CREDIT AGREEMENT
Dated as of March 12, 2004
Among
ATLAS AMERICA, INC.,
as Borrower
AIC, INC.
ATLAS AMERICA, INC. (PA),
ATLAS ENERGY CORPORATION,
ATLAS ENERGY GROUP, INC.,
ATLAS ENERGY HOLDINGS, INC.
ATLAS NOBLE CORP.,
ATLAS PIPELINE PARTNERS GP, LLC
ATLAS RESOURCES INC.,
REI-NY, INC.,
RESOURCE AMERICA, INC.,
RESOURCE ENERGY, INC.,
VIKING RESOURCES CORPORATION
as Guarantors
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent and Issuing Bank
BANK OF OKLAHOMA, N.A.
And
U.S. BANK, NATIONAL ASSOCIATION
as Co-Documentation Agents
and
THE LENDERS SIGNATORY HERETO
$75,000,000 Senior Secured Revolving Credit Facility
WACHOVIA CAPITAL MARKETS, LLC
as Lead Arranger
TABLE OF CONTENTS
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ARTICLE I Definitions and Accounting Matters.................................................................2
Section 1.01 Terms Defined Above....................................................................2
Section 1.02 Certain Defined Terms..................................................................2
Section 1.03 Accounting Terms and Determinations...................................................15
ARTICLE II Commitments......................................................................................15
Section 2.01 Loans and Letters of Credit...........................................................15
Section 2.02 Borrowings, Continuations and Conversions, Letters of Credit..........................16
Section 2.03 Changes of Commitments................................................................18
Section 2.04 Fees..................................................................................18
Section 2.05 Several Obligations...................................................................19
Section 2.06 Notes.................................................................................19
Section 2.07 Prepayments...........................................................................19
Section 2.08 Borrowing Base........................................................................20
Section 2.09 Assumption of Risks...................................................................21
Section 2.10 Obligation to Reimburse and to Prepay.................................................22
Section 2.11 Lending Offices.......................................................................23
ARTICLE III Payments of Principal and Interest..............................................................23
Section 3.01 Repayment of Loans....................................................................23
Section 3.02 Interest..............................................................................23
ARTICLE IV Payments; Pro Rata Treatment; Computations; Etc..................................................24
Section 4.01 Payments..............................................................................24
Section 4.02 Pro Rata Treatment....................................................................25
Section 4.03 Computations..........................................................................25
Section 4.04 Non-receipt of Funds by the Administrative Agent......................................25
Section 4.05 Set-off, Sharing of Payments, Etc.....................................................25
Section 4.06 Taxes.................................................................................26
ARTICLE V Capital Adequacy..................................................................................29
Section 5.01 Additional Costs......................................................................29
Section 5.02 Limitation on LIBOR Loans.............................................................30
Section 5.03 Illegality............................................................................30
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03..............................30
Section 5.05 Compensation..........................................................................31
ARTICLE VI Conditions Precedent.............................................................................31
Section 6.01 Initial Funding.......................................................................31
Section 6.02 Initial and Subsequent Loans and Letters of Credit....................................33
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Section 6.03 Conditions Precedent for the Benefit of Lenders.......................................33
Section 6.04 No Waiver.............................................................................33
ARTICLE VII Representations and Warranties..................................................................33
Section 7.01 Corporate Existence...................................................................33
Section 7.02 Financial Condition...................................................................34
Section 7.03 Litigation............................................................................34
Section 7.04 No Breach.............................................................................34
Section 7.05 Authority.............................................................................34
Section 7.06 Approvals.............................................................................34
Section 7.07 Use of Loans..........................................................................35
Section 7.08 ERISA.................................................................................35
Section 7.09 Taxes.................................................................................36
Section 7.10 Titles, etc...........................................................................36
Section 7.11 No Material Misstatements.............................................................37
Section 7.12 Investment Company Act................................................................37
Section 7.13 Public Utility Holding Company Act....................................................37
Section 7.14 Partnership Interests.................................................................37
Section 7.15 Capitalization and Subsidiaries.......................................................37
Section 7.16 Location of Business and Offices......................................................38
Section 7.17 Defaults..............................................................................38
Section 7.18 Environmental Matters.................................................................38
Section 7.19 Compliance with the Law...............................................................39
Section 7.20 Insurance.............................................................................40
Section 7.21 Hedging Agreements....................................................................40
Section 7.22 Restriction on Liens..................................................................40
Section 7.23 Material Agreements...................................................................40
Section 7.24 Gas Imbalances........................................................................41
Section 7.25 Relationship of Obligors..............................................................41
ARTICLE VIII Affirmative Covenants..........................................................................41
Section 8.01 Reporting Requirements................................................................41
Section 8.02 Litigation............................................................................43
Section 8.03 Maintenance, Etc......................................................................43
Section 8.04 Environmental Matters.................................................................44
Section 8.05 Further Assurances....................................................................44
Section 8.06 Performance of Obligations............................................................45
Section 8.07 Engineering Reports...................................................................45
Section 8.08 Title Curative........................................................................46
Section 8.09 Additional Collateral.................................................................46
Section 8.10 Corporate Identity....................................................................48
Section 8.11 ERISA Information and Compliance......................................................49
Section 8.12 Parent and Atlas Holdings Guarantees..................................................49
ARTICLE IX Negative Covenants...............................................................................49
Section 9.01 Debt..................................................................................49
Section 9.02 Hedging Agreements....................................................................50
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Section 9.03 Liens.................................................................................51
Section 9.04 Investments, Loans and Advances.......................................................51
Section 9.05 Dividends, Distributions and Redemptions..............................................52
Section 9.06 Sales and Leasebacks..................................................................52
Section 9.07 Nature of Business....................................................................52
Section 9.08 Limitation on Leases..................................................................52
Section 9.09 Mergers, Etc..........................................................................52
Section 9.10 Proceeds of Notes and Letters of Credit...............................................53
Section 9.11 ERISA Compliance......................................................................53
Section 9.12 Sale or Discount of Receivables.......................................................54
Section 9.13 Current Ratio.........................................................................54
Section 9.14 Funded Debt to EBITDA.................................................................54
Section 9.15 Tangible Net Worth....................................................................54
Section 9.16 Parent's Consolidated Interest Coverage Ratio.........................................55
Section 9.17 Payment on Intercompany Debt to Parent................................................55
Section 9.18 Sale of Oil and Gas Properties and APL Intersets......................................55
Section 9.19 Environmental Matters.................................................................55
Section 9.20 Transactions with Affiliates..........................................................55
Section 9.21 Subsidiaries..........................................................................56
Section 9.22 Negative Pledge Agreements............................................................56
Section 9.23 Gas Imbalances, Take-or-Pay or Other Prepayments......................................56
Section 9.24 Accounting Changes....................................................................56
ARTICLE X Events of Default; Remedies.......................................................................56
Section 10.01 Events of Default.....................................................................56
Section 10.02 Remedies..............................................................................58
Section 10.03 Present Assignment of Interests.......................................................58
ARTICLE XI The Administrative Agent.........................................................................59
Section 11.01 Appointment, Powers and Immunities....................................................59
Section 11.02 Reliance by Administrative Agent......................................................60
Section 11.03 Defaults..............................................................................60
Section 11.04 Rights as a Lender....................................................................60
Section 11.05 Indemnification.......................................................................60
Section 11.06 Non-Reliance on Administrative Agent and other Lenders................................61
Section 11.07 Action by Administrative Agent........................................................61
Section 11.08 Resignation or Removal of Administrative Agent........................................61
ARTICLE XII Miscellaneous...................................................................................62
Section 12.01 Waiver................................................................................62
Section 12.02 Notices...............................................................................62
Section 12.03 Payment of Expenses, Indemnities, etc.................................................62
Section 12.04 Amendments, Etc. Release of Parent and Atlas Holdings Guarantees......................64
Section 12.05 Successors and Assigns................................................................64
Section 12.06 Assignments and Participations........................................................64
Section 12.07 Invalidity............................................................................66
Section 12.08 Counterparts..........................................................................66
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Section 12.09 References, Use of Word "Including"...................................................66
Section 12.10 Survival..............................................................................66
Section 12.11 Captions..............................................................................66
Section 12.12 NO ORAL AGREEMENTS....................................................................66
Section 12.13 GOVERNING LAW, SUBMISSION TO JURISDICTION.............................................66
Section 12.14 Interest..............................................................................68
Section 12.15 Confidentiality.......................................................................68
Section 12.16 USA Patriot Act Notice................................................................69
Annex I List of Percentage Shares, Maximum Revolving Credit Amounts
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Borrowing, Continuation and Conversion Request
Exhibit C Form of Compliance Certificate
Exhibit D Security Instruments
Exhibit E Form of Assignment Agreement
Exhibit F Form of Letter in Lieu
SCHEDULES
Schedule 2.01(b) Existing Letters of Credit
Schedule 7.03 Litigation
Schedule 7.10 Ownership Report
Schedule 7.14 Partnership Interests
Schedule 7.15 Subsidiary Interests
Schedule 7.20 Insurance
Schedule 7.21 Hedging Agreements
Schedule 7.23 Material Agreements
Schedule 7.24 Gas Imbalance Status for Obligors and Subsidiaries
Schedule 9.01 Debt
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of March 12, 2004, among ATLAS AMERICA,
INC., a Delaware corporation (the "Borrower"); AIC, INC., a Delaware corporation
("AIC"); ATLAS AMERICA, INC., a Pennsylvania corporation ("Atlas PA"); ATLAS
ENERGY CORPORATION, an Ohio corporation ("AEC"), ATLAS ENERGY GROUP, INC., an
Ohio corporation ("Atlas Energy"); ATLAS ENERGY HOLDINGS, INC., a Delaware
corporation ("Atlas Holdings"), ATLAS NOBLE CORP., a Delaware corporation
("Atlas Noble"); ATLAS PIPELINE PARTNERS GP, LLC, a Delaware limited liability
company, ("Atlas Pipeline"), ATLAS RESOURCES, INC., a Pennsylvania corporation
("Atlas Resources"); REI-NY, INC., a Delaware corporation ("REI"); RESOURCE
AMERICA, INC., a Delaware corporation ("Parent"); RESOURCE ENERGY, INC., a
Delaware corporation ("Resource Energy"); and VIKING RESOURCES CORPORATION, a
Pennsylvania corporation ("Viking"), (AEC, AIC, Atlas Energy, Atlas Holdings,
Atlas Noble, Atlas Pipeline, Atlas PA, Atlas Resources, Parent, REI, Resource
Energy, and Viking collectively, the "Guarantors"; the Borrower and the
Guarantors collectively, the "Obligors"); each of the lenders that is a
signatory hereto or which becomes a signatory hereto as provided in Section
12.06 (individually, together with its successors and assigns, a "Lender" and,
collectively, the "Lenders"); WACHOVIA BANK, NATIONAL ASSOCIATION, as
administrative agent for the Lenders (in such capacity, together with its
successors in such capacity the "Administrative Agent"), BANK OF OKLAHOMA, N.A.
and U.S. BANK, NATIONAL ASSOCIATION as co-documentation agents (in such
capacity, together with its successors in such capacity, the "Co-Documentation
Agents"), and WACHOVIA BANK, NATIONAL ASSOCIATION, as issuing bank (in such
capacity, together with its successors in such capacity, the "Issuing Bank").
R E C I T A L S
A. WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent,
issuing bank and a lender, the Obligors (except for Atlas Pipeline) and the
lenders thereto a party (the "Prior Lenders") are parties to that certain Credit
Agreement dated as of July 31, 2002, as amended (the "Prior Credit Agreement"),
pursuant to which the Prior Lenders agreed to make loans to and extensions of
credit to the Borrower, as evidenced by promissory notes (the "Prior Notes") of
the Borrower in favor of the Prior Lenders issued pursuant to the Prior Credit
Agreement, which notes and other indebtedness, obligations and liabilities under
the Prior Credit Agreement (the "Prior Debt") were secured by liens and security
interests (the "Existing Liens") granted by Borrower and certain Guarantors and
guaranteed by certain of the Guarantors.
B. The Obligors, the Prior Lenders and the Administrative Agent have
executed that certain Assignment of Notes, Documents and Liens dated as of even
date herewith ("Assignment of Notes, Documents and Liens"), pursuant to which,
with the consent of the Obligors, Administrative Agent, as agent for the Prior
Lenders, and the Prior Lenders have assigned to the Lenders all of their rights,
titles and interests in and to the Prior Credit Agreement, the Prior Notes, the
Existing Liens and certain other loan documents, and assigned to the
Administrative Agent for the benefit of the Lenders such security documents and
the liens and security interests securing the Prior Debt.
C. The Borrower has requested that the Administrative Agent and the
Lenders amend, extend and rearrange all of the Prior Debt as secured by the
Existing Liens, restate the Prior Credit Agreement and provide certain loans to
and extensions of credit on behalf of the Borrower.
D. The Administrative Agent, Co-Documentation Agents, and the Lenders
have agreed to amend, extend and rearrange the Prior Debt as secured by the
Existing Liens, restate the Prior Credit Agreement and to make such loans and
extensions of credit subject to the terms and conditions of this Agreement.
E. Each of the Borrower, Guarantors, the Lenders and Administrative
Agent intend that loans and letters of credit outstanding under the Prior Credit
Agreement, shall, on the Closing Date, be amended, restated and converted into
Loans and Letters of Credit under this Agreement (but shall not be deemed to be
repaid or terminated), all Existing Liens securing the Prior Debt of the
Borrower pursuant to the Prior Credit Agreement shall be continued and renewed
and shall remain in full force and effect as security for the payment of all
Indebtedness of the Borrower under this Agreement, and the Prior Credit
Agreement shall be amended and restated in its entirety in the form of this
Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements herein contained and of the loans, extensions of credit and
commitments hereinafter referred to, the parties hereto agree to amend and
restate the Prior Credit Agreement as follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above. As used in this Agreement, the terms
"Administrative Agent," "AEC," "AIC," "Assignment of Notes, Documents and
Liens," "Atlas Energy," "Atlas Holdings," "Atlas Noble," "Atlas PA," "Atlas
Pipeline," "Atlas Resources," "Borrower," "Guarantors," "Issuing Bank,"
"Lender," "Lenders," "Obligors," "Parent," "PNC," "Prior Credit Agreement,"
"Prior Debt," "Prior Lenders," "REI," "Resource Energy," "Co-Documentation
Agent," and "Viking" shall have the meanings indicated above.
Section 1.02 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have equivalent meanings
when used in the plural and vice versa):
Additional Costs shall have the meaning assigned such term in Section
5.01(a).
Adjusted LIBOR shall mean, with respect to any LIBOR Loan, a rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
the Administrative Agent to be equal to the quotient of (i) LIBOR for such Loan
for the Interest Period for such Loan divided by (ii) 1 minus the Reserve
Requirement for such Loan for such Interest Period.
Affected Loans shall have the meaning assigned such term in Section
5.04.
Affiliate of any Person shall mean (i) any Person directly or
indirectly controlled by, controlling or under common control with such first
Person, (ii) any director or officer of such first Person or of any Person
referred to in clause (i) above and (iii) if any Person in clause (i) above is
an individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any Person who is
controlled by any such member or trust. For purposes of this definition, any
Person which owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to "control" (including, with its correlative meanings, "controlled by"
and "under common control with") such corporation or other Person.
Agreement shall mean this Credit Agreement, as the same may from time
to time be further amended or supplemented.
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Aggregate Maximum Revolving Credit Amounts at any time shall equal the
sum of the Maximum Revolving Credit Amounts of the Lenders ($75,000,000), as the
same may be reduced pursuant to Section 2.03(b).
Aggregate Revolving Credit Commitments at any time shall equal the
amount calculated in accordance with Section 2.03.
Applicable Lending Office shall mean, for each Lender and for each Type
of Loan, the lending office of such Lender (or an Affiliate of such Lender)
designated for such Type of Loan on the signature pages hereof or such other
offices of such Lender (or of an Affiliate of such Lender) as such Lender may
from time to time specify to the Administrative Agent and the Borrower as the
office by which its Loans of such Type are to be made and maintained.
Applicable Margin shall mean the applicable per annum percentage set
forth at the appropriate intersection in the table shown below, based on the
Borrowing Base Utilization as in effect from time to time:
---------------------------------------------------------------------------------------------
Borrowing Base Utilization Applicable Margin
---------------------------------------------------------------------------------------------
LIBOR Loans Base Rate Loans
---------------------------------------------------------------------------------------------
Less than or equal to 50% 1.75% 0.25%
---------------------------------------------------------------------------------------------
Greater than 50%, 2.00% 0.50%
but less than or equal to 75%
---------------------------------------------------------------------------------------------
Greater than 75% 2.25% 0.75%
---------------------------------------------------------------------------------------------
Each change in the Applicable Margin resulting from a change in the Borrowing
Base Utilization shall take effect on the day such change in the Borrowing Base
Utilization occurs.
Assignment shall have the meaning assigned such term in Section
12.06(b).
APL shall mean Atlas Pipeline Partners, L.P., a Delaware limited
partnership.
APL Collateral Value shall mean the collateral value attributable to
the APL units pledged by Obligors as determined by the Lenders in accordance
with the procedures set forth under Section 2.08.
APL Units shall mean common and subordinated equity units issued by APL
to Obligors.
Atlas Pipeline shall mean Atlas Pipeline Partners, GP, LLC, a Delaware
limited liability company.
Base Rate shall mean, with respect to any Base Rate Loan, for any day,
a rate per annum equal to the higher of (i) the Federal Funds Rate for any such
day plus 1/2 of 1% or (ii) the Prime Rate for such day. Each change in any
interest rate provided for herein based upon the Base Rate resulting from a
change in the Base Rate shall take effect at the time of such change in the Base
Rate.
Base Rate Loans shall mean Loans that bear interest at rates based upon
the Base Rate.
Borrowing Base shall mean at any time an amount equal to the amount
determined in accordance with Section 2.08.
Borrowing Base Deficiency shall mean, and occur at any time when, the
amount by which the aggregate outstanding principal amount of the Loans plus the
LC Exposure exceeds the Borrowing Base, whether as the result of a
redetermination, a scheduled reduction, or otherwise.
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Borrowing Base Period shall mean the period from the Closing Date until
August 1, 2004, and each six-month period commencing August 1, 2004, and each
February 1 and August 1 thereafter.
Borrowing Base Utilization shall mean at any time, an amount equal to
the quotient of (i) the aggregate principal amount of Loans outstanding plus LC
Exposure, divided by (ii) the Borrowing Base.
Business Day shall mean any day other than a day on which commercial
banks are authorized or required to close in Texas or North Carolina and, where
such term is used in the definition of "Quarterly Date" or if such day relates
to a borrowing or continuation of, a payment or prepayment of principal of or
interest on, or a conversion of or into, or the Interest Period for, a LIBOR
Loan or a notice by the Borrower with respect to any such borrowing or
continuation, payment, prepayment, conversion or Interest Period, any day which
is also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
Change of Control means the occurrence of any of the following events:
(a) any Person or two or more Persons, other than the Parent and its
Subsidiaries, acting as a group shall acquire beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Exchange Act, and including holding proxies to vote for the election of
directors other than proxies held by the Borrower's management or their
designees to be voted in favor of persons nominated by the Borrower's Board of
Directors) of 35% or more of the outstanding voting securities of the Borrower,
measured by voting power (including both ordinary shares and any preferred stock
or other equity securities entitling the holders thereof to vote with the
holders of common stock in elections for directors of the Borrower), (b) the
Borrower shall fail beneficially to own, directly or indirectly, 85% of the
outstanding shares of voting capital stock of AIC, Atlas Energy, AEC, Atlas
Noble, Atlas PA, Atlas Resources, REI, Resource Energy, or Viking and any other
Wholly Owned Subsidiary now or hereafter existing, (c) the Borrower shall fail
beneficially to own, directly or indirectly, 51% of the membership interests of
Atlas Pipeline, or (d) the first day on which a majority of the Board of
Directors of either the Borrower or Parent are not Continuing Directors.
Closing Date shall mean the date upon which the conditions precedent
for initial funding set forth in Section 6.01 are satisfied.
Code shall mean the Internal Revenue Code of 1986, as amended from time
to time and any successor statute.
Commitment shall mean for any Lender, its Revolving Credit Commitment.
Consolidated Interest Coverage Ratio shall mean the ratio of (i) EBITDA
for such Person and its Consolidated Subsidiaries on a consolidated basis for
the fiscal quarter ending on such date to (ii) cash interest payments made for
such Person and its Consolidated Subsidiaries on a consolidated basis for such
fiscal quarter.
Consolidated Net Income shall mean with respect to such Person and its
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of such Person and its Consolidated Subsidiaries after allowances for
taxes for such period, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (i) the net income of any other
entity in which such Person or any Consolidated Subsidiary has an interest
(which interest does not cause the net income of such other entity to be
consolidated with the net income of such Person and its Consolidated
Subsidiaries in accordance with GAAP), except to the extent of the amount of
dividends or distributions actually paid in such period by such other entity to
such Person or to a Consolidated Subsidiary, as the case may be; (ii) the net
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income (but not loss) of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary is not at the time permitted by operation
of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary, or is otherwise
restricted or prohibited in each case determined in accordance with GAAP; (iii)
the net income (or loss) of any entity acquired in a pooling-of-interests
transaction for any period prior to the date of such transaction; (iv) any gains
or losses attributable to discontinued operations, in an aggregate amount not to
exceed $5,000,000 or to Property sales not in the ordinary course of business,
and (v) the cumulative effect of a change in accounting principles and any gains
or losses attributable to writeups or write downs of assets.
Consolidated Subsidiaries shall mean each Subsidiary of a Person
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of such Person in accordance with GAAP.
Consolidated Tangible Net Worth shall mean with respect to a Person at
any time, (i) the consolidated assets of such Person and its Consolidated
Subsidiaries including all items which should be classified as assets on the
consolidated financial statements of such Person and its Consolidated
Subsidiaries, but excluding the amount of goodwill, patents, trademarks, service
marks, tradenames, copyright and organization expenses (to the extent reflected
in determining consolidated assets of such Person and its Consolidated
Subsidiaries) less (ii) all items which should be classified as liabilities on
the consolidated financial statements of such Person and its Consolidated
Subsidiaries.
Continuing Directors means any member of the Board of Directors of the
Borrower who (x) is a member of such Board of Directors as of the date of this
Agreement or (y) was nominated for election or elected to such Board of
Directors with the affirmative vote of two-thirds of the Continuing Directors
who were members of such Board of Directors at the time of such nomination or
election.
Cumulative Net Income Amount shall mean, as of the date of
determination, an amount equal to the sum of (a) 50% of the Borrower's
cumulative Consolidated Net Income during the period from January 1, 2004, to,
and including, the date of determination and (b) $5,000,000.
Debt shall mean, for any Person the sum of the following (without
duplication): (i) all obligations of such Person for borrowed money or evidenced
by bonds, debentures, notes or other similar instruments (including principal,
interest, fees and charges); (ii) all obligations of such Person (whether
contingent or otherwise) in respect of bankers' acceptances, letters of credit,
surety or other bonds and similar instruments; (iii) all obligations of such
Person to pay the deferred purchase price of Property or services (other than
for borrowed money); (iv) all obligations under leases which shall have been, or
should have been, in accordance with GAAP, recorded as capital leases in respect
of which such Person is liable (whether contingent or otherwise); (v) all
obligations under operating leases which require such Person or its Affiliate to
make payments over the term of such lease, including payments at termination,
based on the purchase price or appraisal value of the Property subject to such
lease plus a marginal interest rate, and used primarily as a financing vehicle
for, or to monetize, such Property; (vi) all Debt (as described in the other
clauses of this definition) and other obligations of others secured by a Lien on
any asset of such Person, whether or not such Debt is assumed by such Person;
(vii) all Debt (as described in the other clauses of this definition) and other
obligations of others guaranteed by such Person or in which such Person
otherwise assures a creditor against loss of the debtor or obligations of
others; (viii) all obligations or undertakings of such Person to maintain or
cause to be maintained the financial position or covenants of others or to
purchase the Debt or Property of others; (ix) obligations to deliver goods or
services including Hydrocarbons in consideration of advance payments; (x)
obligations to pay for goods or services whether or not such goods or services
are actually received or utilized by such Person; (xi) any capital stock of such
Person in which such Person has a mandatory obligation to redeem such stock;
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(xii) any Debt of a Subsidiary for which such Person is liable either by
agreement or because of a Governmental Requirement; (xiii) the undischarged
balance of any production payment created by such Person or for the creation of
which such Person directly or indirectly received payment; and (xiv) all
obligations of such Person under Hedging Agreements.
Default shall mean an Event of Default or an event which with notice or
lapse of applicable grace period or both would become an Event of Default.
Dollars and $ shall mean lawful money of the United States of America.
EBITDA shall mean, for any period, the sum of Consolidated Net Income
for such period plus the following expenses or charges to the extent deducted
from Consolidated Net Income in such period: interest, income taxes,
depreciation, depletion and amortization.
Engineering Reports shall have the meaning assigned such term in
Section 2.08.
Environmental Laws shall mean any and all Governmental Requirements
pertaining to health or the environment in effect in any and all jurisdictions
in which any Obligor or any Subsidiary is conducting or at any time has
conducted business, or where any Property of any Obligor or any Subsidiary is
located, including without limitation, the Oil Pollution Act of 1990 ("OPA"),
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection laws. The term "oil" shall
have the meaning specified in OPA, the terms "hazardous substance" and "release"
or "threatened release" have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" or "disposed" have the meanings specified in RCRA;
provided, however, that (i) in the event either OPA, CERCLA or RCRA is amended
so as to broaden the meaning of any term defined thereby, such broader meaning
shall apply subsequent to the effective date of such amendment and (ii) to the
extent the laws of the state in which any Property of any Obligor or any
Subsidiary is located establish a meaning for "oil," "hazardous substance,"
"release," "solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute.
ERISA Affiliate shall mean each trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
ERISA Event shall mean (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder, (ii) the withdrawal of the
Borrower, any Subsidiary or any ERISA Affiliate from a Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, (iii) 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, (iv)
the institution of proceedings to terminate a Plan by the PBGC or (v) any other
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
Event of Default shall have the meaning assigned such term in Section
10.01.
6
Excepted Liens shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with worker's compensation, unemployment
insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators' Liens in favor of Persons other than
Obligors, Subsidiaries and their Affiliates, vendors', carriers',
warehousemen's, repairmen's, mechanics', workmen's, materialmen's, construction
or other like Liens arising by operation of law in the ordinary course of
business or incident to the exploration, development, operation and maintenance
of Oil and Gas Properties or statutory landlord's liens, each of which is in
respect of obligations that have not been outstanding more than 90 days or which
are being contested in good faith by appropriate proceedings and for which
adequate reserves have been maintained in accordance with GAAP; (iv) any Liens
reserved in leases by lessors or farmout agreements by farmors for royalties and
for compliance with the terms of the farmout agreements or leases in the case of
leasehold estates, to 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 any Obligor or any Subsidiary or
materially impair the value of such Property subject thereto; (v) encumbrances
(other than to secure the payment of borrowed money or the deferred purchase
price of Property or services), easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any rights of way or other
Property of any Obligor or any Subsidiary for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the
transportation of gas, oil, or timber, and other like purposes, or for the joint
or common use of real estate, rights of way, facilities and equipment, and
defects, irregularities, zoning restrictions and deficiencies in title of any
rights of way or other Property which in the aggregate do not materially impair
the use of such rights of way or other Property for the purposes of which such
rights of way and other Property are held by any Obligor or any Subsidiary or
materially impair the value of such Property subject thereto; (vi) deposits of
cash or securities to secure the performance of bids, trade contracts, leases,
statutory obligations and other obligations of a like nature incurred in the
ordinary course of business; (vii) the Existing Liens and (viii) Liens permitted
by the Security Instruments.
Existing Letters of Credit shall mean the issued and outstanding
letters of credit issued under the Existing Credit Agreement more particularly
described on Schedule 2.01(b) attached hereto, which Existing Letters of Credit
shall be deemed Letters of Credit hereunder.
Federal Funds Rate shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with a member of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such- day, provided that (i) if the date for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to the Administrative Agent on such day on such transactions as
determined by the Administrative Agent.
Fee Letter shall mean that certain letter agreement from Wachovia Bank,
National Association and Wachovia Capital Markets, LLC to the Borrower dated
January 27, 2004, concerning certain fees in connection with this Agreement and
any agreements or instruments executed in connection therewith, as the same may
be amended or replaced from time to time.
Financial Statements shall mean the financial statement or statements
of the Borrower and its Consolidated Subsidiaries described or referred to in
Section 7.02.
7
Funded Debt shall mean, for any Person the sum of the following
(without duplication): (i) all obligations of such Person for borrowed money or
evidenced by bonds, debentures, notes or other similar instruments (including
principal, interest, fees and charges); (ii) all obligations of such Person
(whether contingent or otherwise) in respect of bankers' acceptances, letters of
credit, surety or other bonds and similar instruments; (iii) all obligations of
such Person to pay the deferred purchase price of Property or services (other
than for borrowed money); (iv) all obligations under leases which shall have
been, or should have been, in accordance with GAAP, recorded as capital leases
in respect of which such Person is liable (whether contingent or otherwise); (v)
obligations to pay for goods or services whether or not such goods or services
are actually received or utilized by such Person; (vi) any capital stock of such
Person in which such Person has a mandatory obligation to redeem such stock;
(vii) the undischarged balance of any production payment created by such Person
or for the creation of which such Person directly or indirectly received
payment; and (viii) all obligations of such Person under Hedging Agreements.
GAAP shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
Governmental Authority shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's Property is
located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority herein shall mean
a Governmental Authority having jurisdiction over, where applicable, any
Obligor, their Subsidiaries or any of their Property or the Administrative
Agent, any Lender or any Applicable Lending Office.
Governmental Requirement shall mean any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
(whether or not having the force of law), including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
Guarantor shall mean each of the parties named as "Guarantors" in the
opening paragraph of this Agreement and each of the parties that from time to
time become a party to a Guaranty Agreement pursuant to the terms of this
Agreement provided that at such time that Parent ceases beneficially to own,
directly or indirectly, 80% or more of the outstanding shares of voting capital
stock of the Borrower, Parent shall cease to be a Guarantor and at such time
that Atlas Holdings is liquidated and dissolved as permitted under Section 9.09,
Atlas Holdings shall cease to be a Guarantor.
Guarantor Subsidiary shall mean each Subsidiary of Borrower (whether
now existing or hereafter created or acquired) who is (or should have been) a
Guarantor.
Guaranty Agreement shall mean an agreement executed by a Guarantor in
form and substance satisfactory to the Administrative Agent guarantying,
unconditionally, payment of the Indebtedness, as the same may be amended,
modified or supplemented from time to time.
Hedging Agreements shall mean any commodity, interest rate or currency
swap, cap, floor, collar, forward agreement or other exchange or protection
agreements or any option with respect to any such transaction.
Highest Lawful Rate means, as of a particular date, the highest
non-usurious rate of interest, if any, permitted from day to day by applicable
law. To the extent Texas law is applicable, the Lenders hereby notify and
8
disclose to the Borrower that, for purposes of Texas Finance Code ss.303.001, as
it may from time to time be amended, the "applicable ceiling" shall be the
"weekly ceiling" from time to time in effect as limited by Texas Finance Code
ss.303.009; provided, however, that to the extent permitted by applicable law,
the Lender reserves the right to change the "applicable ceiling" from time to
time by further notice and disclosure to the Borrower.
Hydrocarbon Interests shall mean all rights, titles, interests and
estates now or hereafter acquired in and to oil and gas leases, oil, gas and
mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee
interests, overriding royalty and royalty interests, net profit interests and
production payment interests, including any reserved or residual interests of
whatever nature.
Hydrocarbons shall mean oil, gas, casinghead gas, drip gasoline,
natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons and all products refined or separated therefrom.
Indebtedness shall mean any and all amounts owing or to be owing by the
Borrower or any Obligor to the Administrative Agent, the Issuing Bank and/or the
Lenders or any Affiliates of Lenders in connection with the Loan Documents, any
Letter of Credit Agreements, any Hedging Agreements now or hereafter arising
between the Borrower or any Obligor and the Administrative Agent, the Issuing
Bank, any Lender or its Affiliate and permitted by the terms of this Agreement,
and all renewals, extensions and/or rearrangements of any of the foregoing.
Indemnified Parties shall have the meaning assigned such term in
Section 12.03(a)(ii).
Indemnity Matters shall mean any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), claims, demands and
causes of action made or threatened against a Person and, in connection
therewith, all losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or concurrent
negligence of such Person seeking indemnification.
Initial Borrowing Base shall have the meaning assigned such term in
Section 2.08(a).
Initial Funding shall mean the funding of the initial Loans or issuance
of the initial Letters of Credit upon satisfaction of the conditions set forth
in Sections 6.01 and 6.02.
Initial Reserve Report shall mean collectively the reports, copies of
which have been delivered to the Administrative Agent, dated as of October 1,
2003, prepared by ▇▇▇▇▇▇ & Company, Inc.
Intercompany Debt shall mean Funded Debt that is owed by a Wholly Owned
Subsidiary to the Borrower or any other Obligor or by the Borrower or other
Obligor to another Obligor, the Borrower or a Wholly Owned Subsidiary.
Intercompany Notes shall mean the promissory notes executed to evidence
the Intercompany Debt.
Interest Period shall mean, with respect to any LIBOR Loan, the period
commencing on the date such LIBOR Loan is made and ending on the numerically
corresponding day in the first, second, or third calendar month thereafter, as
the Borrower may select as provided in Section 2.02, except that each Interest
Period which commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the appropriate
subsequent calendar month. Notwithstanding the foregoing: (i) no Interest Period
may end after the Revolving Credit Termination Date; (ii) no Interest Period for
any LIBOR Loan may end after the due date of any installment, if any, provided
for in Section 3.01 to the extent that such LIBOR Loan would need to be prepaid
9
prior to the end of such Interest Period in order for such installment to be
paid when due; (iii) each Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day (or,
if such next succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day); and (iv) no Interest Period shall
have a duration of less than one month and, if the Interest Period for any LIBOR
Loans would otherwise be for a shorter period, such Loans shall not be available
hereunder.
Issuing Bank shall have the meaning assigned to such term in the
introductory paragraph to this Agreement, or any other Lender agreed to between
the Borrower and the Administrative Agent to issue Letters of Credit.
LC Commitment at any time shall mean $10,000,000.
LC Exposure at any time shall mean the difference between (i) the
aggregate face amount of all undrawn and uncancelled Letters of Credit plus (ii)
the aggregate of all amounts drawn under all Letters of Credit and not yet
reimbursed.
Letter of Credit Agreements shall mean the written agreements with the
Issuing Bank, as issuing lender for any Letter of Credit, executed in connection
with the issuance by the Issuing Bank of the Letters of Credit, such agreements
to be on the Issuing Bank's customary form for letters of credit of comparable
amount and purpose as from time to time in effect or as otherwise agreed to by
the Borrower and the Issuing Bank.
Letters of Credit shall mean the stand-by letters of credit issued
pursuant to Section 2.01(b) and all reimbursement obligations pertaining to any
such letters of credit, and "Letter of Credit" shall mean any one of the Letters
of Credit and the reimbursement obligations pertaining thereto.
LIBOR shall mean the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) of interest determined on the basis of the rate for
deposits in Dollars for a period equal to the applicable Interest Period
commencing on the first day of such Interest Period appearing on Dow ▇▇▇▇▇
Market Service Page 3750 as of 11:00 a.m. (London time) two (2) Business Days
prior to the first day of the applicable Interest Period. In the event that such
rate does not appear on Dow ▇▇▇▇▇ Market Service Page 3750, "LIBOR" shall be
determined by the Administrative Agent to be the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) at which deposits in Dollars
are offered by leading reference banks in the London interbank market to the
Administrative Agent at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of the applicable Interest Period for a period equal to
such Interest Period and in an amount substantially equal to the amount of the
applicable Loan.
LIBOR Loans shall mean Loans the interest rates on which are determined
on the basis of rates referred to in the definition of "Adjusted LIBOR".
Lien shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to (i)
the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (ii) production payments and the like payable
out of Oil and Gas Properties. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
Property. For the purposes of this Agreement, each Obligor or any Subsidiary
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, or leases under a financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person in a transaction intended to create a financing.
10
Loan Documents shall mean this Agreement, the Notes, all Letters of
Credit, all Letter of Credit Agreements, the Fee Letter, the Security
Instruments, the Guaranty Agreements and the Assignment of Notes, Documents and
Liens.
Loans shall mean the loans as provided for by Section 2.01(a) or any
Continuations or Conversions thereof.
Majority Lenders shall mean, at any time while no Loans are
outstanding, Lenders having at least sixty-seven percent (67%) of the Aggregate
Revolving Credit Commitments and, at any time while Loans are outstanding,
Lenders holding at least sixty-seven percent (67%) of the outstanding aggregate
principal amount of the Loans (without regard to any sale by a Lender of a
participation in any Loan under Section 12.06(c)).
Material Adverse Effect shall mean any material and adverse effect on
(i) the assets, liabilities, financial condition, business, operations or
affairs of the Borrower and the Guarantors taken as a whole, or (ii) the ability
of the Borrower or any Guarantor to carry out its business as at the Closing
Date (excluding the dissolution or liquidation of any Guarantor pursuant to a
merger to the extent permitted under Section 9.09) or meet its obligations under
the Loan Documents on a timely basis, or (iii) the Administrative Agent's and
the Lenders' interests in the collateral securing the Indebtedness, or the
Administrative Agents' or the Lenders' ability to enforce their rights and
remedies under this Agreement or any other Loan Document, at law or in equity.
Material Agreements shall have the meaning assigned to such term in
Section 7.23.
Maximum Revolving Credit Amount shall mean, as to each Lender, the
amount set forth opposite such Lender's name on Annex I under the caption
"Maximum Revolving Credit Amounts" (as the same may be reduced pursuant to
Section 2.03(b) pro rata to each Lender based on its Percentage Share), as
modified from time to time to reflect any assignments permitted by Section
12.06(b).
Mortgaged Property shall mean the Property owned by the Obligors and
which is subject to the Liens existing and to exist under the terms of the
Security Instruments.
Multiemployer Plan shall mean a Plan defined as such in Section 3(37)
or 4001(a)(3) of ERISA.
Notes shall mean the Notes provided for by Section 2.06, together with
any and all renewals, extensions for any period, increases, rearrangements,
substitutions or modifications thereof.
Oil and Gas Properties shall mean Hydrocarbon Interests; the Properties
now or hereafter pooled or unitized with Hydrocarbon Interests; all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests; all operating
agreements, contracts and other agreements which relate to any of the
Hydrocarbon Interests or the production, sale, purchase, exchange or processing
of Hydrocarbons from or attributable to such Hydrocarbon Interests; all
Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon Interests, including all oil in tanks, the lands covered thereby
and all rents, issues, profits, proceeds, products, revenues and other incomes
from or attributable to the Hydrocarbon Interests; all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests; and all Properties, rights, titles,
11
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, injection ▇▇▇▇▇ or other ▇▇▇▇▇,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.
Oil and Gas Properties Collateral Value shall mean the collateral value
of the Oil and Gas Properties as determined by the Lenders in accordance with
the procedures set forth under Section 2.08.
Other Taxes shall have the meaning assigned such term in Section
4.06(b).
Ownership Report shall mean a report prepared by the Borrower on a well
by well basis reflecting the working and net revenue interests for each Obligor,
and the gross working interest and gross revenue interests for each Partnership
and such other information reasonably requested by Lender in form attached
hereto as Schedule 7.10.
Partnerships shall mean such partnerships listed on Schedule 7.14 and
such other partnerships which are principally engaged in the acquisition and
development of Oil and Gas Properties as may be wholly or partially owned
directly or indirectly by any Obligor from time to time hereafter other than
APL.
PBGC shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.
Percentage Share shall mean the percentage of the Aggregate Revolving
Credit Commitment to be provided by a Lender under this Agreement as indicated
on Annex I hereto, as modified from time to time to reflect any assignments
permitted by Section 12.06(b).
Permitted Merger shall mean such merger or consolidation as is
permitted under Section 9.09.
Person shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof, or
any other form of entity.
Plan shall mean any employee pension benefit plan, as defined in
Section 3(2) of ERISA, which (i) is currently or hereafter sponsored, maintained
or contributed to by the Borrower, any Subsidiary or an ERISA Affiliate or (ii)
was at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Borrower, any Subsidiary or an ERISA Affiliate.
Post-Default Rate shall mean, in respect of any principal of any Loan
or any other amount payable by the Borrower under this Agreement or any other
Loan Document, a rate per annum equal to two percent (2%) per annum above the
Base Rate as in effect from time to time plus the Applicable Margin (if any),
but in no event to exceed the Highest Lawful Rate.
12
Prime Rate shall mean the rate of interest from time to time announced
publicly by the Administrative Agent as its prime commercial lending rate. Such
rate is set by the Administrative Agent as a general reference rate of interest,
taking into account such factors as the Administrative Agent may deem
appropriate, it being understood that many of the Administrative Agent's
commercial or other loans are priced in relation to such rate, that it is not
necessarily the lowest or best rate actually charged to any customer and that
the Administrative Agent may make various commercial or other loans at rates of
interest having no relationship to such rate.
Principal Office shall mean the principal office of the Administrative
Agent, presently located at ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
Property shall mean any interest in any kind of property or asset,
whether real, personal or mixed, moveable or immoveable, tangible or intangible.
Quarterly Dates shall mean the first day of each January, April, July,
and October in each year, the first of which shall be April 1, 2004; provided,
however, that if any such day is not a Business Day, such Quarterly Date shall
be the next succeeding Business Day.
Redetermination Date shall mean the date that the redetermined
Borrowing Base becomes effective subject to the notice requirements specified in
Section 2.08(b) both for scheduled redeterminations and unscheduled
redeterminations.
Regulation D shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
Regulatory Change shall mean, with respect to any Lender, any change
after the Closing Date in any Governmental Requirement (including Regulation D)
or the adoption or making after such date of any interpretations, directives or
requests applying to a class of lenders (including such Lender or its Applicable
Lending Office) of or under any Governmental Requirement (whether or not having
the force of law) by any Governmental Authority charged with the interpretation
or administration thereof.
Required Payment shall have the meaning assigned such term in Section
4.04.
Reserve Report shall mean a report, in form and substance satisfactory
to the Administrative Agent, setting forth, as of each October 1 or April 1,
immediately prior to the commencement of each Borrowing Base Period, as
applicable (or such other date in the event of an unscheduled redetermination);
(i) the oil and gas reserves attributable to all of the Obligors' Oil and Gas
Properties whether owned directly or indirectly by such Person and expressly
including such reserves attributable to each Obligor's net ownership in the
Partnerships' Oil and Gas Properties together with a projection of the rate of
production and future net income, taxes, operating expenses and capital
expenditures with respect thereto as of such date, based upon the pricing
assumptions consistent with SEC reporting requirements at the time and (ii) such
other information as the Administrative Agent may reasonably request.
Reserve Requirement shall mean, for any Interest Period for any LIBOR
Loan, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding one billion Dollars against
"Eurocurrency liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against (i) any category of liabilities which includes
13
deposits by reference to which LIBOR is to be determined as provided in the
definition of "LIBOR" or (ii) any category of extensions of credit or other
assets which include a LIBOR Loan.
Responsible Officer shall mean, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and, with respect to
financial matters, the term "Responsible Officer" shall include the Chief
Financial Officer of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the Borrower.
Revolving Credit Commitment shall mean, for any Lender, its obligation
to make Loans and participate in the issuance of Letters of Credit as provided
in Section 2.01(b) up to the lesser of (i) such Lender's Maximum Revolving
Credit Amount and (ii) such Lender's Percentage Share of the then effective
Borrowing Base.
Revolving Credit Termination Date shall mean the earlier to occur of
(i) the third anniversary date of the Closing Date, (ii) the date that the
Commitments are terminated pursuant to Section 10.02, and (iii) the date that
the Commitments are fully terminated pursuant to Section 2.03(b).
Scheduled Redetermination Date shall have the meaning assigned such
term in Section 2.08(b).
SEC shall mean the Securities and Exchange Commission or any successor
Governmental Authority.
Security Instruments shall mean the agreements or instruments described
or referred to in Exhibit D, and any and all other agreements or instruments now
or hereafter executed and delivered by the Obligors or any other Person (other
than participation or similar agreements between any Lender and any other lender
or creditor with respect to any Indebtedness pursuant to this Agreement) in
connection with, or as security for the payment or performance of, the Notes,
the Guarantees, the Hedge Agreements, this Agreement, or reimbursement
obligations under the Letters of Credit, as such agreements may be amended,
supplemented or restated from time to time.
Special Entity shall mean any joint venture, limited liability company
or partnership, general or limited partnership or any other type of partnership
or company other than a corporation in which the Borrower or one or more of its
other Subsidiaries is a member, owner, partner or joint venturer and owns,
directly or indirectly, at least a majority of the equity of such entity or
controls such entity, but excluding any tax partnerships that are not classified
as partnerships under state law. For purposes of this definition, any Person
which owns directly or indirectly an equity investment in another Person which
allows the first Person to manage or elect managers who manage the normal
activities of such second Person will be deemed to "control" such second Person
(e.g. a sole general partner controls a limited partnership).
Subsidiary shall mean (i) any corporation of which at least a majority
of the outstanding shares of stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the Borrower or one or more of its Subsidiaries or by the Borrower
and one or more of its Subsidiaries and (ii) any Special Entity excluding APL.
Successful Public Offering means the completion of the offering as
described in the Borrower's Form S-1 filed with the SEC on February 10, 2004,
Registration No. 333-112653.
14
Tax Matters Agreement means that agreement to be entered into between
Parent and Borrower upon a Successful Public Offering under which Parent and
Borrower agree to pay income taxes on terms reasonably satisfactory to
Administrative Agent.
Taxes shall have the meaning assigned such term in Section 4.06(a).
Transfer shall mean any sale, assignment, farm-out, conveyance or other
transfer of any Oil and Gas Property, or any interest in any Oil and Gas
Property (including, without limitation, any working interest, overriding
royalty interest, production payments, net profits interest, royalty interest,
or mineral fee interest) or in any Partnership or APL units of any Obligor,
except for (i) the sale of Hydrocarbons in the ordinary course of business on a
current basis, or (ii) the sale or transfer of equipment in the ordinary course
of business that is no longer necessary for the business of any Obligor or is
contemporaneously replaced by equipment of at least comparable value and use.
Transition Services Agreement means that agreement to be entered into
between Parent and Borrower upon a Successful Public Offering under which Parent
and Borrower each agrees to provide for a fee to the other Person certain
administrative, accounting and operational services under terms reasonably
acceptable to Administrative Agent.
Type shall mean, with respect to any Loan, a Base Rate Loan or a LIBOR
Loan.
Wholly Owned Subsidiary shall mean a Subsidiary for which all of the
outstanding shares of stock or other equity of such entity is owned directly or
indirectly by Borrower or one of Borrower's Wholly Owned Subsidiaries.
Section 1.03 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the audited financial statements of the Borrower referred to in Section 7.02
(except for changes concurred with by the Borrower's independent public
accountants).
ARTICLE II
Commitments
Section 2.01 Loans and Letters of Credit.
(a) Loans. Each Lender severally agrees, on the terms and conditions of
this Agreement, to make loans to the Borrower during the period from and
including (i) the Closing Date or (ii) such later date that such Lender becomes
a party to this Agreement as provided in Section 12.06(b), to and up to, but
excluding, the Revolving Credit Termination Date in an aggregate principal
amount at any one time outstanding up to, but not exceeding, the amount of such
Lender's Revolving Credit Commitment as then in effect; provided, however, that
the aggregate principal amount of all such Loans by all Lenders hereunder at any
one time outstanding together with the LC Exposure shall not exceed the greater
of (i) the Borrowing Base and (ii) the Aggregate Revolving Credit Commitments.
Subject to the terms of this Agreement, during the period from the Closing Date
to and up to, but excluding, the Revolving Credit Termination Date, the Borrower
may borrow, repay and reborrow the amount described in this Section 2.01(a).
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(b) Letters of Credit. During the period from and including the Closing
Date to, but excluding, five (5) Business Days prior to the Revolving Credit
Termination Date, the Issuing Bank, as issuing bank for the Lenders, agrees to
[continue the Existing Letters of Credit and] extend credit for the account of
any Obligor other than Parent at any time and from time to time by issuing,
renewing, extending or reissuing Letters of Credit; provided however, the LC
Exposure at any one time outstanding shall not exceed the lesser of (i) the LC
Commitment or (ii) the Aggregate Revolving Credit Commitments, as then in
effect, minus the aggregate principal amount of all Loans then outstanding. The
Lenders shall participate in such Letters of Credit according to their
respective Percentage Shares. Each of the Letters of Credit shall (i) be issued
by the Issuing Bank, (ii) contain such terms and provisions as are reasonably
required by the Issuing Bank, (iii) be for the account of such Obligor other
than Parent, and (iv) expire not later than the earlier of (A) twelve months
from the date of issuance of such Letter of Credit and (B) five (5) Business
Days before the Revolving Credit Termination Date.
(c) Limitation on Types of Loans. Subject to the other terms and
provisions of this Agreement, at the option of the Borrower, the Loans may be
Base Rate Loans or LIBOR Loans; provided that, without the prior written consent
of the Majority Lenders, no more than five LIBOR Loans may be outstanding at any
time.
(d) Loans and Borrowings under the Prior Credit Agreement. On the
Closing Date (or as soon as practicable with respect to (iv)):
(i) the Borrower shall pay all accrued and unpaid commitment
fees, break funding fees under Section 5.05 and all other fees that are
outstanding under the Existing Credit Agreement for the account of each
Prior Lender under the Prior Credit Agreement;
(ii) each "Base Rate Loan" and "LIBOR Loan" outstanding under
the Prior Credit Agreement shall be deemed to be repaid with the
proceeds of a new Base Rate Loan or LIBOR Loan, as applicable, under
this Agreement;
(iii) the Administrative Agent shall use reasonable efforts to
cause such Prior Lender under the Prior Credit Agreement to deliver to
the Borrower as soon as practicable after the Closing Date, the Note
issued by the Borrower to it under the Prior Credit Agreement, marked
"canceled" or otherwise similarly defaced; and
(iv) the Prior Credit Agreement and the commitments thereunder
shall be superceded by this Agreement and such commitments shall
terminate.
It is the intent of the parties that this Agreement not
constitute a novation of the obligations and liabilities
existing under the Prior Credit Agreement or evidence
repayment of any such obligations and liabilities and that
this Agreement amend and restate in its entirety the Prior
Credit Agreement and re-evidence the obligations of the
Borrower outstanding thereunder.
Section 2.02 Borrowings, Continuations and Conversions, Letters of
Credit.
(a) Borrowings. The Borrower shall give the Administrative Agent (which
shall promptly notify the Lenders) advance notice as hereinafter provided of
each borrowing hereunder, which shall specify (i) the aggregate amount of such
borrowing, (ii) the Type and (iii) the date (which shall be a Business Day) of
the Loans to be borrowed, and (iv) (in the case of LIBOR Loans) the duration of
the Interest Period therefor.
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(b) Minimum Amounts. If a borrowing consists in whole or in part of
LIBOR Loans, such LIBOR Loans shall be in amounts of at least $500,000 or any
whole multiple of $250,000 in excess thereof. If a borrowing consists in whole
or in part of Base Rate Loans, such Base Rate Loans shall be in amounts of at
least $500,000 or integral multiples of $250,000 in excess thereof.
(c) Notices. All borrowings, continuations and conversions shall
require advance written notice to the Administrative Agent (which shall promptly
notify the Lenders) in the form of Exhibit B (or telephonic notice promptly
confirmed by such a written notice), which in each case shall be irrevocable,
from the Borrower to be received by the Administrative Agent not later than
12:00 p.m. Charlotte, North Carolina time at least one Business Day prior to the
date of each Base Rate Loan borrowing and three Business Days prior to the date
of each LIBOR Loan borrowing, continuation or conversion. Without in any way
limiting the Borrower's obligation to confirm in writing any telephonic notice,
the Administrative Agent may act without liability upon the basis of telephonic
notice believed by the Administrative Agent in good faith to be from the
Borrower prior to receipt of written confirmation. In each such case, the
Borrower hereby waives the right to dispute the Administrative Agent's record of
the terms of such telephonic notice except in the case of gross negligence or
willful misconduct by the Administrative Agent.
(d) Continuation Options. Subject to the provisions made in this
Section 2.02(d), the Borrower may elect to continue all or any part of any LIBOR
Loan beyond the expiration of the then current Interest Period relating thereto
by giving advance notice as provided in Section 2.02(c) to the Administrative
Agent (which shall promptly notify the Lenders) of such election, specifying the
amount of such Loan to be continued and the Interest Period therefor. In the
absence of such a timely and proper election, the Borrower shall be deemed to
have elected to convert such LIBOR Loan to a Base Rate Loan pursuant to Section
2.02(e). All or any part of any LIBOR Loan may be continued as provided herein,
provided that (i) any continuation of any such Loan shall be (as to each Loan as
continued for an applicable Interest Period) in amounts of at least $500,000 or
any whole multiple of $250,000 in excess thereof and (ii) no Default shall have
occurred and be continuing. If a Default shall have occurred and be continuing,
each LIBOR Loan shall be converted to a Base Rate Loan on the last day of the
Interest Period applicable thereto.
(e) Conversion Options. The Borrower may elect to convert all or any
part of any LIBOR Loan on the last day of the then current Interest Period
relating thereto to a Base Rate Loan by giving advance notice to the
Administrative Agent (which shall promptly notify the Lenders) of such election.
Subject to the provisions made in this Section 2.02(e), the Borrower may elect
to convert all or any part of any Base Rate Loan at any time and from time to
time to a LIBOR Loan by giving advance notice as provided in Section 2.02(c) to
the Administrative Agent (which shall promptly notify the Lenders) of such
election. All or any part of any outstanding Loan may be converted as provided
herein, provided that (i) any conversion of any Base Rate Loan into a LIBOR Loan
shall be (as to each such Loan into which there is a conversion for an
applicable Interest Period) in amounts of at least $500,000 or any whole
multiple of $250,000 in excess thereof and (ii) no Default shall have occurred
and be continuing. If a Default shall have occurred and be continuing, no Base
Rate Loan may be converted into a LIBOR Loan.
(f) Advances. Not later than 12:00 p.m. Charlotte, North Carolina time
on the date specified for each the borrowing hereunder, each Lender shall make
available the amount of the Loan to be made by it on such date to the
Administrative Agent, to an account which the Administrative Agent shall
specify, in immediately available funds, for the account of the Borrower. The
amounts so received by the Administrative Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Borrower by depositing
the same, in immediately available funds, in an account of the Borrower,
designated by the Borrower and maintained at the Principal Office.
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(g) Letters of Credit. The Borrower shall give the Issuing Bank (which
shall promptly notify the Lenders of such request and their Percentage Share of
such Letter of Credit) advance notice to be received by the Issuing Bank not
later than 12:00 p.m. Charlotte, North Carolina time not less than three
Business Days prior thereto of each request for the issuance, and at least ten
Business Days prior to the date of the renewal or extension, of a Letter of
Credit hereunder which request shall specify (i) the amount of such Letter of
Credit, (ii) the date (which shall be a Business Day) such Letter of Credit is
to be issued, renewed or extended, (iii) the duration thereof, (iv) the name and
address of the beneficiary thereof, and (v) such other information as the
Issuing Bank may reasonably request, all of which shall be reasonably
satisfactory to the Issuing Bank. Subject to the terms and conditions of this
Agreement, on the date specified for the issuance, renewal or extension of a
Letter of Credit, the Administrative Agent shall issue, renew or extend such
Letter of Credit to the beneficiary thereof.
In conjunction with the issuance of each Letter of Credit, the Borrower
shall execute a Letter of Credit Agreement. In the event of any conflict between
any provision of a Letter of Credit Agreement and this Agreement, the Borrower,
the Issuing Bank, the Administrative Agent and the Lenders hereby agree that the
provisions of this Agreement shall govern.
The Issuing Bank will send to the Borrower and each Lender, immediately
upon issuance of any Letter of Credit, or an amendment thereto, a true and
complete copy of such Letter of Credit, or such amendment thereto.
Section 2.03 Changes of Commitments.
(a) The Aggregate Revolving Credit Commitments shall at all times be
equal to the lesser of (i) the Aggregate Maximum Revolving Credit Amounts after
adjustments resulting from reductions pursuant to Section 2.03(b) or (ii) the
then effective Borrowing Base as determined from time to time.
(b) The Borrower shall have the right to terminate or to reduce the
amount of the Aggregate Maximum Revolving Credit Amounts at any time, or from
time to time, upon not less than thirty (30) days' prior notice to the
Administrative Agent (who shall promptly notify the Lenders) of each such
termination or reduction, which notice shall specify the effective date thereof
and the amount of any such reduction (which shall not be less than $1,000,000 or
any whole multiple of $1,000,000 in excess thereof; and no more than an amount
by which the Aggregate Maximum Revolving Credit Amounts would be less than the
aggregate outstanding principal amount of the Loans plus the LC Exposure) and
shall be irrevocable and effective only upon receipt by the Administrative
Agent.
(c) The Aggregate Maximum Revolving Credit Amounts once terminated or
reduced may not be reinstated.
Section 2.04 Fees.
(a) Commitment Fee. The Borrower shall pay to the Administrative Agent
for the account of each Lender a commitment fee on the daily average unused
amount of the Borrowing Base for each Borrowing Base Period up to, but
excluding, the earlier of the date the Aggregate Revolving Credit Commitments
are terminated or the Revolving Credit Termination Date at a rate per annum
equal to 1/2 of 1%. Accrued commitment fees shall be payable quarterly in
arrears on each Quarterly Date and on the earlier of the date the Aggregate
Revolving Credit Commitments are terminated or the Revolving Credit Termination
Date.
(b) Increase in Borrowing Base. The Borrower shall pay to the
Administrative Agent, as a fee for the ratable account of the Lenders (i) a fee
equal to three-eighths of one percent (0.375%) of each marginal increase in the
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then current Borrowing Base after the Initial Borrowing Base. Any fee arising
under this Section 2.04(b) is to be paid upon the effective date of the related
Borrowing Base increase.
(c) Letter of Credit Fees.
(i) The Borrower agrees to pay the Administrative Agent, for
the account of each Lender, commissions for issuing the Letters of
Credit on the daily average outstanding of the maximum liability of the
Issuing Bank existing from time to time under such Letter of Credit
(calculated separately for each Letter of Credit) at the rate per annum
equal to the Applicable Margin in effect from time to time for LIBOR
Loans, provided that each Letter of Credit shall bear a minimum
commission of $500 and further provided, during any period commencing
on the date of an Event of Default until the same is paid in full or
all Events of Default are cured and waived, equal to the Post-Default
Rate. Each Letter of Credit shall be deemed to be outstanding up to the
full face amount of the Letter of Credit until the Issuing Bank has
received the canceled Letter of Credit or a written cancellation of the
Letter of Credit from the beneficiary of such Letter of Credit in form
and substance acceptable to the Issuing Bank, or for any reductions in
the amount of the Letter of Credit (other than from a drawing), written
notification from the beneficiary of such Letter of Credit. Such
commissions are payable in advance at issuance of the Letter of Credit
for the first year thereof and thereafter, quarterly in arrears on each
Quarterly Date and upon cancellation or expiration of each such Letter
of Credit.
(ii) The Borrower agrees to pay the Administrative Agent, for
the account of the Issuing Bank, commissions for issuing the Letters of
Credit (calculated separately for each Letter of Credit) equal to
0.125% of the face amount of each Letter of Credit, payable upon
issuance of such Letter of Credit.
(d) Fee Letter. The Borrower shall pay to Administrative Agent for its
account such other fees as are set forth in the Fee Letter on the dates
specified therein to the extent not paid prior to the Closing Date.
Section 2.05 Several Obligations. The failure of any Lender to make any
Loan to be made by it or to provide funds for disbursements or reimbursements
under Letters of Credit on the date specified therefor shall not relieve any
other Lender of its obligation to make its Loan or provide funds on such date,
but no Lender shall be responsible for the failure of any other Lender to make a
Loan to be made by such other Lender or to provide funds to be provided by such
other Lender.
Section 2.06 Notes. The Loans made by each Lender shall be evidenced by
a single promissory note of the Borrower in substantially the form of Exhibit A
dated (i) the Closing Date or (ii) the effective date of an Assignment pursuant
to Section 12.06(b), payable to the order of such Lender in a principal amount
equal to its Maximum Revolving Credit Amount as originally in effect and
otherwise duly completed and such substitute Notes as required by Section
12.06(b). The date, amount, Type, interest rate and Interest Period of each Loan
made by each Lender, and all payments made on account of the principal thereof,
shall be recorded by such Lender on its books for its Note, and, prior to any
transfer may be endorsed by such Lender on the schedule attached to such Note or
any continuation thereof or on any separate record maintained by such Lender.
Failure to make any such notation or to attach a schedule shall not affect any
Lender's or the Borrower's rights or obligations in respect of such Loans or
affect the validity of such transfer by any Lender of its Note.
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Section 2.07 Prepayments
(a) Voluntary Prepayments. The Borrower may prepay the Base Rate Loans
upon not less than one (1) Business Day's prior notice to the Administrative
Agent (which shall promptly notify the Lenders), which notice shall specify the
prepayment date (which shall be a Business Day) and the amount of the prepayment
(which shall be at least $100,000 or the remaining aggregate principal balance
outstanding on the Notes) and shall be irrevocable and effective only upon
receipt by the Administrative Agent, provided that interest on the principal
prepaid, accrued to the prepayment date, shall be paid on the prepayment date.
The Borrower may prepay LIBOR Loans on the same conditions as for Base Rate
Loans (except that prior notice to the Administrative Agent shall be not less
than three (3) Business Days for LIBOR Loans) and in addition such prepayments
of LIBOR Loans shall be subject to the terms of Section 5.05 and shall be in an
amount equal to all of the LIBOR Loans for the Interest Period prepaid. In the
event of a voluntary prepayment pursuant to this Section 2.07(a), Borrower shall
be entitled to reborrow such amounts pursuant to Section 2.01.
(b) Mandatory Prepayments. If a Borrowing Base Deficiency results from
the redetermination of the Borrowing Base pursuant to Section 2.08(b) or (d),
then the Borrower shall, within thirty (30) days notify Administrative Agent of
Borrower's election to, (i) prepay the Loans in two equal installments equal to
one half of the aggregate principal amount sufficient to eliminate such
Borrowing Base Deficiency, together with interest on the principal amount paid
accrued to the date of each such prepayment due ninety (90) days and one hundred
and eighty (180) days from the date of such redetermination, (ii) pledge, or
cause any Subsidiary to pledge, additional unencumbered collateral of sufficient
value and character (as determined by the Administrative Agent and the Lenders
in their sole discretion) that when added to the existing collateral shall cause
the Borrowing Base to equal or exceed the aggregate outstanding Loans plus the
LC Exposure, or (iii) any combination of (i) and (ii) satisfactory to the
Administrative Agent and the Lenders. If, because of LC Exposure, a Borrowing
Base Deficiency remains after prepaying all of the Loans, the Borrower shall pay
to the Administrative Agent on behalf of the Lenders an amount equal to such
remaining Borrowing Base Deficiency to be held as cash collateral as provided in
Section 2.10(b).
(c) Generally. Prepayments permitted or required under this Section
2.07 shall be without premium or penalty, except as required under Section 5.05
for prepayment of LIBOR Loans. Any prepayments on the Loans may be reborrowed
subject to the then effective Aggregate Revolving Credit Commitments.
Section 2.08 Borrowing Base.
(a) The Borrowing Base shall be determined in accordance with Section
2.08(b) by the Administrative Agent with the concurrence of the Lenders and is
subject to redetermination in accordance with Section 2.08(d). Upon any
redetermination of the Borrowing Base, such redetermination shall remain in
effect until the next Redetermination Date. So long as any of the Commitments
are in effect or any LC Exposure or Loans are outstanding hereunder, this
facility shall be governed by the then effective Borrowing Base. During the
period from and after the Closing Date until the first redetermination pursuant
to Section 2.08 or adjusted pursuant to Section 8.07(b), the amount of the
Borrowing Base shall be $65,000,000 (the "Initial Borrowing Base") which amount
is comprised of the APL Collateral Value, initially determined to be
$10,000,000, and the Oil and Gas Properties Collateral Value, initially
determined to be $55,000,000.
(b) Upon receipt of the reports required by Section 8.07 and such other
reports, data and supplemental information as may from time to time be
reasonably requested by the Administrative Agent (the "Engineering Reports"),
the Borrowing Base shall be redetermined for each Borrowing Base Period and each
such redetermination shall be effective as of the date set forth in such notice
of redetermination delivered by the Administrative Agent to Borrower (the
"Scheduled Redetermination Date"). The Oil and Gas Properties Collateral Value
shall be determined based upon the loan collateral value assigned to the
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Mortgaged Properties. The APL Collateral Value shall be determined based upon
the loan collateral value assigned to the APL units pledged by Obligors to
secure the Indebtedness. The Borrowing Base shall be equal to the sum of the Oil
and Gas Properties Collateral Value and the APL Collateral Value and such other
credit factors (including without limitation the assets, liabilities, cash flow,
business, properties, prospects, management and ownership of the Borrower and
its Subsidiaries) which the Lenders deem significant. The Lenders' determination
of the Borrowing Base shall be in their sole discretion and shall not be subject
to review or challenge. Upon each redetermination of the Borrowing Base, the
Administrative Agent shall recommend to the Lenders a new Borrowing Base and the
Lenders in accordance with their customary policies and procedures for extending
credit to oil and gas reserve-based customers shall establish the redetermined
Borrowing Base by unanimous agreement in the event of any increase in the
Borrowing Base and by agreement of at least the Majority Lenders in the event of
any redetermination to maintain or reduce the Borrowing Base. If the Borrower
does not furnish the Engineering Reports by the date required, the Lenders may
nonetheless determine a new Borrowing Base. It is expressly understood that the
Lenders shall have no obligation to determine the Borrowing Base at any
particular amount, either in relation to the Maximum Revolving Credit Amount or
otherwise.
(c) The Borrower shall have the right to reduce the amount of
the Borrowing Base upon not less than thirty (30) days' prior written notice to
the Administrative Agent (who shall promptly notify the Lenders) of the
reduction, which shall specify the effective date thereof and the amount of such
reduction (which shall not be less than $1,000,000 or any whole multiple of
$1,000,000 in excess thereof, no more than an amount which would cause a
Borrowing Base Deficiency) and shall be irrevocable and effective only upon
receipt by the Administrative Agent. The Borrowing Base once reduced at
Borrower's election may not be reinstated by Borrower, nor shall Lenders be
obligated to determine the Borrowing Base at any subsequent Scheduled
Redetermination Date or other Special Borrowing Base Determination at any
particular amount, either in relation to the Borrowing Base prior or subsequent
to any such optional reduction by Borrower.
(d) In addition to "Scheduled Borrowing Base Determinations"
pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each
request one (1) additional redetermination of the Borrowing Base during each
Borrowing Base Period. In the event the Borrower or Majority Lenders request a
"Special Borrowing Base Determination" pursuant to this Section 2.08(d), the
Borrower shall deliver written notice of such request to the Administrative
Agent which shall include: (i) Engineering Report(s) prepared as of a date not
more than thirty (30) calendar days prior to the date of such request, and (ii)
such other information as Administrative Agent and the Lenders shall request
prepared as of a date not more than thirty (30) calendar days prior to the date
of such request. Likewise, in the event the Lenders exercise their option for a
Special Borrowing Base Determination, the Administrative Agent shall give the
Borrower notice of the redetermined Borrowing Base which shall state the
effective date of the redetermination.
Section 2.09 Assumption of Risks. The Borrower assumes all risks of the
acts or omissions of any beneficiary of any Letter of Credit or any transferee
thereof with respect to its use of such Letter of Credit. Neither the Issuing
Bank (except in the case of gross negligence or willful misconduct on the part
of the Issuing Bank or any of its employees), its correspondents nor any Lender
shall be responsible for the validity, sufficiency or genuineness of
certificates or other documents or any endorsements thereon, even if such
certificates or other documents should in fact prove to be invalid,
insufficient, fraudulent or forged; for errors, omissions, interruptions or
delays in transmissions or delivery of any messages by mail, telex, or
otherwise, whether or not they be in code; for errors in translation or for
errors in interpretation of technical terms; the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason;
the failure of any beneficiary or any transferee of any Letter of Credit to
comply fully with conditions required in order to draw upon any Letter of
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Credit; or for any other consequences arising from causes beyond the Issuing
Bank's control or the control of the Issuing Bank's correspondents. In addition,
neither the Issuing Bank, the Administrative Agent nor any Lender shall be
responsible for any error, neglect, or default of any of the Issuing Bank's
correspondents; and none of the above shall affect, impair or prevent the
vesting of any of the Issuing Bank's, the Administrative Agent's or any Lender's
rights or powers hereunder or under the Letter of Credit Agreements, all of
which rights shall be cumulative. The Issuing Bank and its correspondents may
accept certificates or other documents that appear on their face to be in order,
without responsibility for further investigation of any matter contained therein
regardless of any notice or information to the contrary. In furtherance and not
in limitation of the foregoing provisions, the Borrower agrees that any action,
inaction or omission taken or not taken by the Issuing Bank or by any
correspondent for the Issuing Bank in good faith in connection with any Letter
of Credit, or any related drafts, certificates, documents or instruments, shall
be binding on the Borrower and shall not put the Issuing Bank or its
correspondents under any resulting liability to the Borrower.
Section 2.10 Obligation to Reimburse and to Prepay.
(a) If a disbursement by the Issuing Bank is made under any Letter of
Credit, the Borrower shall pay to the Administrative Agent within two (2)
Business Days after notice of any such disbursement is received by the Borrower,
the amount of each such disbursement made by the Issuing Bank under the Letter
of Credit (if such payment is not sooner effected as may be required under this
Section 2.10 or under other provisions of the Letter of Credit), together with
interest on the amount disbursed from and including the date of disbursement
until payment in full of such disbursed amount at a varying rate per annum equal
to (i) the then applicable interest rate for Base Rate Loans through the second
Business Day after notice of such disbursement is received by the Borrower and
(ii) thereafter, the Post-Default Rate for Base Rate Loans (but in no event to
exceed the Highest Lawful Rate) for the period from and including the third
Business Day following the date of such disbursement to and including the date
of repayment in full of such disbursed amount. The obligations of the Borrower
under this Agreement with respect to each Letter of Credit shall be absolute,
unconditional and irrevocable and shall be paid or performed strictly in
accordance with the terms of this Agreement under all circumstances whatsoever,
including, without limitation, but only to the fullest extent permitted by
applicable law, the following circumstances: (i) any lack of validity or
enforceability of this Agreement, any Letter of Credit or any of the Security
Instruments; (ii) any amendment or waiver of (including any default), or any
consent to departure from this Agreement (except to the extent permitted by any
amendment or waiver), any Letter of Credit or any of the Security Instruments;
(iii) the existence of any claim, set-off, defense or other rights which the
Borrower may have at any time against the beneficiary of any Letter of Credit or
any transferee of any Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank, the
Administrative Agent, any Lender or any other Person, whether in connection with
this Agreement, any Letter of Credit, the Security Instruments, the transactions
contemplated hereby or any unrelated transaction; (iv) any statement,
certificate, draft, notice or any other document presented under any Letter of
Credit proves to have been forged, fraudulent, insufficient or invalid in any
respect or any statement therein proves to have been untrue or inaccurate in any
respect whatsoever; (v) payment by the Issuing Bank under any Letter of Credit
against presentation of a draft certificate which appears on its face to comply,
but does not comply, with the terms of such Letter of Credit; and (vi) any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing.
Notwithstanding anything in this Agreement to the contrary, the Borrower will
not be liable for payment or performance that results from the gross negligence
or willful misconduct of the Issuing Bank, except (i) where the Borrower or any
Subsidiary actually recovers the proceeds for itself or the Issuing Bank of any
payment made by the Issuing Bank in connection with such gross negligence or
willful misconduct or (ii) in cases where the Administrative Agent makes payment
to the named beneficiary of a Letter of Credit.
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(b) In the event of the occurrence of any Event of Default, a payment
or prepayment pursuant to Section 2.07(b) or the maturity of the Notes, whether
by acceleration or otherwise, an amount equal to the LC Exposure (or the excess
in the case of Section 2.07(b)) shall be deemed to be forthwith due and owing by
the Borrower to the Issuing Bank, the Administrative Agent and the Lenders as of
the date of any such occurrence; and the Borrower's obligation to pay such
amount shall be absolute and unconditional, without regard to whether any
beneficiary of any such Letter of Credit has attempted to draw down all or a
portion of such amount under the terms of a Letter of Credit, and, to the
fullest extent permitted by applicable law, shall not be subject to any defense
or be affected by a right of set-off, counterclaim or recoupment which the
Borrower may now or hereafter have against any such beneficiary, the Issuing
Bank, the Administrative Agent, the Lenders or any other Person for any reason
whatsoever. Such payments shall be held by the Issuing Bank on behalf of the
Lenders as cash collateral securing the LC Exposure in an account or accounts at
the Principal Office; and the Borrower hereby grants to and by its deposit with
the Administrative Agent grants to the Administrative Agent a security interest
in such cash collateral. In the event of any such payment by the Borrower of
amounts contingently owing under outstanding Letters of Credit and in the event
that thereafter drafts or other demands for payment complying with the terms of
such Letters of Credit are not made prior to the respective expiration dates
thereof, the Administrative Agent agrees, if no Event of Default has occurred
and is continuing or if no other amounts are outstanding under this Agreement,
the Notes or the Security Instruments, to remit to the Borrower amounts for
which the contingent obligations evidenced by the Letters of Credit have ceased.
(c) Each Lender severally and unconditionally agrees that it shall
promptly reimburse the Issuing Bank an amount equal to such Lender's Percentage
Share of any disbursement made by the Issuing Bank under any Letter of Credit
that is not reimbursed according to this Section 2.10.
(d) Notwithstanding anything to the contrary contained herein, if no
Default exists and subject to availability under the Aggregate Revolving Credit
Commitments (after reduction for LC Exposure), to the extent the Borrower has
not reimbursed the Issuing Bank for any drawn upon Letter of Credit within one
(1) Business Days after notice of such disbursement has been received by the
Borrower, the amount of such Letter of Credit reimbursement obligation shall
automatically be funded by the Lenders as a Loan hereunder and used by the
Lenders to pay such Letter of Credit reimbursement obligation. If an Event of
Default has occurred and is continuing, or if the funding of such Letter of
Credit reimbursement obligation as a Loan would cause the aggregate amount of
all Loans outstanding to exceed the Aggregate Revolving Credit Commitments
(after reduction for LC Exposure), such Letter of Credit reimbursement
obligation shall not be funded as a Loan, but instead shall accrue interest as
provided in Section 2.10(a).
Section 2.11 Lending Offices. The Loans of each Type made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office
for Loans of such Type.
ARTICLE III
Payments of Principal and Interest
Section 3.01 Repayment of Loans.
(a) Loans. On the Revolving Credit Termination Date the Borrower shall
repay the outstanding aggregate principal of the Notes.
(b) Generally. The Borrower will pay to the Administrative Agent, for
the account of each Lender, the principal payments required by this Section
3.01.
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Section 3.02 Interest.
(a) Interest Rates. The Borrower will pay to the Administrative Agent,
for the account of each Lender, interest on the unpaid principal amount of each
Loan made by such Lender for the period commencing on the date such Loan is made
to, but excluding, the date such Loan shall be paid in full, at the following
rates per annum:
(i) if such a Loan is a Base Rate Loan, the Base Rate (as in
effect from time to time) plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate; and
(ii) if such a Loan is a LIBOR Loan, for each Interest Period
relating thereto, the Adjusted LIBOR for such Loan plus the Applicable
Margin (as in effect from time to time), but in no event to exceed the
Highest Lawful Rate.
(b) Post-Default Rate. Notwithstanding the foregoing, the Borrower will
pay to the Administrative Agent, for the account of each Lender interest at the
applicable Post-Default Rate on any Loan made by such Lender, and (to the
fullest extent permitted by law) on any other amount payable by the Borrower
hereunder, under any Loan Document or under any Note held by such Lender to or
for account of such Lender, for the period commencing on the date of an Event of
Default until the same is paid in full or all Events of Default are cured or
waived.
(c) Due Dates. Accrued interest on Base Rate Loans shall be payable on
each Quarterly Date commencing on April 1, 2004, and accrued interest on each
LIBOR Loan shall be payable on the last day of the Interest Period therefor,
except that interest payable at the Post-Default Rate shall be payable from time
to time on demand and interest on any LIBOR Loan that is converted into a Base
Rate Loan (pursuant to Section 5.04) shall be payable on the date of conversion
(but only to the extent so converted). Any accrued and unpaid interest on the
Loans on the Revolving Credit Termination Date shall be paid on such date.
(d) Determination of Rates. Promptly after the determination of any
interest rate provided for herein or any change therein, the Administrative
Agent shall notify the Lenders to which such interest is payable and the
Borrower thereof. Each determination by the Administrative Agent of an interest
rate or fee hereunder shall, except in cases of manifest error, be final,
conclusive and binding on the parties.
ARTICLE IV
Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments. Except to the extent otherwise provided herein,
all payments of principal, interest and other amounts to be made by the Borrower
under this Agreement, the Notes, Letters of Credit, and the Letter of Credit
Agreements shall be made in Dollars, in immediately available funds, to the
Administrative Agent at such account as the Administrative Agent shall specify
by notice to the Borrower from time to time, not later than 12:00 p.m.
Charlotte, North Carolina time on the date on which such payments shall become
due (each such payment made after such time on such due date to be deemed to
have been made on the next succeeding Business Day). Such payments shall be made
without (to the fullest extent permitted by applicable law) defense, set-off or
counterclaim. Each payment received by the Administrative Agent under this
Agreement or any Note for account of a Lender shall be paid promptly to such
Lender in immediately available funds. Except as otherwise provided in the
definition of "Interest Period", if the due date of any payment under this
Agreement or any Note would otherwise fall on a day which is not a Business Day
such date shall be extended to the next succeeding Business Day and interest
shall be payable for any principal so extended for the period of such extension.
At the time of each payment to the Administrative Agent of any principal of or
interest on any borrowing, the Borrower shall notify the Administrative Agent of
the Loans to which such payment shall apply. In the absence of such notice the
Administrative Agent may specify the Loans to which such payment shall apply,
but to the extent possible such payment or prepayment will be applied first to
the Loans comprised of Base Rate Loans.
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Section 4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein each Lender agrees that: (i) each borrowing from the Lenders
under Section 2.01 and each continuation and conversion under Section 2.02 shall
be made from the Lenders pro rata in accordance with their Percentage Share,
each payment of fees under Sections 2.04(a), 2.04(b), and 2.04(c)(i) shall be
made for account of the Lenders pro rata in accordance with their Percentage
Share, and each termination or reduction of the amount of the Aggregate Maximum
Revolving Credit Amounts under Section 2.03(b) shall be applied to the
Commitment of each Lender, pro rata according to the amounts of its respective
Commitment; (ii) each payment of principal of Loans by the Borrower shall be
made for account of the Lenders pro rata in accordance with the respective
unpaid principal amount of the Loans held by the Lenders; and (iii) each payment
of interest on Loans by the Borrower shall be made for account of the Lenders
pro rata in accordance with the amounts of interest due and payable to the
respective Lenders; and (iv) each reimbursement by the Borrower of disbursements
under Letters of Credit shall be made for account of the Issuing Bank or, if
funded by the Lenders, pro rata for the account of the Lenders, in accordance
with the amounts of reimbursement obligations due and payable to each respective
Lender.
Section 4.03 Computations. Interest on LIBOR Loans and fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which such
interest is payable, unless such calculation would exceed the Highest Lawful
Rate, in which case interest shall be calculated on the per annum basis of a
year of 365 or 366 days, as the case may be. Interest on Base Rate Loans shall
be computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
Section 4.04 Non-receipt of Funds by the Administrative Agent. Unless
the Administrative Agent shall have been notified by a Lender or the Borrower
prior to the date on which such notifying party is scheduled to make payment to
the Administrative Agent (in the case of a Lender) of the proceeds of a Loan or
a payment under a Letter of Credit to be made by it hereunder or (in the case of
the Borrower) a payment to the Administrative Agent for account of one or more
of the Lenders hereunder (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that it does not intend
to make the Required Payment to the Administrative Agent, the Administrative
Agent may assume that the Required Payment has been made and may, in reliance
upon such assumption (but shall not be required to), make the amount thereof
available to the intended recipient(s) on such date and, if such Lender or the
Borrower (as the case may be) has not in fact made the Required Payment to the
Administrative Agent, the recipient(s) of such payment shall, on demand, repay
to the Administrative Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Administrative Agent until, but excluding,
the date the Administrative Agent recovers such amount at a rate per annum
which, for any Lender as recipient, will be equal to the Federal Funds Rate, and
for the Borrower as recipient, will be equal to the Base Rate plus the
Applicable Margin.
Section 4.05 Set-off, Sharing of Payments, Etc.
(a) The Borrower agrees that, in addition to (and without limitation
of) any right of set-off, bankers' lien or counterclaim a Lender may otherwise
have, each Lender shall have the right and be entitled (after consultation with
the Administrative Agent), at its option, to offset balances held by it or by
any of its Affiliates for account of the Borrower or any Subsidiary at any of
its offices, in Dollars or in any other currency, against any principal of or
interest on any of such Lender's Loans, or any other amount payable to such
Lender hereunder, which is not paid when due (regardless of whether such
25
balances are then due to the Borrower), in which case it shall promptly notify
the Borrower and the Administrative Agent thereof, provided that such Lender's
failure to give such notice shall not affect the validity thereof.
(b) If any Lender shall obtain payment of any principal of or interest
on any Loan made by it to the Borrower under this Agreement (or reimbursement as
to any Letter of Credit) through the exercise of any right of set-off, banker's
lien or counterclaim or similar right or otherwise, and, as a result of such
payment, such Lender shall have received a greater percentage of the principal
or interest (or reimbursement) then due hereunder by the Borrower to such Lender
than the percentage received by any other Lenders, it shall promptly (i) notify
the Administrative Agent and each other Lender thereof and (ii) purchase from
such other Lenders participations in (or, if and to the extent specified by such
Lender, direct interests in) the Loans (or participations in Letters of Credit)
made by such other Lenders (or in interest due thereon, as the case may be) in
such amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal and/or interest on the Loans held by each of the Lenders (or
reimbursements of Letters of Credit). To such end all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Loans made by other Lenders (or in interest due thereon, as the
case may be) may exercise all rights of set-off, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans (or Letters of Credit) in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of the Borrower. If under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.05 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.05 to share the benefits
of any recovery on such secured claim.
Section 4.06 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 4.01, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender, the Issuing Bank and the Administrative
Agent, taxes imposed on its income, and franchise or similar taxes imposed on
it, by (i) any jurisdiction (or political subdivision thereof) of which the
Administrative Agent, the Issuing Bank or such Lender, as the case may be, is a
citizen or resident or in which such Lender has an Applicable Lending Office,
(ii) the jurisdiction (or any political subdivision thereof) in which the
Administrative Agent, the Issuing Bank or such Lender is organized, or (iii) any
jurisdiction (or political subdivision thereof) in which such Lender, the
Issuing Bank or the Administrative Agent is presently doing business which taxes
are imposed solely as a result of doing business in such jurisdiction (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Lenders, the Issuing Bank or the Administrative Agent (i) the
sum payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 4.06) such Lender, the Issuing Bank or the Administrative
Agent (as the case may be) shall receive an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxing authority or other Governmental Authority in accordance with
applicable law.
26
(b) Other Taxes. In addition, to the fullest extent permitted by
applicable law, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, any
Assignment or any Security Instrument (hereinafter referred to as "Other
Taxes").
(c) INDEMNIFICATION. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE BORROWER WILL INDEMNIFY EACH LENDER AND THE ISSUING BANK AND THE
ADMINISTRATIVE AGENT FOR THE FULL AMOUNT OF TAXES AND OTHER TAXES (INCLUDING,
BUT NOT LIMITED TO, ANY TAXES OR OTHER TAXES IMPOSED BY ANY GOVERNMENTAL
AUTHORITY ON AMOUNTS PAYABLE UNDER THIS SECTION 4.06) PAID BY SUCH LENDER, THE
ISSUING BANK OR THE ADMINISTRATIVE AGENT (ON THEIR BEHALF OR ON BEHALF OF ANY
LENDER), AS THE CASE MAY BE, AND ANY LIABILITY (INCLUDING PENALTIES, INTEREST
AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH
TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED UNLESS THE PAYMENT OF
SUCH TAXES WAS NOT CORRECTLY OR LEGALLY ASSERTED AND SUCH LENDER'S PAYMENT OF
SUCH TAXES OR OTHER TAXES WAS THE RESULT OF ITS GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. ANY PAYMENT PURSUANT TO SUCH INDEMNIFICATION SHALL BE MADE WITHIN
THIRTY (30) DAYS AFTER THE DATE ANY LENDER, THE ISSUING BANK OR THE
ADMINISTRATIVE AGENT, AS THE CASE MAY BE, MAKES WRITTEN DEMAND THEREFOR. IF ANY
LENDER, ISSUING BANK OR THE ADMINISTRATIVE AGENT RECEIVES A REFUND OR CREDIT IN
RESPECT OF ANY TAXES OR OTHER TAXES FOR WHICH SUCH LENDER, ISSUING BANK OR THE
ADMINISTRATIVE AGENT HAS RECEIVED PAYMENT FROM THE BORROWER IT SHALL PROMPTLY
NOTIFY THE BORROWER OF SUCH REFUND OR CREDIT AND SHALL, IF NO DEFAULT HAS
OCCURRED AND IS CONTINUING, WITHIN THIRTY (30) DAYS AFTER RECEIPT OF A REQUEST
BY THE BORROWER (OR PROMPTLY UPON RECEIPT, IF THE BORROWER HAS REQUESTED
APPLICATION FOR SUCH REFUND OR CREDIT PURSUANT HERETO), PAY AN AMOUNT EQUAL TO
SUCH REFUND OR CREDIT TO THE BORROWER WITHOUT INTEREST (BUT WITH ANY INTEREST SO
REFUNDED OR CREDITED) PROVIDED THAT THE BORROWER, UPON THE REQUEST OF SUCH
LENDER, THE ISSUING BANK OR THE ADMINISTRATIVE AGENT, AGREES TO RETURN SUCH
REFUND OR CREDIT (PLUS PENALTIES, INTEREST OR OTHER CHARGES) TO SUCH LENDER OR
THE ADMINISTRATIVE AGENT IN THE EVENT SUCH LENDER OR THE ADMINISTRATIVE AGENT IS
REQUIRED TO REPAY SUCH REFUND OR CREDIT.
(d) Lender Representations.
(i) Each Lender represents that it is either (1) a banking
association or corporation organized under the laws of the United
States of America or any state thereof or (2) it is entitled to
complete exemption from United States withholding tax imposed on or
with respect to any payments, including fees, to be made to it pursuant
to this Agreement (A) under an applicable provision of a tax convention
to which the United States of America is a party or (B) because it is
acting through a branch, agency or office in the United States of
America and any payment to be received by it hereunder is effectively
connected with a trade or business in the United States of America.
Each Lender that is not a banking association or corporation organized
under the laws of the United States of America or any state thereof
agrees to provide to the Borrower and the Administrative Agent on the
Closing Date, or on the date of its delivery of the Assignment pursuant
to which it becomes a Lender, and at such other times as required by
United States law or as the Borrower or the Administrative Agent shall
reasonably request, two accurate and complete original signed copies of
either (A) Internal Revenue Service Form W-8ECI (or successor form)
27
certifying that all payments to be made to it hereunder will be
effectively connected to a United States trade or business (the "Form
W-8ECI Certification") or (B) Internal Revenue Service Form W-8BEN (or
successor form) certifying that it is entitled to the benefit of a
provision of a tax convention to which the United States of America is
a party which completely exempts from United States withholding tax all
payments to be made to it hereunder (the "Form W-8BEN Certification").
In addition, each Lender agrees that if it previously filed a Form
W-8ECI Certification, it will deliver to the Borrower and the
Administrative Agent a new Form W-8ECI Certification prior to the first
payment date occurring in each of its subsequent taxable years; and if
it previously filed a Form W8BEN Certification, it will deliver to the
Borrower and the Administrative Agent a new certification prior to the
first payment date falling in the third year following the previous
filing of such certification. Each Lender also agrees to deliver to the
Borrower and the Administrative Agent such other or supplemental forms
as may at any time be required as a result of changes in applicable law
or regulation in order to confirm or maintain in effect its entitlement
to exemption from United States withholding tax on any payments
hereunder, provided that the circumstances of such Lender at the
relevant time and applicable laws permit it to do so. If a Lender
determines, as a result of any change in either (i) a Governmental
Requirement or (ii) its circumstances, that it is unable to submit any
form or certificate that it is obligated to submit pursuant to this
Section 4.06, or that it is required to withdraw or cancel any such
form or certificate previously submitted, it shall promptly notify the
Borrower and the Administrative Agent of such fact. If a Lender is
organized under the laws of a jurisdiction outside the United States of
America, unless the Borrower and the Administrative Agent have received
a Form W-8BEN Certification or Form W-8ECI Certification satisfactory
to them indicating that all payments to be made to such Lender
hereunder are not subject to United States withholding tax, the
Borrower shall withhold taxes from such payments at the applicable
statutory rate. Each Lender agrees to indemnify and hold harmless the
Borrower or Administrative Agent, as applicable, from any United States
taxes, penalties, interest and other expenses, costs and losses
incurred or payable by (i) the Administrative Agent as a result of such
Lender's failure to submit any form or certificate that it is required
to provide pursuant to this Section 4.06 or (ii) the Borrower or the
Administrative Agent as a result of their reliance on any such form or
certificate which such Lender has provided to them pursuant to this
Section 4.06.
(ii) For any period with respect to which a Lender has failed
to provide the Borrower with the form required pursuant to this Section
4.06, if any (other than if such failure is due to a change in a
Governmental Requirement occurring subsequent to the date on which a
form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 4.06 with respect to taxes
imposed by the United States which taxes would not have been imposed
but for such failure to provide such forms; provided, however, that if
a Lender, which is otherwise exempt from or subject to a reduced rate
of withholding tax, becomes subject to taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps
as such Lender shall reasonably request to assist such Lender to
recover such taxes.
(iii) Any Lender claiming any additional amounts payable
pursuant to this Section 4.06 shall use reasonable efforts (consistent
with legal and regulatory restrictions) to file any certificate or
document requested by the Borrower or the Administrative Agent or to
change the jurisdiction of its Applicable Lending Office or to contest
any tax imposed if the making of such a filing or change or contesting
such tax would avoid the need for or reduce the amount of any such
additional amounts that may thereafter accrue and would not, in the
sole determination of such Lender, be otherwise disadvantageous to such
Lender.
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ARTICLE V
Capital Adequacy
Section 5.01 Additional Costs.
(a) LIBOR Regulations, etc. The Borrower shall pay directly to each
Lender from time to time such amounts as such Lender may determine to be
necessary to compensate such Lender for any costs which it determines are
attributable to its making or maintaining of any LIBOR Loans or issuing or
participating in Letters of Credit hereunder or its obligation to make any LIBOR
Loans or issue or participate in any Letters of Credit hereunder, or any
reduction in any amount receivable by such Lender hereunder in respect of any of
such LIBOR Loans, Letters of Credit (such increases in costs and reductions in
amounts receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which: (i) changes the basis of taxation of any amounts
payable to such Lender under this Agreement or any Note in respect of any of
such LIBOR Loans or Letters of Credit (other than taxes imposed on the overall
net income of such Lender or of its Applicable Lending Office for any of such
LIBOR Loans by the jurisdiction in which such Lender has its principal office or
Applicable Lending Office); or (ii) imposes or modifies any reserve, special
deposit, minimum capital, capital ratio or similar requirements relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of such Lender, or the Commitment or Loans of such Lender or the
London interbank market; or (iii) imposes any other condition affecting this
Agreement or any Note (or any of such extensions of credit or liabilities) or
such Lender's Commitment or Loans. Each Lender will notify the Administrative
Agent and the Borrower of any event occurring after the Closing Date which will
entitle such Lender to compensation pursuant to this Section 5.01(a) as promptly
as practicable after it obtains knowledge thereof and determines to request such
compensation, and will designate a different Applicable Lending Office for the
Loans of such Lender affected by such event if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the sole
opinion of such Lender, be disadvantageous to such Lender, provided that such
Lender shall have no obligation to so designate an Applicable Lending Office
located in the United States. If any Lender requests compensation from the
Borrower under this Section 5.01(a), the Borrower may, by notice to such Lender,
suspend the obligation of such Lender to make additional Loans of the Type with
respect to which such compensation is requested until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 5.04 shall be applicable).
(b) Regulatory Change. Without limiting the effect of the provisions of
Section 5.01(a), in the event that at any time (by reason of any Regulatory
Change or any other circumstances arising after the Closing Date affecting (A)
any Lender, (B) the London interbank market or (C) such Lender's position in
such market), the Adjusted LIBOR, as determined in good faith by such Lender,
will not adequately and fairly reflect the cost to such Lender of funding its
LIBOR Loans, then, if such Lender so elects, by notice to the Borrower and the
Administrative Agent, the obligation of such Lender to make additional LIBOR
Loans shall be suspended until such Regulatory Change or other circumstances
ceases to be in effect (in which case the provisions of Section 5.04 shall be
applicable).
(c) Capital Adequacy. Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the Borrower shall
pay directly to any Lender from time to time on request such amounts as such
Lender may reasonably determine to be necessary to compensate such Lender or its
parent or holding company for any costs which it determines are attributable to
the maintenance by such Lender or its parent or holding company (or any
Applicable Lending Office), pursuant to any Governmental Requirement following
any Regulatory Change, of capital in respect of its Commitment, its Note, or its
Loans or any interest held by it in any Letter of Credit, such compensation to
include, without limitation, an amount equal to any reduction of the rate of
return on assets or equity of such Lender or its parent or holding company (or
any Applicable Lending Office) to a level below that which such Lender or its
parent or holding company (or any Applicable Lending Office) could have achieved
29
but for such Governmental Requirement. Such Lender will notify the Borrower that
it is entitled to compensation pursuant to this Section 5.01(c) as promptly as
practicable after it determines to request such compensation.
(d) Compensation Procedure. Any Lender notifying the Borrower of the
incurrence of Additional Costs under this Section 5.01 shall in such notice to
the Borrower and the Administrative Agent set forth in reasonable detail the
basis and amount of its request for compensation. Determinations and allocations
by each Lender for purposes of this Section 5.01 of the effect of any Regulatory
Change pursuant to Section 5.01(a) or (b), or of the effect of capital
maintained pursuant to Section 5.01(c), on its costs or rate of return of
maintaining Loans or its obligation to make Loans or issue Letters of Credit, or
on amounts receivable by it in respect of Loans or Letters of Credit, and of the
amounts required to compensate such Lender under this Section 5.01, shall be
conclusive and binding for all purposes, provided that such determinations and
allocations are made on a reasonable basis. Any request for additional
compensation under this Section 5.01 shall be paid by the Borrower within thirty
(30) days of the receipt by the Borrower of the notice described in this Section
5.01(d).
Section 5.02 Limitation on LIBOR Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any Adjusted LIBOR for
any Interest Period:
(i) the Administrative Agent determines (which determination
shall be conclusive, absent manifest error) that quotations of interest
rates for the relevant deposits referred to in the definition of
"Adjusted LIBOR" in Section 1.02 are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining
rates of interest for LIBOR Loans as provided herein; or
(ii) the Administrative Agent determines (which determination
shall be conclusive, absent manifest error) that the relevant rates of
interest referred to in the definition of "Adjusted LIBOR" in Section
1.02 upon the basis of which the rate of interest for LIBOR Loans for
such Interest Period is to be determined are not sufficient to
adequately cover the cost to the Lenders of making or maintaining LIBOR
Loans; then the Administrative Agent shall give the Borrower prompt
notice thereof, and so long as such condition remains in effect, the
Lenders shall be under no obligation to make additional LIBOR Loans.
Section 5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain LIBOR
Loans hereunder, then such Lender shall promptly notify the Borrower thereof and
such Lender's obligation to make LIBOR Loans shall be suspended until such time
as such Lender may again make and maintain LIBOR Loans (in which case the
provisions of Section 5.04 shall be applicable).
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03.
If the obligation of any Lender to make LIBOR Loans shall be suspended pursuant
to Sections 5.01, 5.02 or 5.03 ("Affected Loans"), all Affected Loans which
would otherwise be made by such Lender shall be made instead as Base Rate Loans
(and, if an event referred to in Section 5.01(b) or Section 5.03 has occurred
and such Lender so requests by notice to the Borrower, all Affected Loans of
such Lender then outstanding shall be automatically converted into Base Rate
Loans on the date specified by such Lender in such notice) and, to the extent
that Affected Loans are so made as (or converted into) Base Rate Loans, all
payments of principal which would otherwise be applied to such Lender's Affected
Loans shall be applied instead to its Base Rate Loans.
30
Section 5.05 Compensation. The Borrower shall pay to each Lender within
thirty (30) days of receipt of written request of such Lender (which request
shall set forth, in reasonable detail, the basis for requesting such amounts and
which shall be conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or amounts as shall
compensate it for any loss, cost, expense or liability which such Lender
determines are attributable to:
(i) any payment, prepayment or conversion of a LIBOR Loan
properly made by such Lender or the Borrower for any reason (including,
without limitation, the acceleration of the Loans pursuant to Section
10.01) on a date other than the last day of the Interest Period for
such Loan; or
(ii) any failure by the Borrower for any reason (including but
not limited to, the failure of any of the conditions precedent
specified in Article VI to be satisfied) to borrow, continue or convert
a LIBOR Loan from such Lender on the date for such borrowing,
continuation or conversion specified in the relevant notice given
pursuant to Section 2.02(c).
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount so paid, prepaid or converted
or not borrowed for the period from the date of such payment, prepayment or
conversion or failure to borrow to the last day of the Interest Period for such
Loan (or, in the case of a failure to borrow, the Interest Period for such Loan
which would have commenced on the date specified for such borrowing) at the
applicable rate of interest for such Loan provided for herein over (ii) the
interest component of the amount such Lender would have bid in the London
interbank market for Dollar deposits of leading banks in amounts comparable to
such principal amount and with maturities comparable to such period (as
reasonably determined by such Lender).
ARTICLE VI
Conditions Precedent
Section 6.01 Initial Funding. The obligation of the Lenders to amend
and restate the Prior Credit Agreement to make the Initial Funding and of any
Issuing Bank to issue any Letters of Credit hereunder is subject to the receipt
by the Administrative Agent and the Lenders of all fees payable pursuant to
Section 2.04 on or before the Closing Date and the receipt by the Administrative
Agent of the following documents and satisfaction of the other conditions
provided in this Section 6.01, each of which shall be satisfactory to the
Administrative Agent in form and substance:
(a) A certificate of the Secretary or an Assistant Secretary of the
Borrower setting forth (i) resolutions of its board of directors with respect to
the authorization of the Borrower to execute and deliver the Loan Documents to
which it is a party and to enter into the transactions contemplated in those
documents, (ii) the officers of the Borrower (y) who are authorized to sign the
Loan Documents to which Borrower is a party and (z) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers, and
(iv) the articles or certificate of incorporation and bylaws of the Borrower,
certified as being true and complete. The Administrative Agent and the Lenders
may conclusively rely on such certificate until the Administrative Agent
receives notice in writing from the Borrower to the contrary.
(b) A certificate of the Secretary or an Assistant Secretary of each
Guarantor setting forth (i) resolutions of its board of directors with respect
to the authorization of such Guarantor to execute and deliver the Loan Documents
to which it is a party and to enter into the transactions contemplated in those
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documents, (ii) the officers of such Guarantor (y) who are authorized to sign
the Loan Documents to which such Guarantor is a party and (z) who will, until
replaced by another officer or officers duly authorized for that purpose, act as
its representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers, and
(iv) the articles or certificate of incorporation and bylaws (or equivalent
constituent documents) of such Guarantor, certified as being true and complete.
The Administrative Agent and the Lenders may conclusively rely on such
certificates until they receive notice in writing from any Guarantor to the
contrary.
(c) Certificates of the appropriate state agencies with respect to the
existence, qualification and good standing of the Obligors.
(d) A compliance certificate which shall be substantially in the form
of Exhibit C, duly and properly executed by a Responsible Officer and dated as
of the date of the Initial Funding.
(e) The Notes, duly completed and executed.
(f) The Security Instruments, including those described on Exhibit D,
duly completed and executed by the respective parties thereto in sufficient
number of counterparts for recording, if necessary including delivery of all
original stock certificates, blank stock powers, and Intercompany Notes duly
endorsed as required under such Security Instruments.
(g) Review of Obligors' financial condition satisfactory to Lenders.
(h) An opinion of The Ledgewood Law Firm, counsel to the Obligors and
from other local counsel acceptable to the Administrative Agent with respect to
enforceability of the Security Instruments under the laws of the states wherein
the Oil and Gas Properties are located, each in form and substance satisfactory
to the Administrative Agent, as to such matters incident to the transactions
herein contemplated as the Administrative Agent may reasonably request
including, without limitation, opinions as to the continued priority and
perfection of the Existing Liens to secure the Obligations.
(i) A certificate of insurance coverage of the Borrower and each
Guarantor evidencing that the Borrower and each Guarantor are carrying insurance
in accordance with Section 7.20 and Section 8.03(b).
(j) Title information as the Administrative Agent may require setting
forth the status of title acceptable to the Administrative Agent to at least 80%
of the value of the Oil and Gas Properties of the Obligors, including the
Obligors' pro rata interest in the Partnerships' Oil and Gas Properties included
in the Initial Reserve Report.
(k) The Administrative Agent shall have been furnished with appropriate
UCC search certificates and other evidence satisfactory to the Administrative
Agent with respect Obligors' and the Partnerships' Oil and Gas Properties
reflecting no prior Liens other than Excepted Liens.
(l) Environmental assessments and other reports to the extent
maintained by Obligors covering Obligors' and the Partnerships' Oil and Gas
Properties reporting on the current environmental condition of such Properties
satisfactory to Lenders.
(m) The Assignment of Notes, Documents and Liens duly completed and
executed.
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(n) All authorizations, approvals or consents as may be necessary for
the execution, delivery and performance by any Obligor under this Agreement.
(o) The Guaranty Agreements duly completed and executed by the
Guarantors.
(p) Such other documents as the Administrative Agent or any Lender or
special counsel to the Administrative Agent may reasonably request.
Section 6.02 Initial and Subsequent Loans and Letters of Credit. The
obligation of the Lenders to make Loans to the Borrower upon the occasion of
each borrowing hereunder and to issue, renew, extend or reissue Letters of
Credit (including the Initial Funding) is subject to the further conditions
precedent that, as of the date of such Loans and after giving effect thereto:
(a) no Default shall have occurred and be continuing;
(b) no Material Adverse Effect shall have occurred; and
(c) the representations and warranties made by the Borrower in Article
VII and in the Security Instruments shall be true on and as of the date of the
making of such Loans or issuance, renewal, extension or reissuance of a Letter
of Credit with the same force and effect as if made on and as of such date and
following such new borrowing, except to the extent such representations and
warranties are expressly limited to an earlier date.
Each request for a borrowing or issuance, renewal, extension or reissuance of a
Letter of Credit by the Borrower hereunder shall constitute a certification by
the Borrower to the effect set forth in Section 6.02(c) (both as of the date of
such notice and, unless the Borrower otherwise notifies the Administrative Agent
prior to the date of and immediately following such borrowing or issuance,
renewal, extension or reissuance of a Letter of Credit as of the date thereof).
Section 6.03 Conditions Precedent for the Benefit of Lenders. All
conditions precedent to the obligations of the Lenders to make any Loan are
imposed hereby solely for the benefit of the Lenders, and no other Person may
require satisfaction of any such condition precedent or be entitled to assume
that the Lenders will refuse to make any Loan in the absence of strict
compliance with such conditions precedent.
Section 6.04 No Waiver. No waiver of any condition precedent shall
preclude the Administrative Agent or the Lenders from requiring such condition
to be met prior to making any subsequent Loan or preclude the Lenders from
thereafter declaring that the failure of the Borrower to satisfy such condition
precedent constitutes a Default.
ARTICLE VII
Representations and Warranties
Each of the Obligors represents and warrants to the Administrative
Agent and the Lenders that (each representation and warranty herein is given as
of the Closing Date and shall be deemed repeated and reaffirmed on the dates of
each borrowing and issuance, renewal, extension or reissuance of a Letter of
Credit as provided in Section 6.02):
Section 7.01 Corporate Existence. Each of the Obligors: (i) is a
corporation, or limited partnership or limited liability company duly organized,
formed, legally existing and in good standing under the laws of the jurisdiction
of its incorporation or formation, as applicable; (ii) has all requisite
corporate power, and has all material governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
33
now being or as proposed to be conducted; and (iii) is qualified to do business
in all jurisdictions in which the nature of the business conducted by it makes
such qualification necessary and where failure so to qualify would have a
Material Adverse Effect.
Section 7.02 Financial Condition. The audited consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries at September 30, 2003,
and the related consolidated statement of income, stockholders' equity and cash
flow of the Borrower and its Consolidated Subsidiaries for the fiscal year ended
on said date, heretofore furnished to each of the Lenders and the unaudited
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries at
December 31, 2003, and their related consolidated statements of income,
stockholders' equity and cash flow of the Borrower and its Consolidated
Subsidiaries for the three month period ended on such date heretofore furnished
to the Administrative Agent, are/is complete and correct and fairly present the
consolidated financial condition of the Borrower and its Consolidated
Subsidiaries as at said dates and the results of its operations for the fiscal
year and the three month period on said dates, all in accordance with GAAP, as
applied on a consistent basis (subject, in the case of the interim financial
statements, to normal year-end adjustments). Neither the Borrower nor any
Subsidiary has on the Closing Date any material Debt, contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments. Since September 30, 2003,
there has been no change or event having a Material Adverse Effect. Since the
date of the Financial Statements, neither the business nor the Properties of the
Borrower or any Subsidiary have been materially and adversely affected.
Section 7.03 Litigation. Except as disclosed to the Lenders in Schedule
7.03 hereto, there is no litigation, legal, administrative or arbitral
proceeding, investigation or other action of any nature pending or, to the
knowledge of the Obligors threatened against or affecting the Obligors or any
Subsidiary which involves the possibility of any judgment or liability against
any Obligor or any Subsidiary not fully covered by insurance (except for normal
deductibles), and which would have a Material Adverse Effect. Schedule 7.03
attached hereto is a list of all litigation in which any Obligor or its
Subsidiary is a party under which the amount in controversy including all
expenses, fees and costs is greater than $250,000.
Section 7.04 No Breach. Neither the execution and delivery of the Loan
Documents, nor compliance with the terms and provisions hereof will conflict
with or result in a breach of, or require any consent which has not been
obtained as of the Closing Date under, the respective charter or by-laws of the
Obligors or any Subsidiary, or any Governmental Requirement, or any agreement or
instrument to which any Obligor or any Subsidiary is a party or by which it is
bound or to which it or its Properties are subject, or constitute a default
under any such agreement or instrument, or result in the creation or imposition
of any Lien upon any of the revenues or assets of the Obligor or any Subsidiary
pursuant to the terms of any such agreement or instrument other than the Liens
created by the Loan Documents.
Section 7.05 Authority. Each Obligor has all necessary corporate power
and authority to execute, deliver and perform its obligations under the Loan
Documents to which it is a party; and the execution, delivery and performance by
each Obligor of the Loan Documents to which it is a party, have been duly
authorized by all necessary corporate action on its part; and the Loan Documents
constitute the legal, valid and binding obligations of each Obligor, enforceable
in accordance with their terms.
Section 7.06 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority or any other
Person are necessary for the execution, delivery or performance by any Obligor
of the Loan Documents to which it is a party or for the validity or
enforceability thereof, except for the recording and filing of the Security
Instruments as required by this Agreement.
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Section 7.07 Use of Loans. The proceeds of the Loans shall be used (i)
to refinance the Prior Debt, (ii) for the development of the Obligors' Oil and
Gas Properties and the acquisition of Oil and Gas Properties and related assets
by the Obligors, (iii) to fund Obligors' capital contributions under the
Partnerships and APL provided such capital contributions may not be used for the
purpose of funding partnership distributions, (iv) as working capital, (v) for
Letters of Credit to support the obligations of the Borrower and its
Subsidiaries, and (vi) for general company purposes of the Borrower and its
Subsidiaries. Neither the Borrower nor any other Obligor is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
margin stock (within the meaning of Regulation T, U or X of the Board of
Governors of the Federal Reserve System) and no part of the proceeds of any Loan
hereunder will be used to buy or carry any margin stock.
Section 7.08 ERISA.
(a) Each Obligor, each Subsidiary and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the Code
regarding each Plan.
(b) Each Plan is, and has been, maintained in substantial compliance
with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could result in
imposition on any Obligor, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
section 502(c), (i) or (1) of ERISA or a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under
section 409 of ERISA.
(d) No contingent obligations remain due to the termination of any Plan
(other than a defined contribution plan) or any trust created under any such
Plan since September 2, 1974. The only Plan that has been terminated was for The
Atlas Group, Inc. No liability to the PBGC (other than for the payment of
current premiums which are not past due) by any Obligor, any Subsidiary or any
ERISA Affiliate has been or is expected by any Obligor, any Subsidiary or any
ERISA Affiliate to be incurred with respect to any Plan. No ERISA Event with
respect to any Plan has occurred.
(e) Full payment when due has been made of all amounts which any
Obligor, any Subsidiary or any ERISA Affiliate is required under the terms of
each Plan or applicable law to have paid as contributions to such Plan, and no
accumulated funding deficiency (as defined in section 302 of ERISA and section
412 of the Code), whether or not waived, exists with respect to any Plan.
(f) The actuarial present value of the benefit liabilities under each
Plan which is subject to Title IV of ERISA does not, as of the end of each
Obligor's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA.
(g) None of the Obligors, any Subsidiary or any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(l) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by an Obligor, a Subsidiary or any ERISA Affiliate in its sole
discretion at any time without any material liability.
35
(h) None of the Obligors, any Subsidiary or any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the preceding six
calendar years, sponsored, maintained or contributed to, any Multiemployer Plan.
(i) None of the Obligors, any Subsidiary or any ERISA Affiliate is
required to provide security under section 401 (a)(29) of the Code due to a Plan
amendment that results in an increase in current liability for the Plan.
Section 7.09 Taxes. Each Obligor and its Subsidiaries has filed all
United States federal income tax returns and all other tax returns which are
required to be filed by them, or otherwise obtained appropriate extensions to
file, and have paid all material taxes due pursuant to such returns or pursuant
to any assessment received by any Obligor or any Subsidiary except such taxes
that are being contested in good faith by appropriate proceedings and for which
such Obligor, as applicable, has set aside on its books adequate reserves in
accordance with GAAP. The charges, accruals and reserves on the books of each
Obligor and its Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of the Borrower, adequate. No tax lien has been filed and,
to the knowledge of the Obligors, no claim is being asserted with respect to any
such tax, fee or other charge.
Section 7.10 Titles, etc.
(a) Each of the Borrower and its Subsidiaries has good and marketable
title to its Oil and Gas Properties, free and clear of all Liens, except
Excepted Liens. After giving full effect to the Excepted Liens, each Obligor
owns either directly in its own name, or indirectly through its percentage
ownership interest in the Partnerships, the net interests in production
attributable to its Hydrocarbon Interests reflected in the most recently
delivered Ownership Report and the ownership of such Oil and Gas Properties
shall not in any material respect obligate such Obligor to bear the costs and
expenses relating to the maintenance, development and operations of each such
Oil and Gas Property in an amount in excess of the working interest of each Oil
and Gas Property set forth in the most recently delivered Reserve Report;
provided that to the extent an Obligor is a general partner of a Partnership,
such Obligor is liable for all of the costs and expenses attributable to such
Partnership's interest, but only entitled to such Obligor's percentage interest
in such Partnership's net revenues. In the event an Obligor, as a general
partner, pays more than its partnership share of such Partnership's costs and
expenses, such Obligor is entitled to reimbursement of such excess amount out of
the future income of such Partnership. All information contained in the most
recently delivered Ownership Report and Reserve Report is true and correct in
all material respects as of the date thereof.
(b) All leases and agreements necessary for the conduct of the business
of Borrower and its Subsidiaries are valid and subsisting, in full force and
effect and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which would affect in any material respect the
conduct of the business of any Obligor and its Subsidiaries.
(c) The rights, Properties and other assets presently owned, leased or
licensed by Borrower and its Subsidiaries including, without limitation, all
easements and rights of way, include all rights, Properties and other assets
necessary to permit each Obligor and its Subsidiaries to conduct its business in
all material respects in the same manner as its business has been conducted
prior to the Closing Date.
(d) All of the assets and Properties of Borrower and its Subsidiaries
which are reasonably necessary for the operation of its business are in good
working condition and are maintained in accordance with prudent business
standards.
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Section 7.11 No Material Misstatements. No written information,
statement, exhibit, certificate, document or report furnished to the
Administrative Agent and the Lenders (or any of them) by any Obligor or any
Subsidiary in connection with the negotiation of this Agreement contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statement contained therein not materially misleading in
the light of the circumstances in which made. There is no fact peculiar to any
Obligor or any Subsidiary which has a Material Adverse Effect or in the future
is reasonably likely to have a Material Adverse Effect and which has not been
set forth in this Agreement or the other documents, certificates and statements
furnished to the Administrative Agent by or on behalf of the Obligors or any
Subsidiary prior to, or on, the Closing Date in connection with the transactions
contemplated hereby.
Section 7.12 Investment Company Act. None of the Obligors nor any
Subsidiary 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 7.13 Public Utility Holding Company Act. None of the Obligors
nor any Subsidiary is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
Section 7.14 Partnership Interests. Obligors own the percentage general
partner and limited partner interests in the Partnerships set forth on Schedule
7.14. None of the Borrower nor any of its Subsidiaries own any interest in any
partnership or other Special Entity other than the Partnerships, APL and Atlas
Pipeline . The principal place of business and chief executive office of each
Partnership is located at the addresses stated on Schedule 7.14. The Obligors'
ownership interests in the Partnerships are free and clear of any and all liens,
claims and encumbrances including any preferential rights to purchase and
consents to assignments.
Section 7.15 Capitalization and Subsidiaries.
(a) The authorized securities of Borrower consist of Forty-Nine Million
(49,000,000) shares of common stock and One Million (1,000,000) shares of
preferred stock and all issued and outstanding shares of such stock have been
validly issued and are fully paid and nonassessable and are owned by and issued
to Atlas Holdings.
(b) The authorized securities of Resource Energy consist of One Hundred
(100) shares of common stock and all issued and outstanding shares of such stock
have been validly issued and are fully paid and nonassessable and are owned by
and issued to Borrower.
(c) The authorized securities of Viking consist of One Thousand (1,000)
shares of common stock and all issued and outstanding shares of such stock have
been validly issued and are fully paid and nonassessable and are owned by and
issued to Borrower.
(d) The authorized securities of AEC consist of 488 shares of common
stock and all issued and outstanding shares of such stock have been validly
issued and are fully paid and nonassessable and are owned by and issued to AIC.
(e) The authorized securities of AIC consist of 1000 shares of common
stock and all issued and outstanding shares of such stock have been validly
issued and are fully paid and nonassessable and are owned by and issued to
Borrower.
37
(f) The authorized securities of Atlas Energy consist of 1,000 shares
of common stock and all issued and outstanding shares of such stock have been
validly issued and are fully paid and nonassessable and are owned by and issued
to AIC.
(g) The authorized securities of Atlas Holdings consist of 1000 shares
of common stock and all issued and outstanding shares of such stock have been
validly issued and are fully paid and nonassessable and are owned by and issued
to Parent.
(h) The authorized securities of Atlas Noble consist of 1000 shares of
common stock and all issued and outstanding shares of such stock have been
validly issued and are fully paid and nonassessable and are owned by and issued
to Borrower.
(i) The authorized securities of Atlas PA consist of 1000 shares of
common stock and all issued and outstanding shares of such stock have been
validly issued and are fully paid and nonassessable and are owned by and issued
to Borrower.
(j) All issued and outstanding membership interests in Atlas Pipeline
have been validly issued and are fully paid and nonassessable and are owned by
and issued to Resource Energy, Viking, Atlas Energy, Atlas Resources, AIC and
REI.
(k) The authorized securities of Atlas Resources consist of 500 shares
of common stock and all issued and outstanding shares of such stock have been
validly issued and are fully paid and nonassessable and are owned by and issued
to AIC.
(l) The authorized securities of REI-NY, Inc. consist of 1,000 shares
of common stock and all issued and outstanding shares of such stock have been
validly issued and are fully paid and nonassessable and are owned by and issued
to Resource Energy.
(m) Except for Atlas Pipeline and the Wholly Owned Subsidiaries set
forth on Schedule 7.15, neither Borrower nor any Wholly Owned Subsidiary of
Borrower owns directly or indirectly any capital stock of any other Person other
than the Partnerships. Borrower and each Wholly Owned Subsidiary of Borrower,
has good and marketable title to all the securities of the Subsidiaries issued
to it, free and clear of all liens and encumbrances, and all such securities
have been duly and validly issued and are fully paid and nonassessable. The
authorized securities of the Wholly Owned Subsidiaries and the ownership thereof
are as shown on Schedule 7.15 attached hereto and made a part hereof.
Section 7.16 Location of Business and Offices Each Obligor's principal
place of business and chief executive offices are located at the address stated
on the signature page of this Agreement.
Section 7.17 Defaults. None of the Obligors nor any Subsidiary is in
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default under any Material Agreement or instrument to which any
Obligor or any Subsidiary is a party or by which any Obligor or any Subsidiary
is bound. No Default hereunder has occurred and is continuing.
Section 7.18 Environmental Matters. Except as would not have a Material
Adverse Effect (or with respect to (c), (d) and (e) below, where the failure to
take such actions would not have a Material Adverse Effect):
(a) Neither any Property of Borrower or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court or
Governmental Authority or any Environmental Laws;
38
(b) Without limitation of clause (a) above, no Property of Borrower or
any Subsidiary nor the operations currently conducted thereon or, to the best
knowledge of the Obligors, by any prior owner or operator of such Property or
operation, are in violation of or Subject to any existing, pending or threatened
action, suit, investigation, inquiry or proceeding by or before any court or
Governmental Authority or to any remedial obligations under Environmental Laws;
(c) All notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed in connection with the operation or use of any
and all Property of Borrower and each Subsidiary, including without limitation
past or present treatment, storage, disposal or release of a hazardous substance
or solid waste into the environment, have been duly obtained or filed, and
Borrower and each Subsidiary are in compliance with the terms and conditions of
all such notices, permits, licenses and similar authorizations;
(d) All hazardous substances, solid waste, and oil and gas exploration
and production wastes, if any, generated at any and all Property of Borrower or
any Subsidiary have in the past been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and, to
the best knowledge of the Obligors, all such transport carriers and treatment
and disposal facilities have been and are operating in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and are not the
subject of any existing, pending or threatened action, investigation or inquiry
by any Governmental Authority in connection with any Environmental Laws;
(e) Borrower has taken all steps reasonably necessary to determine and
have determined that no hazardous substances, solid waste, or oil and gas
exploration and production wastes, have been disposed of or otherwise released
and there has been no threatened release of any hazardous substances on or to
any Property of Borrower or any Subsidiary except in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment;
(f) To the extent applicable, all Property of Borrower and each
Subsidiary currently satisfies all design, operation, and equipment requirements
imposed by the OPA or scheduled as of the Closing Date to be imposed by OPA
during the term of this Agreement, and Borrower does not have any reason to
believe that such Property, to the extent subject to OPA, will not be able to
maintain compliance with the OPA requirements during the term of this Agreement;
and
(g) Neither Borrower nor any Subsidiary has any known contingent
liability in connection with any release or threatened release of any oil,
hazardous substance or solid waste into the environment.
Section 7.19 Compliance with the Law. None of the Obligors nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
Except for such acts or failures to act as would not have a Material Adverse
Effect, the Oil and Gas Properties of the Obligors and their Subsidiaries (and
properties unitized therewith) have been maintained, operated and developed in a
good and workmanlike manner and in conformity with all applicable laws and all
rules, regulations and orders of all duly constituted authorities having
jurisdiction and in conformity with the provisions of all leases, subleases or
other contracts comprising a part of the Hydrocarbon Interests and other
contracts and agreements forming a part of such Oil and Gas Properties;
specifically in this connection, (i) after the Closing Date, no Oil and Gas
Property of any Obligor or any of their respective Subsidiaries is subject to
having allowable production reduced below the full and regular allowable
(including the maximum permissible tolerance) because of any overproduction
39
(whether or not the same was permissible at the time) prior to the Closing Date
and (ii) none of the ▇▇▇▇▇ comprising a part of the Oil and Gas Properties of
any Obligor (or properties unitized therewith) are deviated from the vertical
more than the maximum permitted by applicable laws, regulations, rules and
orders, and such ▇▇▇▇▇ are, in fact, bottomed under and are producing from, and
the well bores are wholly within, such Oil and Gas Properties (or in the case of
▇▇▇▇▇ located on properties unitized therewith, such unitized properties).
Section 7.20 Insurance. Schedule 7.20 attached hereto contains an
accurate and complete description of all material policies of fire, liability,
workers' compensation and other forms of insurance owned or held by the
Obligors. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of the closing
have been paid, and no notice of cancellation or termination has been received
with respect to any such policy. Such policies are sufficient for compliance
with all requirements of law and of all agreements to which any Obligor is a
party; are valid, outstanding and enforceable policies; provide adequate
insurance coverage in at least such amounts and against at least such risks (but
including in any event public liability) as are usually insured against in the
same general area by companies engaged in the same or a similar business for the
assets and operations of the Obligors; will remain in full force and effect
through the respective dates set forth in Schedule 7.20 without the payment of
additional premiums; and will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by this Agreement. Schedule
7.20 identifies all material risks, if any, which each Obligor and their
respective Board of Directors or officers have designated as being self insured.
None of the Obligors has been refused any insurance with respect to its assets
or operations, nor has its coverage been limited below usual and customary
policy limits, by an insurance carrier to which it has applied for any such
insurance or with which it has carried insurance during the last three years.
Section 7.21 Hedging Agreements. Schedule 7.21 sets forth, as of the
Closing Date, a true and complete list of all Hedging Agreements (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of the Obligors and each Wholly Owned Subsidiary, the material
terms thereof (including the type, term, effective date, termination date and
notional amounts or volumes), the net ▇▇▇▇ to market value thereof, all credit
support agreements relating thereto (including any margin required or supplied),
and the counter party to each such agreement.
Section 7.22 Restriction on Liens. Other than the Prior Credit
Agreement and Existing Liens, neither the Borrower nor any of its Subsidiaries
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 other
Persons on or in respect of their respective assets or Properties.
Section 7.23 Material Agreements. Set forth on Schedule 7.23 is a
complete list of all agreements, indentures, purchase agreements, obligations in
respect of letters of credit, guarantees, partnership agreements, exploration
and development agreements, joint venture agreements, and other instruments
which are material to Borrower's and its Subsidiaries' business, activities, and
operation or ownership of such Obligors' Property (the "Material Agreements") in
effect or to be in effect as of the Closing Date (other than the Partnership
Agreements set forth on Schedule 7.14 and Hedging Agreements set forth on
Schedule 7.21) providing for, evidencing, securing or otherwise relating to any
Debt of any such Obligor or any of its Subsidiaries, and all obligations of
Borrower or any of its Subsidiaries to issuers of surety or appeal bonds issued
for account of any such Obligor or Subsidiary. The Borrower shall also make
available to Administrative Agent and Lenders all Material Agreements and other
agreements and instruments (excluding any such agreements and other instruments
that are cancelable upon 60 or less days notice) of Borrower and each of its
Subsidiaries relating to the purchase, transportation by pipeline, gas
40
processing, marketing, sale and supply of natural gas and other Hydrocarbons,
but in any event, any such agreement or other instrument that will account for
more than 10% of the sales of any such Obligor's or its Subsidiaries during the
Borrower's current fiscal year. Upon request by Administrative Agent, the
Borrower shall deliver, or caused to be delivered, to the Administrative Agent
and the Lenders a complete and correct copy of all such Material Agreements.
Section 7.24 Gas Imbalances. As of the Closing Date, except as set
forth on Schedule 7.24 or on the most recent certificate delivered pursuant to
Section 8.07(c), on a net basis there are no gas imbalances, take or pay or
other prepayments with respect to any of the Obligors' Oil and Gas Properties
which would require any such Obligors to deliver, in the aggregate, five percent
(5%) or more of the monthly production of Hydrocarbons produced from their Oil
and Gas Properties at some future time without then or thereafter receiving fall
payment therefor.
Section 7.25 Relationship of Obligors. The Obligors are engaged in
related businesses and each Obligor is directly and indirectly dependent upon
each other Obligor for and in connection with their business activities and
their financial resources; and each Obligor has determined, reasonably and in
good faith, that such Obligor will receive substantial direct and indirect
economic and financial benefits from the extensions of credit made under this
Agreement, and such extensions of credit are in the best interests of such
Obligor, having regard to all relevant facts and circumstances.
ARTICLE VIII
Affirmative Covenants
Each of the Obligors (including Parent for so long as it is a Guarantor
hereunder) covenants and agrees that, so long as any of the Commitments are in
effect and until payment in full of all Loans hereunder, all interest thereon
and all other amounts payable by the Obligors hereunder:
Section 8.01 Reporting Requirements. The Obligors shall deliver, or
shall cause to be delivered, to the Administrative Agent with sufficient copies
of each for the Lenders:
(a) Annual Financial Statements. As soon as available and in any event
within one hundred (100) days after the end of each of its fiscal year, the
audited consolidated and unaudited consolidating statements of income,
stockholders' equity, changes in financial position and cash flow for each of
the Borrower and Parent and their respective Consolidated Subsidiaries for such
fiscal year, and the related consolidated and consolidating balance sheets of
such Person and its Consolidated Subsidiaries as at the end of such fiscal year,
and setting forth in each case in comparative form the corresponding figures for
the preceding fiscal year, and accompanied by the related opinion of independent
public accountants of recognized national standing acceptable to the
Administrative Agent which opinion shall state that said financial statements
fairly present the consolidated and consolidating financial condition and
results of operations of such Person and its Consolidated Subsidiaries as at the
end of, and for, such fiscal year and that such financial statements have been
prepared in accordance with GAAP, except for such changes in such principles
with which the independent public accountants shall have concurred and such
opinion shall not contain a "going concern" or like qualification or exception,
and a certificate of such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge, except as specifically
stated, of any Default.
(b) Quarterly Financial Statements. As soon as available and in any
event within fifty-five (55) days after the end of each of the first three
fiscal quarterly periods of each of its fiscal year for each of the Borrower and
Parent, consolidated and consolidating statements of income, stockholders'
equity, changes in financial position and cash flow of such Person and its
Consolidated Subsidiaries for such period and for the period from the beginning
of the respective fiscal year to the end of such period, and the related
consolidated and consolidating balance sheets as at the end of such period, and
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setting forth in each case in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year, accompanied by the
certificate of a Responsible Officer, which certificate shall state that said
financial statements fairly present the consolidated and consolidating financial
condition and results of operations of such Person and its Consolidated
Subsidiaries in accordance with GAAP, as at the end of, and for, such period
(subject to normal year-end audit adjustments).
(c) Notice of Default, Etc. Promptly after any Obligor knows that any
Default, Event of Default, labor dispute, or any Material Adverse Effect has
occurred, a notice of such Default or Material Adverse Effect, describing the
same in reasonable detail and the action the Borrower or any Guarantor proposes
to take with respect thereto.
(d) Other Accounting Reports. Promptly upon receipt thereof, a copy of
each other report or letter submitted to the Obligor or any Subsidiary by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Obligor and its Subsidiaries, and a copy of any
response by the Obligor or any Subsidiary, or the Board of Directors of the
Obligor or such Subsidiary, to such letter or report.
(e) SEC Filings, Etc. Promptly upon its becoming available, each
financial statement, report, notice or proxy statement sent by Parent and its
Subsidiaries, and as applicable, Borrower, and its Subsidiaries to stockholders
generally and each regular or periodic report and any registration statement,
prospectus or written communication (other than transmittal letters) in respect
thereof filed by Parent and its Subsidiaries, and as applicable, Borrower, and
its Subsidiaries with or received by Parent and its Subsidiaries, and as
applicable, Borrower, and its Subsidiaries in connection therewith from any
securities exchange or the SEC or any successor agency.
(f) Notices Under Other Loan Agreements. Promptly after the furnishing
thereof, copies of any statement, report or notice furnished by the Parent or by
the Borrower or any of its Subsidiaries 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 8.01.
(g) Other Matters. From time to time such other information regarding
the business, affairs or financial condition of any Obligor or any Subsidiary
(including, without limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA) as any Lender or the
Administrative Agent may reasonably request.
(h) Hedging Agreements. As soon as available and in any event within
fifteen Business Days after the last day of each fiscal quarter, a report, in
form and substance satisfactory to the Administrative Agent, setting forth as of
the last Business Day of such fiscal quarter a true and complete list of all
Hedging Agreements (including commodity price swap agreements, forward
agreements or contracts of sale which provide for prepayment for deferred
shipment or delivery of oil, gas or other commodities) of the Obligors and each
Subsidiary, the material terms thereof (including the type, term, effective
date, termination date and notional amounts or volumes), the net ▇▇▇▇ to market
value therefor, any new credit support agreements relating thereto not listed on
Schedule 7.21, any margin required or supplied under any credit support
document, and the counter party to each such agreement.
The Borrower will furnish to the Administrative Agent, at the time it furnishes
each set of financial statements pursuant to paragraph (a) or (b) above, a
certificate substantially in the form of Exhibit C executed by a Responsible
Officer (i) certifying as to the matters set forth therein and stating that no
Default has occurred and is continuing (or, if any Default has occurred and is
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continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine whether the Borrower
is in compliance with Sections 9.13, 9.14, and 9.15, and whether the Parent is
in compliance with Section 9.16 as of the end of the respective fiscal quarter
or fiscal year.
Section 8.02 Litigation. Borrower and its Subsidiaries shall promptly
give to the Administrative Agent notice of any litigation or proceeding against
or adversely affecting Borrower or any Subsidiary in which the amount claimed
exceeds $250,000 or an aggregate of claims in excess of $1,000,000 and is not
otherwise covered in full by insurance (subject to normal and customary
deductibles and for which the insurer has not assumed the defense), or in which
injunctive or similar relief is sought. Parent shall promptly give notice to the
Administrative Agent of any litigation or proceeding against or adversely
affecting Parent in which the amount claimed exceeds $1,000,000 or an aggregate
of claims in excess of $10,000,000 and is not otherwise covered in full by
insurance (subject to normal and customary deductibles and for which the insurer
has not assumed the defense), or in which injunctive or similar relief is
sought. Borrower will, and will cause each of its Subsidiaries to, promptly
notify the Administrative Agent and each of the Lenders of any claim, judgment,
Lien or other encumbrance affecting any Property of Borrower or any Subsidiary
if the value of the claim, judgment, Lien, or other encumbrance affecting such
Property shall exceed $250,000 or an aggregate of such claims in excess of
$1,000,000 and Parent will promptly notify the Administrative Agent and each of
the Lenders of any claim, judgment, Lien or other encumbrance affecting any
Property of Parent if the value of the claim, judgment, Lien, or other
encumbrance affecting such Property shall exceed $1,000,000 or an aggregate of
such claims in excess of $10,000,000.
Section 8.03 Maintenance, Etc.
(a) Generally. Except as permitted under Section 9.09, each Obligor
shall and shall cause each of its Subsidiaries to: preserve and maintain its
organization, existence and all of its material rights, privileges and
franchises; keep books of record and account in which full, true and correct
entries will be made of all dealings or transactions in relation to its business
and activities; comply with all Governmental Requirements if failure to comply
with such requirements will have a Material Adverse Effect; pay and discharge
all taxes, assessments and governmental charges or levies imposed on it or on
its income or profits or on any of its Property prior to the date on which
penalties attach thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained; upon reasonable
notice, permit representatives of the Administrative Agent or any Lender, during
normal business hours, to examine, copy and make extracts from its books and
records, to inspect its Properties, and to discuss its business and affairs with
its officers, all to the extent reasonably requested by such Lender or the
Administrative Agent (as the case may be); and keep, or cause to be kept,
insured by financially sound and reputable insurers all Property of a character
usually insured by Persons engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such Persons and carry such other insurance as is usually
carried by such Persons including, without limitation, environmental risk
insurance to the extent reasonably available.
(b) Proof of Insurance. Contemporaneously with the delivery of the
financial statements required by Section 8.01(a) to be delivered for each year,
the Borrower will furnish or cause to be furnished to the Administrative Agent
and the Lenders a certificate of insurance coverage from the insurer in form and
substance satisfactory to the Administrative Agent listing Administrative Agent
as "loss payee" and, if requested, will furnish the Administrative Agent and the
Lenders copies of the applicable policies.
(c) Oil and Gas Properties. Borrower will and will cause each of its
Subsidiaries to, do or cause to be done all things reasonably necessary to
preserve and keep in good repair, working order and efficiency all of its Oil
43
and Gas Properties and other material Properties including, without limitation,
all equipment, machinery and facilities, and from time to time will make all the
reasonably necessary repairs, renewals and replacements so that at all times the
state and condition of its Oil and Gas Properties and other material Properties
will be fully preserved and maintained, except to the extent a portion of such
Properties is no longer capable of producing Hydrocarbons in economically
reasonable amounts. Borrower will and will cause each of its Subsidiaries to
promptly: (i) pay and discharge, or make reasonable and customary efforts to
cause to be paid and discharged, all delay rentals, royalties, expenses and
indebtedness accruing under the leases or other agreements affecting or
pertaining to its Oil and Gas Properties, (ii) perform or make reasonable and
customary efforts to cause to be performed, in accordance with industry
standards, the obligations required by each and all of the assignments, deeds,
leases, sub-leases, contracts and agreements affecting its interests in its Oil
and Gas Properties and other material Properties, (iii) will and will cause each
Subsidiary to do all other things necessary to keep unimpaired, except for Liens
described in Section 9.03, its rights with respect to its Oil and Gas Properties
and other material Properties and prevent any forfeiture thereof or a default
thereunder, except to the extent a portion of such Properties is no longer
capable of producing Hydrocarbons in economically reasonable amounts and except
for Transfers permitted by Section 9.18. Borrower will and will cause each of
its Subsidiaries to operate its Oil and Gas Properties and other material
Properties or cause or make reasonable and customary efforts to cause such Oil
and Gas Properties and other material Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance in all
material respects with all Governmental Requirements.
Section 8.04 Environmental Matters.
(a) Establishment of Procedures. The Obligors will and will cause each
of their Subsidiaries to establish and implement such procedures as may be
reasonably necessary to continuously determine and assure that any failure of
the following does not have a Material Adverse Effect: (i) all Property of the
Obligors and their Subsidiaries and the operations conducted thereon and other
activities of the Obligors and their Subsidiaries are in compliance with and do
not violate the requirements of any Environmental Laws, (ii) no oil, hazardous
substances or solid wastes are disposed of or otherwise released on or to any
Property owned by any such party except in compliance with Environmental Laws,
(iii) no hazardous substance will be released on or to any such Property in a
quantity equal to or exceeding that quantity which requires reporting pursuant
to Section 103 of CERCLA, and (iv) no oil, oil and gas exploration and
production wastes or hazardous substance is released on or to any such Property
so as to pose an imminent and substantial endangerment to public health or
welfare or the environment.
(b) Notice of Action. The Obligors will promptly notify the
Administrative Agent and the Lenders in writing of any threatened action,
investigation or inquiry by any Governmental Authority of which any Obligor has
knowledge in connection with any Environmental Laws, excluding routine testing
and corrective action.
(c) Future Acquisitions. The Obligors will and will cause each of their
Subsidiaries to provide environmental audits and tests in accordance with
American Society for Testing and Materials standards as reasonably requested by
the Administrative Agent and the Lenders (or as otherwise required to be
obtained by the Administrative Agent or the Lenders by any Governmental
Authority) in connection with any future acquisitions of Oil and Gas Properties
or other material Properties.
Section 8.05 Further Assurances. The Obligors will and will cause each
of their Subsidiaries 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 Obligors at their expense will and will cause each Subsidiary to
promptly execute and deliver to the Administrative Agent upon request all such
44
other documents, agreements and instruments to comply with or accomplish the
covenants and agreements of the Obligors or any Subsidiary, as the case may be,
in any Loan Document, or to further evidence and more fully describe the
collateral intended as security for the Notes, or to correct any omissions in
any Loan Document, or to state more fully the security obligations set out
herein or in any Loan Document, 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.
Section 8.06 Performance of Obligations. The Borrower will pay the
Notes according to the reading, tenor and effect thereof; the Guarantors will
pay under the Guarantees according to the terms thereof, and the Obligors will
and will cause each of their Subsidiaries to do and perform every act and
discharge all of the obligations to be performed and discharged by them under
this Agreement and any other Loan Document, at the time or times and in the
manner specified.
Section 8.07 Engineering Reports.
(a) Not less than 30 days prior to each Scheduled Borrowing Base
Redetermination Date, commencing with the Scheduled Borrowing Base
Redetermination to occur on or around August 1, 2004, the Borrower shall furnish
to the Administrative Agent and the Lenders a Reserve Report. The Reserve Report
of each year delivered in connection with the February 1 Scheduled Borrowing
Base Redetermination shall be prepared by certified independent petroleum
engineers or other independent petroleum consultant(s) acceptable to the
Administrative Agent and the Reserve Report of each year delivered in connection
with the August 1 Scheduled Borrowing Base Redetermination shall be prepared by
or under the supervision of the chief engineer of the Obligors and for which a
Responsible Officer shall certify such Reserve Report to be true and accurate
and to have been prepared in accordance with the procedures used in the
immediately proceeding February 1 Scheduled Borrowing Base Redetermination
Reserve Report.
(b) In the event of an unscheduled redetermination, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report prepared by
or under the supervision of the chief engineer of the Obligors together with the
certificate of a Responsible Officer who shall certify such Reserve Report to be
true and accurate and to have been prepared in accordance with the procedures
used in the immediately preceding Reserve Report. For any unscheduled
redetermination requested by the Lenders or the Borrower pursuant to Section
2.08(d)), the Borrower shall provide such Reserve Report with an "as of" date as
required by the Lenders as soon as possible, but in any event no later than 30
days following the receipt of the request by the Administrative Agent.
(c) With the delivery of each Reserve Report, the Borrower shall
provide, or cause to be provided, to the Administrative Agent and the Lenders, a
certificate from a Responsible Officer certifying that, to the best of his
knowledge and in all material respects: (i) the information contained in the
Reserve Report and any other information delivered in connection therewith is
true and correct, (ii) the Obligors and the Partnerships own good and marketable
title to the Oil and Gas Properties evaluated in such Reserve Report and such
Properties are free of all Liens except for Liens permitted by Section 9.03,
(iii) except as set forth on an exhibit to the certificate, on a net basis there
are no gas imbalances, take or pay or other prepayments with respect to its Oil
and Gas Properties evaluated in such Reserve Report which would require any
Obligor to deliver Hydrocarbons produced from such Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor,
(iv) none of Obligor's or and the Partnerships' Oil and Gas Properties have been
sold since the date of the last Borrowing Base determination except as set forth
on an exhibit to the certificate, which certificate shall list all of its Oil
and Gas Properties sold and in such detail as reasonably required by the
Administrative Agent, (v) attached to the certificate is a list of its Oil and
Gas Properties added to and deleted from the immediately prior Reserve Report
45
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, (vi) attached
to the certificate is a list of all Persons disbursing proceeds to the Obligors
from their Oil and Gas Properties, and (vii) all of the Oil and Gas Properties
evaluated by such Reserve Report are Mortgaged Property except as set forth on a
schedule attached to the certificate.
Section 8.08 Title Curative. Borrower shall cure, and shall cause its
Subsidiaries to cure or cause to be cured, any title defects or exceptions which
are not Excepted Liens raised by such information, or substitute acceptable
Mortgaged Properties with no title defects or exceptions except for Excepted
Liens covering Mortgaged Properties of an equivalent value, within 30 days after
a request by the Administrative Agent to cure such defects or exceptions.
Section 8.09 Additional Collateral.
(a) Lien in Oil and Gas Properties. At all times hereunder that the
Obligations remain unpaid, including whenever any Obligor acquires any
additional Oil and Gas Properties or additional interests in existing Oil and
Gas Properties, Obligors shall grant to the Administrative Agent for the benefit
of the Lenders as security for the Indebtedness a first-priority Lien interest
(subject only to Excepted Liens) covering at least 80% of the total value (based
upon the most recent Reserve Report plus the value of Oil and Gas Properties
acquired after the date of such Reserve Report determined on a basis consistent
with the Reserve Report) of the Obligors' Oil and Gas Properties either directly
under the Mortgages or indirectly under the pledge of their interests in the
Partnerships. Such Lien will be created and perfected by and in accordance with
the provisions of mortgages, deeds of trust, security agreements and financing
statements, or other Security Instruments, all in form and substance
satisfactory to the Administrative Agent in its sole discretion and in
sufficient executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes.
(b) Title Information. Concurrently with the granting of the Lien or
other action referred to in Section 8.09(a) above, the Borrower or its
Subsidiaries will provide to the Administrative Agent title information in form
and substance satisfactory to the Administrative Agent in its sole discretion
with respect to such Obligor's interests in such Oil and Gas Properties.
(c) Legal Opinions. Promptly after the filing of any new Security
Instrument in any state, upon the request of the Administrative Agent, Borrower
will provide, or cause to be provided, to the Administrative Agent an opinion
addressed to the Administrative Agent for the benefit of the Lenders in form and
substance satisfactory to the Administrative Agent in its sole discretion from
counsel acceptable to Administrative Agent, stating that the Security Instrument
is valid, binding and enforceable in accordance with its terms and in legally
sufficient form for such jurisdiction.
(d) Letters in Lieu.
(i) Upon request by Administrative Agent and Required Lenders,
Borrower shall, and shall cause its Subsidiaries to, provide to
Administrative Agent undated letters, in form of Exhibit F attached
hereto, from Borrower or such Subsidiary to each purchaser of
production and disburser of proceeds of production from or attributable
to the Mortgaged Properties, along with sufficient copies of additional
executed letters with the addressees left blank, authorizing and
directing the addressees to make future payments attributable to
production from the Mortgaged Properties directly to Administrative
Agent for the ratable benefit of the Lenders.
(ii) Borrower and each of its Subsidiaries hereby designates
Administrative Agent as its agent and attorney-in-fact, to act in their
name, place, and stead for the purpose of completing and delivering any
46
and all of the letters in lieu of division orders delivered by Borrower
and such Subsidiaries to Administrative Agent, including, without
limitation, completing any blanks contained in such letter and
attaching exhibits thereto describing the relevant Collateral. The
Borrower and each of its Subsidiaries hereby ratifies and confirms all
that Administrative Agent shall lawfully do or cause to be done by
virtue of this power of attorney and the rights granted with respect to
such power of attorney. This power of attorney is coupled with the
interest of Administrative Agent in the Collateral, shall commence and
be in full force and effect as of the Closing Date and shall remain in
full force and effect and shall be irrevocable so long as any
Obligation remains outstanding or unpaid or any Commitment exists. The
powers conferred on Administrative Agent by this appointment are solely
to protect the interests of Administrative Agent and each of the
Lenders under the Loan Documents and shall not impose any duty upon
Administrative Agent to exercise any such powers. Administrative Agent
shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers and shall not be responsible to
Borrower, its Subsidiaries, or any other Person for any act or failure
to act with respect to such powers, except for gross negligence or
willful misconduct.
(iii) Until such time as Administrative Agent shall notify
Borrower and its Subsidiaries to the contrary, Borrower and its
Subsidiaries shall be entitled to receive from the purchasers or
disbursers of production all such proceeds of runs, subject however to
the liens created under the Security Instruments. Upon the occurrence
and during the continuance of a Default or such other time as
Administrative Agent shall in its discretion so elect, Administrative
Agent may deliver to the addressees the letters-in-lieu described in
Subsection 8.09(d)(i) above and may exercise all rights and remedies
granted under the Security Instruments, including the right to obtain
possession of all proceeds of runs then held by Borrower and its
Subsidiaries or to receive directly from the purchaser or disburser of
production all other proceeds of runs.
(iv) In no case shall any failure, whether purposed or
inadvertent, by Administrative Agent to collect directly any such
proceeds of runs constitute in any way a waiver, remission or release
of any of its rights under the Security Instruments, nor shall any
release of any other proceeds of runs or of any rights of
Administrative Agent to collect other proceeds of runs thereafter.
(e) Subordination of Obligor's Liens.
(i) Each Obligor hereby subordinates and assigns in favor of
Administrative Agent for the benefit of the Lenders any and all liens,
statutory or otherwise and any rights of offset contractual or
otherwise it has or may have in the future against such Obligors'
interests in the Mortgaged Properties or in the Oil and Gas Properties
and revenues attributable to its interest therein, including the
Contracts and Records (defined below).
(ii) Any officer or employee of Administrative Agent is
expressly granted the right at its option upon not less than one (1)
Business Day's notice, to visit and inspect (a) each Obligors' offices,
including all books and records, farmout agreements, area of mutual
interest agreements, development agreements, geologic and geophysical
survey agreements, operating agreements, contracts and other agreements
that relate to any of the Mortgaged Properties or in the Oil and Gas
Properties, seismic, geological and geophysical, drilling and
production data and records, all accounting records, joint interest
billing records, division order records, land files, and contracts and
records referring to the production, sale, purchase, exchange or
processing of Hydrocarbons whether such data, information or agreements
are in written form or electronic format (the "Contracts and Records"),
and to examine, take copies and extracts therefrom, and (b) any of the
Mortgaged Properties.
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(iii) Following the occurrence and during the continuance of
an Event of Default, each Obligor acknowledges that the Administrative
Agent is expressly granted the right to exercise any and all liens,
statutory or otherwise, rights of offset or recoupment it has and to
receive the monies, income, proceeds, or benefits attributable to the
sale of Oil and Gas produced from or attributable to the Mortgaged
Properties, to hold the same as security for the Indebtedness and to
apply it on the principal and interest or other amounts owing on any of
the Indebtedness, whether or not then due, in such order or manner as
Administrative Agent may elect.
(iv) In the event of a foreclosure, deed in lieu, or other
transfer of record or beneficial ownership or operations of the
Mortgaged Properties, each Obligor, as bailee, agrees to cooperate and
assist Administrative Agent and its officers, agents and counsel in the
peaceful transfer and delivery of such Contracts and Records to such
party or parties as Administrative Agent may in writing direct.
(v) Following the occurrence and during the continuance of a
Default or Event of Default and within thirty (30) days after receipt
of notice from Administrative Agent, Obligors will relinquish their
respective rights to operate the Properties of Obligors to the
Administrative Agent or its designee.
(f) Pledge of Partnerships. Borrower shall and shall cause each of its
Wholly Owned Subsidiaries to pledge all of its interest in any Partnership and
to provide such information about such Partnership as Lenders may reasonably
request.
(g) Subordination of Intercompany Debt. Any Intercompany Notes or
advances of any Obligor howsoever evidenced by journal entries or otherwise now
or hereafter owed to or held by any other Obligor (including Parent, to the
extent it is no longer an Obligor) are hereby subordinated to the Indebtedness
of such other Obligor to the Lenders, and any document or instrument evidencing
such loans or advances shall contain a legend giving notice of such
subordination. Any Intercompany Notes or advances of any other Obligor due to
such Obligor (including Parent, to the extent it is no longer an Obligor), if
the Administrative Agent so requests, shall be collected, enforced and received
by such Obligor (including Parent, to the extent it is no longer an Obligor) as
trustee for the Lenders and be paid over to the Administrative Agent for the
account of the Lenders on account of the Indebtedness but without affecting in
any manner the liability of such Obligor under the other provisions of this
Agreement or any other Loan Document. Any Lien, claim, right or other
encumbrance on any property of any Obligor in favor of any other Obligor
(including Parent, to the extent it is no longer an Obligor) is hereby
subordinated in all respects to the Liens granted to the Administrative Agent
for the benefit of the Lenders.
Section 8.10 Corporate Identity. The Borrower shall or cause to be done
(or refrain from doing or causing to be done, as the case may be) all things
necessary to ensure that the separate legal identity of the Borrower will at all
times be respected and that neither the Borrower nor any of its Subsidiaries
will be liable for any obligations, contractual or otherwise, of the Parent or
any other entity in which the Parent owns any equity interest (other than the
Borrower and its Subsidiaries), except as permitted by Sections 9.01 (c), (h) or
Section 9.04(f). Without limiting the foregoing, the Borrower will (a) observe,
and cause the Parent to observe, all requirements, procedures and formalities
necessary or advisable in order that the Borrower will for all purposes be
considered a validly existing corporation separate and distinct from the Parent
and the Parent's Subsidiaries other than Borrower and its Subsidiaries, (b) not
permit any commingling of the assets of the Parent or any of the Parent's
Subsidiaries other than Borrower and its Subsidiaries with assets of the
Borrower or any of its Subsidiaries which would prevent such assets of the
Parent or any of the Parent's Subsidiaries other than Borrower and its
48
Subsidiaries from being readily distinguished from the assets of the Borrower
and its Subsidiaries and (c) take reasonable and customary actions to ensure
that creditors of the Parent and the Parent's Subsidiaries other than Borrower
and its Subsidiaries are aware that each such Person is an entity separate and
distinct from the Borrower and its Subsidiaries.
Section 8.11 ERISA Information and Compliance. The Obligors will
promptly furnish and will cause the Subsidiaries and any ERISA Affiliate to
promptly furnish to the Administrative Agent with sufficient copies to the
Lenders (i) promptly after the filing thereof with the United States Secretary
of Labor, the Internal Revenue Service or the PBGC, copies of each annual and
other report with respect to each Plan or any trust created thereunder, (ii)
immediately upon becoming aware of the occurrence of any ERISA Event or of any
"prohibited transaction," as described in section 406 of ERISA or in section
4975 of the Code, in connection with any Plan or any trust created thereunder, a
written notice signed by a Responsible Officer specifying the nature thereof,
what action the Obligors, the Subsidiary or the ERISA Affiliate is taking or
proposes to take with respect thereto, and, when known, any action taken or
proposed by the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto, and (iii) immediately upon receipt thereof, copies of any
notice of the PBGCs intention to terminate or to have a trustee appointed to
administer any Plan. With respect to each Plan (other than a Multiemployer
Plan), the Obligors will, and will cause each Subsidiary and ERISA Affiliate to,
(i) satisfy in full and in a timely manner, without incurring any late payment
or underpayment charge or penalty and without giving rise to any lien, all of
the contribution and funding requirements of section 412 of the Code (determined
without regard to subsections (d), (e), (f) and (k) thereof) and of section 302
of ERISA (determined without regard to sections 303, 304 and 306 of ERISA), and
(ii) pay, or cause to be paid, to the PBGC in a timely manner, without incurring
any late payment or underpayment charge or penalty, all premiums required
pursuant to sections 4006 and 4007 of ERISA.
Section 8.12 Parent and Atlas Holdings Guarantees. The Obligors agree:
(a) for so long as Parent beneficially owns, directly or indirectly,
80% or more of the outstanding shares of voting capital stock of the Borrower,
Parent shall guarantee Borrower's Obligations under its Guaranty Agreement. At
such time as Parent ceases to beneficially own, directly or indirectly, 80% or
more of the outstanding shares of voting capital stock of the Borrower, so long
as no Event of Default is outstanding, Parent shall automatically cease to be a
Guarantor and Obligor hereunder, and Administrative Agent shall execute and
file, as necessary, at Obligors' expense such releases of Parent's Guaranty
Agreement and any liens and security interests pledged by Parent as security
under the Security Instruments; and
(b) upon dissolution of Atlas Holdings as permitted under Section 9.09,
so long as no Event of Default is outstanding, Atlas Holdings shall
automatically cease to be a Guarantor and Obligor hereunder, and Administrative
Agent shall execute and file, as necessary, at Obligors' expense such releases
of Atlas Holding's Guaranty Agreement and any liens and security interests
pledged by Atlas Holding as security under the Security Instruments.
ARTICLE IX
Negative Covenants
The Obligors (including Parent for so long as it is a Guarantor)
covenant and agree that, so long as any of the Commitments are in effect and
until payment in full of Loans hereunder, all interest thereon and all other
amounts payable by the Obligors hereunder, without the prior written consent of
the Majority Lenders:
Section 9.01 Debt. None of the Obligors or their Subsidiaries and none
of the Partnerships will incur, create, assume or permit to exist any Debt,
except:
49
(a) the Notes or other Indebtedness or any guaranty of or suretyship
arrangement for the Notes or other Indebtedness;
(b) Debt of the Borrower disclosed in Schedule 9.01, and any renewals
or extensions (but not increases) thereof;
(c) Debt of Parent and its Subsidiaries (excluding Borrower and its
Subsidiaries) to the extent same is not guaranteed or secured by Property of
Borrower or its Subsidiaries;
(d) accounts payable (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business which,
if greater than 90 days past the invoice or billing date, are being contested in
good faith by appropriate proceedings if reserves adequate under GAAP shall have
been established therefor;
(e) Debt under leases permitted under Section 9.08;
(f) Debt associated with bonds or surety obligations pursuant to
Governmental Requirements in connection with the operation of any Obligor's Oil
and Gas Properties;
(g) Debt of the Obligors under Hedging Agreements permitted under
Section 9.02;
(h) prior to a Successful Public Offering, Intercompany Debt owed by a
Wholly Owned Subsidiary to the Borrower or to another Obligor, or by the
Borrower or another Obligor to a Wholly Owned Subsidiary, provided, that, in
each such case such Intercompany Debt in excess of $250,000 is (i) evidenced by
an Intercompany Note which has been pledged to secure the Obligations and is in
the possession of the Administrative Agent, (ii) provided that the applicable
rate of interest under any loans from Parent to Borrower or any of its
Subsidiaries shall not exceed the Base Rate plus Applicable Margin then in
effect, and (iii) subordinated to the Obligations upon terms and conditions
satisfactory to the Administrative Agent;
(i) following a Successful Public Offering, Intercompany Debt shall be
permitted only to the extent it is unsecured and subordinated to the
Indebtedness on terms acceptable to the Administrative Agent, evidencing
obligations arising under the Tax Sharing Agreement and Transition Services
Agreement;
(j) non-recourse Debt of Atlas Pipeline in its capacity as general
partner of APL; and
(k) Debt of the Borrower and its Subsidiaries not otherwise described
under subparagraphs (a) through (j) above not to exceed $2,000,000 in the
aggregate.
Section 9.02 Hedging Agreements. Borrower shall not and shall not
permit its Subsidiaries to enter into or in any manner be liable on any Hedging
Agreement except:
(a) Hedging Agreements entered into with the purpose and effect of
fixing prices on oil and/or gas expected to be produced by such Person provided
that at all times: (1) no such contract shall be for speculative purposes; (2)
no such contract fixes a price for a term of more than thirty-six (36) months;
(3) no such contract, when aggregated with all Hedging Agreements permitted
hereunder requires such Person to deliver more than 75% of total estimated Oil
and Gas to be produced in any month from the Oil and Gas Properties classified
as proved developed producing on the most recent Reserve Report; (4) the
agreements documenting such Hedging Agreements do not contain any provision
exonerating the non-defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party; and (5) each such contract
50
shall be with the Administrative Agent, or any of the Lenders or their
Affiliates, or with a counterparty or have a guarantor of the obligation of the
counterparty who, at the time the contract is made, has long-term obligations
rated AA or Aa2 or better, respectively, by Standard & Poor's Corporation or
▇▇▇▇▇'▇ Investors Services, Inc. (or a successor credit rating agency).
(b) Hedging Agreements entered into with the purpose and effect of
fixing interest rates on a principal amount of the Notes of the Borrower that is
accruing interest at a variable rate, provided that (1) no such contract shall
be for speculative purposes; (2) the floating rate index of each such contract
generally matches the index used to determine the floating rates of interest on
the corresponding Indebtedness of the Borrower to be hedged by such contract;
(3) the aggregate notional amount of such Hedging Agreements shall not exceed
seventy-five percent (75%) of the principal outstanding under the Notes; (4) the
tenor of each such contract shall not extend beyond the Revolving Credit
Termination Date; and (5) each such contract shall be with a Lender or with a
counterparty or have a guarantor of the obligation of the counterparty who, at
the time the contract is made, has long-term obligations rated AA or Aa2 or
better, respectively, by Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors
Services, Inc. (or a successor credit rating agency).
(c) In the event the Borrower enters into a Hedging Agreement with any
of the Lenders, the Contingent Obligation evidenced under such Hedging Agreement
shall not be applied against such Lender's Commitment nor against the Borrowing
Base Utilization. Any Indebtedness incurred under any Hedging Agreement with any
Lender shall be treated as an Obligation pari passu with all Obligations
otherwise incurred hereunder or under the other Loan Documents and shall be
secured under the Security Instruments.
Section 9.03 Liens. None of the Borrower nor any of its Subsidiaries
will create, incur, assume or permit to exist any Lien on any of its Properties
(now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens;
(c) Liens securing leases allowed under Section 9.08, but only on the
Property under lease; and
(d) Liens on cash or securities of an Obligor securing the Debt
described in Section 9.01(f) and (i).
Section 9.04 Investments, Loans and Advances. Borrower will not and
will not permit its Subsidiaries to make or permit to remain outstanding any
loans or advances to or investments in any Person, except that the foregoing
restriction shall not apply to:
(a) accounts receivable arising in the ordinary course of business;
(b) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within one year from the date of creation thereof;
(c) commercial paper maturing within one year from the date of creation
thereof rated in the highest grade by Standard & Poor's Corporation or ▇▇▇▇▇'▇
Investors Service, Inc.;
(d) deposits maturing within one year from the date of creation thereof
with, including certificates of deposit issued by, any Lender or any office
located in the United States of any other bank or trust company which is
51
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000.00 (as of the
date of such Lender's or bank or trust company's most recent financial reports)
and has a short term deposit rating of no lower than A2 or P2, as such rating is
set forth from time to time, by Standard & Poor's Corporation or ▇▇▇▇▇'▇
Investors Service, Inc., respectively;
(e) deposits in money market funds investing exclusively in investments
described in Section 9.04(c), or 9.04(d);
(f) investments, loans or advances in or to the Borrower or any
Subsidiary permitted under Section 9.01(g); and
(g) advances to fund Borrower and its Wholly Owned Subsidiaries'
capital contributions under Partnerships and APL as provided under Section
7.07(iii); and
(h) other investments, loans or advances not to exceed in the aggregate
$2,000,000.
Section 9.05 Dividends, Distributions and Redemptions. The Borrower
will not declare or pay any dividend, purchase, redeem or otherwise acquire for
value any of its stock now or hereafter outstanding, return any capital to its
stockholders or make any distribution of its assets to its stockholders if an
Event of Default has occurred and is continuing or would occur as a result of
such distribution or to the extent such distribution plus any prior
distributions after the Closing Date exceeds the Cumulative Net Income Amount.
Provided further, no distribution or dividends shall be paid to Parent or Atlas
Holdings from proceeds of a Successful Public Offering until all Intercompany
Indebtedness then owing by Borrower or its Subsidiaries to Parent and Atlas
Holdings has been paid in full.
Section 9.06 Sales and Leasebacks. Borrower shall not and shall not
permit any of its Subsidiaries to enter into any arrangement, directly or
indirectly, with any Person whereby any such Obligor or Subsidiary shall sell or
transfer any of its Property, whether now owned or hereafter acquired, and
whereby such Obligor or Subsidiary shall then or thereafter rent or lease as
lessee such Property or any part thereof or other Property which such Obligor or
Subsidiary intends to use for substantially the same purpose or purposes as the
Property sold or transferred.
Section 9.07 Nature of Business. Borrower shall not and shall not
permit any of its Subsidiaries to allow any material change to be made in the
character of its business or the business of the Partnerships as an independent
oil and gas exploration and production company. Borrower shall not and shall not
permit any of its Subsidiaries to materially amend, waive or modify any of their
Material Agreements or Partnership Agreements in any manner that could
reasonably be expected to cause any material and adverse effect on the
Administrative Agent's and the Lenders' interests in the collateral securing the
Indebtedness, or the Administrative Agents' or the Lenders' ability to enforce
their rights and remedies under this Agreement or any other Loan Document, at
law or in equity.
Section 9.08 Limitation on Leases. Borrower shall not and shall not
permit any of its Subsidiaries to create, incur, assume or permit to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal including capital leases, but excluding leases of Hydrocarbon
Interests), under leases or lease agreements which would cause the aggregate
amount of all payments made by Borrower and its Subsidiaries pursuant to all
such leases or lease agreements to exceed $2,000,000 in any period of twelve
consecutive calendar months during the life of such leases.
Section 9.09 Mergers, Etc. Borrower shall not and shall not permit any
of its Subsidiaries to merge into or with or consolidate with any other Person,
or liquidate, sell, lease or otherwise dispose of (whether in one transaction or
52
in a series of transactions) all or substantially all of its Property or assets
(whether now owned or hereafter acquired) to or in favor of any other Person,
except, so long as no Default exists or would result therefrom, (i) any
Subsidiary may merge with (A) the Borrower, provided the Borrower shall be the
continuing or surviving Person, or (B) any one or more other Subsidiaries,
provided that when any Subsidiary is merging with another Subsidiary, the
continuing or surviving Person shall be a Guarantor, (ii) any Subsidiary may
dispose of all or substantially all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or to another Subsidiary; provided if the transferor
in such a transaction is a Guarantor, then the transferee must either be the
Borrower or a Guarantor and (iii) so long as no Event of Default has occurred
and is continuing, Parent may cause the dissolution of Atlas Holdings prior to
and in connection with Parent's spin-off distribution to its common stockholders
of its remaining common stock in the Borrower following the Successful Public
Offering.
Section 9.10 Proceeds of Notes and Letters of Credit. The Borrower will
not permit the proceeds of the Notes or Letters of Credit to be used for any
purpose other than those permitted by Section 7.07. Neither the Borrower nor any
Person acting on behalf of the Borrower has taken or will take any action which
might cause any of the Loan Documents to violate 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.
Section 9.11 ERISA Compliance. The Borrower shall not, and shall not
permit any of its Subsidiaries at any time to:
(a) Engage in, or permit any Subsidiary or ERISA Affiliate to engage
in, any transaction in connection with which any Obligor, any Subsidiary or any
ERISA Affiliate could be subjected to either a civil penalty assessed pursuant
to section 502(c), (i) or (1) of ERISA or a tax imposed by Chapter 43 of
Subtitle D of the Code;
(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 any Obligor, any Subsidiary or any
ERISA Affiliate to the PBGC;
(c) 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 law, any Obligor, 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 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 under any Plan maintained by
any Obligor, any Subsidiary or any ERISA Affiliate which is regulated under
Title IV of ERISA to exceed the cur-rent value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA;
(f) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan;
53
(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 any Obligor, 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, or (2) any other Plan that is subject to Title IV of ERISA
under which the actuarial present value of the benefit liabilities under such
Plan exceeds the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities;
(h) Incur, or permit any Subsidiary or ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201
or 4204 of ERISA;
(i) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(l) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that any Obligor, any
Subsidiary or any ERISA Affiliate is required to provide security to such Plan
under section 401 (a)(29) of the Code.
Section 9.12 Sale or Discount of Receivables. Borrower shall not, and
shall not permit any Subsidiary to discount or sell (with or without recourse)
any of its notes receivable or accounts receivable.
Section 9.13 Current Ratio. The Borrower will not permit the ratio of
its (i) current assets (including any unused amount under the Borrowing Base) to
(ii) current liabilities (excluding current maturities of the Notes, and the
percentage below of the advance payments received by the Borrower for the
drilling and completion of oil and gas ▇▇▇▇▇ which are classified as current
liabilities:
(X) for the quarter ending March 31, 2004, 50% of such
advanced payments,
(Y) for the quarter ending June 30, 2004, 25% of such advanced
payments, and
(Z) thereafter, 0% of such advanced payments),
to be less than 1.0 to 1.0 at the end of any quarter.
Section 9.14 Funded Debt to EBITDA. The Borrower will not permit the
ratio of Funded Debt to EBITDA of the Borrower as of the end of any fiscal
quarter of the Borrower (on a consolidated basis calculated quarterly based upon
the four most recently completed quarters) to be more than 3.00 to 1.00. For
purposes of calculating the ratio of Borrower's Funded Debt to EBITDA, (i) the
EBITDA and Funded Debt attributable to APL shall be excluded, however, cash
distributions from APL paid to Borrower shall be included in calculation of
Borrower's EBITDA and (ii) Borrower shall exclude Funded Debt of Borrower owed
to Parent to the extent permitted under Section 9.01(h) and (i).
Section 9.15 Tangible Net Worth. The Borrower will maintain at all
times a Consolidated Tangible Net Worth in an amount not less than the sum of
(i) $29,500,000.00, plus (ii) fifty percent (50%) of Consolidated Net Income
after December 31, 2003, on a cumulative basis (provided that no negative
adjustment will be made in the event that Consolidated Net Income is a deficit
figure for such period).
54
Section 9.16 Parent's Consolidated Interest Coverage Ratio. For so long
as Parent is a Guarantor hereunder, Parent will not permit its Consolidated
Interest Coverage Ratio as of the end of any fiscal quarter of Parent beginning
March 31, 2004 (calculated upon the four most recently completed fiscal
quarters, quarterly at the end of each fiscal quarter) to be less than 2.00 to
1.00 (provided that for purposes of this calculation Parent's EBITDA shall
exclude any accretion of discounts in Parent's real estate operations).
Section 9.17 Payment on Intercompany Debt to Parent
(a) Prior to a Successful Public Offering, for so long as no Event of
Default exists and is continuing or would occur as a result of such payment, (i)
to the extent Parent pays federal income taxes on a consolidated basis, the
Borrower may pay quarterly payments on its Intercompany Debt to Parent in a
principal amount up to Borrower's calculated federal income tax liability on an
unconsolidated basis for such quarterly tax period.
(b) Following a Successful Public Offering, for so long as no event of
Default exists and is continuing or would occur as a result of such payment no
payments on Intercompany Indebtedness shall be permitted except:
(i) for so long as the Tax Sharing Agreement is in effect,
Borrower may make principal payments thereunder equal to Borrower's
calculated federal income tax liability on an unconsolidated basis net
of amounts owed to Borrower by Parent, and
(ii) for so long as the Transition Services Agreement is in
effect, Borrower may make principal payments equal to Borrower's net
obligations in an amount not to exceed $500,000 per quarter.
Section 9.18 Sale of Oil and Gas Properties and APL Interests. The
Obligors will not, and will not permit any of their Subsidiaries to, Transfer
any Oil and Gas Property or any interest in any Oil and Gas Property for which
value was given in the most recent Borrowing Base redetermination to any Person
other than Obligors, provided, for so long as no Default exists, Obligors may
Transfer up to $250,000 in the aggregate of such Oil and Gas Property Assets
during any Borrowing Base Period. For so long as any Default exists or such
Transfer would cause a Borrowing Base Deficiency, the Obligors will not, and
will not permit any of their Subsidiaries to, Transfer any APL Units to any
Person other than Obligors. Upon any Transfer of Oil and Gas Properties or APL
Units as permitted herein, the Borrowing Base shall be automatically reduced (i)
in the event of a sale of Oil and Gas Properties, by the current Oil and Gas
Collateral Value attributable to such Oil and Gas Properties under current
Borrowing Base determination, and (ii) in the event of a sale of APL Units, by
an amount equal to the percentage of original pledged APL Units sold multiplied
by the current APL Collateral Value.
Section 9.19 Environmental Matters. None of the Obligors nor any
Subsidiary will cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to
any remedial obligations under any Environmental Laws, assuming disclosure to
the applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations would have a Material Adverse Effect.
Section 9.20 Transactions with Affiliates. The Borrower shall not, and
shall not permit its Subsidiaries to enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of Property or the
rendering of any service, with any Affiliate unless such transactions are
otherwise permitted under this Agreement, are in the ordinary course of its
business and are upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm's length transaction with a Person not an
Affiliate.
55
Section 9.21 Subsidiaries. The Borrower shall not, and shall not permit
any of its Subsidiary Guarantors to create any additional Subsidiaries that do
not become Guarantors hereunder. Borrower shall not and shall not permit any of
its Subsidiary Guarantors to sell or to issue any stock or ownership interest of
a Subsidiary, except to Borrower or any of its Wholly Owned Subsidiaries and
except in compliance with Section 9.04, Borrower shall not, and shall not permit
any of its Subsidiary Guarantors to, create any new Partnerships other than
drilling fund limited partnerships on terms substantially similar to the
Partnerships set forth on Schedule 7.14.
Section 9.22 Negative Pledge Agreements. The Borrower shall not and
shall not permit any of its Subsidiary Guarantors to create, incur, assume or
permit to exist any contract, agreement or understanding (other than this
Agreement and the Security Instruments) which in any way prohibits or restricts
the granting, conveying, creation or imposition of any Lien on any of its
Property or restricts any Subsidiary Guarantor from paying dividends to the
Borrower, or which requires the consent of or notice to other Persons in
connection therewith.
Section 9.23 Gas Imbalances, Take-or-Pay or Other Prepayments. The
Borrower will not and will not permit any of its Subsidiary Guarantors to allow
gas imbalances, take-or-pay or other prepayments with respect to the Oil and Gas
Properties of the Subsidiary Guarantors which would require the Subsidiary
Guarantors to deliver in the aggregate five percent (5%) or more of their
Hydrocarbons produced on a monthly basis from such Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor.
Section 9.24 Accounting Changes. Borrower shall not and shall not
permit any Subsidiary to make any significant change in accounting treatment or
reporting practices except as required by GAAP, or change the fiscal year of the
Borrower or any Subsidiary.
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default. One or more of the following events
shall constitute an "Event of Default":
(a) the Borrower shall default in the payment or prepayment when due of
any principal of or interest on any Loan, or any reimbursement obligation for a
disbursement made under any Letter of Credit, or any fees or other amount
payable by it hereunder or under any Security Instrument; or
(b) any Obligor or any Subsidiary shall default in the payment when due
of any principal of or interest on any of its other Debt aggregating $500,000 or
more, or any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Debt shall occur if the effect of such event
is to cause, or (with the giving of any notice or the lapse of time or both) to
permit the holder or holders of such Debt (or a trustee or agent on behalf of
such holder or holders) to cause, such Debt to become due prior to its stated
maturity; or
(c) any representation, warranty or certification made or deemed made
herein or in any Loan Document by any Obligor or any Subsidiary, or any
certificate furnished to any Lender or the Administrative Agent pursuant to the
provisions hereof or any Security Instrument, shall prove to have been false or
misleading as of the time made or furnished in any material respect; or
56
(d) any Obligor shall default in the performance of any of its
obligations under Article IX or any other Article of this Agreement other than
under Article VIII; or any Obligor shall default in the performance of any of
its obligations under Article VIII or under any Loan Document to which it is a
party (other than the payment of amounts due which shall be governed by Section
10.01(a)) and such default shall continue unremedied for a period of thirty (30)
days following the occurrence thereof; or
(e) any Obligor shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(f) any Obligor shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect), (iv) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, liquidation or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Federal Bankruptcy Code, or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the application or
consent of any Obligor, in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of such Obligor of all or any substantial part
of its assets, or (iii) similar relief in respect of such Obligor under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing shall
be entered and continue unstayed and in effect, for a period of 60 days; or (iv)
an order for relief against any Obligor shall be entered in an involuntary case
under the Federal Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in excess of
$250,000 in the aggregate shall be rendered by a court against Borrower or any
of its Subsidiaries and/or, for so long as Parent is a Guarantor, in excess of
$1,000,000 against Parent and the same shall not be discharged (or provision
shall not be made for such discharge), or a stay of execution thereof shall not
be procured, within the period of time prescribed by applicable rules of civil
procedure in which to perfect an appeal thereof and such Obligor shall not,
within said period, or such longer period during which execution of the same
shall have been stayed, or an appeal therefrom shall cause the execution thereof
to be stayed during such appeal; or
(i) the Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms,
or, with respect to the Security Instruments, cease to create a valid and
perfected Lien of the priority required thereby on any of the collateral
purported to be covered thereby, except to the extent permitted by the terms of
this Agreement, or any Obligor shall so state in writing; or
(j) an event having a Material Adverse Effect shall occur; or
(k) a Change of Control occurs; provided, any Change of Control that
occurs as a result of a Permitted Merger shall not constitute a Default; or
(l) any Obligor conceals any of its Property with the intent to hinder,
delay or defraud any Lender, the Issuing Bank, or the Administrative Agent with
respect to their rights in the Mortgaged Property or any other Property of the
Obligors.
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Section 10.02 Remedies.
(a) In the case of an Event of Default other than one referred to in
clauses (e), (f) or (g) of Section 10.01, the Administrative Agent, upon request
of the Majority Lenders, shall, by notice to the Borrower, cancel the
Commitments (in whole or part) and/or declare the principal amount then
outstanding of, and the accrued interest on, the Loans and all other amounts
payable by the Borrower hereunder and under the Notes (including without
limitation the payment of cash collateral to secure the LC Exposure as provided
in Section 2.10(b)) to be forthwith due and payable, whereupon such amounts
shall be immediately due and payable without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
(b) In the case of the occurrence of an Event of Default referred to in
clauses (e), (f) or (g) of Section 10.01, the Commitments shall be automatically
canceled and the principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Borrower hereunder and under
the Notes (including without limitation the payment of cash collateral to secure
the LC Exposure as provided in Section 2.10(b)) shall become automatically
immediately due and payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the Notes, whether by
acceleration or otherwise shall be applied first to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second to accrued interest on the Notes; third to fees; fourth pro rata to
principal outstanding on the Notes and other Indebtedness; fifth to serve as
cash collateral to be held by the Administrative Agent to secure the LC
Exposure; and any excess shall be paid to the Borrower or as otherwise required
by any Governmental Requirement.
Section 10.03 Present Assignment of Interests.
(a) Notwithstanding that, under Article III of the Mortgages, the
Obligors thereto have unconditionally assigned to Administrative Agent for the
ratable benefit of the Lenders all of the proceeds of runs accruing to the
Mortgaged Properties covered thereby:
(i) Until such time as Administrative Agent shall notify such
Obligors to the contrary, Obligors shall be entitled to receive from
the purchasers or disbursers of production all such proceeds of runs,
subject however to the liens created under the Mortgages, which liens
are hereby affirmed and ratified. Automatically upon an Event of
Default under Section 10.01(e), (f) or (g) and upon the occurrence and
during the continuance of any other Event of Default, Administrative
Agent may exercise all rights and remedies granted under the Mortgages,
including the right to obtain possession of all proceeds of runs then
held by Obligors or to receive directly from the purchasers or
disbursers of production all other proceeds of runs.
(ii) In no case shall any failure, whether purposed or
inadvertent, by Administrative Agent to collect directly any such
proceeds of runs constitute in any way a waiver, remission or release
of any of its rights under the Mortgages, nor shall any release of any
other proceeds of runs or of any rights of Administrative Agent to
collect other proceeds of runs thereafter.
(iii) Obligors will upon the instruction of Administrative
Agent join with Administrative Agent in notifying, in writing and
accompanied (if necessary) by certified copies of the Mortgages, the
purchasers or disbursers of production, produced from the Mortgaged
Properties, of the existence of the Mortgages, and instructing that all
proceeds of runs be paid directly to Administrative Agent for the
ratable benefit of the Lenders.
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(b) Notwithstanding that, under Article VIII of the Pledge, Assignment
and Security Agreement executed by each of the Obligors, as "Debtor" thereto
(herein collectively the "Pledges"), such parties have unconditionally assigned
to Administrative Agent for the ratable benefit of the Lenders all of the
dividends, interest, or other "Distributions" (as defined therein) paid or
payable in respect of the Collateral covered thereby:
(i) Until such time as Administrative Agent shall notify such
Obligors to the contrary, Obligors shall be entitled to receive and
retain all such Distributions, subject however to the security
interests created under the Pledges, which liens are hereby affirmed
and ratified. Automatically upon an Event of Default under Section
10.01(f) or (g) and upon the occurrence and during the continuance of
any other Event of Default, Administrative Agent may exercise all
rights and remedies granted under the Pledges, including the right to
obtain possession of all Distributions then held by Obligors or to
receive directly from the Subsidiaries and Partnerships making such
payments all future Distributions attributable to the Collateral.
(ii) In no case shall any failure, whether purposed or
inadvertent, by Administrative Agent to collect directly any such
Distributions constitute in any way a waiver, remission or release of
any of its rights under the Pledges, nor shall any release of any other
Distributions or of any rights of Administrative Agent to collect other
Distributions thereafter.
(iii) Obligors will upon the instruction of Administrative
Agent join with Administrative Agent in notifying in writing to the
entities responsible for making such Distributions of the existence of
the Pledges, and instructing that all Distributions be paid directly to
Administrative Agent for the ratable benefit of the Lenders.
ARTICLE XI
The Administrative Agent
Section 11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the Security Instruments with such powers as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and the Security Instruments, together with such other powers as are
reasonably incidental thereto. The Administrative Agent (which term as used in
this sentence and in Section 11.05 and the first sentence of Section 11.06 shall
include reference to its Affiliates and its and its Affiliates' officers,
directors, employees, attorneys, accountants, experts and agents): (i) shall
have no duties or responsibilities except those expressly set forth in the Loan
Documents, and shall not by reason of the Loan Documents be a trustee or
fiduciary for any Lender; (ii) makes no representation or warranty to any Lender
and shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement, or in any certificate
or other document referred to or provided for in, or received by any of them
under, this Agreement, or for the value, validity, effectiveness, genuineness,
execution, effectiveness, legality, enforceability or sufficiency of this
Agreement, any Note or any other document referred to or provided for herein or
for any failure by any of the Obligors or any other Person (other than the
Administrative Agent) to perform any of its obligations hereunder or thereunder
or for the existence, value, perfection or priority of any collateral security
or the financial or other condition of the Borrower, its Subsidiaries or any
other obligor or guarantor; (iii) except pursuant to Section 11.07 shall not be
required to initiate or conduct any litigation of collection proceedings
hereunder; and (iv) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith including its own ordinary
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negligence, except for its own gross negligence or willful misconduct. The
Administrative Agent may employ agents, accountants, attorneys and experts and
shall not be responsible for the negligence or misconduct of any such agents,
accountants, attorneys or experts selected by it in good faith or any action
taken or omitted to be taken in good faith by it in accordance with the advice
of such agents, accountants, attorneys or experts. The Administrative Agent may
deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Administrative Agent. The
Administrative Agent is authorized to release any collateral that is permitted
to be sold or released pursuant to the terms of the Loan Documents.
Section 11.02 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telecopier, telegram
or cable) believed by it to be genuine and correct and to have been signed or
sent by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Administrative Agent.
Section 11.03 Defaults. The Administrative Agent shall not be deemed to
have knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans or of fees or failure to reimburse for Letter
of Credit drawings) unless the Administrative Agent has received notice from a
Lender or the Borrower specifying such Default and stating that such notice is a
"Notice of Default". In the event that the Administrative Agent receives such a
notice of the occurrence of a Default, the Administrative Agent shall give
prompt notice thereof to the Lenders. In the event of a payment Default, the
Administrative Agent shall give each Lender prompt notice of each such payment
Default.
Section 11.04 Rights as a Lender. With respect to its Commitments and
the Loans made by it and its participation in the issuance of Letters of Credit,
Wachovia Bank, National Association (and any successor acting as Administrative
Agent) in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting as the Administrative Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Administrative Agent
in its individual capacity. Wachovia Bank, National Association (and any
successor acting as Administrative Agent) and its Affiliates may (without having
to account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with the
Obligors (and any of their Affiliates) as if it were not acting as the
Administrative Agent, and Wachovia Bank, National Association and its Affiliates
may accept fees and other consideration from the Obligors for services in
connection with this Agreement or otherwise without having to account for the
same to the Lenders.
Section 11.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent and the Issuing Bank ratably in accordance with their
percentage shares for the indemnity matters as described in Section 12.03 to the
extent not indemnified or reimbursed by the Obligors under Section 12.03, but
without limiting the obligations of the Obligors under said Section 12.03 and
for any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent or the Issuing Bank in any way relating to or arising out
of: (1) this Agreement, the Security Instruments or any other documents
contemplated by or referred to herein or the transactions contemplated hereby,
but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder or (ii) the enforcement of any of the terms of this Agreement,
any Security Instrument or of any such other documents; WHETHER OR NOT ANY OF
THE FOREGOING SPECIFIED IN THIS SECTION 11.05 ARISES FROM THE SOLE OR CONCURRENT
NEGLIGENCE OF THE ADMINISTRATIVE AGENT OR THE ISSUING BANK, provided that no
Lender shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the Administrative Agent.
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Section 11.06 Non-Reliance on Administrative Agent and other Lenders.
Each Lender acknowledges and agrees that it has, independently and without
reliance on the Administrative Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis of the Obligors and its decision to enter into this Agreement, and that
it will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement. The Administrative Agent shall
not be required to keep itself informed as to the performance or observance by
the Obligors of this Agreement, the Notes, the Security Instruments or any other
document referred to or provided for herein or to inspect the properties or
books of the Obligors. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Obligors (or any
of their Affiliates) which may come into the possession of the Administrative
Agent or any of its Affiliates. In this regard, each Lender acknowledges that
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP is acting in this transaction as special counsel to the
Administrative Agent only, except to the extent otherwise expressly stated in
any legal opinion or any Loan Document. Each Lender will consult with its own
legal counsel to the extent that it deems necessary in connection with the Loan
Documents and the matters contemplated therein.
Section 11.07 Action by Administrative Agent. Except for action or
other matters expressly required of the Administrative Agent hereunder, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall (i) receive written instructions from
the Majority Lenders (or all of the Lenders as expressly required by Section
12.04) specifying the action to be taken, and (ii) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The
instructions of the Majority Lenders (or all of the Lenders as expressly
required by Section 12.04) and any action taken or failure to act pursuant
thereto by the Administrative Agent shall be binding on all of the Lenders. If a
Default has occurred and is continuing, the Administrative Agent shall take such
action with respect to such Default as shall be directed by the Majority Lenders
(or all of the Lenders as required by Section 12.04) in the written instructions
(with indemnities) described in this Section 11.07, provided that, unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interests of the Lenders. In no event, however, shall the
Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement and the Security Instruments or applicable law.
Section 11.08 Resignation or Removal of Administrative Agent. Subject
to the appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by giving notice
thereof to the Lenders and the Borrower, and the Administrative Agent may be
removed at any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's
giving of notice of resignation or the Majority Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent. Upon the acceptance of
such appointment hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
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obligations hereunder. After any retiring Administrative Agent's resignation or
removal hereunder as Administrative Agent, the provisions of this Article XI and
Section 12.03 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Administrative
Agent.
ARTICLE XII
Miscellaneous
Section 12.01 Waiver. No failure on the part of the Administrative
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under any of the Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any of the Loan Documents
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
Section 12.02 Notices. All notices and other communications provided
for herein and in the other Loan Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other Loan
Documents) shall be given or made by telex, telecopy, courier or U.S. Mail or in
writing and telexed, telecopied, mailed or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof or in the Loan Documents or, as to any party, at such other address as
shall be designated by such party in a notice to each other party. Except as
otherwise provided in this Agreement or in the other Loan Documents, all such
communications shall be deemed to have been duly given when transmitted, if
transmitted before 1:00 p.m. local time on a Business Day (otherwise on the next
succeeding Business Day) by telex or telecopier and evidence or confirmation of
receipt is obtained, or personally delivered or, in the case of a mailed notice,
three (3) Business Days after the date deposited in the mails, postage prepaid,
in each case given or addressed as aforesaid.
Section 12.03 Payment of Expenses, Indemnities, etc.
(a) The Obligors agree:
(i) whether or not the transactions hereby contemplated are
consummated, to pay all reasonable expenses of the Administrative Agent
in the administration (both before and after the execution hereof and
including advice of counsel as to the rights and duties of the
Administrative Agent and the Lenders with respect thereto) of, and in
connection with the negotiation, syndication, investigation,
preparation, execution and delivery of, recording or filing of,
preservation of rights under, enforcement of, and refinancing,
renegotiation or restructuring of, the Loan Documents and any
amendment, waiver or consent relating thereto (including, without
limitation, travel, photocopy, mailing, courier, telephone and other
similar expenses of the Administrative Agent, the cost of environmental
audits, surveys and appraisals at reasonable intervals, the reasonable
fees and disbursements of counsel and other outside consultants for the
Administrative Agent and, in the case of enforcement, the reasonable
fees and disbursements of counsel for the Administrative Agent and any
of the Lenders); and promptly reimburse the Administrative Agent for
all amounts expended, advanced or incurred by the Administrative Agent
or the Lenders to satisfy any obligation of the Obligors under this
Agreement or any Security Instrument, including without limitation, all
costs and expenses of foreclosure;
(ii) To indemnify the Administrative Agent and each Lender and
each of their affiliates and each of their officers, directors,
employees, representatives, agents, attorneys, accountants and experts
("Indemnified Parties") from, hold each of them harmless against and
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promptly upon demand pay or reimburse each of them for, the indemnity
matters which may be incurred by or asserted against or involve any of
them (whether or not any of them is designated a party thereto) as a
result of, arising out of or in any way related to (i) any actual or
proposed use by the Borrower or any Guarantor of the proceeds of any of
the loans or letters of credit, (ii) the execution, delivery and
performance of the loan documents, (iii) the operations of the business
of the Obligors and their Subsidiaries, (iv) the failure of the
Obligors or any Subsidiary to comply with the terms of any loan
document, or with any governmental requirement, (v) any inaccuracy of
any representation or any breach of any warranty of the Obligors set
forth in any of the loan documents, (vi) the issuance, execution and
delivery or transfer of or payment or failure to pay under any letter
of credit, or (vii) the payment of a drawing under any letter of credit
notwithstanding the non-compliance, non-delivery or other improper
presentation of the manually executed draft(s) and certification(s),
(viii) any assertion that the Lenders were not entitled to receive the
proceeds received pursuant to the Security Instruments, or (ix) any
other aspect of the loan documents, including, without limitation, the
reasonable fees and disbursements of counsel and all other expenses
incurred in connection with investigating, defending or preparing to
defend any such action, suit, proceeding (including any investigations,
litigation or inquiries) or claim and INCLUDING ALL INDEMNITY MATTERS
ARISING BY REASON OF THE ORDINARY NEGLIGENCE OF ANY INDEMNIFIED PARTY,
but excluding all indemnity matters arising solely by reason of claims
between the Lenders or any Lender and the Administrative Agent or a
Lender's shareholders against the Administrative Agent or Lender or by
reason of the gross negligence or willful misconduct on the part of the
Indemnified Party; and
(iii) TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE
INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST
RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND
LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME SUBJECT (I) UNDER ANY
ENVIRONMENTAL LAW APPLICABLE TO THE OBLIGORS OR ANY SUBSIDIARY OR ANY
OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE TREATMENT OR
DISPOSAL OF HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (II) AS A
RESULT OF THE BREACH OR NON-COMPLIANCE BY ANY OBLIGOR OR ANY SUBSIDIARY
WITH ANY ENVIRONMENTAL LAW APPLICABLE TO ANY OBLIGOR OR ANY SUBSIDIARY,
(III) DUE TO PAST OWNERSHIP BY ANY OBLIGOR OR ANY SUBSIDIARY OF ANY OF
THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH,
THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN
PRESENT LIABILITY, (IV) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT
OR DISPOSAL OF HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES
OWNED OR OPERATED BY ANY OBLIGOR OR ANY SUBSIDIARY, OR (V) ANY OTHER
ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN
DOCUMENTS.
(b) No Indemnified Party may settle any claim to be indemnified without
the consent of the indemnitor, such consent not to be unreasonably withheld;
provided, that the indemnitor may not reasonably withhold consent to any
settlement that an Indemnified Party proposes, if the indemnitor does not have
the financial ability to pay all its obligations outstanding and asserted
against the indemnitor at that time, including the maximum potential claims
against the Indemnified Party to be indemnified pursuant to this Section 12.03.
(c) In the case of any indemnification hereunder, the Administrative
Agent or Lender, as appropriate shall give notice to the Obligors of any such
claim or demand being made against the Indemnified Party and the Obligors shall
have the non-exclusive right to join in the defense against any such claim or
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demand provided that if any Obligor provides a defense, the Indemnified Party
shall bear its own cost of defense unless there is a conflict between the
Obligors and such Indemnified Party.
(d) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER
WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN
OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON
ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. To the extent that an Indemnified
Party is found to have committed an act of gross negligence or willful
misconduct, this contractual obligation of indemnification shall continue but
shall only extend to the portion of the claim that is deemed to have occurred by
reason of events other than the gross negligence or willful misconduct of the
Indemnified Party.
(e) The Obligors' obligations under this Section 12.03 shall survive
any termination of this Agreement and the payment of the Notes and shall
continue thereafter in full force and effect.
(f) The Obligors shall pay any amounts due under this Section 12.03
within thirty (30) days of the receipt by the Obligors of notice of the amount
due.
Section 12.04 Amendments, Etc. Release of Parent and Atlas Holdings
Guarantees. Any provision of this Agreement or any other Loan Document may be
amended, modified or waived with the Obligors' and the Majority Lenders' prior
written consent; provided that (i) no amendment, modification or waiver which
extends the final maturity of the Loans, increases the Aggregate Maximum
Revolving Credit Amounts, increases the Borrowing Base, forgives the principal
amount of any Indebtedness outstanding under this Agreement, releases any
Guarantor (other than Parent, as provided below), of the Indebtedness, or
releases Security Instruments (other than Security Instruments granted by
Parent, as provided below) which in the aggregate cover a material portion of
the Mortgaged Property (as reflected on the most recent Reserve Report delivered
under Section 8.07) during each Borrowing Base Period, reduces the interest rate
applicable to the Loans or the fees payable to the Lenders generally, affects
Section 2.03(a), this Section 12.04 or Section 12.06(a) or modifies the
definition of "Majority Lenders" shall be effective without consent of all
Lenders; (ii) no amendment, modification or waiver which increases the Maximum
Revolving Credit Amount of any Lender shall be effective without the consent of
such Lender; and (iii) no amendment, modification or waiver which modifies the
rights, duties or obligations of the Administrative Agent shall be effective
without the consent of the Administrative Agent. Notwithstanding the foregoing,
Administrative Agent is authorized to execute such releases in favor of (i)
Parent of the Parent's Guaranty Agreement or any Security Instruments granted by
Parent at such time as Parent ceases beneficially to own, directly or
indirectly, 80% or more of the outstanding shares of voting capital stock of the
Borrower and (ii) Atlas Holdings of the Atlas Holdings Guaranty Agreement or any
Security Instruments granted by Atlas Holdings at such time as Atlas Holdings is
dissolved as permitted under Section 9.09 hereof.
Section 12.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 12.06 Assignments and Participations
(a) The Borrower may not assign its rights or obligations hereunder or
under the Notes or any Letters of Credit without the prior consent of all of the
Lenders and the Administrative Agent.
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(b) Any Lender may, upon the written consent of the Administrative
Agent and, if no Default exists, with consent of the Borrower (which consent
will not be unreasonably withheld or delayed), assign to one or more assignees
all or a portion of its rights and obligations under this Agreement pursuant to
an Assignment Agreement substantially in the form of Exhibit E (an
"Assignment"); provided, however, that (i) any such assignment shall be in the
amount of the lesser of (A) at least $5,000,000 or (B) the total amount of a
Lender's rights and obligations under this Agreement and (ii) the assignee or
assignor shall pay to the Administrative Agent a processing and recordation fee
of $3,500 for each assignment. Any such assignment will become effective upon
the execution and delivery to the Administrative Agent of the Assignment and the
consent of the Administrative Agent. Promptly after receipt of an executed
Assignment, the Administrative Agent shall send to the Borrower a copy of such
executed Assignment. Upon receipt of such executed Assignment, the Borrower,
will, at its own expense, execute and deliver new Notes to the assignor and/or
assignee, as appropriate, in accordance with their respective interests as they
appear. Upon the effectiveness of any assignment pursuant to this Section
12.06(b), the assignee will become a "Lender," if not already a "Lender," for
all purposes of this Agreement and the Security Instruments. The assignor shall
be relieved of its obligations hereunder to the extent of such assignment (and
if the assigning Lender no longer holds any rights or obligations under this
Agreement, such assigning Lender shall cease to be a "Lender" hereunder except
that its rights under Sections 4.06, 5.01, 5.05 and 12.03 shall not be
affected). The Administrative Agent will prepare on the last Business Day of
each month during which an assignment has become effective pursuant to this
Section 12.06(b), a new Annex I giving effect to all such assignments effected
during such month, and will promptly provide the same to the Borrower and each
of the Lenders.
(c) Each Lender may transfer, grant or assign participations in all or
any part of such Lender's interests hereunder pursuant to this Section 12.06(c)
to any Person, provided that: (i) such Lender shall remain a "Lender" for all
purposes of this Agreement and the transferee of such participation shall not
constitute a "Lender" hereunder; and (ii) no participant under any such
participation shall have rights to approve any amendment to or waiver of any of
the Loan Documents except to the extent such amendment or waiver would (w)
modify the definition of "Majority Lenders," (x) forgive any principal owing on
any Indebtedness or extend the final maturity of the Loans, (y) reduce the
interest rate (other than as a result of waiving the applicability of any
post-default increases in interest rates) or fees applicable to any of the
Commitments or Loans or Letters of Credit in which such participant is
participating, or postpone the payment of any thereof, or (z) release any
guarantor of the Indebtedness or release Security Instruments which in the
aggregate cover more than five percent (5%) by value of the Mortgaged Property
(as reflected on the most recent Reserve Report delivered under Section 8.07)
during each Borrowing Base Period supporting any of the Commitments or Loans or
Letters of Credit in which such participant is participating. In the case of any
such participation, the participant shall not have any rights under this
Agreement or any of the Security Instruments (the participant's rights against
the granting Lender in respect of such participation to be those set forth in
the agreement with such Lender creating such participation), and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had not
sold such participation, provided that such participant shall be entitled to
receive additional amounts under Article V on the same basis as if it were a
Lender and be indemnified under Section 12.03 as if it were a Lender. In
addition, each agreement creating any participation must include an agreement by
the participant to be bound by the provisions of Section 12.15.
(d) The Lenders may furnish any information concerning the Borrower in
the possession of the Lenders from time to time to assignees and participants
(including prospective assignees and participants); provided that, such Persons
agree to be bound by the provisions of Section 12.15.
(e) Notwithstanding anything in this Section 12.06 to the contrary, any
Lender may assign and pledge its Note to any Federal Reserve Bank. No such
assignment and/or pledge shall release the assigning and/or pledging Lender from
its obligations hereunder.
65
(f) Notwithstanding any other provisions of this Section 12.06, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower to file a registration statement with the
SEC or to qualify the Loans under the "Blue Sky" laws of any state.
Section 12.07 Invalidity. In the event that any one or more of the
provisions contained in any of the Loan Documents shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of the Notes, this
Agreement or any other Loan Document.
Section 12.08 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.09 References, Use of Word "Including". The words "herein,"
"hereof," "hereunder" and other words of similar import when used in this
Agreement refer to this Agreement as a whole, and not to any particular article,
section or subsection. Any reference herein to a Section or Article shall be
deemed to refer to the applicable Section or Article of this Agreement unless
otherwise stated herein. Any reference herein to an exhibit, schedule, or other
attachment shall be deemed to refer to the applicable exhibit, schedule, or
other attachment attached hereto unless otherwise stated herein. The words
"including," "includes" and words of similar import mean "including, without
limitation."
Section 12.10 Survival. The obligations of the parties under Section
4.06, Article V, and Sections 11.05 and 12.03 shall survive the repayment of the
Loans and the termination of the Commitments. To the extent that any payments on
the Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Indebtedness so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Administrative Agent's and the Lenders' Liens, security
interests, rights, powers and remedies under this Agreement and each Security
Instrument shall continue in full force and effect. In such event, each Security
Instrument shall be automatically reinstated and the Obligors shall take such
action as may be reasonably requested by the Administrative Agent and the
Lenders to effect such reinstatement.
Section 12.11 Captions. Captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
Section 12.12 NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER
AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 12.13 GOVERNING LAW, SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED
66
STATES FEDERAL LAW PERMITS ANY LENDER TO CHARGE INTEREST AT THE RATE ALLOWED BY
THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED. CH. 346 OF THE TEXAS FINANCE
CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING
TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS
SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE BORROWER AND EACH GUARANTOR HEREBY ACCEPTS FOR ITSELF AND
(TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER AND EACH
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO
JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE THE ADMINISTRATIVE AGENT OR
ANY LENDER FROM OBTAINING JURISDICTION OVER THE BORROWER OR ANY GUARANTOR IN ANY
COURT OTHERWISE HAVING JURISDICTION.
(c) THE BORROWER AND EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEM LOCATED AT ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, AS THE DESIGNEE, APPOINTEE AND ADMINISTRATIVE AGENT OF THE BORROWER AND
EACH GUARANTOR TO RECEIVE, FOR AND ON BEHALF OF THE BORROWER AND EACH GUARANTOR,
SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS. IT IS UNDERSTOOD THAT A COPY OF
SUCH PROCESS SERVED ON SUCH ADMINISTRATIVE AGENT WILL BE PROMPTLY FORWARDED BY
OVERNIGHT COURIER TO THE BORROWER AND THE RELEVANT GUARANTOR AT THEIR ADDRESSES
SET FORTH UNDER ITS SIGNATURE BELOW, BUT THE FAILURE OF THE BORROWER OR SUCH
GUARANTOR TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS. THE BORROWER AND EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER AND ANY GUARANTOR AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.
(d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT
OR ANY LENDER OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE BORROWER OR ANY GUARANTOR IN ANY OTHER JURISDICTION.
(e) THE BORROWER, EACH GUARANTOR AND EACH LENDER HEREBY (I) IRREVOCABLY
AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY SECURITY
INSTRUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY
67
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF ADMINISTRATIVE AGENT OR COUNSEL
FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE SECURITY INSTRUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 12.13.
Section 12.14 Interest. It is the intention of the parties hereto to
conform strictly to Applicable Usury Laws regarding the use, forbearance or
detention of the indebtedness evidenced by this Agreement, the Notes and the
other Loan Documents, whether such laws are now or hereafter in effect,
including the laws of the United States of America or any other jurisdiction
whose laws are applicable, and including any subsequent revisions to or judicial
interpretations of those laws, in each case to the extent they are applicable to
this Agreement, the Notes and the other Loan Documents (the "Applicable Usury
Laws"). Accordingly, if any acceleration of the maturity of the Notes or any
payment by Borrower or any other Person produces a rate in excess of the Highest
Lawful Rate or otherwise results in Borrower or such other Person being deemed
to have paid any interest in excess of the Maximum Amount, as hereinafter
defined, or if any Lender shall for any reason receive any unearned interest in
violation of any Applicable Usury Laws, or if any transaction contemplated
hereby would otherwise be usurious under any Applicable Usury Laws, then, in
that event, regardless of any provision contained in this Agreement or any other
Loan Document or other agreement or instrument executed or delivered in
connection herewith, the provisions of this Section 12.14 shall govern and
control, and neither Borrower nor any other Person shall be obligated to pay, or
apply in any manner to, any amount that would be excessive interest. No Lender
shall ever be deemed to have contracted for or be entitled to receive, collect,
charge, reserve or apply as interest on any Loan (whether termed interest
therein or deemed to be interest by judicial determination or operation of law),
any amount in excess of the Highest Lawful Rate, and, in the event that such
Lender ever receives, collects, or applies as interest any such excess, such
amount which would be excessive interest shall be applied as a partial
prepayment of principal and treated hereunder as such, and, if the principal
amount of the applicable Loans are paid in full, any remaining excess shall
forthwith be paid to Borrower. In determining whether or not the interest
contracted for, received, collected, charged reserved, paid or payable,
including under any specific contingency, exceeds the Highest Lawful Rate,
Borrower and each Lender shall, to the maximum extent permitted under applicable
law, (a) characterize any non-principal payment (other than payments which are
expressly designated as interest payments hereunder) as an expense or fee rather
than as interest, (b) exclude voluntary pre-payments and the effect thereof, and
(c) amortize and spread the total amount of interest throughout the entire
stated term of the Loans so that the interest rate is uniform throughout such
term; provided that if the Loans are paid in full prior to the end of the full
contemplated term hereof, and if the interest received for the actual period of
existence thereof exceeds the Highest Lawful Rate, if any, then the Lenders
shall refund to Borrower the amount of such excess, or credit the amount of such
excess against the aggregate unpaid principal balance of all Loans made by
Lender. As used herein, the term "Maximum Amount" means the maximum nonusurious
amount of interest which may be lawfully contracted for, reserved, charged,
collected or received by Lender in connection with the indebtedness evidenced by
this Agreement, the Notes and other Loan Documents under all Applicable Usury
Laws. Texas Finance Code, Chapter 346, which regulates certain revolving loan
accounts and revolving tri-party accounts, shall not apply to any revolving loan
accounts created under, or apply in any manner to, the Note, this Agreement or
the other Loan Documents.
Section 12.15 Confidentiality. Subject to provisions under Section
12.16 below, in the event that the Borrower provides to the Administrative Agent
or the Lenders written confidential information belonging to the Borrower, if
the Borrower shall denominate such information in writing as "confidential," the
68
Administrative Agent and the Lenders shall thereafter maintain such information
in confidence in accordance with the standards of care and diligence that each
utilizes in maintaining its own confidential information. This obligation of
confidence shall not apply to such portions of the information which (i) are in
the public domain, (ii) hereafter become part of the public domain without the
Administrative Agent or the Lenders breaching their obligation of confidence to
the Borrower, (iii) are previously known by the Administrative Agent or the
Lenders from some source other than the Borrower, (iv) are hereafter developed
by the Administrative Agent or the Lenders without using the Borrower's
information, (v) are hereafter obtained by or available to the Administrative
Agent or the Lenders from a third party who owes no obligation of confidence to
the Borrower with respect to such information or through any other means other
than through disclosure by the Borrower, (vi) are disclosed with the Borrower's
consent, (vii) must be disclosed either pursuant to any Governmental Requirement
or to Persons regulating the activities of the Administrative Agent or the
Lenders provided, Administrative Agent and Lenders shall endeavor to provide
notice to the Borrower as soon as practicable in the event Borrower desires to
enjoin the disclosure of such information, however, failure of Administrative
Agent or Lenders to provide such prior notice to Borrower shall not give rise to
any claim or cause of action by Borrower or any Obligor against Administrative
Agent or such Lenders, or (viii) as may be required by law or regulation or
order of any Governmental Authority in any judicial, arbitration or governmental
proceeding. Further, the Administrative Agent or a Lender may disclose any such
information to any other Lender, any independent petroleum engineers or
consultants, any independent certified public accountants, any legal counsel
employed by such Person in connection with this Agreement or any Security
Instrument, including without limitation, the enforcement or exercise of all
rights and remedies thereunder, or any assignee or participant (including
prospective assignees and participants) in the Loans; provided, however, that
the Administrative Agent or the Lenders shall receive a confidentiality
agreement from the Person to whom such information is disclosed such that said
Person shall have the same obligation to maintain the confidentiality of such
information as is imposed upon the Administrative Agent or the Lenders
hereunder. Notwithstanding anything to the contrary provided herein, this
obligation of confidence shall cease three (3) years from the date the
information was furnished, unless the Borrower requests in writing at least
thirty (30) days prior to the expiration of such three year period, to maintain
the confidentiality of such information for an additional three year period. The
Borrower waives any and all other rights it may have to confidentiality as
against the Administrative Agent and the Lenders arising by contract, agreement,
statute or law except as expressly stated in this Section 12.15.
Section 12.16 USA Patriot Act Notice. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the Act.
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
69
BORROWER:
Address for Notice: ATLAS AMERICA, INC.,
a Delaware corporation
Atlas America, Inc.
c/o Resource America, Inc. By:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, 10th Floor -------------------------------------
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Executive Vice President
Fax No.: ▇▇▇.▇▇▇.▇▇▇▇
E-mail:▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
GUARANTORS:
AIC, INC., a Delaware corporation
By:
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
ATLAS AMERICA, INC., a Pennsylvania
corporation
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
ATLAS ENERGY CORPORATION, an
Ohio corporation
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
ATLAS ENERGY GROUP, INC., an Ohio
corporation
By:
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
SIGNATURE PAGE 1 TO CREDIT AGREEMENT
ATLAS ENERGY HOLDINGS, INC., a
Delaware corporation
By:
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
ATLAS NOBLE CORP., a
Delaware corporation
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
ATLAS PIPELINE PARTNERS GP, LLC,
a Delaware limited liability company
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ATLAS RESOURCES, INC., a
Pennsylvania corporation
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
REI-NY, INC., a
Delaware corporation
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
SIGNATURE PAGE 2 TO CREDIT AGREEMENT
RESOURCE AMERICA, INC., a
Delaware corporation
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
RESOURCE ENERGY, INC., a
Delaware corporation
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
VIKING RESOURCES CORPORATION, a
Pennsylvania corporation
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
SIGNATURE PAGE 3 TO CREDIT AGREEMENT
LENDER, ADMINISTRATIVE AGENT AND
ISSUING BANK:
WACHOVIA BANK, NATIONAL ASSOCIATION
Individually, Administrative Agent and
Issuing Bank
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Director
Lending Office for Base Rate Loans and
LIBOR Loans and Address for Notices:
Wachovia Bank, National Association
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SIGNATURE PAGE 4 TO CREDIT AGREEMENT
U.S. BANK, NATIONAL ASSOCIATION
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Contact
-------
Primary Credit and Financials: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
SIGNATURE PAGE 5 TO CREDIT AGREEMENT
BANK OF OKLAHOMA, N.A.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Contact
-------
Primary Credit: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇-▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇.▇▇▇
SIGNATURE PAGE 6 TO CREDIT AGREEMENT
COMPASS BANK
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Contact
-------
Primary Credit: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
SIGNATURE PAGE 7 TO CREDIT AGREEMENT
TEXAS CAPITAL BANK, N.A.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Contact
-------
Primary Credit: ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
SIGNATURE PAGE 8 TO CREDIT AGREEMENT
ANNEX I
LIST OF PERCENTAGE SHARES, MAXIMUM REVOLVING CREDIT AMOUNTS
-----------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Name of Lender Percentage Maximum Revolving
Share Credit Amount
-----------------------------------------------------------------------------------------------------
Wachovia Bank, National Association 23.3333% $17,500,000
Bank of Oklahoma, N.A. 23.33333% $17,500,000
U.S. Bank, National Association 23.33333% $17,500,000
Compass Bank 20.00000% $15,000,000
Texas Capital Bank, N.A. 10.00000% $7,500,000
-----------------------------------------------------------------------------------------------------
TOTAL 100% $75,000,000.00
-----------------------------------------------------------------------------------------------------
ANNEX I TO CREDIT AGREEMENT
SCHEDULE 2.01(b)
LETTERS OF CREDIT
L/C Number Amount Expiration Date Beneficiary
SM200159 $25,000 07/31/04 Travelers Indemnity Company
SM200162 $250,000 01/01/05 American Manufacturers Mutual Insurance Co.
SM204112 $1,000,000 07/14/04 First Energy Solutions Corp.
SM205637 $150,000 10/31/04 NY State Department of Environmental Conservation
SM205641 $150,000 10/31/04 NY State Department of Environmental Conservation
SM205642 $120,000 10/31/04 Travelers Casualty & Surety Co.
--------
$1,695,000
SCHEDULE 2.01(B) TO CREDIT AGREEMENT - Page 1
SCHEDULE 7.03
LITIGATION
1. Resource America, Inc., et al. v. Certain Underwriting Members of Lloyd's,
Court of Common Pleas, Philadelphia County, Pennsylvania, No. 002709.
2. Resource America, Inc. v. Admiral Insurance Company, Multnomah County,
Oregon Circuit Court, No. 0306-06066.
3. Cherry, et al. v. Resource America, Inc., et al., New York Supreme Court,
Chautauqua County, No. K1-2000-171.
4. ▇▇▇▇▇ v. Bank Philadelphia, et al., U.S. District Court, Eastern District
of Pennsylvania, No. 02-CV 975.
SCHEDULE 7.03 TO CREDIT AGREEMENT - Page 1
SCHEDULE 7.10
OWNERSHIP REPORTS
(Attached as separate document)
SCHEDULE 7.10 TO CREDIT AGREEMENT - Separate Document
SCHEDULE 7.14
PARTNERSHIP INTERESTS
------------------------------------------------------------------------------------------------------------------------------------
Program# Program Name Managing General Partner ▇▇▇▇▇ ▇▇% LP%
Well
Count
------------------------------------------------------------------------------------------------------------------------------------
19 VIKING RESOURCES 1999 LP Viking Resources Corporation 23 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
21 VIKING 89 CANTON Viking Resources Corporation 5 63.50% 36.50%
------------------------------------------------------------------------------------------------------------------------------------
22 VIKING 1990-2 ACCREDITED ONLY Viking Resources Corporation 3 54.85% 45.15%
------------------------------------------------------------------------------------------------------------------------------------
23 VIKING RESOURCES 1991-1 Viking Resources Corporation 6 60.79% 39.21%
------------------------------------------------------------------------------------------------------------------------------------
24 1991 VIKING RESOURCES LTD.PSHP Viking Resources Corporation 11 35.32% 64.68%
------------------------------------------------------------------------------------------------------------------------------------
25 1991 ▇▇▇▇▇ JOINT VENTURE Viking Resources Corporation 2 30.00% 70.00%
------------------------------------------------------------------------------------------------------------------------------------
26 1992 VIKING RESOURCES LTD.PSHP Viking Resources Corporation 5 35.26% 64.74%
------------------------------------------------------------------------------------------------------------------------------------
27 1992-2 VIKING RESOURCES Viking Resources Corporation 2 30.68% 69.32%
------------------------------------------------------------------------------------------------------------------------------------
28 1993 VIKING RESOURCES LTD.PSHP Viking Resources Corporation 9 30.93% 69.07%
------------------------------------------------------------------------------------------------------------------------------------
29 1994 VIKING RESOURCES LTD.PSHP Viking Resources Corporation 31 30.00% 70.00%
------------------------------------------------------------------------------------------------------------------------------------
30 1995 VIKING RESOURCES LTD.PSHP Viking Resources Corporation 46 30.00% 70.00%
------------------------------------------------------------------------------------------------------------------------------------
31 1996 VIKING RESOURCES LTD.PSHP Viking Resources Corporation 50 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
32 1997 VIKING RESOURCES LTD.PSHP Viking Resources Corporation 45 30.00% 70.00%
------------------------------------------------------------------------------------------------------------------------------------
33 1998 VIKING RESOURCES LTD.PSHP Viking Resources Corporation 32 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
100039 CHAUTAUQUA JOINT VENTURE Resource Energy, Inc. 12 63.68% 0.00%
------------------------------------------------------------------------------------------------------------------------------------
100040 CMSV/RAI 1989 DRILLING PROGRAM Resource Energy, Inc. 15 19.98% 80.02%
------------------------------------------------------------------------------------------------------------------------------------
100042 RESOURCE AMERICA 1990 PIPELINE Resource Energy, Inc. 1 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100043 CMSV/RAI 1990 NATURAL GAS DEVL Resource Energy, Inc. 10 19.98% 80.02%
------------------------------------------------------------------------------------------------------------------------------------
100044 RA 1989 PIPELINE INCOME Resource Energy, Inc. 4 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100058 ▇▇▇▇▇▇ ASSOCIATES Resource Energy, Inc. 1 28.00% 72.00%
------------------------------------------------------------------------------------------------------------------------------------
100061 ROYAL ASSOCIATES Resource Energy, Inc. 1 7.50% 92.50%
------------------------------------------------------------------------------------------------------------------------------------
100062 WOOSTER ASSOCIATES Resource Energy, Inc. 1 24.10% 75.90%
------------------------------------------------------------------------------------------------------------------------------------
100071 ▇▇▇▇▇▇ YIELD PLUS Resource Energy, Inc. 38 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100072 ▇▇▇▇▇▇ YIELD PLUS II Resource Energy, Inc. 3 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100073 ▇▇▇▇▇▇ YIELD PLUS III Resource Energy, Inc. 26 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100074 ▇▇▇▇▇▇ YIELD PLUS IV Resource Energy, Inc. 32 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100075 ▇▇▇▇▇▇ YIELD PLUS V Resource Energy, Inc. 9 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100076 BRIGHTON INCOME PARTNERSHIP Resource Energy, Inc. 25 50.00% 50.00%
------------------------------------------------------------------------------------------------------------------------------------
100077 BRIGHTON/▇▇▇▇▇▇▇▇▇ DRILLING Resource Energy, Inc. 7 10.00% 90.00%
------------------------------------------------------------------------------------------------------------------------------------
100078 BUCKEYE 1991 INCOME PROGRAM LP Resource Energy, Inc. 19 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100079 ▇▇▇▇▇-▇▇▇▇▇▇ 1993 DRLNG PROG Resource Energy, Inc. 88 0.00% 100.00%
------------------------------------------------------------------------------------------------------------------------------------
100080 ▇▇▇▇▇-▇▇▇▇▇▇ 1994 Resource Energy, Inc. 66 0.00% 100.00%
------------------------------------------------------------------------------------------------------------------------------------
100081 EAST OHIO GAS DRILLING Resource Energy, Inc. 2 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100083 ▇▇▇▇▇▇▇▇▇ INDUSTRIAL Resource Energy, Inc. 17 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100084 TWC YIELD PLUS 1991 Resource Energy, Inc. 31 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100803 SUNRAY ENERGY ASSOCIATES 1984 Resource Energy, Inc. 6 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100804 TRIANGLE ENERGY ASSOC. 1984 Resource Energy, Inc. 6 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100810 LANGASCO OHIO DRLG PTRS 1985 Resource Energy, Inc. 4 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100812 TRIANGLE ENERGY ASSOC. 1985 Resource Energy, Inc. 5 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100813 SCH JOINT VENTURE Resource Energy, Inc. 15 0.00% 100.00%
------------------------------------------------------------------------------------------------------------------------------------
100814 LANGASCO OHIO DRLG PTRS 1986 Resource Energy, Inc. 6 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100815 LANGASCO ▇▇▇ INCOME PTRS 1986 Resource Energy, Inc. 67 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100817 LANGASCO INCOME PTRS 1987-1 Resource Energy, Inc. 35 0.50% 99.50%
------------------------------------------------------------------------------------------------------------------------------------
100818 LANGASCO INCOME PTRS 1987-II Resource Energy, Inc. 33 0.50% 99.50%
------------------------------------------------------------------------------------------------------------------------------------
100852 TD ENERGY ASSOCIATES 1983 Resource Energy, Inc. 3 1.43% 98.57%
------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7.14 TO CREDIT AGREEMENT - Page 1
------------------------------------------------------------------------------------------------------------------------------------
Program# Program Name Managing General Partner ▇▇▇▇▇ ▇▇% LP%
Well
Count
------------------------------------------------------------------------------------------------------------------------------------
100853 TD ENERGY ASSOCIATES 1984 Resource Energy, Inc. 4 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100854 TD ENERGY ASSOCIATES 1985 Resource Energy, Inc. 4 1.00% 99.00%
------------------------------------------------------------------------------------------------------------------------------------
100855 TD/TRIANGLE ENERGY ASSOCIATES Resource Energy, Inc. 1 2.35% 97.65%
------------------------------------------------------------------------------------------------------------------------------------
100856 CLINCHER ENERGY ASSOC 1986 Resource Energy, Inc. 4 2.00% 98.00%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ LP #1 - 1985 Atlas Resources, Inc. 7 16.00% 84.00%
------------------------------------------------------------------------------------------------------------------------------------
100952 ATLAS ENERGY PARTNERS LP-1986 Atlas Resources, Inc. 7 16.00% 84.00%
------------------------------------------------------------------------------------------------------------------------------------
100953 ATLAS ENERGY PARTNERS LP-1987 Atlas Resources, Inc. 9 22.38% 77.62%
------------------------------------------------------------------------------------------------------------------------------------
100954 ATLAS ENERGY PARTNERS LP-1988 Atlas Resources, Inc. 9 24.36% 75.64%
------------------------------------------------------------------------------------------------------------------------------------
100955 ATLAS ENERGY PARTNERS LP-1989 Atlas Resources, Inc. 9 18.00% 82.00%
------------------------------------------------------------------------------------------------------------------------------------
100956 ATLAS ENERGY PARTNERS LP-1990 Atlas Resources, Inc. 12 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ENERGY NINETIES - 10 Atlas Resources, Inc. 11 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ENERGY NINETIES - 11 Atlas Resources, Inc. 14 30.00% 70.00%
------------------------------------------------------------------------------------------------------------------------------------
100960 ATLAS ENERGY PARTNERS LP-1991 Atlas Resources, Inc. 11 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
100961 ATLAS AMERICA SERIES 21-A Atlas Resources, Inc. 68 33.83% 66.17%
------------------------------------------------------------------------------------------------------------------------------------
100962 ATLAS AMERICA SERIES 21-B Atlas Resources, Inc. 89 34.00% 66.00%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ENERGY NINETIES - 12 Atlas Resources, Inc. 13 30.00% 70.00%
------------------------------------------------------------------------------------------------------------------------------------
100964 ATLAS ENERGY NINETIES - JV 92 Atlas Resources, Inc. 51 33.00% 67.00%
------------------------------------------------------------------------------------------------------------------------------------
100965 ATLAS ENERGY PARTNERS LP-1992 Atlas Resources, Inc. 5 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
100966 ATLAS AMERICA SER 22-2002 LTD Atlas Resources, Inc. 51 32.53% 67.47%
------------------------------------------------------------------------------------------------------------------------------------
100967 ATLAS ENERGY NINETIES-PUBLIC 1 Atlas Resources, Inc. 14 24.00% 76.00%
------------------------------------------------------------------------------------------------------------------------------------
100968 ATLAS ENERGY NINETIES-1993 LTD Atlas Resources, Inc. 18 30.00% 70.00%
------------------------------------------------------------------------------------------------------------------------------------
100969 ATLAS ENERGY PARTNERS LP-1993 Atlas Resources, Inc. 8 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
100970 ATLAS ENERGY NINETIES-PUBLIC 2 Atlas Resources, Inc. 14 24.00% 76.00%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ENERGY NINETIES - 14 Atlas Resources, Inc. 52 33.00% 67.00%
------------------------------------------------------------------------------------------------------------------------------------
100972 ATLAS ENERGY PARTNERS LP-1994 Atlas Resources, Inc. 11 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
100973 ATLAS ENERGY NINETIES-PUBLIC 3 Atlas Resources, Inc. 26 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ENERGY NINETIES - 15 Atlas Resources, Inc. 60 30.00% 70.00%
------------------------------------------------------------------------------------------------------------------------------------
100975 ATLAS AMERICA SER 23-2002 LTD Atlas Resources, Inc. 47 32.00% 68.00%
------------------------------------------------------------------------------------------------------------------------------------
100976 ATLAS AMERICA PUBLIC 11-2002 LTD Atlas Resources, Inc. 167 32.25% 67.75%
------------------------------------------------------------------------------------------------------------------------------------
100977 ATLAS ENERGY PARTNERS LP-1995 Atlas Resources, Inc. 6 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
100978 ATLAS ENERGY NINETIES-PUBLIC 4 Atlas Resources, Inc. 32 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ENERGY NINETIES - 16 Atlas Resources, Inc. 50 21.50% 78.50%
------------------------------------------------------------------------------------------------------------------------------------
100980 ATLAS ENERGY PARTNERS LP-1996 Atlas Resources, Inc. 13 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
100981 ATLAS ENERGY NINETIES-PUBLIC 5 Atlas Resources, Inc. 36 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ENERGY NINETIES - 17 Atlas Resources, Inc. 46 26.50% 73.50%
------------------------------------------------------------------------------------------------------------------------------------
100983 ATLAS ENERGY PARTNERS LP-1997 Atlas Resources, Inc. 6 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
100984 ATLAS ENERGY NINETIES-PUBLIC 6 Atlas Resources, Inc. 55 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ENERGY NINETIES - 18 Atlas Resources, Inc. 62 31.50% 68.50%
------------------------------------------------------------------------------------------------------------------------------------
100986 ATLAS ENERGY PARTNERS LP-1998 Atlas Resources, Inc. 19 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
100987 EXPLORATION 1997 Atlas Energy Corporation 4 29.45% 70.55%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ENERGY NINETIES - 19 Atlas Resources, Inc. 82 31.50% 68.50%
------------------------------------------------------------------------------------------------------------------------------------
100989 ATLAS ENERGY - PUBLIC #7 Atlas Resources, Inc. 64 31.00% 69.00%
------------------------------------------------------------------------------------------------------------------------------------
100990 ATLAS AMERICA SERIES #24-2003(A) LTD. Atlas Resources, Inc. 75 32.63% 67.37%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ SERIES #24-2003(B) LTD. Atlas Resources, Inc. 115 33.22% 66.78%
------------------------------------------------------------------------------------------------------------------------------------
100994 ATLAS ENERGY PUBLIC #8 Atlas Resources, Inc. 58 29.00% 71.00%
------------------------------------------------------------------------------------------------------------------------------------
100995 ATLAS ENERGY 1999 Atlas Resources, Inc. 5 25.00% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
100996 ATLAS AMERICA PUBLIC 9 LTD Atlas Resources, Inc. 83 29.00% 71.00%
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ SERIES 20 LTD Atlas Resources, Inc. 105 27.00% 73.00%
------------------------------------------------------------------------------------------------------------------------------------
100998 ATLAS AMERICA PUBLIC 10 LTD Atlas Resources, Inc. 107 32.00% 68.00%
------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7.14 TO CREDIT AGREEMENT - Page 2
SCHEDULE 7.15
SUBSIDIARY INTERESTS
Schedule 7.15 - Capitalization and Subsidiaries
-----------------------------------------------
100% Number of Number of
Subsidiaries Owner Authorized Shares Issued Shares
------------ ----- ----------------- -------------
Atlas Energy Holdings, Inc. Resource America, Inc. 1,000 ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. (DE) Atlas Energy Holdings, Inc. 1,000 ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. (PA) Atlas America, Inc. (DE) 1,000 100
Atlas Noble Corp. Atlas America, Inc. (DE) 1,000 100
Resource Energy, Inc. Atlas America, Inc. (DE) 1,000 1,000
REI-NY, Inc. Resource Energy, Inc. 1,000 1,000
Resource Well Services, Inc. Resource Energy, Inc. 100 100
Viking Resources Corp. Atlas America, Inc. (DE) 1,000 100
RFI Holding Company, Inc. Viking Resources Corp. 10 10
AIC, Inc. Atlas America, Inc. (DE) 1,000 1,000
Anthem Securities, Inc. AIC, Inc. 500 500
Atlas Energy Corporation AIC, Inc. 488 488
Pennsylvania Industrial Energy, Inc. AIC, Inc. 500 500
SCHEDULE 7.15 TO CREDIT AGREEMENT - Page 2
100% Number of Number of
Subsidiaries Owner Authorized Shares Issued Shares
------------ ----- ----------------- -------------
Atlas Information Management, LLC AIC, Inc. 500 500
Atlas Energy Group, Inc. AIC, Inc. 1,000 1,000
AED Investments, Inc. Atlas Energy Group, Inc. 1,000 1,000
Atlas Resources, Inc. AIC, Inc. 500 200
ARD Investments, Inc. Atlas Resources, Inc. 1,000 1,000
Atlas Pipeline Partners GP, LLC AIC, Inc. 33.40%
Viking Resources Corp. 23.56%
Resource Energy, Inc. 20.24%
Atlas Energy Group, Inc. 10.21%
Atlas Resources, Inc. 5.96%
REI-NY, Inc. 6.63%
SCHEDULE 7.15 TO CREDIT AGREEMENT - Page 2
SCHEDULE 7.20 TO CREDIT AGREEMENT - Page 7
SCHEDULE 7.20
INSURANCE
------------------------------------------------------------------------------------------------------------------------------------
Coverage Type Policy Number Insurance Carrier Coverage Description Limit Deductible Exp. Date
------------- ------------- ----------------- -------------------- ----- ---------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Worker's 1063995-3 NY State Insurance Fund Statutory NY 9/18/2004
------------------------------------------------------------------------------------------------------------------------------------
Compensation Employer's Liability Unlimited
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Disability Insurance DBL165283-4 NY State Insurance Fund Disability Benefits NY - Statutory 7/1/2004
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Worker's ▇▇-▇▇▇▇-▇▇▇▇ Federal Insurance Co. Statutory PA, OK, MD 2/6/2005
------------------------------------------------------------------------------------------------------------------------------------
Compensation AZ, KS, NC
------------------------------------------------------------------------------------------------------------------------------------
DE, MA, CA, SC
------------------------------------------------------------------------------------------------------------------------------------
Employer's Liability
------------------------------------------------------------------------------------------------------------------------------------
Bodily Injury by Accident
------------------------------------------------------------------------------------------------------------------------------------
each accident $500,000
------------------------------------------------------------------------------------------------------------------------------------
policy limit $500,000
------------------------------------------------------------------------------------------------------------------------------------
Bodily Injury by Disease $500,000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Commercial 73200463 Federal Insurance Co. Automobile Policy 3/1/2005
------------------------------------------------------------------------------------------------------------------------------------
Automobile
------------------------------------------------------------------------------------------------------------------------------------
Bodily Injury & Property
Damage combined
------------------------------------------------------------------------------------------------------------------------------------
single limit of liability $1,000,000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Hired & Non-Owned Liability $1,000,000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Uninsured Motorists
------------------------------------------------------------------------------------------------------------------------------------
OH $25,000
------------------------------------------------------------------------------------------------------------------------------------
PA, NY, NJ, ME $50,000
------------------------------------------------------------------------------------------------------------------------------------
Applies only to employees
driving a
------------------------------------------------------------------------------------------------------------------------------------
company owned vehicle within
the scope of their employment.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Under Insured Motorists
------------------------------------------------------------------------------------------------------------------------------------
OH $25,000
------------------------------------------------------------------------------------------------------------------------------------
PA, NY, NJ, ME $50,000
------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7.20 TO CREDIT AGREEMENT -- Page 1
------------------------------------------------------------------------------------------------------------------------------------
Coverage Type Policy Number Insurance Carrier Coverage Description Limit Deductible Exp. Date
------------- ------------- ----------------- -------------------- ----- ---------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Commercial 73200463 Federal Insurance Co. NJ First Party Benefits Basic
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Automobile PA Combination First Party Basic
Benefits
------------------------------------------------------------------------------------------------------------------------------------
PA Extraordinary Medical Benefits $500,000 $100,000
------------------------------------------------------------------------------------------------------------------------------------
NY First Party Benefits Basic
------------------------------------------------------------------------------------------------------------------------------------
OH Medical Payments $10,000
------------------------------------------------------------------------------------------------------------------------------------
Physical Damage
------------------------------------------------------------------------------------------------------------------------------------
Valuation: Actual Cash Value
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Perils $1,000
------------------------------------------------------------------------------------------------------------------------------------
Collision $1,000
------------------------------------------------------------------------------------------------------------------------------------
Towing & Labor
------------------------------------------------------------------------------------------------------------------------------------
Hired Automobile Physical Damage $35,000
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Perils $1,000
------------------------------------------------------------------------------------------------------------------------------------
Collision $1,000
------------------------------------------------------------------------------------------------------------------------------------
ATV Deductible $500
------------------------------------------------------------------------------------------------------------------------------------
Drive Other Car Coverage
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Commercial Package 3710-6326 Federal Insurance Co. Commercial Property Section 3/1/2005
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Chubb Broad Form (equivalent to
Special
------------------------------------------------------------------------------------------------------------------------------------
Cause of Loss form)
------------------------------------------------------------------------------------------------------------------------------------
Valuation: Replacement Cost
------------------------------------------------------------------------------------------------------------------------------------
Agreed Amount
------------------------------------------------------------------------------------------------------------------------------------
Coinsurance - None
------------------------------------------------------------------------------------------------------------------------------------
Blanket Building, Contents & $5,706,000 $1,000
Improvements
------------------------------------------------------------------------------------------------------------------------------------
& Betterments
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Blanket Extra Expense $325,000 None
------------------------------------------------------------------------------------------------------------------------------------
Additional Coverage
------------------------------------------------------------------------------------------------------------------------------------
Valuable Papers
------------------------------------------------------------------------------------------------------------------------------------
Limit varies by location $25,000-
$100,000
------------------------------------------------------------------------------------------------------------------------------------
Pollutant Clean-up at a scheduled
location
------------------------------------------------------------------------------------------------------------------------------------
due to a covered cause of loss $25,000 None
------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7.20 TO CREDIT AGREEMENT -- Page 2
------------------------------------------------------------------------------------------------------------------------------------
Coverage Type Policy Number Insurance Carrier Coverage Description Limit Deductible Exp. Date
------------- ------------- ----------------- -------------------- ----- ---------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Commercial 37106326 Federal Insurance Co. Commercial General Liability 3/1/2005
Package Section
------------------------------------------------------------------------------------------------------------------------------------
(continued) Bodily Injury & Property Damage $2,500
combined
------------------------------------------------------------------------------------------------------------------------------------
single limit of liability Bodily Injury
------------------------------------------------------------------------------------------------------------------------------------
& Property
------------------------------------------------------------------------------------------------------------------------------------
Damage
------------------------------------------------------------------------------------------------------------------------------------
Deductible
------------------------------------------------------------------------------------------------------------------------------------
Per Occurrence $1,000,000
------------------------------------------------------------------------------------------------------------------------------------
General Aggregate $2,000,000
------------------------------------------------------------------------------------------------------------------------------------
Products/Completed Operations $2,000,000
Aggregate
------------------------------------------------------------------------------------------------------------------------------------
Personal/Advertising Injury $1,000,000
------------------------------------------------------------------------------------------------------------------------------------
Fire Legal Liability $250,000
------------------------------------------------------------------------------------------------------------------------------------
Medical Expense
------------------------------------------------------------------------------------------------------------------------------------
Stop Gap Employer's Liability - $500,000 $1,000
Ohio
------------------------------------------------------------------------------------------------------------------------------------
Employee Benefits Liability $1,000,000 $1,000
------------------------------------------------------------------------------------------------------------------------------------
Claims Made
------------------------------------------------------------------------------------------------------------------------------------
Underground Resources &
Equipment
------------------------------------------------------------------------------------------------------------------------------------
Aggregate $1,000,000
------------------------------------------------------------------------------------------------------------------------------------
Premises/Operations;
Products/Completed
------------------------------------------------------------------------------------------------------------------------------------
Operations; XCU
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Equipment Floater Section
------------------------------------------------------------------------------------------------------------------------------------
Scheduled Equipment $5,996,884
------------------------------------------------------------------------------------------------------------------------------------
All Risk, including breakdown
for compressor
------------------------------------------------------------------------------------------------------------------------------------
engines.
------------------------------------------------------------------------------------------------------------------------------------
Coinsurance: 80%
------------------------------------------------------------------------------------------------------------------------------------
Actual Cash Value
------------------------------------------------------------------------------------------------------------------------------------
Mobile Equipment of Others $100,000
------------------------------------------------------------------------------------------------------------------------------------
Rental Expense $25,000
------------------------------------------------------------------------------------------------------------------------------------
Employees' Tools & Clothing $10,000
------------------------------------------------------------------------------------------------------------------------------------
Schedule of Deductibles
------------------------------------------------------------------------------------------------------------------------------------
Mechanical Breakdown of $25,000
Compressors
------------------------------------------------------------------------------------------------------------------------------------
All other causes - 5% per
occurrence
------------------------------------------------------------------------------------------------------------------------------------
subject to a $5,000 minimum and
$25,000
------------------------------------------------------------------------------------------------------------------------------------
maximum
------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7.20 TO CREDIT AGREEMENT -- Page 3
------------------------------------------------------------------------------------------------------------------------------------
Coverage Type Policy Number Insurance Carrier Coverage Description Limit Deductible Exp. Date
------------- ------------- ----------------- -------------------- ----- ---------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Commercial 37106326 Federal Insurance Co. Mobile Equipment Section
Package (continued)
------------------------------------------------------------------------------------------------------------------------------------
(continued) Schedule of Deductibles
(continued)
------------------------------------------------------------------------------------------------------------------------------------
Radio Stations, 2-ways, Tower, $1,000
Mast, tools
------------------------------------------------------------------------------------------------------------------------------------
Extra Expense $5,000
------------------------------------------------------------------------------------------------------------------------------------
Oil & Gas Lease Property Form $174,000 1,000
------------------------------------------------------------------------------------------------------------------------------------
Scheduled Disposal ▇▇▇▇▇ (2)
------------------------------------------------------------------------------------------------------------------------------------
Replacement Cost Valuation
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Pollution Liability 37250307 Federal Insurance Co. Bodily Injury and Property
------------------------------------------------------------------------------------------------------------------------------------
Damage combined
------------------------------------------------------------------------------------------------------------------------------------
single limit per pollution $1,000,000 $10,000
incident
------------------------------------------------------------------------------------------------------------------------------------
Policy Aggregate $1,000,000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Sub limit
------------------------------------------------------------------------------------------------------------------------------------
On-site pollution clean-up
------------------------------------------------------------------------------------------------------------------------------------
Per pollution incident $100,000 $10,000
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Commercial Umbrella 7972-09-63 Federal Insurance Co. Underlying policies include: 3/1/2005
------------------------------------------------------------------------------------------------------------------------------------
Employers Liability; General
Liability;
------------------------------------------------------------------------------------------------------------------------------------
Automobile Liability;
Pollution Liability
------------------------------------------------------------------------------------------------------------------------------------
Following form on excess
liability section
------------------------------------------------------------------------------------------------------------------------------------
Per Occurrence $25,000,000 $10,000*
------------------------------------------------------------------------------------------------------------------------------------
Policy Aggregate $25,000,000
------------------------------------------------------------------------------------------------------------------------------------
Pollution Sublimit $10,000,000
------------------------------------------------------------------------------------------------------------------------------------
*Self-Insured Retention
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Commercial Excess HXA7393230 Westchester Surplus Underlying policy $24,000,000 Excess of 3/10/2004
------------------------------------------------------------------------------------------------------------------------------------
Liability Lines Insurance Co. Federal Insurance Co. Umbrella $26,000,000
Policy
------------------------------------------------------------------------------------------------------------------------------------
Excess Liability only -
following form
------------------------------------------------------------------------------------------------------------------------------------
Operations of Atlas America Inc.
and
------------------------------------------------------------------------------------------------------------------------------------
Atlas Resources Inc. only.
------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7.20 TO CREDIT AGREEMENT -- Page 4
------------------------------------------------------------------------------------------------------------------------------------
Coverage Type Policy Number Insurance Carrier Coverage Description Limit Deductible Exp. Date
------------- ------------- ----------------- -------------------- ----- ---------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Electronic Data CSI8698771 Hartford Steam Boiler Data Processing Equipment and $859,300 $1,000 1/30/2005
Extra
------------------------------------------------------------------------------------------------------------------------------------
Processing Inspection & Insurance Expense combined limit
Co
------------------------------------------------------------------------------------------------------------------------------------
Data & Media $162,000
------------------------------------------------------------------------------------------------------------------------------------
Debris Removal $250,000
------------------------------------------------------------------------------------------------------------------------------------
Business Income $10,000
------------------------------------------------------------------------------------------------------------------------------------
Transit $25,000
------------------------------------------------------------------------------------------------------------------------------------
Earthquake sub limit $5,000
------------------------------------------------------------------------------------------------------------------------------------
Theft Included
------------------------------------------------------------------------------------------------------------------------------------
Commercial Crime 2824309 National Union Fire Dishonesty by employees $1,000,000 $2,500 6/16/2004
------------------------------------------------------------------------------------------------------------------------------------
Insurance Co. ncluding ERISA Endorsement
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
1st Layer Directors 1350692 Admiral Insurance Co. Limit of Liability $3,000,000 $100,000* 7/2/2004
------------------------------------------------------------------------------------------------------------------------------------
& Officers Liability *Corporate Reimbursement
------------------------------------------------------------------------------------------------------------------------------------
Retro-Active Date: 5/2/96 -
$1,000,000
------------------------------------------------------------------------------------------------------------------------------------
Retro-Active Date: 1/22/98 -
$2 mil xs $1 mil
------------------------------------------------------------------------------------------------------------------------------------
SEC Claims Retention $250,000
------------------------------------------------------------------------------------------------------------------------------------
Retroactive Date: 5/2/97
------------------------------------------------------------------------------------------------------------------------------------
Wrongful Employment Acts $100,000
Retention
------------------------------------------------------------------------------------------------------------------------------------
No coverage for entity
------------------------------------------------------------------------------------------------------------------------------------
Retroactive Date: 5/2/97
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
2nd Layer Directors R2HS612958 RSUI Indemnity Co. Limit of Liability $2,000,000 Excess of 7/2/2004
------------------------------------------------------------------------------------------------------------------------------------
& Officers Liability Following Form - Admiral Admiral
Insurance Co.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
3rd Layer Directors ELU82497-03 XL Specialty Insurance Limit of Liability $5,000,000 Excess of 7/2/2004
Co.
------------------------------------------------------------------------------------------------------------------------------------
& Officers Liability Following Form - Admiral Royal
Insurance Co. Indemnity
------------------------------------------------------------------------------------------------------------------------------------
Retroactive Date: 5/2/98
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
4th Layer Directors 1928790013 Liberty Mutual Insurance Limit of Liability $5,000,000 Excess of 7/2/2004
------------------------------------------------------------------------------------------------------------------------------------
& Officers Liability Co. Following Form - Admiral Indian Harbor
Insurance Co.
------------------------------------------------------------------------------------------------------------------------------------
Retroactive Date: 5/2/99
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
5th Layer Directors DOXG21658583001ACE/USA ACE American Limit of Liability $5,000,000 Excess of 7/2/2004
------------------------------------------------------------------------------------------------------------------------------------
& Officers Liability Insurance Co. Following Form - Admiral Great
Insurance Co. American
------------------------------------------------------------------------------------------------------------------------------------
Retroactive Date: 5/2/99
------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7.20 TO CREDIT AGREEMENT -- Page 5
------------------------------------------------------------------------------------------------------------------------------------
Coverage Type Policy Number Insurance Carrier Coverage Description Limit Deductible Exp. Date
------------- ------------- ----------------- -------------------- ----- ---------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Employment Practices CEP03626878 Fireman's Fund Insurance Employment Pracitces Liability
------------------------------------------------------------------------------------------------------------------------------------
Liability Co. Per claim limit 5,000,000 50,000 8/15/2004
------------------------------------------------------------------------------------------------------------------------------------
Aggregate Limit each policy 5,000,000
period
------------------------------------------------------------------------------------------------------------------------------------
Pending & Prior Litigation:
8/15/2003
------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7.20 TO CREDIT AGREEMENT -- Page 6
SCHEDULE 7.21
HEDGING AGREEMENTS
See Attached.
SCHEDULE 7.21 TO CREDIT AGREEMENT - Page 1
SCHEDULE 7.23
MATERIAL AGREEMENTS
1. Gas Purchase Agreement, dated March 31, 1999, among FirstEnergy Solutions
Corp. (f/k/a Northeast Ohio Gas Marketing, Inc.), Atlas Energy Group, Inc.,
Atlas Resources, Inc. and Resource Energy, Inc., as amended by Amendment to Gas
Purchase Agreement dated February 1, 2001 and Second Amendment to Base Gas
Purchase Agreement dated July 15, 2003.
2. Omnibus Agreement, dated February 2, 2000, among Atlas America, Inc.,
Resource Energy, Inc., Viking Resources Corporation, Atlas Pipeline Operating
Partnership, L.P. and Atlas Pipeline Partners, L.P.
3. Master Natural Gas Gathering Agreement, dated February 2, 2000, among Atlas
America, Inc., Resource Energy, Inc., Viking Resources Corporation, Atlas
Pipeline Operating Partnership, L.P. and Atlas Pipeline Partners, L.P.
4. Natural Gas Gathering Agreement, dated January 5, 2001, among Atlas Pipeline
Operating Partnership, L.P., Atlas Pipeline Partners, L.P. and Atlas Noble Corp.
5. Natural Gas Gathering Agreement, dated March 16, 2001, among Atlas Pipeline
Operating Partnership, L.P., Atlas Pipeline Partners, L.P. and Viking Resources
Corporation.
6. Natural Gas Gathering Agreement, dated January 1, 2002, among Atlas Pipeline
Operating Partnership, L.P., Atlas Pipeline Partners, L.P., Atlas Resources,
Inc., Atlas Energy Group, Inc., Atlas Noble Corp., Resource Energy, Inc. and
Viking Resources Corporation.
7. The Intercompany Notes.
8. Amended and Restated Limited Liability Company Agreement of Atlas Pipeline
Partners GP, LLC dated September 24, 1003.
9. Gas Purchase Agreement, dated November 13, 2002, between UGI Energy Services,
Inc. d/b/a GASMARK and Viking Resources Corporation.
SCHEDULE 7.23 TO CREDIT AGREEMENT - Page 1
SCHEDULE 7.24 TO CREDIT AGREEMENT - Page 1
SCHEDULE 7.24
GAS IMBALANCES
None
SCHEDULE 7.23 TO CREDIT AGREEMENT - Page 1
SCHEDULE 9.01
See Attached.
SCHEDULE 9.01 TO CREDIT AGREEMENT Page 1