the carrying value of assets (including Hedge Contracts)
recorded in accordance with GAAP and including non-cash charges resulting from
the requirements of SFAS 133 or 143 and any non-cash expenses incurred pursuant
to SFAS 123R) for such period minus (c) all non-cash items of income which were
included in determining such consolidated Net Income (including non-cash income
resulting from the requirements of SFAS 133 or 143).
"Eligible Assignee" means (a) a Lender, (b) an Affiliate of a Lender,
(c) an Approved Fund, (d) a commercial bank organized under the laws of the
United States, or any state thereof, and having total assets in excess of
$250,000,000 and approved by the Administrative Agent in its sole discretion,
which approval shall not be unreasonably withheld, (e) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development or a political subdivision
of any such country and which has total assets in excess of $250,000,000,
provided that such bank is acting through a branch or agency located in the
United States and such bank is approved by the Administrative Agent in its sole
discretion, which approval shall not be unreasonably withheld, (f) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans or
securities in the ordinary course of its business and having (together with its
Affiliates) total assets in excess of $250,000,000 and approved by the
Administrative Agent in its sole discretion, which approval shall not be
unreasonably withheld, (g) any other Person (other than a natural person)
approved by (i) the Administrative Agent in its sole discretion, which approval
shall not be unreasonably withheld and (ii) unless a Default has occurred and is
continuing at the time any assignment is effected pursuant to this Agreement,
the Borrower, which approval shall not be unreasonably withheld; provided that
notwithstanding the foregoing, "Eligible Assignee" shall not include the
Borrower or any Affiliate or Subsidiary of a Loan Party.
"Engineering Report" means either an Independent Engineering Report or
an Internal Engineering Report and includes the Initial Engineering Reports
where applicable.
"Environment" or "Environmental" shall have the meanings set forth in
42 U.S.C. 9601(8) (1988).
"Environmental Claim" means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
6
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law.
"Environmental Law" means, as to the Borrower or its Subsidiaries, all
Legal Requirements or common law theories applicable to the Borrower or its
Subsidiaries arising from, relating to, or in connection with the Environment,
health, or safety, including CERCLA, relating to (a) pollution, contamination,
injury, destruction, loss, protection, cleanup, reclamation or restoration of
the air, surface water, groundwater, land surface or subsurface strata, or other
natural resources; (b) solid, gaseous or liquid waste generation, treatment,
processing, recycling, reclamation, cleanup, storage, disposal or
transportation; (c) exposure to pollutants, contaminants, hazardous, infectious,
or toxic substances, materials or wastes; (d) the safety or health of employees;
or (e) the manufacture, processing, handling, transportation, distribution in
commerce, use, storage or disposal of hazardous, infectious, or toxic
substances, materials or wastes.
"Environmental Liability" shall mean all liabilities, obligations,
damages, losses, claims, actions, suits, judgments, orders, fines, penalties,
fees, expenses and costs (including administrative oversight costs, natural
resource damages and remediation costs), whether contingent or otherwise,
arising out of or relating to (a) compliance or non-compliance with any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the Release of any Hazardous Materials or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed
or imposed with respect to any of the foregoing.
"Environmental Permit" means any permit, license, order, approval,
registration or other authorization under Environmental Law.
"Equity Interest" means, with respect to any Person, any shares,
interests, participation, or other equivalents (however designated) of corporate
stock, membership interests or partnership interests (or any other ownership
interests) of such Person.
"Equity Issuance" means any issuance of equity securities or any other
Equity Interests (including any preferred equity securities) by a Person other
than equity securities issued (i) to the Borrower or one of its Subsidiaries,
(ii) to APC, and (iii) pursuant to employee or director and officer stock option
or similar plans in the ordinary course of business.
"Equity Issuance Proceeds" means, with respect to any Equity Issuance,
all cash and cash equivalent investments received by the Borrower or any of its
Subsidiaries from such Equity Issuance after payment of, or provision for, all
underwriter fees and expenses, SEC and blue sky fees, printing costs, fees and
expenses of accountants, lawyers and other professional advisors, brokerage
commissions and other out-of-pocket fees and expenses actually incurred in
connection with such Equity Issuance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
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"ERISA Affiliate" means each member of a controlled group of
corporations and all businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a single employer
under Section 414 of the Code.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Federal Reserve Board (or any successor), as in effect from
time to time.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Rate Advance comprising the same Borrowing, the interest rate per annum (rounded
upward to the nearest whole multiple of 1/100 of 1% per annum) set forth on
Reuters Reference LIBOR01 as the London Interbank Offered Rate, for deposits in
Dollars at 11:00 a.m. (London, England time) two Business Days before the first
day of such Interest Period and for a period equal to such Interest Period;
provided, that, if no such quotation appears on the Reuters Reference LIBOR01,
the Eurodollar Rate shall be an interest rate per annum equal to the rate per
annum at which deposits in Dollars are offered by the principal office of
Societe Generale in London, England to prime banks in the London interbank
market at 11:00 a.m. (London, England time) two Business Days before the first
day of such Interest Period in an amount substantially equal to the Eurodollar
Rate Advance to be maintained by the Lender that is the Administrative Agent in
respect of such Borrowing and for a period equal to such Interest Period.
"Eurodollar Rate Advance" means an Advance which bears interest as
provided in Section 2.09(b).
"Eurodollar Rate Reserve Percentage" of any Lender for the Interest
Period for any Eurodollar Rate Advance means the reserve percentage applicable
during such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any emergency,
supplemental, or other marginal reserve requirement) for such Lender with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 7.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of any Borrower hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise or "margin" or similar
taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) 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 any Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee request by the Borrower and any
Lender party to this Agreement on the Closing Date), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
8
Lender becomes a party hereto (or designates a new lending office) or is
attributable to such Foreign Lender's failure or inability (other than as a
result of a Change in Law) to comply with Section 2.14(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from any Borrower with respect to such withholding tax pursuant to
Section 2.14(a). Notwithstanding anything to the contrary contained in this
definition, "Excluded Taxes" shall not include any withholding tax imposed at
any time on payments made by or on behalf of a Borrower that is not a resident
of the United States for tax purposes to any Lender or Administrative Agent
hereunder or under any other Credit Document, provided that such Lender and such
Administrative Agent shall have complied with Section 2.14(e).
"Farmout" means an arrangement pursuant to agreement whereby the
owner(s) of one or more oil, gas and/or mineral lease or other oil and natural
gas working interest with respect to a property from which production of
Hydrocarbons is sought agrees to transfer or assign an interest in such property
to one or more Persons in exchange for (a) drilling, or participating in the
cost of the drilling of (or agreeing to do so) one or more ▇▇▇▇▇, or undertaking
other exploration or development activity or participating in the cost of such
activity, to attempt to obtain production of Hydrocarbons from such property, or
(b) obtaining production of Hydrocarbons from such property, or participating in
the costs of such production.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the immediately preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for any such
day on such transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any of its successors.
"Fee Letter" means that certain fee letter dated December 20, 2007
among the Borrower, Societe Generale, and SG Americas Securities, LLC, as
amended by the Amendment to Fee Letter dated as of January 29, 2008 and as the
same may be further amended, modified or supplemented from time to time.
"Financial Statements" means the pro forma unaudited consolidated
balance sheet of the Borrower as of the date of this Agreement after giving
effect to the consummation of the Closing Date Acquisition and the Borrowings
made hereunder on the Closing Date, and including the certification of a
Responsible Officer of the Borrower, all prepared in accordance with GAAP
(except for the absence of footnotes and adjustments typically made at
year-end), the copies of which have been delivered to the Administrative Agent
and the Lenders.
"Foreign Lender" means any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is resident for tax
purposes. For purposes of this definition, the United States of America, each
9
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
"Fund" means any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, applied on a basis consistent with the requirements
of Section 1.03.
"Gas Imbalance" means (a) a sale or utilization by Borrower or other
members of the Company Group of volumes of natural gas in excess of its gross
working interest, (b) receipt of volumes of natural gas into a gathering system
and redelivery by Borrower or other members of the Company Group of a larger or
smaller volume of natural gas under the terms of the applicable transportation
agreement, or (c) delivery to a gathering system of a volume of natural gas
produced by Borrower or a member of the Company Group that is larger or smaller
than the volume of natural gas such gathering system redelivers for the account
of Borrower or such member of the Company Group, as applicable.
"General Partner" means Abraxas General Partner, LLC, a Delaware
limited liability company.
"Governmental Authority" means the government of the United States of
America or any other nation, or of 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 (including any supra-national bodies such as the European Union or
the European Central Bank).
"Guarantor" means each entity, which may from time to time, execute a
Guaranty or a supplement to a Guaranty, including each Subsidiary of the
Borrower and the General Partner.
"Guaranty" means a Guaranty in substantially the form of the attached
Exhibit C and executed by a Guarantor.
"Hazardous Substance" means the substances identified as such pursuant
to CERCLA and those regulated under any other Environmental Law, including
pollutants, contaminants, petroleum, petroleum products, radionuclides,
radioactive materials, and medical and infectious waste.
"Hazardous Waste" means the substances regulated as such pursuant to
any Environmental Law.
"Hedge Contract" means (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
10
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.
"Hydrocarbon Hedge Agreement" means a Hedge Contract between the
Borrower or one of its Subsidiaries and any financial institution or other
counterparty which is intended to reduce or eliminate the risk of fluctuations
in the price of Hydrocarbons.
"Hydrocarbons" means oil, gas, coal seam gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, and all other liquid and
gaseous hydrocarbons produced or to be produced in conjunction therewith from a
well bore and all products, by-products, and other substances derived therefrom
or the processing thereof, and all other minerals and substances produced in
conjunction with such substances, including sulfur, geothermal steam, water,
carbon dioxide, helium, and any and all minerals, ores, or substances of value
and the products and proceeds therefrom.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Independent Engineer" means ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ or any other
third party engineering firm acceptable to the Administrative Agent in its sole
discretion.
"Independent Engineering Report" means a report, in form and substance
satisfactory to the Administrative Agent and each of the Lenders, prepared by an
Independent Engineer, addressed to the Administrative Agent and the Lenders with
respect to the Oil and Gas Properties owned by the Borrower or any of its
Subsidiaries (or to be acquired by the Borrower or any of its Subsidiaries, as
applicable) which are, or are to be, included in the Borrowing Base, which
report shall (a) specify the location, quantity, and type of the estimated
Proven Reserves attributable to such Oil and Gas Properties, (b) contain a
projection of the rate of production of such Oil and Gas Properties, (c) contain
an estimate of the net operating revenues to be derived from the production and
sale of Hydrocarbons from such Proven Reserves based on product price and cost
escalation assumptions specified by the Administrative Agent and the Lenders
which are consistent with the Administrative Agent's and the Lenders' customary
internal standards and practices for valuing and redetermining the value of Oil
and Gas Properties in connection with reserve based oil and gas loan
transactions, and (d) contain such other information as is customarily obtained
from and provided in such reports or is otherwise reasonably requested by the
Administrative Agent or any Lender.
"Information " is defined in Section 9.09.
11
"Initial Acquisition" means the acquisition of certain Oil and Gas
Properties by the Borrower and its Subsidiaries pursuant to the Contribution
Agreement.
"Initial Acquisition Instruments" means, collectively, the
Contribution Agreement, the Omnibus Agreement and all other documents,
instruments, and agreements executed and delivered by the sellers and other
parties named in the Contribution Agreement or the Borrower or any Guarantor in
connection with the Initial Acquisition.
"Initial Engineering Reports" means, collectively, an Independent
Engineering Report dated as of June 30, 2007 and the St. Mary's Engineering
Report, covering the Proven Reserves of the Loan Parties (after giving pro forma
effect to the Closing Date Acquisition) and otherwise in form acceptable to the
Administrative Agent.
"Intercompany Debt" means Debt incurred by one or more Loan Parties
and owing to any other Loan Party or Loan Parties.
"Intercreditor Agreement" means the Intercreditor and Subordination
Agreement, dated the date hereof and substantially in the form of Exhibit D
hereto, executed and delivered by the Administrative Agent, the Senior Agent and
the Loan Parties pursuant to the terms of this Agreement.
"Interest Expense" means, for the Borrower and its consolidated
Subsidiaries for any period, total interest, letter of credit fees, and other
fees and expenses incurred in connection with any Debt for such period, whether
paid or accrued, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, imputed interest under Capital Leases, and net costs under
Interest Hedge Agreements, all as determined in conformity with GAAP.
"Interest Hedge Agreement" means a Hedge Contract between the Borrower
or one of its Subsidiaries and one or more financial institutions providing for
the exchange of nominal interest obligations between the Borrower and such
financial institution or the cap of the interest rate on any Debt of the
Borrower.
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such Eurodollar
Rate Advance or the date of the Conversion of any Reference Rate Advance into a
Eurodollar Rate Advance and ending on the last day of the period selected by the
Borrower pursuant to the provisions below and Section 2.03 and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below and Section 2.03. The duration of each
such Interest Period shall be one, two, three, or six months, in each case as
the Borrower may, upon notice received by the Administrative Agent not later
than 11:00 a.m. (New York time) on the third Business Day prior to the first day
of such Interest Period, select; provided, however, that:
(a) the Borrower may not select any Interest Period which ends after
the Maturity Date;
12
(b) Interest Periods commencing on the same date for Advances
comprising part of the same Borrowing shall be of the same duration;
(c) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period shall
be extended to occur on the next succeeding Business Day; provided that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the immediately preceding Business Day; and
(d) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month.
"Internal Engineering Report" means a report, in form and substance
satisfactory to the Administrative Agent and each Lender, prepared by the
Borrower and certified by a Responsible Officer of the Borrower, addressed to
the Administrative Agent and the Lenders with respect to the Oil and Gas
Properties owned by the Borrower or any of its Subsidiaries (or to be acquired
by the Borrower or any of its Subsidiaries, as applicable) which are, or are to
be, included in the Borrowing Base, which report shall (a) specify the location,
quantity, and type of the estimated Proven Reserves attributable to such Oil and
Gas Properties, (b) contain a projection of the rate of production of such Oil
and Gas Properties, (c) contain an estimate of the net operating revenues to be
derived from the production and sale of Hydrocarbons from such Proven Reserves
based on product price and cost escalation assumptions specified by the
Administrative Agent and the Lenders which are consistent with the
Administrative Agent's and the Lenders' customary internal standards and
practices for valuing and redetermining the value of Oil and Gas Properties in
connection with reserve based oil and gas loan transactions, and (d) contain
such other information as is customarily obtained from and provided in such
reports or is otherwise reasonably requested by the Administrative Agent or any
Lender.
"Leases" means all oil and gas leases, oil, gas and mineral leases,
oil, gas and casinghead gas leases, wellbore assignments or any other
instruments, agreements, or conveyances under and pursuant to which the owner
thereof has or obtains the right to enter upon lands and explore for, drill, and
develop such lands for the production of Hydrocarbons.
"Legal Requirement" means, as to any Person, any law, statute,
ordinance, decree, requirement, order, judgment, rule, regulation (or official
interpretation of any of the foregoing) of, and the terms of any license or
permit issued by, any Governmental Authority, including Regulations D, T, U, and
X, which is applicable to such Person.
"Lender Hedging Obligations" means all obligations arising from time
to time under Hedge Contracts entered into from time to time between any Loan
Party and a counterparty that is a Lender or an Affiliate of a Lender; provided
that if such counterparty ceases to be a Lender hereunder or an Affiliate of a
Lender hereunder, Lender Hedging Obligations shall only include such obligations
to the extent arising from transactions entered into at the time such
counterparty was a Lender hereunder or an Affiliate of a Lender hereunder.
13
"Lenders" means the lenders listed on the signature pages of this
Agreement and each Eligible Assignee that shall become a party to this Agreement
pursuant to Section 9.08.
"Lien" means any mortgage, lien, pledge, assignment, charge, deed of
trust, security interest, hypothecation, preference, deposit arrangement or
encumbrance (or other type of arrangement having the practical effect of the
foregoing) to secure or provide for the payment of any obligation of any Person,
whether arising by contract, operation of law, or otherwise (including the
interest of a vendor or lessor under any conditional sale agreement, synthetic
lease, Capital Lease, or other title retention agreement).
"Liquid Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States maturing
within 270 days from the date of any acquisition thereof;
(b) (i) negotiable or nonnegotiable certificates of deposit, time
deposits, or other similar banking arrangements maturing within 270 days from
the date of acquisition thereof or which may be liquidated for the full amount
thereof without penalty or premium ("bank debt securities"), issued by (A) any
Lender or Senior Lender (or any Affiliate of any Lender or any Senior Lender),
or (B) any other bank or trust company so long as either (i) such certificate of
deposit is pledged to secure the Borrower's or any Subsidiaries' ordinary course
of business bonding requirements, or (ii) the amount thereof is less than or
equal to $100,000, or any other bank or trust company, if at the time of deposit
or purchase, such bank debt securities are rated A or A2 or better by either
Standard & Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc., and (ii)
commercial paper issued by (A) any Lender or Senior Lender (or any Affiliate of
any Lender or any Senior Lender) or (B) any other Person if at the time of
purchase such commercial paper is rated at the highest or the second highest
credit rating given by either Standard & Poor's Ratings Group or ▇▇▇▇▇'▇
Investors Service, Inc., or upon the discontinuance of both of such services,
such other nationally recognized rating service or services, as the case may be,
as shall be selected by the Borrower with the consent of the Required Lenders;
(c) deposits in money market funds investing exclusively in
investments described in clauses (a) and (b) above;
(d) repurchase agreements relating to investments described in clauses
(a) and (b) above with a market value at least equal to the consideration paid
in connection therewith, with any Person who regularly engages in the business
of entering into repurchase agreements and has a combined capital and surplus
and undivided profit of not less than $500,000,000.00, if at the time of
entering into such agreement the debt securities of such Person are rated at the
highest or the second highest credit rating given by either Standard & Poor's
Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc.; and
(e) such other instruments (within the meaning of Article 9 of the
Uniform Commercial Code in effect in New York) or investment property as the
Borrower may request and the Administrative Agent may approve in writing.
14
"Loan Documents" means this Agreement, the Notes, the Guaranties, the
Security Instruments, any Hedge Contract with a Swap Counterparty, the
Intercreditor Agreement, the Post-Closing Agreement, and each other agreement,
instrument, or document executed by the Borrower, any Guarantor, or any of the
Borrower's or a Guarantor's Subsidiaries or any of their officers at any time in
connection with this Agreement or in connection with any of the Obligations.
"Loan Party" means the Borrower, the General Partner, or any
Guarantor.
"Material Adverse Change" means (a) a material adverse change in the
business, assets (including the Oil and Gas Properties), condition (financial or
otherwise), results of operations or prospects of the Borrower individually, or
the Company Group, taken as a whole, since the Closing Date (but after giving
pro forma effect to the Closing Date Acquisition) or (b) a material adverse
effect on the Borrower's, individually, or the Company Group's, taken as a
whole, ability to perform its obligations under this Agreement, any Note, any
Guaranty, or any other Loan Document.
"Maturity Date" means January 31, 2009.
"Maximum Rate" means the maximum nonusurious interest rate under
applicable law (determined under such laws after giving effect to any items
which are required by such laws to be construed as interest in making such
determination, including if required by such laws, certain fees and other
costs).
"Mortgage" means the mortgage or deed of trust executed by any one or
more of the Loan Parties in favor of the Administrative Agent for the ratable
benefit of the Secured Parties in substantially the form of the attached Exhibit
E or such other form as may be requested by the Administrative Agent, together
with any assumptions or assignments of the obligations thereunder by the
Borrower, any Guarantor or any of their respective Subsidiaries.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Net Income" means, with respect to the Borrower and its consolidated
Subsidiaries, for any period, the net income for such period after taxes, as
determined in accordance with GAAP, excluding, however, (a) extraordinary items,
including (i) any net non-cash gain or loss during such period arising from the
sale, exchange, retirement or other disposition of capital assets (such term to
include all fixed assets and all securities) other than in the ordinary course
of business, and (ii) any write-up or write-down of assets, including without
limitation, Oil and Gas Properties and Hedge Contracts, and (b) the cumulative
effect of any change in GAAP.
"Note" means a promissory note of the Borrower payable to the order of
any Lender in an amount not to exceed the Commitment of such Lender, in
substantially the form of the attached Exhibit F, evidencing indebtedness of the
Borrower to such Lender resulting from the Advance owing to such Lender.
"Notice of Borrowing" means a notice of borrowing in the form of the
attached Exhibit G signed by a Responsible Officer of the Borrower.
15
"Notice of Conversion or Continuation" means a notice of conversion or
continuation in the form of the attached Exhibit H signed by a Responsible
Officer of the Borrower.
"Obligations" means (a) all principal, interest, fees, reimbursements,
indemnifications, and other amounts payable by the Borrower, any Guarantor or
any of their respective Subsidiaries to the Administrative Agent or the Lenders
under the Loan Documents (other than the Hedge Contracts with a Swap
Counterparty) and (b) all Lender Hedging Obligations.
"Oil and Gas Business" means (a) the acquisition, exploration,
exploitation, development, operation and disposition of interests in Oil and Gas
Properties and Hydrocarbons, (b) the gathering, marketing, treating, processing,
storage, selling and transporting of any production from such interests or
properties, including the marketing of Hydrocarbons obtained from unrelated
Persons, (c) any business relating to or arising from exploration for or
development, production, treatment, processing, storage, transportation or
marketing of oil, gas and other minerals and products produced in association
therewith, (d) any business relating to oilfield sales and service, and (e) any
activity that is ancillary or necessary or desirable to facilitate the
activities described in clauses (a) through (d) of this definition.
"Oil and Gas Properties" means fee mineral interests, term mineral
interests, Leases, subleases, Farmouts, royalties, overriding royalties, net
profit interests, carried interests, production payments, back-in interests and
reversionary interests and similar mineral interests, and all unsevered and
unextracted Hydrocarbons in, under, or attributable to such oil and gas
Properties and interests.
"Omnibus Agreement" means the Omnibus Agreement dated May 25, 2007,
among APC, the General Partner, the Operating Company and the Borrower, as
amended in accordance with the terms hereof.
"Operating Company" means Abraxas Operating, LLC, a Delaware limited
liability company.
"Other Taxes" means 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 under any other Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.
"Participant" has the meaning assigned to such term in paragraph (d) of
Section 9.08.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permit" means any approval, certificate of occupancy, consent,
waiver, exemption, variance, franchise, order, permit, authorization, right or
license of or from any Governmental Authority, including an Environmental
Permit.
"Permitted Holder" means any holder of Equity Interest in the Borrower
on the Closing Date.
16
"Permitted Liens" is defined in Section 6.01.
"Permitted Subject Liens" means the Liens permitted under paragraphs
(c), (d), (e), (f), (g) and (i) of Section 6.01.
"Person" (whether or not capitalized) means an individual,
partnership, corporation (including a business trust), joint stock company,
limited liability company, limited liability partnership, trust, unincorporated
association, joint venture or other entity, Governmental Authority or other
entity.
"Plan" means an employee benefit plan (other than a Multiemployer
Plan) maintained for employees of the Borrower or any member of the Controlled
Group and covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code.
"Pledge Agreement" means a Pledge Agreement in substantially the form
of the attached Exhibit I, executed by the Borrower or any of its Subsidiaries
or any of the Guarantors (other than the General Partner), if applicable,
covering the Equity Interests in the Operating Company and each direct or
indirect Subsidiary of Borrower or General Partner.
"Post-Closing Agreement" means the post-closing letter agreement dated
as of January 31, 2008 between the Borrower and the Administrative Agent.
"Private Placement" means the private placement of the general and
limited partnership Equity Interests of the Borrower to APC and such other third
parties pursuant to the terms of the Private Placement Agreement.
"Private Placement Agreement" means the Purchase Agreement among the
Borrower, the General Partner, APC, the Operating Company and the purchasers
named therein dated as of May 25, 2007 pursuant to which such purchasers have
purchased the Common Units (as described therein) of the Borrower for an
aggregate purchase price of $100,000,117.28, as amended in accordance with the
terms hereof.
"Private Placement Documents" means, collectively, the Private
Placement Agreement, the Registration Rights Agreement, and all other documents,
instruments, and agreements executed and delivered by the General Partner, APC
or the purchasers named in the Private Placement Agreement in connection with
the Private Placement or the Registration Rights Agreement.
"Property" of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.
"Proven Reserves" means, at any particular time, the estimated
quantities of Hydrocarbons which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs attributable to Oil and Gas Properties included or to be included in
the Borrowing Base under then existing economic and operating conditions (i.e.,
prices and costs as of the date the estimate is made).
17
"Pro Rata Share" means, with respect to any Lender, (a) if such
Commitments have not been terminated, the ratio (expressed as a percentage) of
such Lender's Commitment at such time to the aggregate Commitments at such time,
or (b) if the aggregate Commitments have been terminated, the ratio (expressed
as a percentage) of Advances owing to such Lender to the aggregate Advances
owing to all such Lenders.
"Purchase and Sale Agreement" means the Purchase and Sale Agreement
dated as of December 11, 2007 between the Sellers and Operating Company, as it
may be amended, supplemented or otherwise modified from time to time.
"PV-10" means estimated future net revenue from Hydrocarbons
discounted at a rate of 10% per annum, before income taxes and with no price or
cost escalation or de-escalation in accordance with guidelines promulgated by
the SEC.
"Reference Rate" means a fluctuating interest rate per annum as shall
be in effect from time to time equal to the rate of interest publicly announced
by Societe Generale as its reference rate, whether or not the Borrower has
notice thereof.
"Reference Rate Advance" means an Advance which bears interest as
provided in Section 2.09(a).
"Register" has the meaning set forth in paragraph (c) of Section 9.08.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of May 25, 2007 among the Borrower and the purchasers named
therein, as amended by Amendment No. 1 to Registration Rights Agreement dated as
of December 5, 2007 and as the same may be further amended in accordance with
the terms hereof.
"Regulations D, T, U, and X" mean Regulations D, T, U, and X of the
Federal Reserve Board, as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Related Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person's Affiliates.
"Release" shall have the meaning set forth in CERCLA or under any
other Environmental Law.
"Reportable Event" means a "reportable event" described in Section
4043 of ERISA and the regulations issued thereunder.
"Required Lenders" means, at any time, Lenders holding at least 66 2/3
% of the Commitments or, if the Commitments have been terminated or expired, the
outstanding principal amount of the Advances.
"Response" shall have the meaning set forth in CERCLA or under any
other Environmental Law.
18
"Responsible Officer" means (a) with respect to any Person that is a
corporation, such Person's Chief Executive Officer, President, Chief Financial
Officer, or Vice President, (b) with respect to any Person that is a limited
liability company, if such Person has officers, then such Person's Chief
Executive Officer, President, Chief Financial Officer, or Vice President, and if
such Person is managed by members, then a Responsible Officer of such Person's
managing member, and if such Person is managed by managers, then a manager (if
such manager is an individual) or a Responsible Officer of such manager (if such
manager is an entity), and (c) with respect to any Person that is a general
partnership or a limited liability partnership, the Responsible Officer of such
Person's general partner or partners.
"Restricted Payment" means, with respect to any Person, principal or
interest payments (in cash, Property or otherwise) on, or redemptions of,
subordinated debt of such Person (other than the Obligations).
"SEC" means the United States Securities and Exchange Commission.
"Secured Parties" means the Administrative Agent, the Lenders and the
Persons that are owed Lender Hedging Obligations.
"Security Agreements" means the Security Agreements, each in
substantially the form of the attached Exhibit J, executed by the Borrower, any
of its Subsidiaries, or any of the Guarantors.
"Security Instruments" means, collectively: (a) the Mortgages, (b) the
Transfer Letters, (c) the Pledge Agreement, (d) the Security Agreements, (e)
each other agreement, instrument or document executed at any time in connection
with the Pledge Agreement, the Security Agreements, or the Mortgages, and (f)
each other agreement, instrument or document executed at any time in connection
with securing the Obligations.
"Sellers" means St. ▇▇▇▇ ▇▇▇▇ & Exploration Company, a Delaware
corporation, ▇▇▇▇▇ ▇. ▇▇▇▇▇ Restated Revocable Trust dated August 14, 1997,
▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee, and the ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable Trust dated January
19, 1995, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee.
"Senior Agent" means Societe Generale or such other Senior Lender
serving in the capacity as the "administrative agent" under the Senior Credit
Agreement to the extent permitted under the Senior Credit Agreement and the
Intercreditor Agreement.
"Senior Collateral" means the "Collateral" as defined in the Senior
Credit Agreement.
"Senior Credit Agreement" means the Amended and Restated Credit
Agreement dated as of the date hereof between the Borrower, the Senior Agent and
the Senior Lenders, as amended, supplemented, restated, extended, substituted,
increased, replaced, renewed, refinanced or otherwise modified.
"Senior Debt" means the "Senior Indebtedness" as defined in the
Intercreditor Agreement.
19
"Senior Event of Default" means an "Event of Default" as defined in
the Senior Credit Agreement.
"Senior Lender Hedging Obligations" means the "Lender Hedging
Obligations" as defined in the Senior Credit Agreement.
"Senior Lenders" means the lenders party to the Senior Credit
Agreement from time to time.
"Senior Loan Documents" means the "Loan Documents" as defined in the
Senior Credit Agreement.
"Senior Security Instruments" means the "Security Instruments" as
defined in the Senior Credit Agreement.
"Solvent" means, with respect to any Person as of the date of any
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including contingent liabilities, of such Person,
(b) the present fair saleable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person is able
to realize upon its assets and pay its debts and other liabilities, contingent
obligations, and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature, and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's Property would constitute unreasonably small capital after giving
due consideration to current and anticipated future capital requirements and
current and anticipated future business conduct and the prevailing practice in
the industry in which such Person is engaged. In computing the amount of
contingent liabilities at any time, such liabilities shall be computed at the
amount which, in light of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"St. Mary's Engineering Report" means the Internal Engineering Report
that evaluates as of December 1, 2007 the Oil and Gas Properties to be acquired
by the Borrower and any of its Subsidiaries pursuant to the Closing Date
Acquisition.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any other Person the accounts of which would be consolidated with those of
the parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
Person, a majority of whose outstanding Voting Securities (other than directors'
qualifying shares) shall at any time be owned by such parent or one or more
Subsidiaries of such parent. Unless otherwise specified, all references herein
to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or
Subsidiaries of the Borrower.
"Swap Counterparty" means any Lender (or Affiliate of a Lender) that
is party to any Hedge Contract with the Borrower or any other Loan Party.
20
"Taxes" means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.
"Termination Event" means (a) a Reportable Event described in Section
4043 of ERISA and the regulations issued thereunder (other than a Reportable
Event not subject to the provision for 30-day notice to the PBGC under such
regulations), (b) the withdrawal of the Borrower or any of its Affiliates from a
Plan during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section 4041 of
ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or
(e) any other event or condition which constitutes grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.
"Transfer Letters" means, collectively, the letters in lieu of
transfer orders in substantially the form of the attached Exhibit K and executed
by the Borrower, any Guarantor or any of their respective Subsidiaries executing
a Mortgage.
"Type" has the meaning set forth in Section 1.04.
"Voting Securities" means (a) with respect to any corporation
(including any unlimited liability company), capital stock of such corporation
having general voting power under ordinary circumstances to elect directors of
such corporation (irrespective of whether at the time stock of any other class
or classes shall have or might have special voting power or rights by reason of
the happening of any contingency), (b) with respect to any partnership, any
partnership interest or other ownership interest having general voting power to
elect the general partner or other management of the partnership or other
Person, and (c) with respect to any limited liability company, membership
certificates or interests having general voting power under ordinary
circumstances to elect managers of such limited liability company.
Section 1.02 Computation of Time Periods. In this Agreement, with
respect to the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each means "to but excluding".
Section 1.03 Accounting Terms; Changes in GAAP. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lenders hereunder shall
(unless otherwise disclosed to the Lenders in writing at the time of delivery
thereof) be prepared, in accordance with GAAP applied on a basis consistent with
those used in the preparation of the latest financial statements furnished to
the Lenders hereunder (which prior to the delivery of the first financial
statements under Section 5.06, shall mean the Financial Statements). All
calculations made for the purposes of determining compliance with this Agreement
shall (except as otherwise expressly provided herein) be made by application of
GAAP applied on a basis consistent with that used in the preparation of the
annual or quarterly financial statements furnished to the Lenders pursuant to
Section 5.06 most recently delivered prior to or concurrently with such
calculations (or, prior to the delivery of the first financial statements under
Section 5.06, used in the preparation of the Financial Statements). In addition,
21
all calculations and defined accounting terms used herein shall, unless
expressly provided otherwise, when referring to any Person, where applicable,
refer to such Person on a consolidated basis and mean such Person and its
consolidated Subsidiaries.
Section 1.04 Types of Advances. Advances are distinguished by "Type."
The "Type" of an Advance refers to the determination whether such Advance is a
Eurodollar Rate Advance or Reference Rate Advance.
Section 1.05 Miscellaneous. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation." The word "will"
shall be construed to have the same meaning and effect as the word "shall."
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein," "hereof" and "hereunder," and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, paragraphs, Exhibits and Schedules shall be construed to refer to
Articles, Sections and paragraphs, of, and Exhibits and Schedules to, this
Agreement, (e) any reference to any law or regulation herein shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time and (f) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
ARTICLE II
CREDIT FACILITIES
Section 2.01 Commitment for Advances.
(a) Advances. Each Lender severally agrees, on the terms and
conditions set forth in this Agreement (including without limitation, the terms
set forth in Section 3.01), to make a single advance term loan on the Closing
Date in accordance with its Pro Rata Share on a non-revolving basis to the
Borrower in an amount equal to such Lender's Commitment. Any Advances which have
been prepaid or repaid may not be reborrowed.
(b) Evidence of Debt. The Advance made by each Lender shall be
evidenced by the records maintained by the Administrative Agent in the ordinary
course of business. The records maintained by the Administrative Agent shall be
conclusive absent manifest error of the amount of the Advances made by the
Lenders to the Borrower and the interest and payments thereon. Any failure to so
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Borrower hereunder to pay any amount owing with respect to
the Obligations. In the event of any conflict between the accounts and records
maintained by any Lender and the accounts and records of the Administrative
Agent in respect of such matters, the accounts and records of the Administrative
22
Agent shall control in the absence of manifest error. Upon the request of any
Lender to Borrower made through the Administrative Agent, the Borrower shall
execute and deliver to such Lender (through the Administrative Agent) a Note,
which, in addition to such records maintained by the Administrative Agent, shall
evidence the obligation of the Borrower to repay the Advance made by such Lender
to the Borrower. Each Lender may attach schedules to a Note and endorse thereon
the date, Type (if applicable), amount, currency and maturity of its Advance and
payments with respect thereto, but such action or the failure to do so shall not
control over the records thereof maintained by the Administrative Agent.
Section 2.02 [Reserved].
Section 2.03 Method of Borrowing.
(a) Notice. Each Borrowing shall be made pursuant to a Notice of
Borrowing (or by telephone notice promptly confirmed in writing by a Notice of
Borrowing), given not later than 11:00 a.m. (New York time) (i) on the third
Business Day before the date of the proposed Borrowing, in the case of a
Borrowing comprised of Eurodollar Rate Advances or (ii) on the Business Day of
the proposed Borrowing, in the case of a Borrowing comprised of Reference Rate
Advances, by the Borrower to the Administrative Agent, which shall in turn give
to each Lender prompt notice of such proposed Borrowing by facsimile. Each
Notice of Borrowing shall be in writing (by facsimile or otherwise) specifying
the information required therein. In the case of a proposed Borrowing comprised
of Eurodollar Rate Advances, the Administrative Agent shall promptly notify each
Lender of the applicable interest rate under Section 2.09(b). Each Lender shall,
before 12:00 noon (New York time) on the date of such Borrowing, make available
for the account of its Applicable Lending Office to the Administrative Agent at
its address referred to in Section 9.02, or such other location as the
Administrative Agent may specify by notice to the Lenders, in same day funds, in
the case of a Borrowing, such Lender's Pro Rata Share of such Borrowing. After
the Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent shall
make such funds available to the Borrower at its account with the Administrative
Agent.
(b) Conversions and Continuations. The Borrower may elect to Convert
or continue any Borrowing under this Section 2.03 by delivering an irrevocable
Notice of Conversion or Continuation to the Administrative Agent at the
Administrative Agent's office no later than 11:00 a.m. (New York time) (i) on
the date which is at least three Business Days in advance of the proposed
Conversion or continuation date in the case of a Conversion to or a continuation
of a Borrowing comprised of Eurodollar Rate Advances and (ii) on the Business
Day of the proposed Conversion, in the case of a Conversion to a Borrowing
comprised of Reference Rate Advances. Each such Notice of Conversion or
Continuation shall be in writing (by facsimile or otherwise) specifying the
information required therein. Promptly after receipt of a Notice of Conversion
or Continuation under this Section, the Administrative Agent shall provide each
Lender with a copy thereof and, in the case of a Conversion to or a continuation
of a Borrowing comprised of Eurodollar Rate Advances, notify each Lender of the
applicable interest rate under Section 2.09(b).
(c) Certain Limitations. Notwithstanding anything to the contrary
contained in paragraphs (a) and (b) above:
23
(i) at no time shall there be more than one Interest Period applicable
to outstanding Eurodollar Rate Advances and the Borrower may not select
Eurodollar Rate Advances for any Borrowing at any time that a Default has
occurred and is continuing;
(ii) if any Lender shall, at least one Business Day before the date of
any requested Borrowing, Conversion, or continuation, notify the Administrative
Agent that any Change in Law makes it unlawful, or that any central bank or
other Governmental Authority asserts that it is unlawful, for such Lender or its
Applicable Lending Office to perform its obligations under this Agreement to
make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances,
the right of the Borrower to select Eurodollar Rate Advances from such Lender
shall be suspended until such Lender shall notify the Administrative Agent that
the circumstances causing such suspension no longer exist, and the Advance made
by such Lender in respect of such Borrowing, Conversion, or continuation shall
be a Reference Rate Advance;
(iii) if the Administrative Agent is unable to determine the
Eurodollar Rate for Eurodollar Rate Advances comprising any requested Borrowing,
the right of the Borrower to select Eurodollar Rate Advances for such Borrowing
or for any subsequent Borrowing shall be suspended until the Administrative
Agent shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist, and each Advance comprising such Borrowing
shall be a Reference Rate Advance;
(iv) if the Required Lenders shall, at least one Business Day before
the date of any requested Borrowing, notify the Administrative Agent that the
Eurodollar Rate for Eurodollar Rate Advances comprising such Borrowing will not
adequately reflect the cost to such Lenders of making or funding their
respective Eurodollar Rate Advances, as the case may be, for such Borrowing, the
right of the Borrower to select Eurodollar Rate Advances for such Borrowing or
for any subsequent Borrowing shall be suspended until the Administrative Agent
shall notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist, and each Advance comprising such Borrowing shall be
a Reference Rate Advance; and
(v) if the Borrower shall fail to select the duration or continuation
of any Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01 and
paragraph (b) of this Section 2.03, the Administrative Agent shall forthwith so
notify the Borrower and the Lenders and such Advances shall be made available to
the Borrower on the date of such Borrowing as Reference Rate Advances or, if an
existing Advance, Convert into Reference Rate Advances.
(d) Notices Irrevocable. Each Notice of Borrowing and Notice of
Conversion or Continuation shall be irrevocable and binding on the Borrower. In
the case of any Borrowing for which the related Notice of Borrowing specifies is
to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each
Lender against any loss, out-of-pocket cost, or expense incurred by such Lender
as a result of any failure by the Borrower to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III including any loss (including any loss of
anticipated profits), cost, or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
24
Advance to be made by such Lender as part of such Borrowing when such Advance,
as a result of such failure, is not made on such date.
(e) Funding by Lenders; Presumption by Administrative Agent. Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section 2.03 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 a payment to be
made by such Lender, the greater of the Federal Funds Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation and (ii) in the case of a payment to be made by the
Borrower, the interest rate applicable to Base Rate Advances. If the Borrower
and such Lender shall pay such interest to the Administrative Agent for the same
or an overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period. If
such Lender pays its share of the applicable Borrowing to the Administrative
Agent, then the amount so paid shall constitute such Lender's Advance included
in such Borrowing. Any payment by the Borrower shall be without prejudice to any
claim the Borrower may have against a Lender that shall have failed to make such
payment to the Administrative Agent.
(f) Lender Obligations Several. The failure of any Lender to make the
Advance to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, to make its Advance on the date of such
Borrowing. No Lender shall be responsible for the failure of any other Lender to
make the Advance to be made by such other Lender on the date of any Borrowing.
Section 2.04 Reduction of the Commitments. Upon the making of the
Advances on the on the Closing Date, each Lender's Commitment shall be reduced
to $0.
Section 2.05 Prepayment of Advances.
(a) Optional. The Borrower may prepay the Advances, after giving by
11:00 a.m. (New York time): (i) in the case of Eurodollar Rate Advances, at
least three Business Days' or (ii) in the case of Reference Rate Advances, same
Business Day's, irrevocable prior written notice to the Administrative Agent
stating the proposed date and aggregate principal amount of such prepayment. If
any such notice is given, the Borrower shall prepay the Advances in whole or
ratably in part in an aggregate principal amount equal to the amount specified
in such notice, together with accrued interest to the date of such prepayment on
the principal amount prepaid and amounts, if any, required to be paid pursuant
to Section 2.12 as a result of such prepayment being made on such date;
provided, however, that each partial prepayment shall be made in minimum amounts
of $500,000 and in integral multiples of $100,000 in excess thereof. Full
prepayments of any Borrowing are permitted without restriction of amounts.
25
(b) Mandatory.
(i) Equity Issuance. If the Borrower or any Subsidiary receives
Equity Issuance Proceeds, so long as (a) no Borrowing Base Deficiency exists
under the Senior Credit Agreement and (b) no Senior Event of Default exists,
then immediately upon the receipt thereof by the Borrower such Equity Issuance
Proceeds shall be applied ratably, according to the then unpaid amounts thereof,
without preference or priority of any kind among them, to the payment of the
Advances then due and payable; provided that in no event shall the Borrower be
required to make prepayments pursuant to this paragraph with respect to Equity
Issuance Proceeds in excess of $100,000,000.
(ii) Illegality. If any Lender shall notify the Administrative
Agent and the Borrower that Change in Law makes it unlawful, or that any central
bank or other Governmental Authority asserts that it is unlawful for such Lender
or its Applicable Lending Office to perform its obligations under this Agreement
to maintain any Eurodollar Rate Advances of such Lender then outstanding
hereunder, (i) the Borrower shall, no later than 11:00 a.m. (New York time) (A)
if not prohibited by law, on the last day of the Interest Period for each
outstanding Eurodollar Rate Advance made by such Lender or (B) if required by
such notice, on the second Business Day following its receipt of such notice,
prepay all of the Eurodollar Rate Advances made by such Lender then outstanding,
together with accrued interest on the principal amount prepaid to the date of
such prepayment and amounts, if any, required to be paid pursuant to Section
2.12 as a result of such prepayment being made on such date, (ii) such Lender
shall simultaneously make a Reference Rate Advance to the Borrower on such date
in an amount equal to the aggregate principal amount of the Eurodollar Rate
Advances prepaid to such Lender, and (iii) the right of the Borrower to select
Eurodollar Rate Advances from such Lender for any subsequent Borrowing shall be
suspended until such Lender shall notify the Administrative Agent that the
circumstances causing such suspension no longer exist.
(c) Interests, Costs and Application of Payments. Each prepayment
pursuant to any provision of this Section 2.05 shall be accompanied by accrued
interest on the amount prepaid to the date of such prepayment and amounts, if
any, required to be paid pursuant to Section 2.12 as a result of such prepayment
being made on such date. Each prepayment under this Section 2.05(b) (other than
paragraph (iv) above) shall be applied to the Advances as determined by the
Administrative Agent and agreed to by the Lenders in their sole discretion.
(d) No Additional Right; Ratable Prepayment. The Borrower shall have no
right to prepay any principal amount of any Advance except as provided in this
Section 2.05, and all notices given pursuant to this Section 2.05 shall be
irrevocable and binding upon the Borrower. Each payment of any Advance pursuant
to this Section 2.05 shall be made in a manner such that all Advances comprising
part of the same Borrowing are paid in whole or ratably in part.
Section 2.06 Repayment of Advances. The Borrower shall repay to the
Administrative Agent for the ratable benefit of the Lenders the outstanding
principal amount of each Advance, together with any accrued interest thereon, on
the Maturity Date or such earlier date pursuant to Section 7.02 or Section 7.03.
Section 2.07 [Reserved].
26
Section 2.08 Fees. The Borrower agrees to pay to the Administrative
Agent the fees described in the Fee Letter.
Section 2.09 Interest. The Borrower shall pay interest on the unpaid
principal amount of each Advance made by each Lender from the date of such
Advance until such principal amount shall be paid in full, at the following
rates per annum:
(a) Reference Rate Advances. If such Advance is a Reference Rate
Advance, a rate per annum equal at all times to the Adjusted Reference Rate in
effect from time to time plus the Applicable Margin in effect from time to time,
payable quarterly in arrears on the last day of each March, June, September, and
December and on the date such Reference Rate Advance shall be paid in full.
(b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate
Advance, a rate per annum equal at all times during the Interest Period for such
Advance to the Eurodollar Rate for such Interest Period plus the Applicable
Margin in effect from time to time, payable on the last day of such Interest
Period and, in the case of any Interest Period longer than three months in
duration, on the third monthly anniversary of the beginning of such Interest
Period as well as the last day of such Interest Period.
(c) Additional Interest on Eurodollar Rate Advances. The Borrower shall
pay to each Lender, so long as any such Lender shall be required under
regulations of the Federal Reserve Board to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities,
additional interest on the unpaid principal amount of each Eurodollar Rate
Advance of such Lender, from the effective date of such Advance until such
principal amount is paid in full, at an interest rate per annum equal at all
times to the remainder obtained by subtracting (i) the Eurodollar Rate for the
Interest Period for such Advance from (ii) the rate obtained by dividing such
Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such Lender for such Interest Period, payable on each date on
which interest is payable on such Advance. Such additional interest payable to
any Lender shall be determined by such Lender and notified to the Borrower
through the Administrative Agent (such notice to include the calculation of such
additional interest, which calculation shall be conclusive in the absence of
manifest error).
(d) Usury Recapture.
(i) If, with respect to any Lender, the effective rate of interest
contracted for under the Loan Documents, including the stated rates of interest
and fees contracted for hereunder and any other amounts contracted for under the
Loan Documents which are deemed to be interest, at any time exceeds the Maximum
Rate, then the outstanding principal amount of the loans made by such Lender
hereunder shall bear interest at a rate which would make the effective rate of
interest for such Lender under the Loan Documents equal the Maximum Rate until
the difference between the amounts which would have been due at the stated rates
and the amounts which were due at the Maximum Rate (the "Lost Interest") has
been recaptured by such Lender.
(ii) If, when the loans and reimbursement obligations made
hereunder are repaid in full, the Lost Interest has not been fully recaptured by
such Lender pursuant to the preceding paragraph, then, to the extent permitted
27
by law, for the loans and other credit extensions made hereunder by such Lender
the interest rates charged under Section 2.09 hereunder shall be retroactively
increased such that the effective rate of interest under the Loan Documents was
at the Maximum Rate since the effectiveness of this Agreement to the extent
necessary to recapture the Lost Interest not recaptured pursuant to the
preceding sentence and, to the extent allowed by law, the Borrower shall pay to
such Lender the amount of the Lost Interest remaining to be recaptured by such
Lender.
Section 2.10 Payments and Computations.
(a) Payment Procedures. The Borrower shall make each payment under this
Agreement not later than 11:00 a.m. (New York time) on the day when due in
Dollars to the Administrative Agent at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or such other location as the Administrative Agent shall
designate in writing to the Borrower) in same day funds without deduction,
setoff, or counterclaim of any kind. The Administrative Agent shall promptly
thereafter cause to be distributed like funds relating to the payment of
principal, interest or fees ratably (other than amounts payable solely to the
Administrative Agent or a specific Lender pursuant to Section 2.08(c), 2.09(c),
2.12, 2.13, 2.14, 9.04, 9.05, or 9.06, but after taking into account payments
effected pursuant to Section 7.04) in accordance with each Lender's Pro Rata
Share to the Lenders for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount payable to
any Lender to such Lender for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement.
(b) Computations. All computations of interest based on the Reference
Rate and of fees shall be made by the Administrative Agent on the basis of a
year of 365 or 366 days, as the case may be, and all computations of interest
based on the Eurodollar Rate and the Federal Funds Rate shall be made by the
Administrative Agent, on the basis of a year of 360 days, in each case for the
actual number of days (including the first day, but excluding the last day)
occurring in the period for which such interest or fees are payable. Each
determination by the Administrative Agent of an interest rate or fee shall be
conclusive and binding for all purposes, absent manifest error.
(c) Non-Business Day Payments. Whenever any payment shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause payment of interest on or
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the immediately preceding Business Day.
(d) Payments by Borrower; Presumptions by Administrative Agent. 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 hereunder 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 the amount due. In such event, if the Borrower has not
in fact made such payment, then each of the Lenders severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
28
Lender, 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 Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation.
Section 2.11 Sharing of Payments, Etc. If any Lender shall, by
exercising any right of setoff or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Advances or other
obligations hereunder resulting in such Lender's receiving payment of a
proportion of the aggregate amount of its Advances and accrued interest thereon
or other such obligations greater than its pro rata share thereof as provided
herein, then the Lender receiving such greater proportion shall (a) notify the
Administrative Agent of such fact, and (b) purchase (for cash at face value)
participations in the Advances and such other obligations of the other Lenders,
or make such other adjustments as shall be equitable, 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
Advances and other amounts owing them, 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 shall not be construed to apply to (x) any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or (y) any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Advances to any assignee
or participant, other than to the Borrower or any Subsidiary thereof (as to
which the provisions of this Section shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
Legal Requirement, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of setoff 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 2.12 Breakage Costs. If (a) any payment of principal of any
Eurodollar Rate Advance is made other than on the last day of the Interest
Period for such Advance, whether as a result of any payment pursuant to Section
2.05, the acceleration of the maturity of the Obligations pursuant to Article
VII, or otherwise, or (b) the Borrower fails to make a principal or interest
payment with respect to any Eurodollar Rate Advance on the date such payment is
due and payable, the Borrower shall, within 10 days of any written demand sent
by any Lender to the Borrower through the Administrative Agent, pay to the
Administrative Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, out-of-pocket costs or
expenses which it may reasonably incur as a result of such payment or
nonpayment, including any loss (including loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such Advance.
Section 2.13 Increased Costs.
(a) Increased Costs Generally. If any Change in Law shall:
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(i) impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in the Eurodollar Rate
Reserve Percentage);
(ii) subject any Lender to any tax of any kind whatsoever with respect
to this Agreement or any Eurodollar Rate Advance made by it, or change the basis
of taxation of payments to such Lender in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 2.14 and the imposition of,
or any change in the rate of, any Excluded Tax payable by such Lender); or
(iii) impose on any Lender or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Rate Advances
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 Rate Advance (or
of maintaining its obligation to make any such Advance) or to reduce the amount
of any sum received or receivable by such Lender hereunder (whether of
principal, interest or any other amount) then, upon request of such Lender, the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender determines that any Change in
Law affecting such Lender or any lending office of such Lender or such Lender's
holding company, if any, regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender's capital or on the capital
of such Lender's holding company, if any, as a consequence of this Agreement,
the Commitments of such Lender or the Advances made by such Lender to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender,
as the case may be, such additional amount or amounts as will compensate such
Lender or such Lender's holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender setting
forth the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section and delivered to the Borrower 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.
(d) Delay in Requests. Failure or delay on the part of any Lender to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's right to demand such compensation.
Section 2.14 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without reduction or withholding for any
30
Indemnified Taxes or Other Taxes, provided that if the Borrower shall be
required by applicable Legal Requirement to deduct any Indemnified Taxes
(including any Other Taxes) from such payments, then (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or Lender, as the case may be, receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall timely pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable Legal Requirement.
(b) Payment of Other Taxes by the Borrower. Without limiting the
provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable Legal
Requirement.
(c) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent and each Lender, within 10 Business Days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Administrative Agent or such
Lender, as the case may be, and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Status of 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 resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under 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 or reasonably
requested by the Borrower or the Administrative Agent, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate of withholding. In
addition, any Lender, if requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.
Without limiting the generality of the foregoing, in the event that the
Borrower is resident for tax purposes in the United States of America, any
Foreign Lender shall deliver to the Borrower and the Administrative Agent (in
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such number of copies as shall be requested by the recipient) on or prior to the
date on which such Foreign Lender becomes a Lender under this Agreement (and
from time to time thereafter upon the request of the Borrower or the
Administrative Agent, but only if such Foreign Lender is legally entitled to do
so), whichever of the following is applicable:
(i) duly completed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States of America is a party,
(ii) duly completed copies of Internal Revenue Service Form
W-8ECI,
(iii) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a "bank" within
the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent shareholder"
of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a
"controlled foreign corporation" described in section 881(c)(3)(C) of the Code
and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or
(iv) any other form prescribed by applicable law as a basis for
claiming exemption from or a reduction in United States Federal withholding tax
duly completed together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower to determine the withholding
or deduction required to be made.
(f) Treatment of Certain Refunds. If the Administrative Agent or a
Lender determines, in its sole and reasonable discretion, that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section, it shall pay to the Borrower an amount equal to such
refund (but only to the extent of indemnity payments made, or additional amounts
paid, by the Borrower under this Section with respect to the Taxes or Other
Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses
of the Administrative Agent or such Lender, as the case may be, and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund), provided that the Borrower, upon the request of
the Administrative Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This paragraph shall not be construed to
require the Administrative Agent or any Lender to make available its tax returns
(or any other information relating to its taxes that it deems confidential) to
the Borrower or any other Person.
ARTICLE III
CONDITIONS OF LENDING
Section 3.01 Conditions Precedent to Effectiveness. The obligation of
each Lender to make its Advance on the Closing Date is subject to the conditions
precedent that:
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(a) Documentation. The Administrative Agent shall have received the
following duly executed by all the parties thereto, in form and substance
satisfactory to the Administrative Agent and the Lenders, and, where applicable,
in sufficient copies for each Lender:
(i) this Agreement, a Note payable to the order of each requesting
Lender in the amount of its Commitment, the Security Agreements, the Guaranties,
the Pledge Agreements, and Mortgages encumbering substantially all of the
Borrower's and its Subsidiaries' personal property and encumbering at least 90%
of the PV-10 of the Loan Parties' Proven Reserves (as set forth in the Initial
Engineering Reports) and Oil and Gas Properties in connection therewith
(including the Oil and Gas Properties to be acquired under the Closing Date
Acquisition), and each of the other Loan Documents, including the Intercreditor
Agreement, and all attached exhibits and schedules;
(ii) a favorable opinion of (A) the Borrower's and the Guarantors'
primary counsel dated as of the date of this Agreement in form and covering such
matters as the Administrative Agent may reasonably request and (B) the
Borrower's and the Guarantors' local counsel dated as of the date of this
Agreement in form and covering such matters as the Administrative Agent may
reasonably request;
(iii) copies, certified as of the date of this Agreement by a
Responsible Officer of the General Partner of (A) the resolutions of the board
of managers of the General Partner approving the Loan Documents to which the
Borrower or the General Partner is a party, (B) the articles or certificate of
formation of the General Partner and the company agreement of the General
Partner, (C) the certificate of limited partnership of the Borrower, (D) the
partnership agreement of the Borrower, and (E) all other documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to this Agreement, the Notes, and the other Loan Documents;
(iv) certificates of the secretary or assistant secretary of the
General Partner certifying the names and true signatures of the officers of the
General Partner authorized to sign this Agreement, the Notes, Notices of
Borrowing, Notices of Conversion or Continuation, and the other Loan Documents
to which the Borrower or the General Partner is a party;
(v) other than as otherwise required under clause (iii) above,
copies, certified as of the date of this Agreement by a Responsible Officer or
the secretary or an assistant secretary of each Guarantor of (A) the resolutions
of the Board of Directors (or other applicable governing body) of such Guarantor
approving the Loan Documents to which it is a party, (B) the articles or
certificate (as applicable) of incorporation (or organization) and bylaws of
such Guarantor, and (C) all other documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to the Guaranty, the
Security Instruments, and the other Loan Documents to which such Guarantor is a
party;
(vi) a certificate of the secretary or an assistant secretary of
each Guarantor certifying the names and true signatures of officers of such
Guarantor authorized to sign the Guaranty, Security Instruments and the other
Loan Documents to which such Guarantor is a party;
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(vii) a certificate dated as of the Closing Date from a
Responsible Officer of the Borrower stating that (A) all representations and
warranties of the Borrower set forth in this Agreement are true and correct in
all material respects; (B) no Default has occurred and is continuing; and (C)
the conditions in this Section 3.01 have been met;
(viii) appropriate UCC-1 and UCC-3, as applicable, Financing
Statements covering the Collateral for filing with the appropriate authorities
and any other documents, agreements or instruments necessary to create an
Acceptable Security Interest in such Collateral;
(ix) property insurance certificates evidencing insurance which
meets the requirements of this Agreement and the Security Instruments (including
business interruption insurance), and which is otherwise satisfactory to the
Administrative Agent;
(x) the Initial Engineering Reports;
(xi) to the extent required in connection with the Pledge
Agreements, (A) stock or, to the extent applicable under the Person's
organizational documents, membership or partnership interest certificates, and
stock powers executed in blank for each such stock certificate endorsed in blank
to the Administrative Agent and (B) to the extent such Person is a limited
liability company or a limited partnership, copies of its limited liability
company agreement, partnership agreement or other similar document the terms of
which expressly provide that membership interests or partnership interests, as
applicable, in such Person are securities governed by Chapter 8 of the Uniform
Commercial Code as in effect in the State of New York;
(xii) copies, certified by a Responsible Officer of the Borrower,
of all of the Closing Date Acquisition Instruments and all exhibits and
schedules thereto, together with all amendments, modifications or waivers
thereto in effect as of the date of this Agreement;
(xiii) a Compliance Certificate completed and executed by a
Responsible Officer of the General Partner showing the calculation of, and
Borrower's pro forma compliance with Section 6.17 as of the Closing Date after
giving effect to the Closing Date Acquisition and the Borrowings requested and
made on the Closing Date;
(xiv) certificates of good standing and existence for each Loan
Party in (a) the state, province or territory in which each such Person is
organized and (b) each state, province or territory in which such good standing
is necessary, which certificates shall be dated a date not earlier than 30 days
prior to the date hereof; and
(xv) such other documents, governmental certificates, agreements
and lien searches as the Administrative Agent or any Lender may reasonably
request.
(b) Payment of Fees. On the date of this Agreement, the Borrower shall
have paid the fees required by Section 2.08 and all costs and expenses that have
been invoiced and are payable pursuant to Section 9.04.
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(c) Delivery of Financial Information. The Administrative Agent and the
Lenders shall have received true and correct copies of (i) the Financial
Statements and (ii) such other financial information as the Lenders may
reasonably request.
(d) Security Instruments. The Administrative Agent shall have received
all appropriate evidence required by the Administrative Agent and the Lenders in
their sole discretion necessary to determine that the Administrative Agent (for
its benefit and the benefit of the Lenders) shall have an Acceptable Security
Interest in the Collateral (which shall include, at least 90% of the PV-10 of
the Loan Parties' Proven Reserves (as set forth in the Initial Engineering
Reports) and Oil and Gas Properties in connection therewith, including the Oil
and Gas Properties to be acquired under the Closing Date Acquisition) and that
all actions or filings necessary to protect, preserve and validly perfect such
Liens have been made, taken or obtained, as the case may be, and are in full
force and effect.
(e) Title. The Administrative Agent shall be satisfied in its sole
discretion with the title to the Oil and Gas Properties included in the
Borrowing Base and that such Oil and Gas Properties, after giving effect to the
Closing Date Acquisition, constitute at least 71% of the PV-10 Value of the Loan
Parties' Proven Reserves (as set forth on the Initial Engineering Reports),
including mortgagee's title opinions or other title evidence in form and
substance satisfactory to the Administrative Agent and, in the case of title
opinions, issued by title counsel satisfactory to the Administrative Agent.
(f) Environmental. The Administrative Agent shall have received reports
as it may reasonably require and shall be satisfied with the condition of the
Oil and Gas Properties with respect to the Borrower's compliance with
Environmental Laws.
(g) No Default. No Default shall have occurred and be continuing.
(h) Representations and Warranties. The representations and warranties
contained in Article IV and in each other Loan Document shall be true and
correct in all material respects.
(i) Material Adverse Change. No event or circumstance that could cause
a Material Adverse Change shall have occurred.
(j) No Proceeding or Litigation; No Injunctive Relief. No action, suit,
investigation or other proceeding (including the enactment or promulgation of a
statute or rule) by or before any arbitrator or any Governmental Authority shall
be threatened or pending and no preliminary or permanent injunction or order by
a state or federal court shall have been entered (i) in connection with this
Agreement or any transaction contemplated hereby or (ii) which, in any case, in
the judgment of the Administrative Agent, could reasonably be expected to result
in a Material Adverse Change.
(k) Consents, Licenses, Approvals, etc. The Administrative Agent shall
have received true copies (certified to be such by the Borrower or other
appropriate party) of all consents, licenses and approvals required in
accordance with applicable Legal Requirements, or in accordance with any
document, agreement, instrument or arrangement to which the Borrower, any
Guarantor or any of their respective Subsidiaries is a party, in connection with
the execution, delivery, performance, validity and enforceability of this
Agreement, the other Loan Documents, and the Closing Date Acquisition
35
Instruments. In addition, the Borrower, the Guarantors and their respective
Subsidiaries shall have all such material consents, licenses and approvals
required in connection with the continued operation of the Borrower, such
Guarantors and such Subsidiaries and such approvals shall be in full force and
effect, and all applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on this Agreement and the actions
contemplated hereby. The Administrative Agent shall be satisfied that the
consummation of the Closing Date Acquisition does not contravene any law or any
contractual restriction binding on or affecting the Borrower or any Subsidiary,
the Sellers or any other party to the Closing Date Acquisition Instruments.
(l) Material Contracts. The Borrower shall have delivered to the
Administrative Agent copies of all material contracts, agreements or instruments
listed on the attached Schedule 4.21.
(m) Notice of Borrowing. The Administrative Agent shall have received a
Notice of Borrowing from the Borrower in the form of Exhibit G, with appropriate
insertions and executed by a duly authorized Responsible Officer of the
Borrower.
(n) Closing Date Acquisition. All conditions to the consummation and
effectiveness of the Closing Date Acquisition (other than the payment of the
purchase price) shall have been met. Furthermore, the Administrative Agent shall
have received (i) payoff letters, if any, in form and substance reasonably
satisfactory to the Administrative Agent covering all Debt secured by liens that
encumber any of the Properties being purchased by the Borrower under the Closing
Date Acquisition and (ii) UCC financing statement terminations, deed of trust
and mortgage lien releases and other evidence reasonably required by the
Administrative Agent indicating that all liens encumbering the Acquisition
Assets to be acquired by the Borrower and its Subsidiaries have been terminated
or released.
(o) USA Patriot Act. The Borrower has delivered to each Lender that is
subject to the Act such information requested by such Lender in order to comply
with the Act.
(p) Hydrocarbon Hedge Agreements. The Borrower shall have entered into
Hydrocarbon Hedge Agreements covering notional volumes at least equal to the
minimum volumes set forth on Schedule 3.01(p) and establishing pricing at least
equal to the minimum prices set forth on such Schedule 3.01(p).
(q) Minimum Liquidity. The sum of the Borrower's unrestricted cash and
Unused Commitment Amount as of the Closing Date after giving effect to the
Closing Date Acquisition and the Borrowings requested and made on the Closing
Date shall be at least $15,000,000.
(r) Senior Debt. (i) The Borrower shall have entered into the Senior
Credit Agreement, (ii) the terms and conditions thereof shall be reasonably
satisfactory to the Administrative Agent and the Lenders, and (iii) the
conditions precedent set forth in Section 3.01 of the Senior Credit Agreement
shall contemporaneously herewith have been satisfied or waived in writing as of
the date hereof. The Borrower shall have delivered copies of the Senior Credit
Agreement and each other agreement, instrument, or document executed by the
36
Borrower or any of its Subsidiaries or any of their Responsible Officers at any
time in connection with the Senior Credit Agreement on or before the date
hereof.
Section 3.02 Conditions Precedent to Borrowings. The obligation of each
Lender to make a Borrowing on the occasion of each Borrowing shall be subject to
the further conditions precedent that on the date of such Borrowing:
(a) the following statements shall be true (and each of the giving of
the applicable Notice of Borrowing or Notice of Conversion or Continuation and
the acceptance by the Borrower of the proceeds of such Borrowing shall
constitute a representation and warranty by the Borrower that on the date of
such Borrowing such statements are true):
(i) the representations and warranties contained in Article IV of
this Agreement and the representations and warranties contained in the Security
Instruments, the Guaranties, and each of the other Loan Documents are true and
correct in all material respects on and as of the date of such Borrowing, before
and after giving effect to such Borrowing and to the application of the proceeds
from such Borrowing, as though made on and as of such date; and
(ii) no Default has occurred and is continuing or would result
from such Borrowing or from the application of the proceeds therefrom; and
(b) the Administrative Agent shall have received such other approvals,
opinions, or documents reasonably deemed necessary or desirable by the
Administrative Agent as a result of circumstances occurring after the date of
this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 4.01 Existence; Subsidiaries. The Borrower is a limited
partnership duly organized, validly existing and in good standing under the laws
of Delaware and in good standing and qualified to do business in each other
jurisdiction where its ownership or lease of Property or conduct of its business
requires such qualification. Each Subsidiary of the Borrower is duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
formation and in good standing and qualified to do business in each jurisdiction
where its ownership or lease of Property or conduct of its business requires
such qualification. The General Partner is a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware and
in good standing and qualified to do business in each jurisdiction where its
ownership or lease of Property or conduct of its business requires such
qualification. As of the date of this Agreement, Schedule 4.01 sets forth the
capital structure of the Borrower and the Subsidiaries of the Borrower.
Section 4.02 Power. The execution, delivery, and performance by the
Borrower of this Agreement, the Notes, and the other Loan Documents to which it
is a party and by the Guarantors of the Guaranties and the other Loan Documents
to which they are a party and the consummation of the transactions contemplated
hereby and thereby (a) are within the Borrower's and such Guarantors' governing
powers, (b) have been duly authorized by all necessary governing action, (c) do
37
not contravene (i) the Borrower's or any Guarantor's certificate or articles of
incorporation, bylaws, limited liability company agreement, or other similar
governance documents or (ii) any law or any contractual restriction binding on
or affecting the Borrower or any Guarantor, and (d) will not result in or
require the creation or imposition of any Lien prohibited by this Agreement. At
the time of each Advance, such Advance, and the use of the proceeds of such
Advance, will be within the Borrower's governing ▇▇▇▇▇▇, ▇▇▇▇ have been duly
authorized by all necessary governing action, will not contravene (i) the
Borrower's articles or certificate of incorporation or other organizational
documents or (ii) any law or any contractual restriction binding on or affecting
the Borrower and will not result in or require the creation or imposition of any
Lien prohibited by this Agreement.
Section 4.03 Authorization and Approvals. No consent, order,
authorization, or approval or other action by, and no notice to or filing with,
any Governmental Authority or any other Person is required for the due
execution, delivery, and performance by the Borrower of this Agreement, the
Notes, or the other Loan Documents to which the Borrower is a party or by each
Guarantor of its Guaranty or the other Loan Documents to which it is a party or
the consummation of the transactions contemplated thereby. No consents, licenses
and approvals are required in accordance with applicable Legal Requirements, or
in accordance with any document, agreement, instrument or arrangement to which
the Borrower, the Guarantors, and their respective Subsidiaries is a party, in
connection with the execution, delivery, performance, validity and
enforceability of the Closing Date Acquisition Instruments. At the time of each
Borrowing, no authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority will be required for such Borrowing or
the use of the proceeds of such Borrowing.
Section 4.04 Enforceable Obligations. This Agreement, the Notes, and
the other Loan Documents to which the Borrower is a party have been duly
executed and delivered by the Borrower and the Guaranties and the other Loan
Documents to which each Guarantor is a party have been duly executed and
delivered by such Guarantors. Each Loan Document is the legal, valid, and
binding obligation of the Borrower and any Guarantor which is a party to it
enforceable against the Borrower and each such Guarantor in accordance with its
terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium, or similar law affecting
creditors' rights generally and by general principles of equity.
Section 4.05 Financial Statements.
(a) The Borrower has delivered to the Administrative Agent and the
Lenders copies of the Financial Statements, and the Financial Statements present
fairly the financial condition of Borrower and its Subsidiaries as of their
respective dates and for their respective periods in accordance with GAAP. As of
the date of the Financial Statements, there were no material contingent
obligations, liabilities for taxes, unusual forward or long-term commitments, or
unrealized or anticipated losses of the Borrower, except as disclosed therein in
accordance with GAAP and adequate reserves for such items have been made in
accordance with GAAP.
(b) All projections, estimates, and pro forma financial
information furnished by the Borrower were prepared on the basis of assumptions,
38
data, information, tests, or conditions believed to be reasonable at the time
such projections, estimates, and pro forma financial information were furnished.
(c) Since the date of the Financial Statements, no event or
circumstance that could reasonably be expected to cause a Material Adverse
Change has occurred.
(d) As of the date of this Agreement and after giving effect to
the Closing Date Acquisition but before giving effect to the making of the
Advances, neither the Borrower nor any of its Subsidiaries has any Debt other
than the Debt listed on Schedule 4.05.
Section 4.06 True and Complete Disclosure. All factual information
(excluding estimates and projections such as the estimates and projections
contained in the Engineering Reports) heretofore or contemporaneously furnished
by or on behalf of the Borrower or any of the Guarantors in writing to any
Lender or the Administrative Agent for purposes of or in connection with this
Agreement, any other Loan Document or any transaction contemplated hereby or
thereby is, and all other such factual information hereafter furnished by or on
behalf of the Borrower and the Guarantors in writing to the Administrative Agent
or any of the Lenders shall be, true and accurate in all material respects on
the date as of which such information is dated or certified and does not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements contained therein not misleading at such time.
All projections and estimates furnished by the Borrower (including, without
limitation, all estimates and projections contained in the Engineering Reports)
were prepared on the basis of assumptions, data, information, tests, or
conditions believed to be reasonable at the time such projections, estimates,
and pro forma financial information were furnished. This Section 4.06 shall not
be applicable to the Financial Statements as to which the representations and
warranties set forth in Section 4.05 shall be applicable.
Section 4.07 Litigation; Compliance with Laws.
(a) Other than as set forth in Schedule 4.07, there is no pending or,
to the best knowledge of the Borrower, threatened action or proceeding affecting
the Borrower or any of the Guarantors before any court, Governmental Authority
or arbitrator which could reasonably be expected to cause a Material Adverse
Change or which purports to affect the legality, validity, binding effect or
enforceability of this Agreement, any Note, or any other Loan Document.
Additionally, there is no pending or, to the best knowledge of the Borrower,
threatened action or proceeding instituted against the Borrower or any of the
Guarantors which seeks to adjudicate the Borrower or any of the Guarantors as
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or for any substantial part
of its Property, to the extent required herein.
(b) The Borrower and its Subsidiaries have complied in all material
respects with all material statutes, rules, regulations, orders and restrictions
of any Governmental Authority having jurisdiction over the conduct of their
respective businesses or the ownership of their respective Property.
39
Section 4.08 Use of Proceeds. The proceeds of the Advances will be used
by the Borrower for the purposes described in Section 5.09. The Borrower is not
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U). No proceeds of any
Advance will be used to purchase or carry any margin stock in violation of
Regulation T, U or X.
Section 4.09 Investment Company Act. Neither the Borrower nor any of
the Guarantors is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 4.10 Federal Power Act. No Credit Party and no Subsidiary of a
Credit Party is subject to regulation under the Federal Power Act, as amended or
any other Legal Requirement which regulates the incurring by such Person of
Debt, including Legal Requirements relating to common contract carriers or the
sale of electricity, gas, steam, water or other public utility services.
Section 4.11 Taxes.
(a) Reports and Payments. All Returns (as defined below in clause (c)
of this Section 4.11) required to be filed by or on behalf of the Borrower, the
Guarantors, or any member of the Controlled Group (hereafter collectively called
the "Tax Group") have been duly filed on a timely basis or appropriate
extensions have been obtained and such Returns are and will be true, complete
and correct, except where the failure to so file would not be reasonably
expected to cause a Material Adverse Change; and all Taxes shown to be payable
on the Returns or on subsequent assessments with respect thereto will have been
paid in full on a timely basis, and no other Taxes will be payable by the Tax
Group with respect to items or periods covered by such Returns, except in each
case to the extent of (i) reserves reflected in the Financial Statements or
subsequent financial statements delivered under Section 5.06 or (ii) taxes that
are being contested in good faith. The reserves for accrued Taxes reflected in
the financial statements delivered to the Lenders under this Agreement are
adequate in the aggregate for the payment of all unpaid Taxes, whether or not
disputed, for the period ended as of the date thereof and for any period prior
thereto, and for which the Tax Group may be liable in its own right, as
withholding agent or as a transferee of the assets of, or successor to, any
Person, except for such Taxes or reserves therefor, the failure to pay or
provide for which does not and would not reasonably be expected to cause a
Material Adverse Change.
(b) Taxes Definition. "Taxes" in this Section 4.11 shall mean all
taxes, charges, fees, levies, or other assessments imposed by any federal,
state, local, or foreign taxing authority, including income, gross receipts,
excise, real or personal property, sales, occupation, use, service, leasing,
environmental, value added, transfer, payroll, and franchise taxes (and
including any interest, penalties, or additions to tax attributable to or
imposed on or with respect to any such assessment).
(c) Returns Definition. "Returns" in this Section 4.11 shall mean any
federal, state, local, or foreign report, estimate, declaration of estimated
Tax, information statement or return relating to, or required to be filed in
connection with, any Taxes, including any information return or report with
respect to backup withholding or other payments of third parties.
40
Section 4.12 Pension Plans. All Plans are in compliance in all material
respects with all applicable provisions of ERISA. No Termination Event has
occurred with respect to any Plan, and each Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. No "accumulated funding deficiency" (as defined in
Section 302 of ERISA) has occurred, and for plan years after December 31, 2007,
no unpaid minimum required contribution exists, and there has been no excise tax
imposed under Section 4971 of the Code. No Reportable Event has occurred with
respect to any Multiemployer Plan, and each Multiemployer Plan has complied with
and been administered in all material respects in accordance with applicable
provisions of ERISA and the Code. The present value of all benefits vested under
each Plan (based on the assumptions used to fund such Plan) did not, as of the
last annual valuation date applicable thereto, exceed the value of the assets of
such Plan allocable to such vested benefits by more than $1,000,000. Neither the
Borrower nor any member of the Controlled Group has had a complete or partial
withdrawal from any Multiemployer Plan for which there is any withdrawal
liability in excess of $1,000,000. As of the most recent valuation date
applicable thereto, neither the Borrower nor any member of the Controlled Group
would become subject to any liability under ERISA in excess of $1,000,000 if the
Borrower or any member of the Controlled Group has received notice that any
Multiemployer Plan is insolvent or in reorganization. Based upon GAAP existing
as of the date of this Agreement and current factual circumstances, the Borrower
has no reason to believe that the annual cost during the term of this Agreement
to the Borrower or any member of the Controlled Group for post-retirement
benefits to be provided to the current and former employees of the Borrower or
any member of the Controlled Group under Plans that are welfare benefit plans
(as defined in Section 3(1) of ERISA) could, in the aggregate, reasonably be
expected to cause a Material Adverse Change.
Section 4.13 Condition of Property; Casualties. Each of the Borrower
and the Guarantors has good and defensible title to all of its Properties free
and clear of all Liens except for Permitted Liens. The material Properties used
or to be used in the continuing operations of the Borrower and each of the
Guarantors are in good repair, working order and condition, ordinary wear and
tear excepted. Since the date of the Financial Statements, neither the business
nor the material Properties of the Borrower and each of the Guarantors, taken as
a whole, has been materially and adversely affected as a result of any fire,
explosion, earthquake, flood, drought, windstorm, accident, strike or other
labor disturbance, embargo, requisition or taking of Property or cancellation of
contracts, Permits, or concessions by a Governmental Authority, riot, activities
of armed forces, or acts of God or of any public enemy.
Section 4.14 No Burdensome Restrictions; No Defaults.
(a) Neither the Borrower nor any Guarantor is a party to any indenture,
loan, or credit agreement or any lease or other agreement or instrument or
subject to any charter or corporate restriction or provision of applicable Legal
Requirement that could reasonably be expected to cause a Material Adverse
Change. Neither the Borrower nor any of its Subsidiaries is in default under or
with respect to any contract, agreement, lease, or other instrument to which the
Borrower or any Subsidiary is a party and which could reasonably be expected to
cause a Material Adverse Change or under any agreement in connection with any
Debt. Neither the Borrower nor any of its Subsidiaries has received any notice
41
of default under any material contract, agreement, lease, or other instrument to
which the Borrower or such Subsidiary is a party.
(b) No Default has occurred and is continuing.
Section 4.15 Environmental Condition.
(a) Permits, Etc. The Borrower and the Guarantors, or to the extent
that the right of operation is vested in others, such operators on behalf of the
Borrower and the Guarantors, (i) have obtained all Environmental Permits
necessary for the ownership and operation of their respective Properties and the
conduct of their respective businesses except where the failure to obtain such
Environmental Permit could not reasonably be expected to cause a Material
Adverse Change; (ii) have at all times been and are in compliance with all terms
and conditions of such Permits and with all other requirements of applicable
Environmental Laws except where the failure to be in compliance could not
reasonably be expected to cause a Material Adverse Change; (iii) have not
received notice of any material violation or alleged violation of any
Environmental Law or Permit; and (iv) are not subject to any actual or
contingent Environmental Claim, which could reasonably be expected to cause a
Material Adverse Change.
(b) Certain Liabilities. To the Borrower's actual knowledge, none of
the present or previously owned or operated Property of the Borrower or any
Guarantor or of any of their former Subsidiaries, wherever located: (i) has been
placed on or proposed to be placed on the National Priorities List, the
Comprehensive Environmental Response Compensation Liability Information System
list, or their state or local analogs, or have been otherwise investigated,
designated, listed, or identified as a potential site for removal, remediation,
cleanup, closure, restoration, reclamation, or other response activity under any
Environmental Laws; (ii) is subject to a Lien, arising under or in connection
with any Environmental Laws, that attaches to any revenues or to any Property
owned or operated by the Borrower or any of the Guarantors, wherever located,
which could reasonably be expected to cause a Material Adverse Change; or (iii)
has been the site of any Release of Hazardous Substances or Hazardous Wastes
from present or past operations which has caused at the site or at any
third-party site any condition that has resulted in or could reasonably be
expected to result in the need for Response that would cause a Material Adverse
Change.
(c) Certain Actions. Without limiting the foregoing: (i) all necessary
notices have been properly filed, and no further action is required under
current Environmental Law as to each Response or other restoration or remedial
project undertaken by the Borrower or the Guarantors (or to the extent that the
right of operation is vested in others, undertaken by such operators on behalf
of the Borrower or the Guarantors), or any of their former Subsidiaries on any
of their presently or formerly owned or operated Property and (ii) the present
and, to the Borrower's knowledge, future liability, if any, of the Borrower and
the Guarantors which could reasonably be expected to arise in connection with
requirements under Environmental Laws will not result in a Material Adverse
Change.
Section 4.16 Permits, Licenses, Etc. The Borrower and the Guarantors,
or to the extent that the right of operation is vested in others, such operators
on behalf of the Borrower and the Guarantors, possess all authorizations,
Permits, licenses, patents, patent rights or licenses, trademarks, trademark
42
rights, trade name rights and copyrights which are material to the conduct of
their business. The Borrower and the Guarantors, or to the extent that the right
of operation is vested in others, such operators on behalf of the Borrower and
the Guarantors, manage and operate their business in all material respects in
accordance with all applicable Legal Requirements and good industry practices.
Section 4.17 Gas Contracts. Other than as set forth in Schedule 4.17,
neither the Borrower nor any of the Guarantors, as of the date hereof and as of
the Closing Date: (a) is obligated in any material respect by virtue of any
prepayment made under any contract containing a "take-or-pay" or "prepayment"
provision or under any similar agreement to deliver hydrocarbons produced from
or allocated to any of the Borrower's and its Subsidiaries' Oil and Gas
Properties at some future date without receiving full payment therefor at the
time of delivery, or (b) has produced gas, in any material amount, subject to,
and none of the Borrower's and the Guarantors' Oil and Gas Properties is subject
to, balancing rights of third parties or subject to balancing duties under
governmental requirements, in each case other than in the ordinary course of
business and which prepayments and balancing rights, in the aggregate, do not
result in the Borrower or any Guarantor having net aggregate liability at any
time in excess of an amount equal to 1% of the Proven Reserves categorized as
"proved, developed and producing" on the most recently delivered Engineering
Report.
Section 4.18 Liens; Titles, Leases, Etc. None of the Property of the
Borrower or any of the Guarantors is subject to any Lien other than Permitted
Liens or Liens to be released on the Closing Date. On the Closing Date, all
governmental actions and all other filings, recordings, registrations, third
party consents and other actions which are necessary to create and perfect the
Liens provided for in the Security Instruments will have been made, obtained and
taken in all relevant jurisdictions. All Leases and agreements for the conduct
of business of the Borrower and the Guarantors are valid and subsisting, in full
force and effect and there exists no default or event of default or circumstance
which with the giving of notice or lapse of time or both would give rise to a
default under any such Leases or agreements which could reasonably be expected
to cause a Material Adverse Change. Neither the Borrower nor any of the
Guarantors is a party to any agreement or arrangement (other than this Agreement
and the Security Instruments), or subject to any order, judgment, writ or
decree, which either restricts or purports to restrict its ability to grant
Liens to secure the Obligations against their respective assets or Properties.
Section 4.19 Solvency and Insurance. Before and after giving effect to
the making of the Advances and after giving effect to the Closing Date
Acquisition, each of the Borrower and its Subsidiaries is Solvent. Additionally,
each of the Borrower and its Subsidiaries carry insurance required under Section
5.02.
Section 4.20 Hydrocarbon Hedge Agreements. The Hydrocarbon Hedge
Agreements in effect on the Closing Date meet the minimum volume and minimum
pricing requirements set forth in Section 3.01(p).
Section 4.21 Material Agreements. Schedule 4.21 sets forth a complete
and correct list of all material agreements, leases, indentures, purchase
agreements, obligations in respect of letters of credit, guarantees, joint
venture agreements, and other instruments in effect or to be in effect as of the
date hereof and as of the Closing Date (other than (a) the Hydrocarbon Hedge
43
Agreements and (b) the Closing Date Acquisition Instruments and any material
agreements or instruments disclosed therein) providing for, evidencing, securing
or otherwise relating to any Debt of the Borrower or any of the Guarantors, and
all obligations of the Borrower or any of the Guarantors to issuers of surety or
appeal bonds issued for account of the Borrower or any such Guarantor, and such
list correctly sets forth the names of the debtor or lessee and creditor or
lessor with respect to the Debt or lease obligations outstanding or to be
outstanding and the Property subject to any Lien securing such Debt or lease
obligation. Also set forth on Schedule 4.21 is a complete and correct list of
all material agreements and other instruments of the Borrower and the Guarantors
relating to the purchase, transportation by pipeline, gas processing, marketing,
sale and supply of natural gas and other Hydrocarbons. Except as detailed
otherwise in Schedule 4.21, the Borrower has heretofore delivered to the
Administrative Agent and the Lenders a complete and correct copy of all such
material credit agreements, indentures, purchase agreements, contracts, letters
of credit, guarantees, joint venture agreements, or other instruments, including
any modifications or supplements thereto, as in effect on the date hereof and as
of the Closing Date.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Obligation shall remain outstanding, or any Lender shall
have any Commitment hereunder, the Borrower agrees, unless the Required Lenders
shall otherwise consent in writing, to comply with the following covenants:
Section 5.01 Compliance with Laws, Etc. The Borrower shall comply, and
cause each of its Subsidiaries to comply, in all material respects with all
Legal Requirements. Without limiting the generality and coverage of the
foregoing, the Borrower shall comply, and shall cause each of its Subsidiaries
to comply, in all material respects, with all Environmental Laws and all laws,
regulations, or directives with respect to equal employment opportunity and
employee safety in all jurisdictions in which the Borrower, or any of its
Subsidiaries do business; provided, however, that this Section 5.01 shall not
prevent the Borrower or any of its Subsidiaries from, in good faith and with
reasonable diligence, contesting the validity or application of any such laws or
regulations by appropriate legal proceedings. Without limitation of the
foregoing, the Borrower shall, and shall cause each of its Subsidiaries to, (a)
maintain and possess all authorizations, Permits, licenses, trademarks, trade
names, rights and copyrights which are material to the conduct of its business
and (b) obtain, as soon as practicable, all consents or approvals required from
the United States or any states of the United States (or other Governmental
Authorities) necessary to grant the Administrative Agent an Acceptable Security
Interest in the Borrower's and its Subsidiaries' Oil and Gas Properties.
Section 5.02 Maintenance of Insurance.
(a) The Borrower shall, and shall cause each of its Subsidiaries to,
procure and maintain or shall cause to be procured and maintained continuously
in effect policies of insurance in form and amounts and issued by companies,
associations or organizations reasonably satisfactory to the Administrative
Agent covering such casualties, risks, perils, liabilities and other hazards
reasonably required by the Administrative Agent, including business interruption
44
insurance. In addition, the Borrower shall, and shall cause each of its
Subsidiaries to, comply with all requirements regarding insurance contained in
the Security Instruments.
(b) All certified copies of policies or certificates thereof, and
endorsements and renewals thereof shall be delivered to and retained by the
Administrative Agent. Unless the Senior Credit Agreement requires otherwise, the
policies of insurance shall either have attached thereto a lender's loss payable
endorsement for the benefit of the Administrative Agent, as loss payee in form
reasonably satisfactory to the Administrative Agent or shall name the
Administrative Agent as an additional insured, as applicable. The Borrower shall
furnish the Administrative Agent with a certificate of insurance or a certified
copy of all policies of insurance required. Unless the Senior Credit Agreement
requires otherwise, all policies or certificates of insurance shall set forth
the coverage, the limits of liability, the name of the carrier, the policy
number, and the period of coverage. Unless the Senior Credit Agreement requires
otherwise, all policies of insurance required under the terms hereof shall
contain an endorsement or agreement by the insurer that any loss shall be
payable in accordance with the terms of such policy notwithstanding any act of
negligence of the Borrower, or a Subsidiary or any party holding under the
Borrower or a Subsidiary which might otherwise result in a forfeiture of the
insurance and the further agreement of the insurer waiving all rights of setoff,
counterclaim or deductions against the Borrower and its Subsidiaries. Without
limiting the generality of the foregoing provisions, unless the Senior Credit
Agreement requires otherwise, Administrative Agent will be named as an
additional insured and will be provided a waiver of subrogation on the
Borrower's general liability and umbrella policies. Unless the Senior Credit
Agreement requires otherwise, all such policies shall contain a provision that
notwithstanding any contrary agreements between the Borrower, its Subsidiaries,
and the applicable insurance company, such policies will not be canceled,
allowed to lapse without renewal, surrendered or amended (which provision shall
include any reduction in the scope or limits of coverage) without at least 30
days' prior written notice to the Administrative Agent unless such is cancelled
for non-payment of premium and then the Administrative Agent will be given 10
days notice of cancellation. In the event that, notwithstanding the "lender's
loss payable endorsement" requirement of this Section 5.02, the proceeds of any
insurance policy described above are paid to the Borrower or a Subsidiary and
any Obligations are outstanding and the Senior Debt has been indefeasibly paid
in full, the Borrower shall deliver such proceeds to the Administrative Agent
immediately upon receipt.
Section 5.03 Preservation of Existence, Etc. The Borrower shall
preserve and maintain, and cause each of its Subsidiaries to preserve and
maintain, its partnership, corporate or limited liability company, as
applicable, existence, rights, franchises, and privileges in the jurisdiction of
its formation, and qualify and remain qualified, and cause each such Subsidiary
to qualify and remain qualified, as a foreign entity in each jurisdiction in
which qualification is necessary or desirable in view of its business and
operations or the ownership of its Properties, and, in each case, where failure
to qualify or preserve and maintain its rights and franchises could reasonably
be expected to cause a Material Adverse Change.
Section 5.04 Payment of Taxes, Etc. The Borrower shall pay and
discharge, and cause each of its Subsidiaries to pay and discharge, before the
same shall become delinquent, (a) all taxes, assessments, and governmental
charges or levies imposed upon it or upon its income or profits or Property that
are material in amount, prior to the date on which penalties attach thereto and
45
(b) all lawful claims that are material in amount which, if unpaid, might by law
become a Lien upon its Property; provided, however, that neither the Borrower
nor any such Subsidiary shall be required to pay or discharge any such tax,
assessment, charge, levy, or claim which is being contested in good faith and by
appropriate proceedings, and with respect to which reserves in conformity with
GAAP have been provided.
Section 5.05 Visitation Rights. At any reasonable time and from time to
time, upon reasonable notice, the Borrower shall, and shall cause its
Subsidiaries to, permit the Administrative Agent and any Lender or any of their
respective agents or representatives thereof, to (a) examine and make copies of
and abstracts from the records and books of account of, and visit and inspect at
their reasonable discretion the Properties of, the Borrower and any such
Subsidiary, and (b) discuss the affairs, finances and accounts of the Borrower
and any such Subsidiary with any of their respective officers or directors.
Section 5.06 Reporting Requirements. The Borrower shall furnish to the
Administrative Agent and each Lender (unless otherwise provided below):
(a) Annual Financials. As soon as available and in any event not later
than 120 days after the end of each fiscal year (commencing with fiscal year
ending December 31, 2007) of the Borrower and its consolidated Subsidiaries (or
such later date authorized by the SEC, if applicable; provided that, the
Borrower shall have delivered proper and timely notices of late filings filed
with the SEC and also delivered such to the Administrative Agent and such later
date may not be a date later than 120 days after the end of such fiscal year):
(i) the Form 10-K filed with the SEC for such fiscal year end, if any (ii) to
the extent not otherwise provided in such Form 10-K, a copy of the annual audit
report for such year for the Borrower and such consolidated Subsidiaries,
including therein the Borrower's and such consolidated Subsidiaries' balance
sheets as of the end of such fiscal year and the Borrower's and such
consolidated Subsidiaries' statements of income, cash flows, and retained
earnings, in each case certified by independent certified public accountants of
national standing reasonably acceptable to the Administrative Agent and
including any management letters delivered by such accountants to the Borrower
or any Subsidiary in connection with such audit; provided that, with respect to
the fiscal year ending December 31, 2007 only, the requirements of this clause
(ii) with respect to such fiscal year shall be satisfied by delivering (A) the
annual audit report of APC and the related financial information described in
this clause (ii) with respect to APC instead of the Borrower, and (B) unaudited
financial statements of the type described in this clause (ii) with respect to
the Borrower for such period, (iii) a certificate of such accounting firm to the
Administrative Agent and the Lenders stating that, in the course of the regular
audit of the business of the Borrower and its consolidated Subsidiaries (or APC,
if applicable), if any, which audit was conducted by such accounting firm in
accordance with generally accepted auditing standards, such accounting firm has
obtained no knowledge that a Default has occurred and is continuing, or if, in
the opinion of such accounting firm, a Default has occurred and is continuing, a
statement as to the nature thereof, and (iv) a Compliance Certificate executed
by a Responsible Officer of the Borrower;
(b) Quarterly Financials. As soon as available and in any event not
later than 60 days after the end of each of the first three fiscal quarters of
each fiscal year (commencing with fiscal quarter ending March 31, 2008) of the
Borrower and its consolidated Subsidiaries (or such later date authorized by the
46
SEC, if applicable; provided that the Borrower shall have delivered proper and
timely notices of late filings filed with the SEC and also delivered such to the
Administrative Agent and such later date may not be a date later than 90 days
after the end of such fiscal quarter): (i) the Form 10-Q filed with the SEC for
such fiscal quarter end, if any, (ii) to the extent not otherwise provided in
such Form 10-Q, unaudited balance sheet and the unaudited statements of income,
cash flows, and retained earnings of each such Person for the period commencing
at the end of the previous year and ending with the end of such fiscal quarter,
all in reasonable detail and duly certified with respect to such consolidated
statements (subject to the absence of footnotes and to year-end audit
adjustments) by a Responsible Officer of the Borrower as having been prepared in
accordance with GAAP; and (iii) a Compliance Certificate executed by a
Responsible Officer of the Borrower;
(c) Oil and Gas Reserve Reports.
(i) As soon as available but in any event on or before February
28th (or 29th, as applicable) of each year, an Independent Engineering Report
dated effective as of the immediately preceding December 31; provided that the
Independent Engineering Report due on February 29, 2008 shall be comprised of
(A) an Independent Engineering Report dated effective as of December 31, 2007
and delivered on or before February 29, 2008, covering all of the Oil and Gas
Properties owned by the Borrower or any of its Subsidiaries (other than those
Oil and Gas Properties acquired pursuant to the Closing Date Acquisition), and
(B) an Independent Engineering Report dated effective as of a date on or before
March 31, 2008 and delivered on or before April 30, 2008, covering all of the
Oil and Gas Properties acquired by the Borrower or any of its Subsidiaries
pursuant to the Closing Date Acquisition, in each case, together with such other
information as may be reasonably requested by any Lender with respect to the Oil
and Gas Properties included or to be included in the Borrowing Base;
(ii) shall be delivered in accordance with Section 2.02(b)(i)
hereof;
(iii) As soon as available but in any event on or before August
31st of each year, an Internal Engineering Report dated effective as of the
immediately preceding June 30;
(iv) Such other information as may be reasonably requested by the
Administrative Agent or any Lender with respect to the Oil and Gas Properties
included or to be included in the Borrowing Base;
(v) With the delivery of each Engineering Report, a certificate
from a Responsible Officer of the Borrower certifying that, to the best of his
knowledge and in all material respects: (a) (i) the factual information
contained in the Engineering Report and any other information delivered in
connection therewith is true and correct in all material respects, and (ii) all
estimates and projections contained in the Engineering Report and any other
information delivered in connection therewith was prepared on the basis of
assumptions, data, information, tests, or conditions believed to be reasonable
at the time such Engineering Report or other information was delivered, (b) the
Borrower or its Subsidiary, as applicable, owns good and defensible title to the
Oil and Gas Properties evaluated in such Engineering Report, and such Properties
are subject to an Acceptable Security Interest to the extent required herein and
are free of all Liens except for Permitted Liens, (c) except as set forth on an
exhibit to the certificate, on a net basis there are no Gas Imbalances, take or
47
pay or other prepayments with respect to its Oil and Gas Properties evaluated in
such Engineering Report which would require the Borrower or any of its
Subsidiaries to deliver Hydrocarbons produced from such Oil and Gas Properties
at some future time without then or thereafter receiving full payment therefor,
(d) none of its Oil and Gas Properties have been sold since the date of the last
Borrowing Base determination under the Senior Credit Agreement 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
Required Lenders, (e) attached to the certificate is a list of its Oil and Gas
Properties added to and deleted from the immediately prior Engineering Report
and a list showing any change in working interest or net revenue interest in its
Oil and Gas Properties occurring and the reason for such change, (f) attached to
the certificate is a list of all Persons disbursing proceeds to the Borrower or
to its Subsidiary, as applicable, from its Oil and Gas Properties, (g) except as
set forth on a schedule attached to the certificate, 90% of the PV-10 of the
Proven Reserves evaluated by such Engineering Report are pledged as Collateral
for the Obligations and attached to the certificate is a schedule detailing
compliance with Section 5.08, and (h) attached to the certificate is a monthly
cash flow budget for the 12 months following the delivery of such certificate
setting forth the Borrower's projections for production volumes, revenues,
expenses, taxes and budgeted capital expenditures during such period;
(d) Production Reports. As soon as available and in any event within 60
days after the end of each fiscal quarter, commencing with the fiscal quarter
ending December 31, 2007, a report certified by a Responsible Officer of the
Borrower in form and substance satisfactory to the Administrative Agent prepared
by the Borrower covering each of the Oil and Gas Properties of the Borrower and
its Subsidiaries and detailing quarterly on a field by field basis (i) the
production, revenue, and price information and associated operating expenses for
each such quarter, (ii) any changes to any producing reservoir, production
equipment, or producing well during each such quarter, which changes could cause
a Material Adverse Change, and (iii) any sales of the Borrower's or any
Subsidiaries' Oil and Gas Properties during each such quarter;
(e) Defaults. As soon as practicable and in any event within five days
after (i) the occurrence of any Default or (ii) the occurrence of any default
under any instrument or document evidencing Debt of the Borrower or any
Subsidiary, in each case known to any officer of the Borrower or any of its
Subsidiaries which is continuing on the date of such statement, a statement of a
Responsible Officer of the Borrower setting forth the details of such Default or
default, as applicable, and the actions which the Borrower or such Subsidiary
has taken and proposes to take with respect thereto;
(f) Quarterly Hedging Reports. Within 60 days after the end of each
calendar quarter end, a statement prepared by Borrower and certified as being
true and correct in all material respects by a Responsible Officer of the
Borrower, (i) setting forth in reasonable detail all Hydrocarbon Hedge
Agreements to which any production of oil, gas or other Hydrocarbons from the
Oil and Gas Properties of the Borrower and its Subsidiaries is then subject,
together with a statement of Borrower's position with respect to each such
Hydrocarbon Hedge Agreement, provided, however, if the price of any of the oil,
gas or other Hydrocarbons produced from such Oil and Gas Properties is subject
to a Hydrocarbon Hedge Agreement, then Borrower shall promptly notify the
Administrative Agent and the Lenders if such Hydrocarbon Hedge Agreement is
terminated, modified, amended or altered prior to the end of its contractual
term, or if there is an amendment, adjustment or modification of the price of
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any of the oil, gas or other Hydrocarbons produced from such Oil and Gas
Properties that is subject to or established by a Hydrocarbon Hedge Agreement,
and (ii) demonstrating the Borrower's compliance with Section 5.12 hereof.
(g) Termination Events. As soon as practicable and in any event (i)
within 30 days after (A) the Borrower knows or has reason to know that any
Termination Event described in clause (a) of the definition of Termination Event
with respect to any Plan has occurred, or (B) the Borrower acquires knowledge
that any member of the Controlled Group knows that any Termination Event
described in clause (a) of the definition of Termination Event with respect to
any Plan has occurred, and (ii) within 10 days after (A) the Borrower knows or
has reason to know that any other Termination Event with respect to any Plan has
occurred, or (B) the Borrower acquires knowledge that any of its Affiliates
knows that any other Termination Event with respect to any Plan has occurred, a
statement of a Responsible Officer of the Borrower describing such Termination
Event and the action, if any, which the Borrower or such Affiliate proposes to
take with respect thereto;
(h) Termination of Plans. Promptly and in any event within two Business
Days after (i) receipt thereof by the Borrower from the PBGC, or (ii) the
Borrower acquires knowledge of any Controlled Group member's receipt thereof
from the PBGC, copies of each notice received by the Borrower or any such member
of the Controlled Group of the PBGC's intention to terminate any Plan or to have
a trustee appointed to administer any Plan;
(i) Other ERISA Notices. Promptly and in any event within five Business
Days after (i) receipt thereof by the Borrower from a Multiemployer Plan
sponsor, or (ii) the Borrower acquires knowledge of any Controlled Group
member's receipt thereof from a Multiemployer Plan sponsor, a copy of each
notice received by the Borrower or any member of the Controlled Group concerning
the imposition or amount of withdrawal liability pursuant to Section 4202 of
ERISA;
(j) Environmental Notices. Promptly upon the receipt thereof by the
Borrower or any of its Subsidiaries, a copy of any form of request, notice,
summons or citation received from the Environmental Protection Agency, or any
other Governmental Authority, concerning (i) violations or alleged violations of
Environmental Laws, which seeks to impose liability therefor and could cause a
Material Adverse Change, (ii) any action or omission on the part of the Borrower
or any Subsidiary or any of their former Subsidiaries in connection with
Hazardous Waste or Hazardous Substances which could reasonably result in the
imposition of liability therefor that could cause a Material Adverse Change,
including any information request related to, or notice of, potential
responsibility under CERCLA, or (iii) concerning the filing of a Lien upon,
against or in connection with the Borrower or any Subsidiary or their former
Subsidiaries, or any of their leased or owned Property, wherever located;
(k) Other Governmental Notices. Promptly and in any event within five
Business Days after receipt thereof by the Borrower or any Subsidiary, a copy of
any notice, summons, citation, or proceeding seeking to modify in any material
respect, revoke, or suspend any material contract, license, permit or agreement
with any Governmental Authority;
49
(l) Material Changes. Prompt written notice of any condition or event
of which the Borrower has knowledge, which condition or event has resulted or
may reasonably be expected to result in (i) a Material Adverse Change (other
than global changes in the Oil and Gas Business or the world economy generally)
or (ii) a breach of or noncompliance with any material term, condition, or
covenant of any material contract to which the Borrower or any of its
Subsidiaries is a party or by which they or their Properties may be bound;
(m) Disputes, Etc. Prompt written notice of (i) any claims, legal or
arbitration proceedings, proceedings before any Governmental Authority, or
disputes, or to the knowledge of the Borrower threatened, or affecting the
Borrower, or any of its Subsidiaries which, if adversely determined, could
reasonably be expected to cause a Material Adverse Change, or any material labor
controversy of which the Borrower or any of its Subsidiaries has knowledge
resulting in or reasonably considered to be likely to result in a strike against
the Borrower or any of its Subsidiaries and (ii) any claim, judgment, Lien or
other encumbrance (other than a Permitted Lien) affecting any Property of the
Borrower or any Subsidiary if the value of the claim, judgment, Lien, or other
encumbrance affecting such Property shall exceed $1,000,000;
(n) Other Accounting Reports. Promptly upon receipt thereof, a copy of
each other report or letter submitted to the Borrower or any Subsidiary by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Borrower and its Subsidiaries, and a copy of
any response by the Borrower or any Subsidiary of the Borrower, or the Board of
Managers (or other applicable governing body) of the Borrower or any Subsidiary
of the Borrower, to such letter or report;
(o) Notices Under Other Loan Agreements. Promptly after the furnishing
thereof, copies of any statement, report or notice furnished to any Person
pursuant to the terms of any 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 5.06;
(p) SEC Filings. Promptly after the sending or filing thereof, copies
of all proxy material, reports and other information which the Borrower or any
of its Subsidiaries sends to or files with the SEC or sends to the limited
partners of the Borrower or the holders of Equity Interests in any of its
Subsidiaries; and
(q) Other Information. Such other information respecting the business
or Properties, or the condition or operations, financial or otherwise, of the
Borrower or any of its Subsidiaries, as any Lender through the Administrative
Agent may from time to time reasonably request.
The Administrative Agent agrees to provide the Lenders with copies of
any material notices and information delivered solely to the Administrative
Agent pursuant to the terms of this Agreement.
Section 5.07 Maintenance of Property. Subject to Section 6.04, the
Borrower shall, and shall cause each of its Subsidiaries to, maintain their
owned, leased, or operated Property in good condition and repair, ordinary wear
and tear excepted; and shall abstain, and cause each of its Subsidiaries to
abstain from, knowingly or willfully permitting the commission of waste or other
injury, destruction, or loss of natural resources, or the occurrence of
pollution, contamination, or any other condition in, on or about the owned or
50
operated Property involving the Environment that could reasonably be expected to
result in Response activities and that could reasonably be expected to cause a
Material Adverse Change.
Section 5.08 Agreement to Pledge. The Borrower shall, and shall cause
each Subsidiary to, grant to the Administrative Agent an Acceptable Security
Interest in all personal Property of the Borrower or any Subsidiary now owned or
hereafter acquired, and shall, and shall cause each Subsidiary to, grant to the
Administrative Agent an Acceptable Security Interest in at least 90% of the
PV-10 of the Proven Reserves of the Borrower and its Subsidiaries based on its
most recently delivered Engineering Report.
Section 5.09 Use of Proceeds. The Borrower shall use the proceeds of
the Advances to fund the acquisition of the Acquisition Assets from the Sellers
pursuant to the Closing Date Acquisition Instruments.
Section 5.10 Title Opinions. The Borrower shall from time to time after
March 31, 2008, upon the reasonable request of the Administrative Agent, take
such actions and execute and deliver such documents and instruments as the
Administrative Agent shall require to ensure that the Administrative Agent
shall, at all times, have received satisfactory title evidence (including, if
requested, supplemental or new title opinions addressed to it) covering at least
80% of the PV-10 of the Proven Reserves of the Borrower and its Subsidiaries as
reasonably determined by the Administrative Agent and at least 80% of the PV-10
of the Proven Reserves which are categorized as "proved, developed and
producing", which title opinions shall be in form and substance acceptable to
the Administrative Agent in its sole discretion and shall include opinions
regarding the before payout and after payout ownership interests held by the
Borrower and the Borrower's Subsidiaries, for all ▇▇▇▇▇ located on the Oil and
Gas Properties covered thereby as to the ownership of Oil and Gas Properties of
the Borrower and its Subsidiaries, and reflecting that the Administrative Agent
has an Acceptable Security Interest in such Oil and Gas Properties of the
Borrower and its Subsidiaries.
Section 5.11 Further Assurances; Cure of Title Defects. The Borrower
shall, and shall cause each Subsidiary to, cure promptly any defects in the
creation and issuance of the Notes and the execution and delivery of the
Security Instruments and this Agreement. The Borrower hereby authorizes the
Lenders or the Administrative Agent to file any financing statements without the
signature of the Borrower to the extent permitted by applicable Legal
Requirements in order to perfect or maintain the perfection of any security
interest granted under any of the Loan Documents. The Borrower at its expense
will, and will cause each Subsidiary to, promptly execute and deliver to the
Administrative Agent upon request all such other documents, agreements and
instruments to comply with or accomplish the covenants and agreements of the
Borrower or any Subsidiary, as the case may be, in the Security Instruments and
this Agreement, or to further evidence and more fully describe the collateral
intended as security for the Obligations, or to correct any omissions in the
Security Instruments, or to state more fully the security obligations set out
herein or in any of the Security Instruments, or to perfect, protect or preserve
any Liens created pursuant to any of the Security Instruments, or to make any
recordings, to file any notices or obtain any consents, all as may be necessary
or appropriate in connection therewith or to enable the Administrative Agent to
exercise and enforce its rights and remedies with respect to any Collateral.
Within 30 days after (a) a request by the Administrative Agent or the Lenders to
51
cure any title defects or exceptions which are not Permitted Liens raised by
such information or (b) a notice by the Administrative Agent that the Borrower
has failed to comply with Section 5.10, the Borrower shall (i) cure such title
defects or exceptions which are not Permitted Liens or substitute acceptable Oil
and Gas Properties with no title defects or exceptions except for Permitted
Liens covering Collateral of an equivalent value and (ii) deliver to the
Administrative Agent satisfactory title evidence (including supplemental or new
title opinions meeting the foregoing requirements) in form and substance
acceptable to the Administrative Agent in its reasonable business judgment as to
the Borrower's and its Subsidiaries' ownership of such Oil and Gas Properties
and the Administrative Agent's Liens and security interests therein as are
required to maintain compliance with Section 5.10.
Section 5.12 Hedging Arrangements. The Borrower shall maintain in
effect all of the Hydrocarbon Hedge Agreements required to be established on the
Closing Date pursuant to Section 3.01(p).
Section 5.13 Deposit Accounts. Unless the Senior Credit Agreement
requires otherwise, the Borrower shall, and shall cause each of its Subsidiaries
to, maintain their principal operating accounts and other deposit accounts with
the Administrative Agent or any Lender or any other bank that has executed an
account control agreement reasonably acceptable in form and substance to the
Administrative Agent.
Section 5.14 Securities Offering. Within nine months after the Closing
Date, the Borrower (a) shall have completed a private placement of equity or (b)
shall have engaged one or more investment bank reasonably acceptable to the
Administrative Agent to publicly sell or privately place common equity
securities, in each case, the net proceeds of which shall equal or exceed the
amount of the Obligations and shall be available to repay the Obligations on or
before the Maturity Date ("Securities Offering"). Notwithstanding anything to
the contrary contained herein, in the event of a failure by the Borrower to
initiate a Securities Offering within nine months after the Closing Date, the
Borrower shall engage a financial institution reasonably acceptable to the
Administrative Agent to pursue the issuance of Debt in an amount sufficient to
repay in full in cash the Obligations.
Section 5.15 Post-Closing Requirements. On or prior to March 31, 2008,
the Borrower shall satisfy each of the requirements set forth in that certain
Post-Closing Agreement, in each case to the satisfaction of the Administrative
Agent as set forth therein.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Obligation shall remain outstanding or any Lender shall
have any Commitment hereunder, the Borrower agrees, unless the Required Lenders
shall otherwise consent in writing, to comply with the following covenants:
Section 6.01 Liens, Etc. The Borrower shall not create, assume, incur,
or suffer to exist, or permit any of its Subsidiaries to create, assume, incur,
or suffer to exist, any Lien on or in respect of any of its Property whether now
owned or hereafter acquired, or assign any right to receive income, except that
52
the Borrower and its Subsidiaries may create, incur, assume, or suffer to exist
(all of which shall be referred to as "Permitted Liens"):
(a) Liens securing the Obligations;
(b) Liens securing the Senior Debt to the extent permitted under the
Intercreditor Agreement;
(c) purchase money Liens or purchase money security interests upon or
in any equipment acquired or held by the Borrower or any of its Subsidiaries in
the ordinary course of business prior to or at the time of the Borrower's or
such Subsidiary's acquisition of such equipment; provided that the Debt secured
by such Liens (i) was incurred solely for the purpose of financing the
acquisition of such equipment, and does not exceed the aggregate purchase price
of such equipment, (ii) is secured only by such equipment and not by any other
assets of the Borrower and its Subsidiaries, and (iii) is not increased in
amount;
(d) Liens for taxes, assessments, or other governmental charges or
levies not yet due or that (provided foreclosure, sale, or other similar
proceedings shall not have been initiated) are being contested in good faith by
appropriate proceedings, and such reserve as may be required by GAAP shall have
been made therefor;
(e) Liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, suppliers, laborers, construction, or similar
Liens arising by operation of law in the ordinary course of business in respect
of obligations that are not yet due or that are being contested in good faith by
appropriate proceedings, provided that such reserve as may be required by GAAP
shall have been made therefor;
(f) Liens to operators and non-operators under joint operating
agreements arising in the ordinary course of the business of the Borrower or the
relevant Subsidiary to secure amounts owing, which amounts are not yet due or
are being contested in good faith by appropriate proceedings, if such reserve as
may be required by GAAP shall have been made therefor;
(g) royalties, overriding royalties, net profits interests, production
payments, reversionary interests, calls on production, preferential purchase
rights and other burdens on or deductions from the proceeds of production, that
do not secure Debt for borrowed money and that are taken into account in
computing the net revenue interests and working interests of the Borrower or any
of its Subsidiaries warranted in the Security Instruments;
(h) Liens arising in the ordinary course of business out of pledges or
deposits under workers' compensation laws, unemployment insurance, old age
pensions or other social security or retirement benefits, or similar legislation
or to secure public or statutory obligations of the Borrower;
(i) Liens arising under operating agreements, unitization and pooling
agreements and orders, Farmout agreements, gas balancing agreements and other
similar agreements, in each case that are customary in the Oil and Gas Business
and that are entered into in the ordinary course of business that are taken into
account in computing the net revenue interests and working interests of the
Borrower or any of its Subsidiaries warranted in the Security Instruments, to
53
the extent 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;
(j) easements, rights-of-way, and other similar encumbrances, and minor
defects in the chain of title that are customarily accepted in the oil and gas
financing industry, none of which interfere with the ordinary conduct of the
business of Borrower or any Subsidiary or materially detract from the value or
use of the Property to which they apply;
(k) Liens in favor of landlords or lessors under operating leases or
Capital Leases of a Loan Party; provided that (i) any such Lien shall secure
only the obligations of such Loan Party arising under the applicable operating
lease or Capital Lease, and (ii) the Debt under such Capital Leases is permitted
under Section 6.02 below;
(l) Liens on cash or securities pledged to secure performance of bids,
tenders, performance bonds, surety and appeals bonds, or regulatory compliance
or other obligations of a like nature incurred in the ordinary course of
business and not in connection with the borrowing of money;
(m) Liens in favor of collecting or payor banks having a right of
setoff, revocation, refund or chargeback with respect to money or instruments of
any of the Company Group on deposit with or in possession of such bank;
(n) Liens on cash and Liquid Investments securing the performance
obligations of Borrower under any Hedge Contract (subject to the limitations set
forth in Section 6.14);
(o) Liens in favor of Persons financing unpaid insurance premiums so
long as (i) such Liens are limited to insurance policies with respect to which
such premiums are financed, and (ii) the obligations secured by such Liens do
not exceed $500,000 in the aggregate;
(p) Subject to paragraphs (d) and (e) of this Section 6.01,
non-consensual statutory Liens on pipeline or pipeline facilities, Hydrocarbons
or Properties of the Company Group which arise out of operation of law and are
not in connection with the borrowing of money;
(q) Liens described in Schedule 4.05; and
(r) Liens resulting from any judgment or award that is not a Default or
Event of Default.
Section 6.02 Debts, Guaranties, and Other Obligations. The Borrower
shall not, and shall not permit any of its Subsidiaries to, create, assume,
suffer to exist, or in any manner become or be liable in respect of, any Debt
except:
(a) Debt of the Borrower and its Subsidiaries under the Loan Documents;
(b) Debt of the Borrower and its Subsidiaries under the Senior Loan
Documents;
54
(c) Debt not otherwise permitted by this Section 6.02 and listed on
Schedule 4.05; provided that the amount of such Debt may not be increased;
(d) Debt in the form of obligations for the deferred purchase price of
Property or services incurred in the ordinary course of business which are not
yet due and payable or are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP have been
established;
(e) Debt secured by the Liens permitted under paragraph (c) of Section
6.01; provided that, the sum of such Debt and other unsecured Debt permitted
under paragraph 6.02(k) does not exceed $250,000 at any time;
(f) Debt under Hydrocarbon Hedge Agreements or Interest Hedge
Agreements which are not prohibited by the terms of Section 6.14;
(g) Debt consisting of sureties or bonds provided to any Governmental
Authority or other Person and assuring payment of contingent liabilities of the
Borrower in connection with the operation of the Oil and Gas Properties,
including with respect to plugging, facility removal and abandonment of its Oil
and Gas Properties;
(h) Intercompany Debt;
(i) Debt constituting letters of credit for the account of any member
of the Company Group provided as security (i) for any matter which is a Lien
permitted under paragraphs (e), (l), (n) or (o) or Section 6.01; provided that
the amount of such Debt shall not exceed the obligations secured by such Lien,
and (ii) to secure payment obligations in connection with self-insurance or
similar requirements in the ordinary course of business;
(j) Debt arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business if extinguished within two (2) Business
Days of incurrence and does not exceed $50,000; and
(k) Debt not otherwise permitted under this Section 6.02, provided that
(i) such Debt is not secured by any Lien, and (ii) the aggregate of amount of
such Debt plus the aggregate amount of Debt permitted under Section 6.02(e)
shall not to exceed $250,000 at any time.
Section 6.03 Agreements Restricting Liens and Distributions. The
Borrower shall not, nor shall it permit any of its Subsidiaries to, create,
incur, assume or permit to exist any contract, agreement or understanding (other
than this Agreement, the Security Instruments and the Senior Loan Documents)
which in any way prohibits or restricts the granting, conveying, creation or
imposition of any Lien on any of its Property, whether now owned or hereafter
acquired, to secure the Obligations or restricts any Subsidiary from paying
dividends to the Borrower, or which requires the consent of or notice to other
Persons in connection therewith.
Section 6.04 Merger or Consolidation; Asset Sales.
55
(a) The Borrower shall not, nor shall it permit any of its Subsidiaries
to merge or consolidate with or into any other Person other than the merger or
consolidation of a Loan Party with and into the Borrower or another Loan Party.
(b) The Borrower shall not, nor shall it permit any of its Subsidiaries
to enter into or effect a Disposition of any of its Properties other than: (i)
the sale of Hydrocarbons in the ordinary course of business, (ii) the
Disposition of equipment that is (A) obsolete, worn out, depleted or uneconomic
and disposed of in the ordinary course of business, (B) no longer necessary for
the business of such Person or (C) contemporaneously replaced by equipment of at
least comparable use, (iii) Farmouts of undeveloped acreage and assignments in
connection with such Farmouts, (iv) Dispositions of Oil and Gas Properties or
any interest therein or Subsidiaries owning Oil and Gas Properties provided that
(A) 100% of the consideration received in respect of such Disposition shall be
cash, (B) the consideration received in respect of such 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 Disposition (as reasonably
determined by the board of managers or the equivalent governing body of the
General Partner and, if requested by the Administrative Agent, the Borrower
shall deliver a certificate of a Responsible Officer of the Borrower certifying
to that effect), and (C) if any such Disposition is of a Subsidiary owning Oil
and Gas Properties, such Disposition shall include all the Equity Interests of
such Subsidiary; (v) the sale, release, surrender (in accordance with the terms
of the applicable lease) or other disposition of leasehold interests in any Oil
and Gas Property to which no Proven Reserves are attributed,(vi) Dispositions of
Properties between and among Loan Parties, and (vii) any Disposition of
Properties not otherwise regulated by Section 6.04(b) and having a fair market
value not to exceed $250,000 during any 12-month period.
(c) Restricted Payments. The Borrower shall not, nor shall it permit
any of its Subsidiaries to, make any Restricted Payments.
Section 6.05 Investments. The Borrower shall not, nor shall it permit
any of its Subsidiaries to, make or permit to exist any loans, advances, or
capital contributions to, or make any investment in (including the making of any
Acquisition), or purchase or commit to purchase any stock or other securities or
evidences of indebtedness of or interests in any Person, except:
(a) Liquid Investments;
(b) trade and customer accounts receivable which are for goods
furnished or services rendered in the ordinary course of business and are
payable in accordance with customary trade terms;
(c) creation of any additional Subsidiaries in compliance with Section
6.15;
(d) investments in negotiable instruments for collection in the
ordinary course of business;
(e) investments made in the ordinary course of business and of a nature
that is customary in the Oil and Gas Business as a means of actively exploiting,
exploring for, acquiring, developing, processing, gathering, marketing or
transporting oil and gas through agreements, transactions, interests or
arrangements which provide for the sharing of risks or costs or satisfy other
56
objectives of the Oil and Gas Business, jointly with third parties, including
entering into operating agreements, working interests, royalty interests,
mineral leases, processing agreements, Farmouts, farm-in agreements, division
orders, contracts for the sale, transportation or exchange of oil and natural
gas, unitization and pooling declarations and agreements and area of mutual
interest agreements, production sharing agreements or other similar or customary
agreement, transactions, properties, interest and investments and expenditures
in connection therewith; provided that (i) no such investments includes an
investment in any Equity Interest in a Person, (ii) any Debt incurred or Lien
granted or permitted to exist pursuant to such Investments is otherwise
permitted under Section 6.01 and Section 6.02, respectively, and (iii) such
investments are taken into account in computing the net revenue interests and
working interests of the Borrower or any of its Subsidiaries warranted in the
Security Instruments;
(f) Hedge Contracts to the extent permitted by Sections 6.02 and 6.14;
(g) Investments in Intercompany Debt; and
(h) Investments not otherwise permitted under this Section 6.06 in an
aggregate amount not to exceed $500,000.
Section 6.06 Affiliate Transactions. Other than as set forth on
Schedule 6.07, the Borrower shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of transactions (including the purchase, sale, lease or
exchange of Property, the making of any investment, the giving of any guaranty,
the assumption of any obligation or the rendering of any service) with any of
their Affiliates unless such transaction or series of transactions is on terms
no less favorable to the Borrower or the Subsidiary, as applicable, than those
that could be obtained in a comparable arm's length transaction with a Person
that is not such an Affiliate.
Section 6.07 Compliance with ERISA. The Borrower shall not, nor shall
it permit any of its Subsidiaries to, directly or indirectly, (a) engage in, or
permit any Subsidiary or ERISA Affiliate to engage in, any transaction in
connection with which the Borrower, any Subsidiary or any ERISA Affiliate could
be subjected to either a civil penalty assessed pursuant to section 502(c), (i)
or (l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code, in
either case, in excess of $1,000,000; (b) terminate, or permit any Subsidiary or
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 to the Borrower,
any Subsidiary or any ERISA Affiliate to the PBGC in excess of $1,000,000; (c)
57
fail to make, or permit any Subsidiary or 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 Legal Requirement, the Borrower, a
Subsidiary or any ERISA Affiliate is required to pay as contributions thereto;
(d) permit to exist, or allow any Subsidiary or ERISA Affiliate to permit to
exist, any accumulated funding deficiency (or unpaid minimum required
contribution for plan years after December 31, 2007) 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 Subsidiary or ERISA Affiliate to
permit, the actuarial present value of the benefit liabilities (as "actuarial
present value of the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA) under any Plan maintained by the Borrower, any Subsidiary
or any ERISA Affiliate which is regulated under Title IV of ERISA to exceed the
current value of the assets (computed on a plan termination basis in accordance
with Title IV of ERISA) of such Plan allocable to such benefit liabilities by
more than $1,000,000; (f) contribute to or assume an obligation to contribute
to, or permit any Subsidiary or ERISA Affiliate to contribute to or assume an
obligation to contribute to, any Multiemployer Plan in excess of $1,000,000; (g)
acquire, or permit any Subsidiary or ERISA Affiliate to acquire, an interest in
any Person that causes such Person to become an ERISA Affiliate with respect to
the Borrower, any Subsidiary or any ERISA Affiliate 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 under which any Subsidiary or ERISA Affiliate would have an
obligation to contribute more than $1,000,000, or (2) any other Plan that is
subject to Title IV of ERISA under which the actuarial present value of the
benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities by more than $1,000,000; (h)
incur, or permit any Subsidiary or ERISA Affiliate to incur, a liability to or
on account of a Plan under section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA;
(i) contribute to or assume an obligation to contribute to, or permit any
Subsidiary or 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 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 Subsidiary or ERISA Affiliate to amend, a Plan resulting in an increase in
current liability such that the Borrower, any Subsidiary or any ERISA Affiliate
is required to provide security to such Plan under section 401(a)(29) of the
Code; or (k) permit to exist any occurrence of any Reportable Event (as defined
in Title IV of ERISA), or any other event or condition, which presents a
material (in the opinion of the Required Lenders) risk of such a termination by
the PBGC of any Plan.
Section 6.08 Sale-and-Leaseback. The Borrower shall not, nor shall it
permit any of its Subsidiaries to, sell or transfer to a Person any Property
(other than with respect to Property that is permitted to be sold or transferred
pursuant to Section 6.04), whether now owned or hereafter acquired, if at the
time or thereafter the Borrower or a Subsidiary shall lease as lessee such
Property or any part thereof or other Property which the Borrower or a
Subsidiary intends to use for substantially the same purpose as the Property
sold or transferred.
Section 6.09 Change of Business. The Borrower shall not, nor shall it
permit any of its Subsidiaries to, make any material change in the character of
its business as an independent oil and gas exploration and production company,
nor will the Borrower or any Subsidiary operate or carry on business in any
jurisdiction other than the United States or Canada.
Section 6.10 Organizational Documents, Name Change. The Borrower shall
not, nor shall it permit any of its Subsidiaries to, amend, supplement, modify
or restate their articles or certificate of incorporation, bylaws, limited
liability company agreements, or other equivalent organizational documents or
amend its name or change its jurisdiction of incorporation, organization or
formation, in any case, without prior written notice to, and prior consent of,
the Administrative Agent.
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Section 6.11 Use of Proceeds. The Borrower will not permit the proceeds
of any Advance to be used for any purpose other than those permitted by Section
5.09. The Borrower will not engage in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U). Neither the Borrower nor any Person acting on behalf of the Borrower has
taken or shall take, nor permit any of the Borrower's Subsidiaries to take any
action which might cause any of the Loan Documents to violate Regulation T, U or
X or any other regulation of the Board of Governors of the Federal Reserve
System 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, including the use of the proceeds of any Advance to
purchase or carry any margin stock in violation of Regulation T, U or X.
Section 6.12 Gas Imbalances, Take-or-Pay or Other Prepayments. The
Borrower shall not, nor shall it permit any of its Subsidiaries to, allow Gas
Imbalances, take-or-pay or other prepayments with respect to the Oil and Gas
Properties of the Borrower or any Subsidiary which would require the Borrower or
any Subsidiary to deliver their respective Hydrocarbons produced on a monthly
basis from such Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor other than Gas Imbalances,
take-or-pay or other prepayments incurred in the ordinary course of business and
which Gas Imbalances, take-or-pay, or other prepayments and balancing rights, in
the aggregate, do not result in the Borrower or any Guarantor having net
aggregate liability at any time in excess of an amount equal to 1% of the Proven
Reserves that are categorized as "proved , developed and producing" on the most
recently delivered Engineering Report.
Section 6.13 Limitation on Hedging. The Borrower shall not, nor shall
it permit any of its Subsidiaries to:
(a) purchase, assume, or hold a speculative position in any commodities
market or futures market or enter into any Hedge Contract for speculative
purposes;
(b) be party to or otherwise enter into any Hydrocarbon Hedge
Agreement, Interest Hedge Agreement or any other Hedge Contract which (i) is
entered into for reasons other than as a part of its normal business operations
as a risk management strategy and/or hedge against changes resulting from market
conditions related to the Borrower's operations, (ii) fixes a price for a term
of more than 5 years, (iii) that covers notional volumes in excess of the
greater of (A) 90% of the anticipated production volumes of crude oil and
natural gas, calculated separately, attributable to Proven Reserves categorized
as "proved, developing and producing" of such Loan Party during the period such
hedge arrangement is in effect as shown on the most recently delivered
Independent Engineering Report (or such separate or supplemental reserve data or
other information acceptable to the Administrative Agent in its sole discretion)
and (B) 85% of the anticipated production volumes of crude oil and natural gas,
calculated separately, attributable to the total Proven Reserves of such Loan
Party during the period such hedge arrangement is in effect as shown on the most
recently delivered Independent Engineering Report (or such separate or
supplemental reserve data or other information acceptable to the Administrative
Agent in its sole discretion), (iv) except for (A) the Collateral under the
Security Instruments with respect to Lender Hedging Obligations, (B) the Senior
Collateral under the Senior Security Instruments with respect to Senior Lender
Hedging Obligations, and (C) letters of credit up to $500,000 in the aggregate
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with respect to Hedge Contracts entered into from time to time with a
counterparty that is not a Lender or a Senior Lender or an Affiliate of a Lender
or a Senior Lender, requires such Loan Party to put up money, assets, or other
security against the event of its nonperformance prior to actual default by such
Loan Party in performing its obligations thereunder, or (iv) is with a
counterparty or has a guarantor of the obligation of the counterparty who
(unless such counterparty is a Senior Lender or one of its Affiliates) at the
time the contract is made has long-term obligations rated less than A- or A3,
respectively, by Standard & Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Service,
Inc; or
(c) allow the aggregate monthly production of crude oil and natural
gas, calculated separately (determined, in the case of contracts that are not
settled on a monthly basis, by a monthly proration reasonably acceptable to
Administrative Agent), for any single month during the period such hedge
arrangements are in effect to be less than the aggregate notional volumes
covered by any Hydrocarbon Hedge Agreements, Interest Hedge Agreements or
similar hedge arrangements; provided that if such production deficiency is the
result of a force majeure event, such production deficiency shall not constitute
a breach hereunder unless such production deficiency shall be continuing for a
period of more than three months.
Section 6.14 Additional Subsidiaries. The Borrower shall not, nor shall
it permit any of its Subsidiaries to, create or acquire any additional
Subsidiaries without (a) prior written notice to the Administrative Agent and
the Required Lenders, (b) such new Subsidiary executing and delivering to the
Administrative Agent, at its request, a Guaranty, a Pledge Agreement (if
applicable), a Security Agreement and a Mortgage (if applicable), and such other
Security Instruments as the Administrative Agent or the Required Lenders may
reasonably request, (c) the equity holder of such Subsidiary executing and
delivering to the Administrative Agent a Pledge Agreement pledging 100% of the
Equity Interest owned by such equity holder of such Subsidiary along with the
certificates pledged thereby, if any, and appropriately executed stock powers in
blank, if applicable, and (d) the delivery by the Borrower and such Subsidiary
of any certificates, opinions of counsel, title opinions or other documents as
the Administrative Agent may reasonably request relating to such Subsidiary.
Section 6.15 Account Payables. The Borrower shall not, nor shall it
permit any of its Subsidiaries to, allow any of its trade payables or other
accounts payable to be outstanding for more than 90 days beyond the date when
due (except in cases where any such trade payable is being disputed in good
faith and adequate reserves under GAAP have been established).
Section 6.16 Current Ratio. The Borrower shall not permit, as of the
end of any fiscal quarter, the ratio of (a) its consolidated current assets to
(b) its consolidated current liabilities, to be less than 1.00 to 1.00. For
purposes of this calculation, (i) "current assets" shall include, as of the date
of calculation, the aggregate Unused Commitment Amounts but shall exclude, as of
the date of calculation (A) any cash deposited with or at the request of a
counterparty to any Hedge Contract and (B) any assets representing a valuation
account arising from the application of SFAS 133 and 143, and (ii) "current
liabilities" shall exclude, as of the date of calculation, (A) the current
portion of long-term Debt and (B) any liabilities representing a valuation
account arising from the application of SFAS 133 and 143.
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Section 6.17 Interest Coverage Ratio. The Borrower (a) shall not
permit, as of the fiscal quarter ending December 31, 2007, the ratio of (i) the
consolidated EBITDA of the Borrower calculated for the three fiscal quarters
then ended, to (ii) the consolidated Interest Expense of the Borrower for the
three fiscal quarters then ended, to be less than 2.50 to 1.00; and (b) shall
not permit, as of the end of each fiscal quarter ending on or after March 31,
2008, the ratio of (i) the consolidated EBITDA of the Borrower calculated for
the four fiscal quarters then ended, to (ii) the consolidated Interest Expense
of the Borrower for the four fiscal quarters then ended, to be less than 2.50 to
1.00.
Section 6.18 Initial Acquisition Instruments/Private Placement
Documents. The Borrower shall not, nor shall it permit any of its Subsidiaries
to, modify, amend, supplement or replace, any of the Initial Acquisition
Instruments or the Private Placement Documents, in any respect that would
adversely affect the Lenders or the Borrower's ability to perform the
Obligations, without the prior written consent of the Administrative Agent and
the Required Lenders.
Section 6.19 Senior Debt. Except as otherwise permitted by the terms of
this Agreement and the Intercreditor Agreement, neither the Borrower nor any of
its Subsidiaries shall amend, supplement or otherwise modify the terms of the
Senior Debt.
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
Section 7.01 Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default" under any Loan Document:
(a) Payment. Any Loan Party (i) fails to pay any principal when due
under this Agreement or (ii) fails to pay, within three (3) Business Days of the
date when due, any other amount due under this Agreement or any other Loan
Document, including payments of interest, fees, reimbursements, and
indemnifications.
(b) Representation and Warranties. Any representation or warranty made
or deemed to be made (i) by the Borrower, any Guarantor or any of their
respective Subsidiaries (or any of their respective officers) in this Agreement
or in any other Loan Document, or (ii) by the Borrower, any Guarantor or any of
their respective Subsidiaries (or any of their respective officers) in
connection with this Agreement or any other Loan Document, shall prove to have
been incorrect in any material respect when made or deemed to be made;
(c) Covenant Breaches. The Borrower, any Guarantor or any of their
respective Subsidiaries shall fail to (i) perform or observe any covenant
contained in Section 5.02(a), Section 5.06(e), Section 5.12, Section 5.13 or
Article VI or (ii) fail to perform or observe any other term or covenant set
forth in this Agreement or in any other Loan Document which is not covered by
clause (i) above or any other provision of this Section 7.01, if such failure
shall remain unremedied for 30 days after the occurrence of such breach or
failure;
(d) Cross-Defaults. (i) The Borrower, any Guarantor or any of their
respective Subsidiaries shall fail to pay any principal of or premium or
interest on its Debt which is outstanding in a principal amount of at least
$1,000,000 individually or when aggregated with all such Debt of the Borrower,
any Guarantor or any of their respective Subsidiaries so in default (but
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excluding the Obligations) when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace or cure period, if any,
specified in the agreement or instrument relating to such Debt (including,
without limitation, the Senior Credit Agreement); (ii) any other event shall
occur or condition shall exist under any agreement or instrument relating to
Debt which is outstanding in a principal amount of at least $1,000,000
individually or when aggregated with all such Debt of the Borrower, such
Subsidiary, or such Guarantor so in default, and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or (iii) any such Debt which is
outstanding in a principal amount of at least $1,000,000 individually or when
aggregated all such Debt of the Borrower, such Subsidiary, or such Guarantor so
in default, shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; provided that, for purposes of this paragraph (d), the
"principal amount" of the obligations in respect of Hedging Contracts at any
time shall be the maximum aggregate amount (giving effect to any netting
agreements) that would be required to be paid if such Hedging Contracts were
terminated at such time;
(e) Insolvency. The Borrower, any Guarantor or any of their respective
Subsidiaries shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower, any of its Subsidiaries, or any Guarantor
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or for any substantial part of its Property and, in the case of any such
proceeding instituted against the Borrower, any such Subsidiary or any such
Guarantor either such proceeding shall remain undismissed for a period of 60
days or any of the actions sought in such proceeding shall occur; or the
Borrower, any of its Subsidiaries, or any Guarantor shall take any company
action to authorize any of the actions set forth above in this paragraph (e);
(f) Judgments. Any judgment or order for the payment of money in excess
of $1,000,000 shall be rendered against the Borrower, any Guarantor or any of
their respective Subsidiaries and either (i) enforcement proceedings shall have
been commenced by any creditor upon such judgment or order or (ii) there shall
be any period of 45 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect;
(g) Termination Events. Any Termination Event with respect to a Plan shall have
occurred, and, 30 days after notice thereof shall have been given to the
Borrower by the Administrative Agent, (i) such Termination Event shall not have
been corrected and (ii) the then present value of such Plan's vested benefits
exceeds the then current value of assets accumulated in such Plan by more than
the amount of $1,000,000 (or in the case of a Termination Event involving the
withdrawal of a "substantial employer" (as defined in Section 4001(a)(2) of
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ERISA), the withdrawing employer's proportionate share of such excess shall
exceed such amount);
(h) Plan Withdrawals. The Borrower or any member of the Controlled
Group as employer under a Multiemployer Plan shall have made a complete or
partial withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an annual amount exceeding
$1,000,000;
(i) Change in Control. A Change in Control shall have occurred;
(j) [Reserved.];
(k) Loan Documents. Any material provision of any Loan Document shall
for any reason cease to be valid and binding on the Borrower or a Guarantor or
any of their respective Subsidiaries or any such Person shall so state in
writing;
(l) Security Instruments. (i) The Administrative Agent shall fail to
have an Acceptable Security Interest in any portion of the Collateral or (ii)
any Security Instrument shall at any time and for any reason cease to create the
Lien on the Property purported to be subject to such agreement in accordance
with the terms of such agreement, or cease to be in full force and effect, or
shall be contested by the Borrower, any Guarantor or any of their respective
Subsidiaries;
(m) Material Adverse Change. An event resulting in a Material Adverse
Change shall have occurred; or
(n) Casualty. Loss, theft, substantial damage or destruction of a
material portion of the Collateral the subject of any Security Instrument not
fully covered by insurance (except for deductibles and allowing for the
depreciated value of such Collateral) shall have occurred.
Section 7.02 Optional Acceleration of Maturity. If any Event of Default
(other than an Event of Default pursuant to paragraph (e) of Section 7.01) shall
have occurred and be continuing, then, and in any such event,
(a) the Administrative Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation (if any) of each Lender to make extensions of credit hereunder,
including making Advances to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrower, declare all principal, interest,
fees, reimbursements, indemnifications, and all other amounts payable under this
Agreement, the Notes, and the other Loan Documents to be forthwith due and
payable, whereupon all such amounts shall become and be forthwith due and
payable in full, without notice of intent to demand, demand, presentment for
payment, notice of nonpayment, protest, notice of protest, grace, notice of
dishonor, notice of intent to accelerate, notice of acceleration, and all other
notices, all of which are hereby expressly waived by the Borrower; and
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(b) the Administrative Agent shall at the request of, or may with the
consent of, the Required Lenders proceed to enforce its rights and remedies
under the Security Instruments, the Guaranties, and any other Loan Document for
the ratable benefit of Secured Parties by appropriate proceedings.
Section 7.03 Automatic Acceleration of Maturity. If any Event of
Default pursuant to paragraph (e) of Section 7.01 shall occur,
(a) (i) the obligation (if any) of each Lender to make extensions of
credit hereunder, including making Advances shall terminate, and (ii) all
principal, interest, fees, reimbursements, indemnifications, and all other
amounts payable under this Agreement, the Notes, and the other Loan Documents
shall become and be forthwith due and payable in full, without notice of intent
to demand, demand, presentment for payment, notice of nonpayment, protest,
notice of protest, grace, notice of dishonor, notice of intent to accelerate,
notice of acceleration, and all other notices, all of which are hereby expressly
waived by the Borrower; and
(b) the Administrative Agent shall at the request of, or may with the
consent of, the Required Lenders proceed to enforce its rights and remedies
under the Security Instruments, the Guaranties, and any other Loan Document for
the ratable benefit of Secured Parties by appropriate proceedings.
Section 7.04 Right of Setoff. If an Event of Default shall have
occurred and be continuing, the Administrative Agent, each Lender, and each of
their respective Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by applicable law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by the Administrative Agent, such Lender, or any
such Affiliate to or for the credit or the account of the Borrower or any other
Loan Party against any and all of the obligations of the Borrower or such Loan
Party now or hereafter existing under this Agreement or any other Loan Document
to the Administrative Agent or such Lender, irrespective of whether or not the
Administrative Agent or such Lender shall have made any demand under this
Agreement or any other Loan Document and although such obligations of the
Borrower or such Loan Party may be contingent or unmatured or are owed to a
branch or office of the Administrative Agent or such Lender different from the
branch or office holding such deposit or obligated on such indebtedness. The
rights of the Administrative Agent, each Lender and their respective Affiliates
under this Section are in addition to other rights and remedies (including other
rights of setoff) that the Administrative Agent, such Lender or their respective
Affiliates may have. The Administrative Agent and each Lender agrees to notify
the Borrower and the Administrative Agent promptly after any such setoff and
application, provided that the failure to give such notice shall not affect the
validity of such setoff and application.
Section 7.05 Non-exclusivity of Remedies. No remedy conferred upon the
Administrative Agent or the Lenders is intended to be exclusive of any other
remedy, and each remedy shall be cumulative of all other remedies existing by
contract, at law, in equity, by statute or otherwise.
Section 7.06 Application of Proceeds.
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(a) Prior to the Payment in Full of Senior Indebtedness (as defined in
the Intercreditor Agreement) and other than as otherwise permitted by the
Intercreditor Agreement, any monies or Property actually received by the
Administrative Agent pursuant to this Agreement or any other Loan Document, the
exercise of any rights or remedies under any Security Instrument or any other
agreement with the Borrower, any Guarantor or any of their respective
Subsidiaries which secures any of the Obligations, shall in any event be held in
trust by the Adminsitrative Agent for the benefit of the Senior Agent and the
Senior Lenders (as defined in the Intercreditor Agreement) and promptly paid or
delivered to the Senior Agent in the form received; and
(b) After Payment in Full of the Senior Indebtedness and the
termination of the Intercreditor Agreement, any monies or Properties actually
received by the Administrative Agent pursuant to this Agreement or any other
Loan Document as a result of the exercise of any rights or remedies under any
Security Instrument or any other agreement with the Borrower, any Guarantor or
any of their respective Subsidiaries which secures the Obligations shall be
applied in the following order:
(i) First, to the payment of all amounts, including costs and
expenses incurred in connection with the collection of such proceeds and the
payment of any part of the Obligations, due to the Administrative Agent under
any of the expense reimbursement or indemnity provisions of this Agreement or
any other Loan Document, any Security Instrument or other collateral documents,
and any applicable Legal Requirement;
(ii) Second, ratably, according to the then unpaid amounts
thereof, without preference or priority of any kind among them, to the payment
of the Obligations then due and payable, including any Lender Hedging
Obligations of any Loan Party; and
(iii) Third, the remainder, if any, to the Borrower or its
Subsidiaries, or its respective successors or assigns, or such other Person as
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
Administrative Agent shall have no responsibility to determine the existence or
amount of Lender Hedging Obligations and may reserve from the application of
amounts under this Section amounts distributable in respect of Lender Hedging
Obligations until it has received evidence satisfactory to it of the existence
and amount of such Lender Hedging Obligations. Subject to paragraph (b) of the
first sentence of this Section, Administrative Agent and Lenders hereby
acknowledge and confirm that the Liens in the Collateral secure the Obligations
and the Lender Hedging Obligations on a ratable basis.
Section 7.07 Intercreditor Agreement. All rights of the Administrative
Agent and the Lenders in this Article VII shall be subject to the terms and
conditions of the Intercreditor Agreement. In the event of a conflict between
the terms of this Agreement and the Intercreditor Agreement, the Intercreditor
Agreement shall control.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Section 8.01 Appointment and Authority. Each of the Lenders hereby
irrevocably appoints Societe Generale to act on its behalf as the Administrative
Agent hereunder and under the other Loan Documents and authorizes the
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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 or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the
Administrative Agent and the Lenders, and neither the Borrower nor any other
Loan Party shall have rights as a third party beneficiary of any of such
provisions.
Section 8.02 Rights as a Lender. The Person serving as the Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.
Section 8.03 Exculpatory Provisions. The Administrative Agent shall not
have any duties or obligations except those expressly set forth herein and in
the other Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;
(b) shall not have any 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 as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable law; and
(c) shall not, except as expressly set forth herein and in the other Loan
Documents, 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 Affiliates that
is communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not
taken by it (i) with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 9.01 and 7.02, and 7.03 or (ii) in the
absence of its own gross negligence or willful misconduct. The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
notice describing such Default is given to the Administrative Agent by the
Borrower or a Lender. The Administrative Agent shall not be responsible for or
have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
66
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth herein or therein or the occurrence of any Default, (iv)
the validity, enforceability, effectiveness or genuineness of this Agreement,
any other Loan Document or any other agreement, instrument or document or (v)
the satisfaction of any condition set forth in Article III or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
Section 8.04 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 (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated 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 have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition
hereunder to the making of an Advance that by its terms must be fulfilled to the
satisfaction of a Lender, the Administrative Agent may presume that such
condition is satisfactory to such Lender unless the Administrative Agent shall
have received notice to the contrary from such Lender prior to the making of
such Advance. 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.
Section 8.05 Delegation of Duties. The Administrative Agent may perform any
and all of its duties and exercise its rights and powers hereunder or under any
other Loan Document 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 of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article 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 8.06 Successor Administrative Agent. The Administrative Agent may
at any time give notice of its resignation to the Lenders and the Borrower. Upon
receipt of any such notice of resignation, the Required Lenders shall have the
right, in consultation with the Borrower, to appoint a successor, which shall be
a bank with an office in New York City or Houston, Texas or an Affiliate of any
such bank with an office in New York City or Houston, Texas. If no such
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 60 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Lenders, appoint a successor Administrative Agent meeting the
qualifications set forth above provided that if the Administrative Agent shall
notify the Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent shall be
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discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any Collateral held by the Administrative
Agent on behalf of the Lenders under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such Collateral until such time as a
successor Administrative Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender directly, until
such time as the Required Lenders appoint a successor Administrative Agent as
provided for above in this Section. Upon the acceptance of a successor's
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents (if not already discharged therefrom as provided
above in this Section). The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
retiring Administrative Agent's resignation hereunder and under the other Loan
Documents, the provisions of this Article and Sections 9.04 and 9.05 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while the retiring Administrative Agent
was acting as Administrative Agent.
Section 8.07 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties 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 or any related
agreement or any document furnished hereunder or thereunder.
Section 8.08 No Other Duties, etc. Anything herein to the contrary
notwithstanding, none of the Persons indentified as a Syndication Agent,
Bookrunner or Arranger on the cover page hereof shall have any powers, duties or
responsibilities under this Agreement or any of the other Loan Documents, except
in its capacity, as applicable, as the Administrative Agent or a Lender
hereunder.
Section 8.09 Collateral Matters.
(a) The Administrative Agent is authorized on behalf of the Secured
Parties, without the necessity of any notice to or further consent from such
Secured Parties, from time to time, to take any actions with respect to any
Collateral or Security Instruments which may be necessary to perfect and
maintain the Liens upon the Collateral granted pursuant to the Security
Instruments. The Administrative Agent is further authorized (but not obligated)
on behalf of the Secured Parties, without the necessity of any notice to or
further consent from the Secured Parties, from time to time, to take any action
in exigent circumstances as may be reasonably necessary to preserve any rights
or privileges of the Secured Parties under the Loan Documents or applicable
Legal Requirements. Persons that are owed any Lender Hedging Obligations by
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accepting the benefit of the Liens granted pursuant to the Security Instruments
hereby agrees to the terms of this paragraph (a).
(b) The Lenders, and Persons that are owed any Lender Hedging Obligations
by accepting the benefit of the Liens granted pursuant to the Security
Instruments, hereby irrevocably authorize the Administrative Agent to (i)
release any Lien granted to or held by the Administrative Agent upon any
Collateral (a) upon termination of this Agreement, termination of all Hedge
Contracts with such Persons, and the payment in full of all outstanding Advances
and all other Obligations payable under this Agreement and under any other Loan
Document; (b) constituting property sold or to be sold or disposed of as part of
or in connection with any disposition permitted under this Agreement or any
other Loan Document; (c) constituting property in which the Borrower or any
Subsidiary owned no interest at the time the Lien was granted or at any time
thereafter; or (d) constituting property leased to the Borrower or any
Subsidiary under a lease which has expired or has been terminated in a
transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by the Borrower or such Subsidiary to be, renewed
or extended; and (ii) release a Guarantor from its obligations under a Guaranty
and any other applicable Loan Document if such Person ceases to be a Subsidiary
as a result of a transaction permitted under this Agreement. Upon the request of
the Administrative Agent at any time, the Secured Parties will confirm in
writing the Administrative Agent's authority to release particular types or
items of Collateral pursuant to this Section 8.09.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Amendments, Etc. No amendment or waiver of any provision of
this Agreement, the Notes, or any other Loan Document, nor consent to any
departure by the Borrower or any Subsidiary therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Required Lenders
and the Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver, or consent shall:
(a) without the consent of each Lender: (i) waive any of the conditions
specified in Article III; (ii) change any provision of this Section or the
definition of "Required Lenders" or any other provision hereof specifying the
number or percentage of Lenders required to amend, waive or otherwise modify any
rights hereunder or make any determination or grant any consent hereunder; (iii)
amend Section 2.11 or any other provision of this Agreement in a manner that
would alter the pro rata sharing of payments or the pro rata allocation of
disbursements required thereby; (iv) release any Guarantor from its obligations
under any Guaranty unless such Guarantor ceases to be a Subsidiary of the
Borrower under a transaction permitted by the terms hereof; (v) permit the
Borrower or any Subsidiary to enter into any merger or consolidation with or
into any other Person or amend Section 6.04(a); (vi) release any Collateral
securing the Obligations, except as provided in Section 8.09 above; (vii) change
Section 7.06 or any other provision of this Agreement in a manner that would
alter the order of application of proceeds set forth in Section 7.06; (viii)
increase the aggregate Commitments; or (ix) amend or waive any provision of, nor
consent to any departure by any party thereto from, the Intercreditor Agreement;
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(b) without the written consent of each Lender directly affected thereby,
(i) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 7.02), (ii) reduce the principal of, or interest
on, the Obligations or any fees or other amounts payable hereunder or under any
other Loan Document, or (iii) postpone any date fixed for any payment of
principal of, or interest on, the Obligations or any fees or other amounts
payable hereunder or extend the Maturity Date;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document and (ii) the Administrative Agent's
Fee Letter may be amended, or rights or privileges thereunder waived, in a
writing executed only by the parties thereto.
Section 9.02 Notices, Etc.
(a) General. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
paragraph (c) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail, sent by facsimile or (subject to
subsection (c) below) electronic mail address as follows:
(i) if to any Borrower or any other Loan Party or the
Administrative Agent, to the address, facsimile number, electronic mail address
or telephone number specified for such Person on Schedule I or to such other
address, facsimile number, electronic mail address or telephone number as shall
be designated by such party in a notice to the other parties; and
(ii) if to any other Lender, to the address, facsimile number,
electronic mail address or telephone number specified in its Administrative
Questionnaire or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such party in a notice to
the Administrative Agent.
(b) Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received;
notices sent by facsimile shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the
extent provided in paragraph (c) below, shall be effective as provided in said
paragraph (c). In no event shall a voicemail message be effective as a notice,
communication or confirmation hereunder.
(c) Effectiveness of Facsimile Documents and Signatures. Loan Documents
may be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Legal Requirements, have
the same force and effect as manually-signed originals and shall be binding on
all Loan Parties, the Administrative Agent and the Lenders. The Administrative
Agent may also require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided, however, that the failure to request
or deliver the same shall not limit the effectiveness of any facsimile document
or signature.
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(d) Limited Use of Electronic Mail. Unless expressly provided otherwise
herein, notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to notices to
any Lender pursuant to Article II, except that, until the Administrative Agent
gives notice to the Borrower to the contrary, Notices of Borrowing and Notices
of Conversion or Continuation may be delivered to the Administrative Agent by
electronic communication. 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. Unless the Administrative Agent otherwise prescribes, (i)
notices and other communications sent to an e-mail address shall be deemed
received upon the sender's receipt of an acknowledgement from the intended
recipient (such as by the "return receipt requested" function, as available,
return e-mail or other written acknowledgement), provided that if such notice or
other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at the
opening of business on the next Business Day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor.
(e) Reliance by Administrative Agent and Lenders. The Administrative
Agent and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Notices of Borrowing) purportedly given by or on behalf of
the Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The BORROWER SHALL INDEMNIFY
THE ADMINISTRATIVE AGENT, EACH LENDER AND THEIR RELATED PARTIES FROM ALL LOSSES,
COSTS, EXPENSES AND LIABILITIES RESULTING FROM THE RELIANCE BY SUCH PERSON ON
EACH NOTICE PURPORTEDLY GIVEN BY OR ON BEHALF OF THE BORROWER. All telephonic
notices to and other communications with the Administrative Agent may be
recorded by the Administrative Agent, and each of the parties hereto hereby
consents to such recording.
Section 9.03 No Waiver; Cumulative Remedies. No failure on the part of
any Lender or the Administrative Agent to exercise, and no delay by any such
Person in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges provided in this Agreement are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
Section 9.04 Costs and Expenses. The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates (including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
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(whether or not the transactions contemplated hereby or thereby shall be
consummated) and (ii) all out-of-pocket expenses incurred by the Administrative
Agent or any Lender (including the fees, charges and disbursements of any
counsel for the Administrative Agent or any Lender), in connection with the
enforcement or protection of its rights (A) in connection with this Agreement
and the other Loan Documents, including its rights under this Section, or (B) in
connection with the Advances made hereunder, including all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Advances. The foregoing costs and expenses shall include all search,
filing, recording, appraisal charges and fees and taxes related thereto, and
other out-of-pocket expenses incurred by the Administrative Agent or any Lender
and the cost of independent public accountants and other outside experts
retained by the Administrative Agent or any Lender. All amounts due under this
Section 9.04 shall be payable within thirty days after demand. The agreements in
this Section shall survive the termination of the Commitments and repayment of
all other Obligations.
Section 9.05 Indemnification. The Borrower shall indemnify the
Administrative Agent (and any sub-agent thereof), 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), and shall
indemnify and hold harmless each Indemnitee from all fees and time charges and
disbursements for attorneys who may be employees of any Indemnitee, incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by the
Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Advance or the use or proposed use of the proceeds therefrom,
(iii) 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,
or any Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory, whether brought by a third party or by the Borrower or any
other Loan Party, and regardless of whether any Indemnitee is a party thereto,
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee. All amounts due under this Section 9.05 shall be payable within
ten Business Days after demand therefor. The agreements in this Section shall
survive the resignation of the Administrative Agent, the replacement of any
Lender, the termination of the Commitments and the repayment, satisfaction or
discharge of all the other Obligations.
Section 9.06 Reimbursement by Lenders. To the extent that the Borrower
for any reason fails to indefeasibly pay any amount required under Section 9.04
or Section 9.05 to be paid by it to the Administrative Agent (or any sub-agent
thereof) or any Related Party of any of the Administrative Agent, each Lender
severally agrees to pay to the Administrative Agent (or any such sub-agent) or
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such Related Party, as the case may be, such Lender's Pro Rata Share (determined
as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent (or any such
sub-agent) in its capacity as such, or against any Related Party of any of the
Administrative Agent acting for the Administrative Agent (or any such sub-agent)
in connection with such capacity. The failure of any Lender to pay its Pro Rata
Share of such unpaid amounts shall not relieve any other Lender of its
obligation, if any, to pay its respective share of such unpaid amounts. No
Lender shall be responsible for the failure of any other Lender to comply with
this Section. All amounts due under this Section 9.06 shall be payable within
ten Business Days after demand therefor. THE AGREEMENTS IN THIS SECTION SHALL
SURVIVE THE RESIGNATION OF THE ADMINISTRATIVE AGENT, THE REPLACEMENT OF ANY
LENDER, THE TERMINATION OF THE COMMITMENTS AND THE REPAYMENT, SATISFACTION OR
DISCHARGE OF ALL THE OTHER OBLIGATIONS
Section 9.07 Waiver of Damages. To the fullest extent permitted by
applicable Legal Requirement, each Loan Party 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, the transactions contemplated hereby or thereby, any Advance or the use
of the proceeds thereof. No Indemnitee shall be liable for any damages arising
from the use by unintended recipients of any information or other materials
distributed by it through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby.
Section 9.08 Successors and Assigns.
(a) Generally. The terms and provisions of this Agreement and the other
Loan Documents shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except that
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender and no
Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of paragraph (b) of this Section, (ii) by way of participation in accordance
with the provisions of paragraph (d) of this Section, or (iii) by way of pledge
or assignment of a security interest subject to the restrictions of paragraph
(f) of this Section and any other attempted assignment or transfer by any party
hereto shall be null and void. Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Indemnitees) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may assign to one or more
Eligible Assignees all or any portion of its rights and obligations under this
Agreement; provided, however, that
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(i) except in the case of an assignment of the entire remaining
amount of the assigning Lender's Commitment and the Advances being assigned at
the time owing to it or in the case of an assignment to a Lender or an Affiliate
of a Lender or an Approved Fund with respect to a Lender, the aggregate amount
of the Advances of such Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall not be less than $5,000,000.00;
(ii) 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 with respect to the Advances assigned;
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance; and
(iv) each Eligible Assignee (other than an Eligible Assignee that
is a Lender or an Affiliate of a Lender) shall pay to the Administrative Agent a
$3,500 processing and recording fee and shall, if it is not a Lender, deliver to
the Administrative Agent an Administrative Questionnaire.
Upon such execution, delivery, acceptance and recording thereof by the
Administrative Agent pursuant to paragraph (c) of this Section, from and after
the effective date specified in each Assignment and Acceptance, (A) the Eligible
Assignee thereunder shall be a party hereto for all purposes and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (B) such assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of such 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 Sections 2.13, 2.14, 9.04 and 9.05 with respect
to facts and circumstances occurring prior to the effective date of such
assignment. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with paragraph (d) of this Section.
(c) Register. The Administrative Agent shall maintain at its Applicable
Lending Office a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitments of, and principal amount of the Advances owing
to, each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
each of the Loan Parties, the Administrative Agent, and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
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(d) Participations. Any Lender may at any time, without the consent of,
or notice to, the Borrower or the Administrative Agent, sell participations to
any Person (other than a natural person or the Borrower or any of any Borrower's
Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such
Lender's rights and/or obligations under this Agreement (including all or a
portion of its Advances owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, waiver or other modification described in the first proviso to
Section 9.01 that directly affects such Participant. Subject to the last two
sentences of this paragraph (d), Borrower agrees that each Participant shall be
entitled to the benefits of, and be bound by the terms of, Sections 2.12, 2.13,
2.14, 9.04, 9.05 and 9.06 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 7.04 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.11 as though it were a Lender. A Participant
shall not be entitled to receive any greater payment under Section 2.13 or 2.14
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 2.14 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.14 as though it were a Lender.
(e) Pledge to Federal Reserve Bank. Any Lender may at any time pledge
or assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
(f) Approved Funds. Notwithstanding anything to the contrary contained
herein, any Lender that is a Approved Fund may create a security interest in all
or any portion of the Advances owing to it and the Note, if any, held by it to
the trustee for holders of obligations owed, or securities issued, by such Fund
as security for such obligations or securities, provided that unless and until
such trustee actually becomes a Lender in compliance with the other provisions
of this Section 9.08, (i) no such pledge shall release the pledging Lender from
any of its obligations under the Loan Documents and (ii) such trustee shall not
be entitled to exercise any of the rights of a Lender under the Loan Documents
even though such trustee may have acquired ownership rights with respect to the
pledged interest through foreclosure or otherwise.
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(g) Electronic Execution of Assignments. The words "execution,"
"signed," "signature," and words of like import in any Assignment and Acceptance
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.
Section 9.09 Confidentiality. Each of the Administrative Agent 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 purporting to have jurisdiction over it (including
any self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable Legal Requirements or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any 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, to (i) any assignee of or Participant in, or any prospective assignee
of or Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (g) with
the consent of the Borrower or (h) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this Section or (y)
becomes available to the Administrative Agent or any Lender or any of their
respective Affiliates on a nonconfidential basis from a source other than the
Borrower. For purposes of this Section, "Information" means all information
received from any Loan Party relating to any Loan Party or any of their
respective businesses, other than any such information that is available to the
Administrative Agent or any Lender or any of its Affiliates on a nonconfidential
basis prior to disclosure by any Loan Party, provided that, in the case of
information received from a Loan Party 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 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 in accordance with safe and sound banking practices.
Section 9.10 Counterparts; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. Except as provided in Section
3.01, 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 that, when taken together, bear the signatures of each of
the other parties hereto. 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 9.11 Survival of Representations, etc. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Advance, and shall continue in full force and
effect as long as any Advance or any other Obligation hereunder shall remain
unpaid or unsatisfied.
Section 9.12 Severability. If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 9.13 Interest Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the Maximum Rate. If the
Administrative Agent or any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal
of the Advances or, if it exceeds such unpaid principal, refunded to the
Borrower. In determining whether the interest contracted for, charged, or
received by the Administrative Agent or a Lender exceeds the Maximum Rate, such
Person may, to the extent permitted by applicable Legal Requirement, (a)
characterize any payment that is not principal as an expense, fee, or premium
rather than interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations
hereunder.
Section 9.14 Governing Law. This Agreement and each of the other Loan
Documents shall be governed by and construed in accordance with the laws of the
State of New York and the applicable laws of the United States of America.
Section 9.15 Submission to Jurisdiction; Waiver of Venue; Service of
Process.
(a) Submission to Jurisdiction. The Borrower, the Lenders, and the
other parties hereto irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the courts of the State of New
York sitting in New York City and of the United States District Court for the
Southern District of the State of New York and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State court or, to the fullest extent permitted by
applicable law, in such Federal court. Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
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enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or in any other Loan Document shall
affect any right that the Administrative Agent or any Lender may otherwise have
to bring any action or proceeding relating to this Agreement or any other Loan
Document against the Borrower or any other Loan Party or its properties in the
courts of any jurisdiction.
(b) Waiver of Venue. Each of the Borrower, the Lenders and the other
parties hereto irrevocably and unconditionally waives, to the fullest extent
permitted by applicable law, any objection that it may now or hereafter have to
the laying of venue of any action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to in paragraph
(a) of this Section. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Service of Process. Each party hereto irrevocably consents to
service of process in the manner provided for notices in Section 9.02 other than
by electronic mail. Nothing in this Agreement will affect the right of any party
hereto to serve process in any other manner permitted by applicable law.
Section 9.16 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LEGAL REQUIREMENTS, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION. EACH PARTY HEREBY AGREES AND
CONSENTS THAT THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 9.17 USA Patriot Act. Each Lender that is subject to the Act
(as hereinafter defined) and the Administrative Agent (for itself and not on
behalf of any 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 or
the Administrative Agent, as applicable, to identify the Borrower in accordance
with the Act.
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Section 9.18 Intercreditor Agreement. The Administrative Agent is
hereby authorized on behalf of the Lenders for the Lenders and its Affiliates
that are Swap Counterparties to enter into the Intercreditor Agreement. A copy
of such Intercreditor Agreement will be made available to each Secured Party on
the Closing Date and thereafter upon request. Each Lender and each Swap
Counterparty (by receiving the benefits thereunder and of the Collateral)
acknowledges and agrees to the terms of such Intercreditor Agreement and agrees
that the terms thereof shall be binding on such Secured Party and its successors
and assigns, as if it were a party thereto.
Section 9.19 Integration. This Agreement and the other Loan Documents
represent the final agreement among the parties and may not be contradicted by
evidence of prior, contemporaneous, or subsequent oral agreements of the
parties. There are no unwritten oral agreements among the parties.
[Remainder of this page intentionally left blank. Signature page
follows.]
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Signature page to Subordinated Credit Agreement
EXECUTED as of the date first above written.
BORROWER: ABRAXAS ENERGY PARTNERS, L.P.
By: Abraxas General Partner, LLC,
its general partner
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Operating Officer
ADMINISTRATIVE AGENT: SOCIETE GENERALE
By:
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Director
LENDERS: SOCIETE GENERALE
By:
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Director
COMERICA BANK
By:
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Name:
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Title:
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THE ROYAL BANK OF CANADA
By:
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Name:
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Title:
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