EXHIBIT 10.55
EXECUTION COPY
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FIRST LIEN CREDIT AGREEMENT
dated as of August 24, 2007,
PACIFIC ENERGY ALASKA OPERATING LLC,
as the Borrower,
PACIFIC ENERGY ALASKA HOLDINGS, LLC,
as Holdings,
the LENDERS from time to time party hereto,
SILVER POINT FINANCE, LLC,
as Administrative Agent, Collateral Agent, Sole Lead Arranger,
Sole Bookrunner and Syndication Agent
and
▇. ▇▇▇▇ & COMPANY,
as Documentation Agent
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINED TERMS..............................................................................1
SECTION 1.02 TERMS GENERALLY...........................................................................25
SECTION 1.03 CLASSIFICATION OF LOANS AND BORROWINGS....................................................26
ARTICLE II
THE CREDITS
SECTION 2.01 COMMITMENTS...............................................................................26
SECTION 2.02 LOANS.....................................................................................27
SECTION 2.03 EVIDENCE OF DEBT; REPAYMENT OF LOANS......................................................28
SECTION 2.04 REQUESTS FOR BORROWINGS...................................................................28
SECTION 2.05 FEES; INTEREST ON LOANS...................................................................29
SECTION 2.06 DEFAULT INTEREST..........................................................................30
SECTION 2.07 ALTERNATE RATE OF INTEREST................................................................30
SECTION 2.08 TERMINATION OF COMMITMENTS................................................................30
SECTION 2.09 CONVERSION AND CONTINUATION OF BORROWINGS.................................................30
SECTION 2.10 REPAYMENT OF BORROWINGS...................................................................31
SECTION 2.11 OPTIONAL PREPAYMENTS; OPTIONAL TERMINATION AND REDUCTION OF AGGREGATE MAXIMUM
CREDIT AMOUNTS............................................................................31
SECTION 2.12 MANDATORY PREPAYMENTS.....................................................................32
SECTION 2.13 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.............................................33
SECTION 2.14 CHANGE IN LEGALITY........................................................................34
SECTION 2.15 INDEMNITY.................................................................................35
SECTION 2.16 PRO RATA TREATMENT........................................................................35
SECTION 2.17 SHARING OF SETOFFS........................................................................35
SECTION 2.18 PAYMENTS..................................................................................36
SECTION 2.19 TAXES, WITHHOLDINGS, ETC..................................................................36
SECTION 2.20 ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES; DUTY TO MITIGATE...................38
SECTION 2.21 BORROWING BASE............................................................................40
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 ORGANIZATION; POWERS......................................................................42
SECTION 3.02 AUTHORIZATION.............................................................................43
SECTION 3.03 ENFORCEABILITY............................................................................43
SECTION 3.04 APPROVALS.................................................................................43
SECTION 3.05 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES; RESERVE REPORTS.................43
SECTION 3.06 NO MATERIAL ADVERSE CHANGE................................................................44
SECTION 3.07 TITLE TO PROPERTIES; POSSESSION UNDER LEASES..............................................44
SECTION 3.08 SUBSIDIARIES..............................................................................44
SECTION 3.09 LITIGATION; COMPLIANCE WITH LAWS..........................................................45
SECTION 3.10 AGREEMENTS................................................................................45
SECTION 3.11 FEDERAL RESERVE REGULATIONS.................................................................
SECTION 3.12 INVESTMENT COMPANY ACT....................................................................46
SECTION 3.13 USE OF PROCEEDS...........................................................................46
SECTION 3.14 TAX RETURNS...............................................................................46
SECTION 3.15 NO MATERIAL MISSTATEMENTS.................................................................46
SECTION 3.16 EMPLOYEE BENEFIT PLANS....................................................................46
SECTION 3.17 ENVIRONMENTAL MATTERS.....................................................................47
SECTION 3.18 INSURANCE.................................................................................47
SECTION 3.19 SECURITY DOCUMENTS........................................................................47
SECTION 3.20 LOCATION OF REAL PROPERTY AND LEASED PREMISES.............................................48
SECTION 3.21 LABOR MATTERS.............................................................................48
SECTION 3.22 SOLVENCY..................................................................................49
SECTION 3.23 SANCTIONED PERSONS........................................................................49
SECTION 3.24 MATERIAL CONTRACTS........................................................................49
SECTION 3.25 RELATED AGREEMENTS........................................................................49
SECTION 3.26 EMPLOYMENT AGREEMENTS.....................................................................50
SECTION 3.27 INTELLECTUAL PROPERTY.....................................................................50
SECTION 3.28 GAS IMBALANCES; PREPAYMENTS...............................................................50
SECTION 3.29 MARKETING ARRANGEMENT.....................................................................51
SECTION 3.30 RIGHT TO RECEIVE PAYMENTS FOR FUTURE PRODUCTION...........................................51
SECTION 3.31 OPERATION OF OIL AND GAS PROPERTIES.......................................................51
SECTION 3.32 AD VALOREM AND SEVERANCE TAXES, LITIGATION................................................52
SECTION 3.33 INSIDER INTERESTS.........................................................................52
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01 CLOSING DATE..............................................................................52
SECTION 4.02 CONDITIONS TO EACH CREDIT EXTENSION.......................................................56
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01 EXISTENCE; COMPLIANCE WITH LAWS; BUSINESSES AND PROPERTIES................................57
SECTION 5.02 INSURANCE.................................................................................57
SECTION 5.03 OBLIGATIONS AND TAXES.....................................................................57
SECTION 5.04 FINANCIAL STATEMENTS......................................................................58
SECTION 5.05 LITIGATION AND OTHER NOTICES..............................................................60
SECTION 5.06 INFORMATION REGARDING COLLATERAL..........................................................61
SECTION 5.07 MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS.................................61
SECTION 5.08 USE OF PROCEEDS...........................................................................61
SECTION 5.09 EMPLOYEE BENEFITS.........................................................................61
SECTION 5.10 COMPLIANCE WITH ENVIRONMENTAL LAWS........................................................62
SECTION 5.11 PREPARATION OF ENVIRONMENTAL REPORTS......................................................62
SECTION 5.12 FURTHER ASSURANCES........................................................................62
SECTION 5.13 COMPLIANCE WITH LEASES....................................................................63
SECTION 5.14 INTEREST RATE PROTECTION AGREEMENTS.......................................................63
SECTION 5.15 INTENTIONALLY OMITTED.....................................................................63
SECTION 5.16 DELIVERY OF RESERVE REPORTS...............................................................63
SECTION 5.17 TITLE INFORMATION.........................................................................65
SECTION 5.18 TITLE.....................................................................................65
SECTION 5.19 EVIDENCE OF COMPLIANCE....................................................................65
SECTION 5.20 LENDERS' MEETINGS.........................................................................65
SECTION 5.21 HEDGING AGREEMENTS........................................................................66
SECTION 5.22 POST-CLOSING MATTERS......................................................................66
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01 INDEBTEDNESS..............................................................................66
SECTION 6.02 LIENS.....................................................................................67
SECTION 6.03 SALE AND LEASE-BACK TRANSACTIONS..........................................................68
SECTION 6.04 INVESTMENTS, LOANS AND ADVANCES...........................................................68
SECTION 6.05 MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND ACQUISITIONS.................................70
SECTION 6.06 RESTRICTED PAYMENTS; PAYMENT OF CERTAIN INDEBTEDNESS; RESTRICTIVE AGREEMENTS..............70
SECTION 6.07 TRANSACTIONS WITH AFFILIATES..............................................................72
SECTION 6.08 BUSINESS OF HOLDINGS, BORROWER AND SUBSIDIARIES; NO FOREIGN SUBSIDIARIES..................72
SECTION 6.09 AMENDMENT OF CERTAIN INDEBTEDNESS AND AGREEMENTS..........................................72
SECTION 6.10 MATERIAL CONTRACTS........................................................................73
SECTION 6.11 LEVERAGE RATIO............................................................................73
SECTION 6.12 CURRENT RATIO.............................................................................73
SECTION 6.13 FISCAL YEAR...............................................................................73
SECTION 6.14 CERTAIN EQUITY INTERESTS..................................................................73
SECTION 6.15 HEDGING AGREEMENTS........................................................................73
SECTION 6.16 TAKE-OR-PAY OR OTHER PREPAYMENTS; GAS IMBALANCES..........................................74
SECTION 6.17 LEASES....................................................................................74
ARTICLE VII
EVENTS OF DEFAULT
ARTICLE VIII
THE AGENT
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 NOTICES...................................................................................79
SECTION 9.02 SURVIVAL OF AGREEMENT.....................................................................80
SECTION 9.03 BINDING EFFECT............................................................................80
SECTION 9.04 SUCCESSORS AND ASSIGNS....................................................................80
SECTION 9.05 THE REGISTER..............................................................................83
SECTION 9.06 EXPENSES; INDEMNITY.........................................................................
SECTION 9.07 RIGHT OF SETOFF...........................................................................85
SECTION 9.08 APPLICABLE LAW............................................................................85
SECTION 9.09 WAIVERS; AMENDMENT........................................................................85
SECTION 9.10 INTEREST RATE LIMITATION....................................................................
SECTION 9.11 ENTIRE AGREEMENT..........................................................................87
SECTION 9.12 WAIVER OF JURY TRIAL......................................................................87
SECTION 9.13 SEVERABILITY..............................................................................87
SECTION 9.14 COUNTERPARTS..............................................................................87
SECTION 9.15 HEADINGS..................................................................................88
SECTION 9.16 JURISDICTION; CONSENT TO SERVICE OF PROCESS...............................................88
SECTION 9.17 CONFIDENTIALITY...........................................................................88
SECTION 9.18 TERMINATION OR RELEASE....................................................................89
SECTION 9.19 USA PATRIOT ACT NOTICE....................................................................89
SECTION 9.20 NO FIDUCIARY RELATIONSHIP; NON-RELIANCE...................................................89
SECTION 9.21 INTERCREDITOR AGREEMENT...................................................................90
SECTION 9.22 SECURITY DOCUMENTS........................................................................90
SECTION 9.23 PERSONAL OBLIGATIONS......................................................................90
ARTICLE X
HEDGING
SECTION 10.01 VOTING....................................................................................90
SECTION 10.02 ACKNOWLEDGEMENT RELATING TO HEDGING AGREEMENTS WITH FIRST LIEN HEDGE
COUNTERPARTIES............................................................................91
SECTION 10.03 AMENDMENT TO INTERCREDITOR PROVISIONS.....................................................91
SCHEDULES
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Schedule 1.01(a) Existing Hedging Agreements
Schedule 1.01(b) Closing Date Mortgaged Real Property
Schedule 1.01(c) Additional Acquisition Agreements
Schedule 2.01 Lenders and Commitments
Schedule 3.04 Government Approvals
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.17 Environmental Matters
Schedule 3.19(a) UCC Filing Offices
Schedule 3.19(b) Intellectual Property Filing Offices
Schedule 3.19(c) Mortgage Filing Offices
Schedule 3.20(a) Owned Real Property
Schedule 3.20(b) Leased Real Property
Schedule 3.24 Material Contracts
Schedule 3.25(c) Consents and Approvals Not Obtained
Schedule 3.26 Employment Agreements
Schedule 3.27 Intellectual Property
Schedule 3.28 Gas Imbalances
Schedule 3.29 Marketing Arrangements
Schedule 3.30 Rights to Receive Payments for Future Production
Schedule 3.33 Insider Interests
Schedule 5.22 Post-Closing Matters
Schedule 6.01 Existing Indebtedness
Schedule 6.02 Existing Liens
EXHIBITS
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Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Guarantee and Collateral Agreement
Exhibit D Form of Intercreditor Agreement
Exhibit E Form of Mortgage
Exhibit F Form of Opinion
Exhibit G Form of Borrowing Request
Exhibit H Form of Solvency Certificate
Exhibit I Form of Compliance Certificate
Exhibit J Form of Engineer's Certificate
Exhibit K Form of Responsible Officer's Certificate
Exhibit L Form of Promissory Note
FIRST LIEN CREDIT AGREEMENT dated as of August 24, 2007 (this
"AGREEMENT"), among PACIFIC ENERGY ALASKA OPERATING LLC, a limited liability
company organized under the laws of the State of Delaware (the "BORROWER");
PACIFIC ENERGY ALASKA HOLDINGS, LLC, a limited liability company organized under
the laws of the State of Delaware ("HOLDINGS"); the LENDERS from time to time
party hereto; SILVER POINT FINANCE, LLC ("SILVER POINT"), as Administrative
Agent, Collateral Agent and Sole Lead Arranger; and ▇. ▇▇▇▇ & COMPANY, as
Documentation Agent (the "DOCUMENTATION AGENT").
The Borrower has requested the Lenders to extend credit to the Borrower
in the form of Loans (such term and each other capitalized term used but not
defined in this recital having the meaning given it in Article I) during the
Availability Period in an aggregate principal amount not in excess of
$200,000,000.
The Borrower has also entered into the Second Lien Loan Documents,
pursuant to which the Borrower has requested the Second Lien Lenders to extend
credit in the form of the Second Lien Loans on the Closing Date in an aggregate
principal amount not in excess of $317,000,000.
On the Closing Date, (a) $115,786,154.92 of the proceeds of the Loans
and the Second Lien Loans will be used by Holdings to purchase the membership
interests of the Borrower pursuant to the Membership Interest Purchase
Agreement, dated as of May 24, 2007, by and among Pacific Energy Resources Ltd.,
a Delaware corporation ("PACIFIC ENERGY"), Forest Alaska Holding LLC, a Delaware
limited liability company, and Forest Oil Corporation, a New York corporation,
as amended by the Amendment No. 1 to Membership Interest Purchase Agreement,
dated as of July 31, 2007 (the "MEMBERSHIP INTEREST PURCHASE AGREEMENT"), (b)
$9,869,384.00 of the proceeds of the Loans and the Second Lien Loans will be
used by Borrower to purchase certain assets pursuant to the Asset Sales
Agreement, dated as of May 24, 2007, by and between Forest Oil Corporation, a
New York corporation, and Pacific Energy, as amended by the Amendment No. 1 to
Asset Sales Agreement, dated as of July 31, 2007 (the "ASSET SALES AGREEMENT"),
(c) $269,007,890.13 of the proceeds of the Loans and the Second Lien Loans will
be used to refinance certain existing debt of the Borrower, and (d)
$30,336,570.95 of the proceeds of the Loans and the Second Lien Loans will be
retained by the Borrower to be used for general corporate purposes of the
Borrower and the Subsidiaries, including the payment of fees and expenses
related to the Transactions.
The Lenders are willing to extend such credit to the Borrower on the
terms and subject to the conditions set forth herein. Accordingly, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINED TERMS. As used in this Agreement, the
following terms have the meanings specified below:"2006 PERL CREDIT AGREEMENT"
shall mean that certain Credit and Guaranty Agreement, dated as of November 30,
2006, among Pacific Energy Resources Ltd., certain of its subsidiaries party
thereto, the lenders from time to time party thereto and Documentation Agent as
lead arranger, syndication agent and administrative agent, as amended,
supplemented or otherwise modified from time to time.
1
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"ACCOUNT CONTROL AGREEMENT" shall mean an account control agreement, in
form and substance reasonably satisfactory to the Agent and the Borrower,
designating the Agent as secured party.
"ACQUISITION" shall mean the consummation of the transactions
contemplated by the Acquisition Agreements.
"ACQUISITION AGREEMENTS" shall mean, collectively (a) the Membership
Interest Purchase Agreement, (b) the Asset Sales Agreement and (c) all other
documents and agreements set forth on Schedule 1.01(c).
"ACQUISITION CLOSING DATE" shall mean the date on which the closing of
the Acquisition occurs under the Acquisition Documents.
"ACQUISITION DOCUMENTS" shall mean (a) the Acquisition Agreements, (b)
the transfers, assignments and conveyances executed and delivered pursuant
thereto, and (c) all other agreements, assignments, deeds, conveyances,
certificates and other documents and instruments now or hereafter executed and
delivered pursuant to the Acquisition Agreements or in connection with the
Acquisition.
"ADL LEASES" shall mean those oil and gas leases in respect of Real
Property located on State of Alaska lands and over which DNR has jurisdiction.
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum equal to the
product of (a) the LIBO Rate in effect for such Interest Period and (b)
Statutory Reserves.
"ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative
Questionnaire in the form of EXHIBIT A, or such other form as may be supplied
from time to time by the Agent.
"AFFILIATE" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified; PROVIDED, HOWEVER, that, for purposes of Section 6.07, the term
"AFFILIATE" shall also include any person that directly or indirectly owns 10%
or more of any class of Equity Interests of the person specified or that is an
officer or director of the person specified.
"AGENCY FEE LETTER" shall mean the letter agreement dated the Closing
Date among Pacific Energy, the Documentation Agent and the Agent.
"AGENT" shall mean Silver Point, in its capacity as administrative
agent for the Lenders and collateral agent for the Secured Parties.
"AGGREGATE MAXIMUM CREDIT AMOUNTS" at any time shall equal the sum of
the Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.11. As of the Closing Date, the Aggregate Maximum Credit Amount is
$120,000,000, and the Aggregate Maximum Credit Amount may be increased to up to
$200,000,000 with the consent of each Lender.
2
"AGREEMENT" shall have the meaning assigned to such term in the
introductory paragraph.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum equal
to the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day PLUS 1/2 of 1%. If the Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms of the definition thereof, the Alternate Base Rate
shall be determined without regard to clause (b) of the preceding sentence until
the circumstances giving rise to such inability no longer exist. Any change in
the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, as the case may be.
"ANNUALIZED CONSOLIDATED EBITDA" shall mean (a) for the four fiscal
quarter period ended on September 30, 2007, Consolidated EBITDA for the
one-fiscal quarter period ending on such date MULTIPLIED BY 4, (b) for the four
fiscal quarter period ended on December 31, 2007, Consolidated EBITDA for the
two-fiscal quarter period ending on such date MULTIPLIED BY 2, and (c) for the
four fiscal quarter period ended on March 31, 2008, Consolidated EBITDA for the
three-fiscal quarter period ending on such date MULTIPLIED BY 1.333.
"ANNUALIZED CONSOLIDATED INTEREST EXPENSE" shall mean (a) for the four
fiscal quarter period ended on September 30, 2007, Consolidated Interest Expense
for the one-fiscal quarter period ending on such date multiplied BY 4, (b) for
the four fiscal quarter period ended on December 31, 2007, Consolidated Interest
Expense for the two-fiscal quarter period ending on such date MULTIPLIED BY 2,
and (c) for the four fiscal quarter period ended on March 31, 2008, Consolidated
Interest Expense for the three-fiscal quarter period ending on such date
MULTIPLIED BY 1.333.
"ANTICIPATED PRODUCTION" shall mean, for any month, the reasonably
anticipated production of crude oil and natural gas (calculated separately) from
the Borrower's and the Subsidiaries' proved developed producing reserves.
"ANTICIPATED NON-PDP PRODUCTION" shall mean, for any month, the
reasonably anticipated production of crude oil and natural gas (calculated
separately) from the Borrower's and the Subsidiaries' reserves which are not
proved developed producing reserves.
"APPLICABLE MARGIN" shall mean, for any day with respect to any ABR
Loan or Eurodollar Loan, as the case may be, the rate per annum set forth in the
Borrowing Base Utilization Grid below based upon the Borrowing Base Utilization
Percentage then in effect:
3
--------- --------------------------------- ------------ ----------- -----------
Borrowing Base Utilization Eurodollar Commitment
Percentage Loans ABR Loans Fee
--------- --------------------------------- ------------ ----------- -----------
▇▇▇▇▇ ▇ less than 50% 1.50% 0.0% 0.30%
--------- --------------------------------- ------------ ----------- -----------
Level 2 greater than or equal to 50%, but 1.75% 0.25% 0.30%
less than 75%
--------- --------------------------------- ------------ ----------- -----------
Level 3 greater than or equal to 75%, but 2.00% 0.50% 0.375%
less than 90%
--------- --------------------------------- ------------ ----------- -----------
Level 4 greater than or equal to 90% 2.25% 0.75% 0.375%
--------- --------------------------------- ------------ ----------- -----------
"ASSET SALE" shall mean the sale, transfer or other disposition (by way
of merger, casualty, condemnation or otherwise) by Holdings, the Borrower or any
of the Subsidiaries to any person other than the Borrower or any Subsidiary Loan
Party of (a) any Equity Interests in the Borrower or any of the Subsidiaries
(including any such sale by the issuer of such Equity Interests but excluding
directors' qualifying shares) or (b) any other assets of Holdings, the Borrower
or any of the Subsidiaries (other than (i) inventory (including Hydrocarbons),
damaged, obsolete or worn out assets, scrap and Permitted Investments, in each
case disposed of in the ordinary course of business and (ii) any sale, transfer
or other disposition that, together with all related sales, transfers or other
dispositions from and after the Closing Date, has a value not in excess of
$1,250,000).
"ASSET SALES AGREEMENT" shall have the meaning assigned to such term in
the recitals to this Agreement.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Agent, in the form
of EXHIBIT B or such other form as shall be approved by the Agent.
"AVAILABILITY PERIOD" shall mean the period from and including the
Effective Date to but excluding the Termination Date.
"BLM" shall mean the Bureau of Land Management, United States
Department of the Interior.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"BORROWER" shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
"BORROWING" shall mean Loans of the same Type made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"BORROWING BASE" shall mean at any time the loan value to be assigned
to the proved oil and gas reserves attributable to the Oil and Gas Properties of
the Borrower and its Subsidiaries evaluated in the Reserve Report in an amount
equal to the amount determined in accordance with Section 2.21, as the same may
be adjusted from time to time pursuant to Section 5.17(c) or Section 6.05(b).
4
"BORROWING BASE DEFICIENCY" occurs if at any time the total Revolving
Credit Exposures exceeds the Borrowing Base then in effect.
"BORROWING BASE UTILIZATION PERCENTAGE" shall mean, as of any day, the
fraction expressed as a percentage, the numerator of which is the sum of the
Revolving Credit Exposures of the Lenders on such day, and the denominator of
which is the Borrowing Base in effect on such day.
"BORROWING REQUEST" shall have the meaning assigned to such term in
Section 2.04.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
PROVIDED, HOWEVER, that when used in connection with a Eurodollar Loan, the term
"BUSINESS DAY" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" shall mean, for any period, (a) the additions to
property, plant and equipment and other capital expenditures (including
maintenance capital expenditures) of Holdings and its subsidiaries that are (or
should be) set forth in a consolidated statement of cash flows of Holdings for
such period prepared in accordance with GAAP and (b) Capital Lease Obligations
or Synthetic Lease Obligations incurred by Holdings and its subsidiaries during
such period, but excluding in each case any such expenditure made to restore,
replace or rebuild property to the condition of such property immediately prior
to any damage, loss, destruction or condemnation of such property, to the extent
such expenditure is made with insurance proceeds, condemnation awards or damage
recovery proceeds relating to any such damage, loss, destruction or
condemnation.
"CAPITAL LEASES" shall mean, in respect of any person, all leases which
shall have been, or should have been, in accordance with GAAP, recorded as
capital leases on the balance sheet of the person liable (whether contingent or
otherwise) for the payment of rent thereunder.
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations of
such person to pay rent or other amounts under any Capital Lease.
A "CHANGE IN CONTROL" shall be deemed to have occurred if (a) at any
time Pacific Energy shall not beneficially own, directly or indirectly, at least
75% of the issued and outstanding Equity Interests in Holdings or (b) at any
time Holdings shall fail to directly own, beneficially and of record, at least
75% of the issued and outstanding Equity Interests in the Borrower or (c) any
"Change of Control" (or any comparable term) shall have occured under the
Subordinated Seller Note.
"CHANGE IN LAW" shall mean (a) the adoption of any law, rule or
regulation after the Closing Date, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the Closing Date or (c) compliance by any Lender (or, for purposes of
Section 2.13, by any lending office of such Lender or by such Lender's holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the Closing
Date.
"CLOSING DATE" shall mean the date upon which the initial Loans are
made pursuant to Article II.
5
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL" shall mean all the "Collateral", as defined in any
Security Document and shall also include the Mortgaged Properties.
"COLLATERAL AGREEMENT" shall mean the First Lien Guarantee and
Collateral Agreement, substantially in the form of EXHIBIT C, among the
Borrower, Holdings, the Subsidiaries party thereto and the Agent for the benefit
of the Secured Parties.
"COLLATERAL AND GUARANTEE REQUIREMENT" shall mean, at any time, the
requirement that:
(a) the Agent shall have received from each of Holdings and its
subsidiaries either (i) a counterpart of the Collateral Agreement duly executed
and delivered on behalf of such person or (ii) in the case of any person that
becomes a Subsidiary after the Closing Date, a supplement to the Collateral
Agreement, in the form specified therein, duly executed and delivered on behalf
of such person within the period required by Section 5.12;
(b) subject to Section 4.01(d)(C) of the Collateral Agreement, all
outstanding Equity Interests in the Borrower and each Domestic Subsidiary and
all other Equity Interests owned by or on behalf of any Loan Party shall have
been pledged pursuant to the Collateral Agreement and the Agent shall have
received (to the extent such Equity Interests are certificated securities)
certificates or other instruments representing all such Equity Interests,
together with undated stock powers or other instruments of transfer with respect
thereto endorsed in blank;
(c) all Indebtedness of Holdings, the Borrower and each Subsidiary that
is owing to any Loan Party shall have been pledged pursuant to the Collateral
Agreement and, to the extent such Indebtedness is evidenced by a promissory
note, the Agent shall have received all such promissory notes, together with
undated instruments of transfer with respect thereto endorsed in blank;
(d) the Agent shall have received (i) counterparts of a Mortgage with
respect to each Mortgaged Property duly executed and delivered by the record
owner of such Mortgaged Property, (ii) tax Lien searches at the applicable
State's central filing system and Uniform Commercial Code searches in form and
substance reasonably satisfactory to the Agent, (iii) opinions of counsel in the
jurisdictions in which the Mortgaged Properties owned by the Borrower or any
Subsidiary on the Closing Date are located, addressed to the Agent and each
Lender, with respect to title to Leases included in the Oil and Gas Properties
on the Closing Date that represent 80% of the Proved PV-10% (as determined by
reference to the Reserve Report as of June 30, 2006 delivered to the Agent prior
to the Closing Date), in form and substance reasonably satisfactory to the
Agent, (iv) on the Closing Date and on the date of any acquisition of a
Mortgaged Property, opinions of counsel in the jurisdictions in which such
Mortgaged Property is located, addressed to the Agent and each Lender, with
respect to the enforceability and validity of the Mortgages thereon and any
related fixture filings, in form and substance reasonably satisfactory to the
Agent and (v) all such other items as shall be reasonably necessary in the
opinion of counsel to the Agent to create and evidence a valid and perfected
first priority mortgage Lien and provide appropriate notice and filing of such
Lien on such Mortgaged Property, subject only to Liens permitted pursuant to
Section 6.02;
6
(e) the Agent shall have received from each applicable Loan Party and
each applicable depository bank or securities intermediary, an executed
counterpart of an Account Control Agreement in respect of each deposit account
and securities account of any Loan Party that is required to be subject to an
Account Control Agreement by Section 4.04(b) of the Collateral Agreement;
(f) all documents and instruments, including Uniform Commercial Code
financing statements and filings with the MMS, BLM and DNR, required by law or
reasonably requested by the Agent to be filed, registered or recorded to create
the Liens intended to be created by the Security Documents and perfect such
Liens to the extent required by, and with the priority required by, the Security
Documents, shall have been filed, registered or recorded or delivered to the
Agent for filing, registration or recording, and all filing, recording and
similar fees and Taxes payable in connection with the foregoing shall have been
paid or provided for in a manner reasonably satisfactory to the Agent; and
(g) each Loan Party shall have obtained all consents and approvals
required to be obtained by it in connection with the execution and delivery of
all Security Documents to which it is a party, the performance of its
obligations thereunder and the granting by it of the Liens thereunder.
"COMMITMENT" shall mean, with respect to each Lender, the commitment of
such Lender to make Loans hereunder, as such commitment may be (a) modified from
time to time pursuant to Section 2.11 and (b) modified from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04. The
amount representing each Lender's Commitment shall at any time be the lesser of
such Lender's Maximum Credit Amount and such Lender's Applicable Percentage of
the then effective Borrowing Base, subject to Section 2.21(c)(iv).
"CONSOLIDATED EBITDA" shall mean, for each trailing four fiscal quarter
period, the sum of (i) the Consolidated Net Income of Holdings and its
subsidiaries during such period, plus (ii) all interest paid during such period
on Indebtedness (including amortization of original issue discount and the
interest component of any deferred payment obligations and capital lease
obligations) which was deducted in determining such Consolidated Net Income,
plus (iii) all income or franchise taxes, if any, payable by Holdings or its
subsidiaries which were deducted in determining, such Consolidated Net Income,
plus (iv) all depreciation, amortization (including amortization of good will
and debt issuance costs), depletion, and other non-cash charges (including any
provision for the reduction in the carrying value of assets recorded in
accordance with GAAP and including those resulting from the ▇▇▇▇ to market of
Hedging Agreement) which were deducted in determining such Consolidated Net
Income, minus (v) all non-cash items of income or gain (including those
resulting from the ▇▇▇▇ to market of Hedging Agreement) which were included in
determining such Consolidated Net Income. Notwithstanding any other provision in
this Agreement, "CONSOLIDATED EBITDA" determined at the end of any fiscal
quarter ending on or prior to March 31, 2008 shall be deemed to be the
Annualized Consolidated EBITDA for the four fiscal quarter period ending on such
date.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, the sum
(determined without duplication) of the aggregate gross interest expense of
Holdings and its subsidiaries for such period, including to the extent included
in interest expense under GAAP: (a) amortization of debt discount, (b)
capitalized interest, (c) the portion of any payments or accruals under Capital
Leases allocable to interest expense, plus the portion of any payments or
accruals under Synthetic Leases allocable to interest expense, whether or not
the same constitutes interest expense under GAAP and (d) dividends on
Disqualified Stock.
7
"CONSOLIDATED NET INCOME" shall mean, as to any Person or Persons for
any period, the gross revenues of such Person or Persons for such period, plus
any cash dividends or distributions actually received by such Person or Persons
from any other business entity, minus all expenses and other proper charges
(including taxes on income, to the extent imposed upon such Person or Persons
but excluding charges for accrued unpaid dividends on preferred stock of such
Person or Persons for such period), determined on a consolidated basis after
eliminating earnings or losses attributable to outstanding minority interests,
but excluding the net earnings of any other business entity in which such Person
or Persons has an ownership interest.
"CONTRACTS" shall mean all contracts, agreements, operating agreements,
farm-out or farm-in agreements, sharing agreements, mineral purchase agreements,
contracts for the purchase, exchange, transportation, processing or sale of
Hydrocarbons, rights-of-way, easements, surface leases, equipment leases,
permits, franchises, licenses, pooling or unitization agreements, and unit or
pooling designations and orders now or hereafter affecting any of the Oil and
Gas Properties, Operating Equipment, Fixture Operating Equipment or Hydrocarbons
now or hereafter covered hereby, or which are useful or appropriate in drilling
for, producing, treating, handling, storing, transporting or marketing oil, gas
or other minerals produced from any of the Oil and Gas Properties, and all as
such contracts and agreements as they may be amended, supplemented or otherwise
modified from time to time.
"CONTROL" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "CONTROLLING" and "CONTROLLED" shall have meanings
correlative thereto.
"▇▇▇▇ INLET" shall mean ▇▇▇▇ Inlet Pipe Line Company, a Delaware
corporation.
"CREDIT DATE" shall mean the date of a Credit Extension.
"CREDIT EXTENSION" shall mean the making, conversion or continuance of
a Loan.
"CURRENT ASSETS" shall mean, at any time, the consolidated current
assets (other than cash, Permitted Investments and FAS 133 assets) of Holdings
and its subsidiaries in accordance with GAAP.
"CURRENT LIABILITIES" shall mean, at any time, the consolidated current
liabilities of Holdings and its subsidiaries at such time (excluding, without
duplication, the current portion of any long-term Indebtedness not yet due and
FAS 133 liabilities) in accordance with GAAP.
"DNR" shall mean the State of Alaska Department of Natural Resources.
"DEFAULT" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"DISQUALIFIED STOCK" shall mean any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (a) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, or
requires the payment of any cash dividend or any other scheduled payment
constituting a return of capital, in each case at any time on or prior to the
8
first anniversary of the Termination Date (determined without regard to the
proviso of the definition thereof unless the Agent and the Borrower shall have
agreed the Termination Date is February 24, 2009), or (b) is convertible into or
exchangeable (unless at the sole option of the issuer thereof) for (i) debt
securities or (ii) any Equity Interest referred to in clause (a) above, in each
case at any time prior to the first anniversary of the Termination Date
(determined without regard to the proviso of the definition thereof unless the
Agent and the Borrower shall have agreed the Termination Date is February 24,
2009).
"DOCUMENTATION AGENT" shall have the meaning assigned to such term in
the introductory paragraph.
"DOLLARS" or "$" shall mean lawful money of the United States of
America.
"DOMESTIC SUBSIDIARY" shall mean a Subsidiary incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia.
"EFFECTIVE DATE" shall mean the first date on which the conditions
specified in Article IV are satisfied (or waived in accordance with Section
9.09).
"ENGINEERING REPORTS" shall have the meaning assigned to such term in
Section 2.21(c)(i).
"ENVIRONMENTAL LAWS" shall mean all former, current and future Federal,
state, local and foreign laws (including common law), treaties, regulations,
rules, ordinances, codes, decrees, judgments, directives, orders (including
consent orders), and agreements in each case, relating to protection of the
environment, natural resources, human health and safety or the presence, Release
of, or exposure to, Hazardous Materials, or the generation, manufacture,
processing, distribution, use, treatment, storage, transport, recycling or
handling of, or the arrangement for such activities with respect to, Hazardous
Materials.
"ENVIRONMENTAL LIABILITY" shall mean all liabilities, obligations,
damages, losses, claims, actions, suits, judgments, orders, fines, penalties,
fees, expenses and costs (including administrative oversight costs, natural
resource damages and remediation costs), whether contingent or otherwise,
arising out of or relating to (a) compliance or non-compliance with any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the Release of any Hazardous Materials or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed
or imposed with respect to any of the foregoing.
"EQUITY INTERESTS" shall mean shares of capital stock, partnership
interests, and membership interests in a limited liability company, beneficial
interests in a trust or other equity interests in any person, and any option,
warrant or other right entitling the holder thereof to purchase or otherwise
acquire any such equity interest.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
9
"ERISA EVENT" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan (other than an event for which the 30-day notice period is waived), (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA) and, on and after
the effectiveness of the Pension Act, any failure by any Plan to satisfy the
minimum funding standards (within the meaning of Section 412 of the Code or
Section 302 of ERISA) applicable to such Plan, whether or not waived, (c) the
filing pursuant to Section 412 of the Code or Section 303 of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan, (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan or
the withdrawal or partial withdrawal of the Borrower or any of its ERISA
Affiliates from any Plan or Multiemployer Plan, (e) the receipt by the Borrower
or any of its ERISA Affiliates from the PBGC or a plan administrator of any
notice relating to the intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan, (f) the adoption of any amendment to a Plan that
would require the provision of security pursuant to Section 401(a)(29) of the
Code or Section 307 of ERISA, (g) on an after the effectiveness of the Pension
Act, a determination that any Plan is, or is expected to be, in "at risk" status
(within the meaning of Section 303(i)(4)(a) of ERISA or Section 430(i)(4)(A) of
the Code), (h) the receipt by the Borrower or any of its ERISA Affiliates of any
notice, or the receipt by any Multiemployer Plan from the Borrower or any of its
ERISA Affiliates of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA (or,
after the effectiveness of the Pension Act, that a Multiemployer Plan is
endangered or in critical status within the meaning of Section 305 of ERISA) or
(i) the occurrence of a "prohibited transaction" with respect to which the
Borrower or any of the Subsidiaries is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to which the Borrower or
any such Subsidiary could otherwise be liable.
"EURODOLLAR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VII.
"EXTRAORDINARY RECEIPTS" shall mean the receipt by Holdings, the
Borrower or any of the Subsidiaries of any non-ordinary course tax refunds,
pension plan reversions, judgments, litigation settlements or non-casualty
insurance proceeds.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day for such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by it.
"FINANCIAL OFFICER" of any person shall mean the chief financial
officer, principal accounting officer, treasurer or controller of such person.
10
"FIRST LIEN HEDGE COUNTERPARTY" shall mean a counterparty to any
Hedging Agreement in respect of which the obligations of any Loan Party
constitute "OBLIGATIONS".
"FIXTURE OPERATING EQUIPMENT" shall mean any of the items described in
the first sentence of the definition of "Operating Equipment" which as a result
of being incorporated into realty or structures or improvements located therein
or thereon, with the intent that they remain there permanently, constitute
fixtures under the laws of the state in which such equipment is located.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean:
(a) Prior to registration of Holdings's capital stock pursuant to the
Securities Act, generally accepted accounting principles consistently applied
which are in effect from time to time in Canada, as set out in the "CICA
Handbook" published by the Canadian Institute of Chartered Accountants, as
amended, replaced or republished from time to time and which, in the case of
Holdings and its subsidiaries, are applied for all periods after the date hereof
in a manner consistent with the manner in which such principles and practices
are applied to Holdings's audited consolidated financial statements as of
December 31, 2006. If any change in any accounting principle or practice is
required by the Canadian Institute of Chartered Accountants (or any such
successor) in order for such principle or practice to continue as a generally
accepted accounting principle or practice, all reports and financial statements
required hereunder with respect to Holdings or with respect to Holdings and its
subsidiaries may be prepared in accordance with such change, but all
calculations and determinations to be made hereunder may be made in accordance
with such change only after notice of such change is given to each Lender and
Required Lenders agree to such change insofar as it affects the accounting of
Holdings or of Holdings and its subsidiaries.
(b) Upon and following the registration of Holdings's capital stock
pursuant to the Securities Act, generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of Holdings
and its subsidiaries, are applied in a consistent manner. Upon any such
registration, all reports and financial statements required hereunder with
respect to Holdings or with respect to Holdings and its subsidiaries may be
prepared in accordance with such principles and practices, but all calculations
and determinations to be made hereunder may be made in accordance with such
principles and practices only after notice of such registration is given to each
Lender and Required Lenders agree to such principles and practices insofar as it
affects the accounting of Holdings or of Holdings and its subsidiaries. If any
change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle
or practice to continue as a generally accepted accounting principle or
practice, all reports and financial statements required hereunder with respect
to Holdings or with respect to Holdings and its subsidiaries may be prepared in
accordance with such change, but all calculations and determinations to be made
hereunder may be made in accordance with such change only after notice of such
change is given to each Lender and Required Lenders agree to such change insofar
as it affects the accounting of Holdings or of Holdings and its subsidiaries.
11
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"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 now or hereinafter in effect, including, without
limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.
"GRANTING LENDER" shall have the meaning assigned to such term in
Section 9.04(h).
"GUARANTEE" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and including
any obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation, (b)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment of
such Indebtedness or other obligation or (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation; PROVIDED, HOWEVER, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
"HAZARDOUS MATERIALS" shall mean (a) petroleum and any petroleum
products or Hydrocarbons, coal ash, radon gas, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, chlorofluorocarbons and all other
ozone-depleting substances and (b) any chemical, material, substance or waste
that is prohibited, limited or regulated by or pursuant to any Environmental
Law.
"HEDGING AGREEMENT" shall mean any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
The "PRINCIPAL AMOUNT" of the obligations of any person in respect of any
Hedging Agreement at any time shall be the maximum aggregate amount (after
giving effect to any netting agreements) that such person would be required to
pay if such Hedging Agreement were terminated at such time.
"HEDGING OBLIGATIONS" shall mean the due and punctual payment and
performance of all obligations of each Loan Party under each Hedging Agreement
(a) that is in effect on the Closing Date and set forth in SCHEDULE 1.01(A)
hereto, (b) that is in effect on the Closing Date with a counterparty that is
(i) the Agent, the Syndication Agent or the Documentation Agent, (ii) a Lender
as of the Closing Date or (iii) an Affiliate of the Agent, the Syndication
Agent, the Documentation Agent or any such Lender or (c) that is entered into
after the Closing Date with a counterparty that is (i) the Agent, the
Syndication Agent or the Documentation Agent, (ii) a Lender as of the date on
which the Hedging Agreement is entered into or (iii) an Affiliate of the Agent,
the Syndication Agent, the Documentation Agent or any such Lender.
12
"HOLDINGS" shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
"HYDROCARBON INTERESTS" shall mean all rights, titles, interests and
estates now owned or hereafter acquired in and to oil and gas leases, leasehold
interests and licenses, oil, gas and mineral leases or other liquid or gaseous
hydrocarbon licenses, leases, fee mineral interests, term mineral interests,
subleases, mineral servitudes, farm-outs, royalties, overriding royalty and
royalty interests, non-consent interests arising out of or pursuant to
Contracts, net profit interests, net revenue and profit interests, oil payments,
production payments, production payment interests and similar interests and
estates, including all reserved or residual interests of whatever nature and all
reversionary or carried interests relating to any of the foregoing. Unless
otherwise indicated herein, each reference to the term "HYDROCARBON INTERESTS"
shall mean Hydrocarbon Interests of the Borrower and the Subsidiaries.
"HYDROCARBONS" shall mean oil, gas, casinghead gas, drip gasoline,
natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons, kerosene, liquefied petroleum gas, refined lubricating oils,
diesel fuel and all products refined, separated, settled or dehydrated
therefrom.
"INDEBTEDNESS" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
under conditional sale or other title retention agreements relating to property
or assets acquired by such person, (d) all obligations of such person in respect
of the deferred purchase price of property or services (excluding accounts
payable incurred in the ordinary course of business and paid within 90 days of
the incurrence thereof (or if earlier, when due)), (e) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such person, whether or not the Indebtedness secured thereby has
been assumed, (f) all Guarantees by such person of Indebtedness of others, (g)
all Capital Lease Obligations and Synthetic Lease Obligations of such person,
(h) all obligations, contingent or otherwise, of such person as an account party
in respect of letters of credit and letters of guaranty, (i) all obligations,
contingent or otherwise, in respect of bankers' acceptances, (j) all obligations
of such person with respect to any arrangement, directly or indirectly, whereby
such person or its subsidiaries shall sell or transfer any material asset, and
whereby such person or any of its subsidiaries shall then or immediately
thereafter rent or lease as lessee such asset or any part thereof, (k) all
obligations with respect to payments received in consideration of oil, gas or
other minerals yet to be acquired or produced at the time of payment (including
obligations under "take-or-pay" contracts and the undischarged balance of any
production payment), and (l) all net payments that such person would have to
make in the event of an early termination under any Hedging Agreement if, on the
date Indebtedness of such person is being determined, such Hedging Agreement
became subject to an early termination as of such date. The Indebtedness of any
person shall include the Indebtedness of any other person (including any
partnership in which such person is a general partner) to the extent such person
is liable therefor as a result of such person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such person is not liable therefor.
"INDEMNITEE" has the meaning ascribed to such term in Section 9.06(b).
13
"INDEPENDENT ENGINEER" shall mean (a) ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇, (b)
▇▇▇▇▇ ▇▇▇▇▇ Company Petroleum Engineers, (c) Netherland, ▇▇▇▇▇▇ & Associates,
Inc., or (d) another independent petroleum engineer acceptable to the Agent.
"INTERCOMPANY SERVICES AGREEMENT" shall mean (a) the Transition
Services Agreement or (b) one or more service agreements, in form and substance
acceptable to the Agent, pursuant to which the services provided for under the
agreement described in the Transition Services Agreement are performed by an
entity of established reputation in the oil and gas industry on terms (including
pricing) and conditions then consistent with standard industry practice for such
services.
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor Agreement,
substantially in the form of EXHIBIT D, among the Agent, the Second Lien Agent,
Holdings and the Borrower.
"INTEREST PAYMENT DATE" shall mean (a) with respect to any ABR Loan,
(i) the last day of each month, commencing on the first such date to occur after
the Closing Date and (ii) the Termination Date, and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a party.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day (or, if there is no numerically corresponding day,
on the last day) in the calendar month that is three months thereafter;
PROVIDED, HOWEVER, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.
"INTERIM REDETERMINATION" shall have the meaning assigned to such term
in Section 2.21(b).
"LEASES" shall mean all oil and gas leases in respect of Real Property
containing proved, probable or possible oil or gas reserves to which the
Borrower or any Subsidiary is a party.
"LENDERS" shall mean the persons listed on SCHEDULE 2.01 and any other
person that has become a party hereto pursuant to an Assignment and Acceptance,
other than any such person that ceases to be a party hereto pursuant to an
Assignment and Acceptance.
"LEVERAGE RATIO" shall mean, on any date, the ratio of (a) Total Debt
on such date to (b) Consolidated EBITDA for the period of four consecutive
fiscal quarters most recently ended on or prior to such date.
"LIBO RATE" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate per annum determined by the Agent at approximately
11:00 a.m. (London time) on the date that is two Business Days prior to the
commencement of such Interest Period by reference to the British Bankers'
Association Interest Settlement Rates for deposits in dollars (as set forth by
any service selected by the Agent that has been nominated by the British
14
Bankers' Association as an authorized information vendor for the purpose of
displaying such rates) for a period equal to such Interest Period; PROVIDED
that, to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the "LIBO RATE" shall be the interest
rate per annum determined by the Agent to be the average of the rates per annum
at which deposits in dollars are offered for such relevant Interest Period to
major banks in the London interbank market in London, England at approximately
11:00 a.m. (London time) on the date that is two Business Days prior to the
beginning of such Interest Period.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, Capital Lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"LOAN DOCUMENTS" shall mean this Agreement, the Security Documents, the
Agency Fee Letter, and the promissory notes, if any, executed and delivered
pursuant to Section 2.03(e), and all other certificates, instruments or
agreements executed and delivered by a Loan Party in connection with any of the
foregoing.
"LOAN DOCUMENT OBLIGATIONS" shall mean (a) the due and punctual payment
by the Borrower of (i) the principal of and interest (including interest
accruing during the pendency of, or which would have accrued but for, any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise and (ii) all other monetary obligations of the Borrower to any of
the Secured Parties under this Agreement and each of the other Loan Documents,
including obligations to pay fees, expense reimbursement obligations and
indemnification obligations, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), (b) the due and
punctual performance of all other obligations of the Borrower under or pursuant
to this Agreement and each of the other Loan Documents to which it is a party
and (c) the due and punctual payment and performance of all the obligations of
each other Loan Party under or pursuant to the Security Documents and each of
the other Loan Documents to which it is a party.
"LOAN PARTIES" shall mean Holdings, the Borrower and the Subsidiary
Loan Parties.
"LOANS" shall mean Loans made by a Lender to the Borrower pursuant to
Section 2.01.
"MARGIN STOCK" shall have the meaning assigned to such term in
Regulation U.
"MASTER CONVEYANCE" shall mean (a) the Master Conveyance dated
effective as of January 1, 2007, between Forest Oil Corporation, a corporation
organized under the laws of the State of New York and the Borrower.
"MATERIAL ADVERSE EFFECT" shall mean (a) a materially adverse effect on
the business, assets, liabilities, operations, condition (financial or
otherwise) or operating results of Holdings and its subsidiaries, taken as a
whole, (b) a material impairment of the ability of the Borrower or any other
Loan Party to perform any of its obligations under any Loan Document to which it
is or will be a party or (c) a material impairment of the rights and remedies of
or benefits available to the Lenders under any Loan Document.
15
"MATERIAL CONTRACT" shall mean, collectively, (i) any contract or other
arrangement to which Holdings, the Borrower or any of the Subsidiaries is a
party (other than the Loan Documents) for which breach, nonperformance,
cancellation or failure to renew (in the case of contracts or arrangements that
are, by their terms, renewable at the option of the Borrower or a Subsidiary)
could reasonably be expected to have a Material Adverse Effect and (ii) any
agreement or instrument evidencing or governing Indebtedness.
"MATERIAL INDEBTEDNESS" shall mean Indebtedness (other than the Loans),
or obligations in respect of one or more Hedging Agreements, of any one or more
of Holdings or any of its subsidiaries in an aggregate principal amount
exceeding $2,500,000.
"MAXIMUM CREDIT AMOUNT" shall mean, as to each Lender, the amount set
forth opposite such Lender's name on Schedule 2.01 under the caption "Maximum
Credit Amounts", as the same may be (a) reduced or terminated from time to time
in connection with a reduction or termination of the Aggregate Maximum Credit
Amounts pursuant to Section 2.11 or (b) modified from time to time pursuant to
any assignment permitted by Section 9.04; PROVIDED, that with respect to any
Lender that does not approve an increased Borrowing Base pursuant to Section
2.21, such Lender's Maximum Credit Amount shall be the amount of such Lender's
Commitment.
"MEMBERSHIP INTEREST ASSIGNMENT" shall mean the Assignment of Right,
Title and Interest to Membership Interest dated effective as of January 1, 2007
by and between Forest Alaska Holding LLC, as Assignor, and Holdings, as
Assignee.
"MEMBERSHIP INTEREST PURCHASE AGREEMENT" shall have the meaning
assigned to such term in the recitals to this Agreement.
"MMS" shall mean the United States Department of Interior Minerals
Management Service.
"MMS LEASES" shall mean the oil and gas leases in respect of Real
Property located on offshore Outer Continental Shelf lands over which the MMS
has jurisdiction.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
thereto.
"MORTGAGED PROPERTIES" shall mean (a) all Real Property of any Loan
Party on the Closing Date and listed on Schedule 1.01(b) and (b) any after
acquired Real Property of any Loan Party having a gross purchase price of
$1,000,000 or more at the time of the acquisition thereof.
"MORTGAGES" shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents substantially in the form of EXHIBIT E or in other forms reasonably
acceptable to the Agent and the Borrower.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
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"NEW BORROWING BASE NOTICE" shall have the meaning assigned to such
term in Section 2.21(d).
"NYMEX" shall mean the New York Mercantile Exchange.
"OBLIGATIONS" shall mean (a) the Loan Document Obligations and (b) the
Hedging Obligations.
"OIL AND GAS PROPERTIES" shall mean (a) Hydrocarbon Interests, (b)
properties and assets now or hereafter pooled or unitized with Hydrocarbon
Interests, (c) all currently existing or future unitization, pooling agreements
and declarations of pooled units and the units created thereby (including all
units created under orders, regulations and rules of any Governmental Authority)
which may affect all or any portion of the Hydrocarbon Interests, (d) all
operating agreements, contracts and other Contracts, including production
sharing contracts and agreements, which relate to any of the Hydrocarbon
Interests or the production, sale, purchase, exchange or processing of
Hydrocarbons from or attributable to such Hydrocarbon Interests, (e) all
Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon Interests, including all oil in tanks, and all rents, issues,
profits, proceeds, products, revenues and other incomes from or attributable to
the Hydrocarbon Interests, (f) all tenements, hereditaments, appurtenances and
properties and assets in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all properties and assets,
rights, titles, interests and estates described or referred to above, including
any and all properties and assets, 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
properties and assets (excluding drilling rigs, automotive equipment, rental
equipment or other personal property or assets 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. Unless otherwise indicated
herein, each reference to the term "OIL AND GAS PROPERTIES" shall mean Oil and
Gas Properties of the Borrower and the Subsidiaries.
"OPERATING EQUIPMENT" shall mean all surface or subsurface machinery,
equipment, facilities, supplies or other properties and assets of whatsoever
kind or nature now or hereafter located on any of the properties or assets
affected by the Oil and Gas Properties which are useful for the production,
treatment, storage or transportation of Hydrocarbons, including all oil ▇▇▇▇▇,
gas ▇▇▇▇▇, water ▇▇▇▇▇, injection ▇▇▇▇▇, casing, tubing, rods, pumping units and
engines, Christmas trees, derricks, separators, gun barrels, flow lines,
pipelines, tanks, gas systems (for gathering, treating and compression), water
systems (for treating, disposal and injection), supplies, derricks, wells, power
plants, poles, cables, wires, meters, processing plants, compressors,
dehydration units, lines, transformers, starters and controllers, machine shops,
tools, storage yards and equipment stored therein, buildings and camps,
telegraph, telephone and other communication systems, roads, loading racks,
shipping facilities and all additions, substitutes and replacements for, and
accessories and attachments to, any of the foregoing. "OPERATING EQUIPMENT"
shall not include any items incorporated into realty or structures or
improvements located therein or thereon in such a manner that they no longer
remain personal property under the laws of the State in which such equipment is
located.
17
"ORRI CONVEYANCE" has the meaning ascribed to such term in the Second
Lien Credit Agreement.
"OTHER TAXES" shall mean any and all present or future stamp,
registration, recording, filing, transfer, documentary, excise or property
Taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to or in
connection with, any Loan Document.
"PACIFIC ENERGY" shall have the meaning assigned to such term in the
recitals to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"PDP PV-10%" shall mean, on any date, 100% of the present value of
future revenues less severance and ad valorem taxes, operating expenses and
capital expenditures of the proved developed producing oil and gas reserves
attributable to the Oil and Gas Properties, as evaluated in the most recently
delivered Reserve Report in respect of proved developed producing oil and gas
reserves attributable to the Oil and Gas Properties, discounted at a rate of 10%
and utilizing the monthly crude oil (WTI) and natural gas (▇▇▇▇▇ Hub) prices, in
each case based upon (i) the actual monthly price quoted on NYMEX on such date
for the corresponding month through the 60th month from such date and (ii) the
arithmetic monthly average for months 49 through 60 for each month after the
60th month. The amount of the PDP PV-10% then in effect shall be (a) calculated
on a PRO FORMA basis for dispositions and acquisitions consummated since the
date of the most recently delivered Reserve Report in respect of proved
developed producing oil and gas reserves attributable to the Oil and Gas
Properties to the extent that a reserve report reasonably acceptable to the
Agent in respect of proved developed producing oil and gas reserves attributable
to such disposition or acquisition is available and (b) adjusted to give effect
to the Borrower's and the Subsidiaries' commodity ▇▇▇▇▇▇ then in effect.
"PENSION ACT" shall mean the Pension Protection Act of 2006.
"PERFECTION CERTIFICATE" shall mean the Perfection Certificate
substantially in the form of EXHIBIT B to the Collateral Agreement.
"PERMITTED ACQUISITION" shall mean the acquisition by the Borrower or
any Subsidiary of all or substantially all of the assets of a person or a line
of business of such person, or not less than 100% of the Equity Interests (other
than directors' qualifying shares) in a person (referred to herein as the
"ACQUIRED Entity"); PROVIDED that (i) such acquisition was not preceded by an
unsolicited tender offer for such Equity Interests by, or proxy contest
initiated by, Pacific Energy, Holdings, the Borrower or any of their respective
Subsidiaries, (ii) the Acquired Entity shall be in a similar line of business as
that of the Borrower and the Subsidiaries as conducted during the current and
most recent calendar year and (iii) at the time of such transaction (A) both
before and after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing, (B) the Borrower would be in compliance with
the covenants set forth in Sections 6.11 and 6.12 as of the most recently
completed period of four consecutive fiscal quarters ending prior to such
transaction for which the financial statements and certificates required by
Section 5.04(a) or 5.04(b), as the case may be, have been delivered, after
18
giving PRO FORMA effect to such transaction, any related incurrences of
Indebtedness and any other event occurring after such period as to which PRO
FORMA recalculation is appropriate (including any other transaction described in
this definition occurring after such period) as if such transaction had occurred
as of the first day of such period, (C) (I) the total consideration paid in
connection with such acquisition and any other acquisitions pursuant to Section
6.04(g) (including any Indebtedness of the Acquired Entity that is assumed by
the Borrower or any Subsidiary following such acquisition and any payments
following such acquisition pursuant to earn-out provisions or similar
obligations) made in the same fiscal year, together with all investments in Oil
and Gas Properties made pursuant to Section 6.04(k) in such fiscal year, shall
not in the aggregate exceed $7,500,000 and (II) the total consideration paid in
connection with such acquisition and any other acquisitions pursuant to Section
6.04(g) (including any Indebtedness of the Acquired Entity that is assumed by
the Borrower or any Subsidiary following such acquisition and any payments
following such acquisition pursuant to earn-out provisions or similar
obligations) during the term of this Agreement, together with all investments in
Oil and Gas Properties made pursuant to Section 6.04(k) during the term of this
Agreement, shall not in the aggregate exceed $25,000,000, (D) the Borrower shall
have delivered a certificate of a Financial Officer of the Borrower, certifying
as to the foregoing and containing reasonably detailed calculations in support
thereof, in form and substance satisfactory to the Agent and (E) the Borrower
shall comply, and shall cause the Acquired Entity to comply, with the applicable
provisions of Section 5.12 and the Security Documents.
"PERMITTED INVESTMENTS" shall mean with respect to any Person, any
direct or indirect advance, loan, guarantee of liabilities (including all
indebtedness, liabilities and obligations of such Person, whether matured or
unmatured, liquidated or unliquidated, primary or secondary, direct or indirect,
absolute, fixed or contingent, and whether or not required to be considered
pursuant to GAAP or other extension of credit or capital contribution to (by
means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition by such Person of any capital stock, bonds, notes, debentures or
other securities or evidences of Indebtedness issued by, any other Person:
(a) in open market commercial paper, maturing within 270 days after
acquisition thereof, which is rated at least A 1 by S&P or P 1 by Moody's.
(b) in marketable obligations, maturing within 12 months after
acquisition thereof, issued or unconditionally guaranteed by the United States
of America or an instrumentality or agency thereof and entitled to the full
faith and credit of the United States of America.
(c) in demand deposits, and time deposits (including certificates of
deposit) maturing within 12 months from the date of deposit thereof, with any
office of any national or state bank or trust company which is organized under
the Laws of the United States of America or any state therein, which has
capital, surplus and undivided profits of at least $500,000,000, and whose
certificates of deposit are rated at least Aa3 by Moody's or AA- by S&P.
(d) in repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (b) above entered
into with any commercial bank meeting the specifications of clause (c) above.
19
(e) in money market or other mutual funds substantially all of whose
assets comprise securities of the types described in clauses (a) through (d)
above.
"PERMITTED REFINANCING INDEBTEDNESS" shall mean any Indebtedness (other
than obligations under Hedging Agreements) issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, defease or refund
(collectively, to "REFINANCE") the Indebtedness (other than obligations under
Hedging Agreements) being Refinanced (or previous refinancings thereof
constituting Permitted Refinancing Indebtedness); PROVIDED that (a) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness so Refinanced (PLUS unpaid accrued
interest, underwriting discounts, origination fees and premium thereon), (b) the
average life to maturity of such Permitted Refinancing Indebtedness is greater
than or equal to that of the Indebtedness being Refinanced, (c) if the
Indebtedness being Refinanced is subordinated in right of payment to the
Obligations under this Agreement, such Permitted Refinancing Indebtedness shall
be subordinated in right of payment to such Obligations on terms at least as
favorable to the Lenders as those contained in the documentation governing the
Indebtedness being Refinanced, (d) no Permitted Refinancing Indebtedness shall
have different obligors, or greater guarantees or security, than the
Indebtedness being Refinanced and (e) if the Indebtedness being Refinanced is
secured by any collateral (whether equally and ratably with, or junior to, the
Secured Parties or otherwise), such Permitted Refinancing Indebtedness may be
secured by such collateral on terms (including Lien subordination terms) no less
favorable to the Secured Parties than those contained in the documentation
governing the Indebtedness being Refinanced.
"PERSON" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership,
Governmental Authority or other entity.
"PLAN" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PRIME RATE" shall mean the rate of interest quoted in THE WALL STREET
JOURNAL, Money Rates Section as the Prime Rate (currently defined as the base
rate on corporate loans posted by at least seventy five percent (75%) of the
nation's thirty (30) largest banks), as in effect from time to time. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. Any Agent or any other Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"PROPOSED BORROWING BASE" shall have the meaning assigned to such term
in Section 2.21(c)(i).
"PROVED PV-10%" shall mean, on any date, 100% of the present value of
future revenues less severance and ad valorem taxes, operating expenses and
capital expenditures of the proved oil and gas reserves attributable to the Oil
and Gas Properties, as evaluated in the most recently delivered Reserve Report
in respect of proved oil and gas reserves attributable to the Oil and Gas
Properties, discounted at a rate of 10% and utilizing the monthly crude oil
20
(WTI) and natural gas (▇▇▇▇▇ Hub) prices, in each case based upon (i) the actual
monthly price quoted on NYMEX on such date for the corresponding month through
the 60th month from such date and (ii) the arithmetic monthly average for months
49 through 60 for each month after the 60th month. The amount of the Proved
PV-10% then in effect shall be (a) calculated on a PRO FORMA basis for
dispositions and acquisitions consummated since the date of the most recently
delivered Reserve Report in respect of proved oil and gas reserves attributable
to the Oil and Gas Properties to the extent that a reserve report reasonably
acceptable to the Agent in respect of proved oil and gas reserves attributable
to such disposition or acquisition is available and (b) adjusted to give effect
to the Borrower's and the Subsidiaries' commodity ▇▇▇▇▇▇ then in effect.
"PURCHASE DATE" shall have the meaning assigned to such term in Section
2.21.
"REAL PROPERTY" shall mean, collectively, all right, title and interest
of the Borrower or any Subsidiary in and to any and all parcels of real property
owned, leased or operated by the Borrower or any Subsidiary together with all
improvements and appurtenant fixtures, equipment, personal property, easements
and other property and rights incidental to the ownership, lease or operation
thereof, including all Oil and Gas Properties that constitute real property.
"REGISTER" shall have the meaning assigned to such term in Section
9.05(a).
"REGULATION T" shall mean Regulation T of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof
"RELATED AGREEMENTS" shall mean, collectively, (i) the Acquisition
Agreements and (ii) the Intercompany Services Agreement.
"RELATED FUND" shall mean, with respect to any Lender that is a fund or
commingled investment vehicle that invests in bank loans, any other fund that
invests in bank loans and is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor. With respect to
Silver Point, "RELATED FUND" shall also include any swap, special purpose
vehicles purchasing or acquiring security interests in collateralized loan
obligations or any other vehicle through which Silver Point may leverage its
investments from time to time.
"RELATED PARTIES" shall mean, with respect to any specified person,
such person's Affiliates and the directors, trustees, officers, employees,
agents and advisors of such person and such person's Affiliates.
"RELEASE" shall mean any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into or through the environment or within or upon any building,
structure, facility or fixture.
"REQUIRED LENDERS" shall mean, at any time, Lenders having Loans
representing more than 66 2/3% of the sum of all Loans outstanding at such time.
21
"RESERVE REPORT" shall mean (a) each of the reserve reports referred to
in Section 3.05(c) and (b) any other reserve report, in form and substance
reasonably satisfactory to the Agent, setting forth, as of each January 1st or
July 1st (or such other date in the event of an Interim Redetermination) the oil
and gas reserves attributable to the Oil and Gas Properties of the Borrower and
its Subsidiaries, together with a projection of the rate of production and
future net income, taxes, operating expenses and capital expenditures with
respect thereto as of such date, based upon the pricing assumptions consistent
with the Agent's lending requirements at the time.
"RESPONSIBLE OFFICER" of any person shall mean any executive officer or
Financial Officer of such person and any other officer or similar official
thereof responsible for the administration of the obligations of such person in
respect of this Agreement, including a reserve engineer of seniority reasonably
acceptable to the Agent.
"RESTRICTED INDEBTEDNESS" shall mean Indebtedness of Holdings, the
Borrower or any Subsidiary, the payment, prepayment, repurchase or defeasance of
which is restricted under Section 6.06(b).
"RESTRICTED PAYMENT" shall mean any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in Holdings, the Borrower or any Subsidiary, or any payment (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any Equity Interests in Holdings, the Borrower or
any Subsidiary.
"REVOLVING CREDIT EXPOSURE" shall mean, with respect to any Lender at
any time, the outstanding principal amount of such Lender's Loans at such time.
"SCHEDULED REDETERMINATION" shall have the meaning assigned to such
term in Section 2.21(b).
"SECOND LIEN AGENT" shall mean the "Agent", as defined in the Second
Lien Credit Agreement.
"SECOND LIEN CREDIT AGREEMENT" shall mean the Second Lien Credit
Agreement dated as of the date hereof, among the Borrower, Holdings, the lenders
from time to time party thereto and Silver Point, as administrative agent and
collateral agent, as amended, supplemented or otherwise modified from time to
time.
"SECOND LIEN LENDERS" shall mean "Lenders", as defined in the Second
Lien Credit Agreement.
"SECOND LIEN LOAN DOCUMENTS" shall mean "Loan Documents", as defined in
the Second Lien Credit Agreement.
"SECOND LIEN LOAN PARTIES" shall mean "Loan Parties", as defined in the
Second Lien Credit Agreement.
"SECOND LIEN LOAN REPAYMENT DATE" shall mean such time as the Second
Lien Loans have been repaid in full.
22
"SECOND LIEN LOANS" shall mean "Loans", as defined in the Second Lien
Credit Agreement.
"SECOND LIEN OBLIGATIONS" shall mean "Loan Document Obligations", as
defined in the Second Lien Credit Agreement.
"SECOND LIEN SECURED PARTY" shall mean "Secured Party", as defined in
the Second Lien Credit Agreement.
"SECURED PARTIES" shall mean (a) the Lenders, (b) the Agent, (c) each
counterparty to any Hedging Agreement entered into with a Loan Party the
obligations under which constitute Obligations, (d) the beneficiaries of each
indemnification obligation undertaken by any Loan Party under any Loan Document,
and (e) the successors and permitted assigns of each of the foregoing.
"SECURITY DOCUMENTS" shall mean the Mortgages, the Collateral
Agreement, the Account Control Agreements, the Intercreditor Agreement and each
of the security agreements, mortgages and other instruments and documents
executed and delivered pursuant to any of the foregoing or pursuant to Section
5.12.
"SILVER POINT" shall have the meaning assigned to such term in the
introductory paragraph.
"SPC" shall have the meaning assigned to such term in Section 9.04(h).
"S&P" shall mean Standard & Poor's Ratings Service, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto.
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one MINUS the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Agent or any Lender (including any branch, Affiliate or other
fronting office making or holding a Loan) is subject for Eurocurrency
Liabilities (as defined in Regulation D of the Board). Eurodollar Loans shall be
deemed to constitute Eurocurrency Liabilities as defined in Regulation D of the
Board) and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"SUBORDINATED INDEBTEDNESS" of a person means any Indebtedness of such
person the payment of which is subordinated to payment of the Obligations, and
shall include, in any event, Indebtedness of the Loan Parties under the
Subordinated Seller Note.
"SUBORDINATED SELLER NOTE" shall mean that certain Subordinated
Accreting Note, dated as of August 24, 2007, made by Pacific Energy in favor of
Forest Oil Corporation in the original principal amount of $29,250,000.
23
"SUBSIDIARY" shall mean, with respect to any person (herein referred to
as the "PARENT"), any corporation, partnership, limited liability company,
association or other business entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or more than 50% of the general partnership interests are,
at the time any determination is being made, owned, Controlled or held or (b)
that is, at the time any determination is made, otherwise Controlled, by the
parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.
"SUBSIDIARY" shall mean any subsidiary of the Borrower.
"SUBSIDIARY LOAN PARTY" shall mean each Subsidiary that has executed
the Collateral Agreement or a supplement thereto and a Mortgage in respect of
each Mortgaged Property which is owned by it.
"SUCCESSFUL SYNDICATION" shall mean the acquisition by a bank or other
financial institution acceptable to the Agent and the Documentation Agent of all
outstanding Commitments and Loans hereunder pursuant to Section 9.04.
"SYNDICATION AGENT" shall mean Silver Point, in its capacity as
syndication agent for the Lenders.
"SYNTHETIC LEASES" shall mean, in respect of any person, all leases
which shall have been, or should have been, in accordance with GAAP, treated as
operating leases on the financial statements of the person liable (whether
contingently or otherwise) for the payment of rent thereunder and which were
properly treated as indebtedness for borrowed money for purposes of U.S. federal
income taxes, if the lessee in respect thereof is obligated to either purchase
for an amount in excess of, or pay upon early termination an amount in excess
of, 80% of the residual value of the Property subject to such operating lease
upon expiration or early termination of such lease.
"SYNTHETIC LEASE OBLIGATIONS" shall mean all monetary obligations under
a Synthetic Lease.
"SYNTHETIC PURCHASE AGREEMENT" shall mean any swap, derivative or other
agreement or combination of agreements pursuant to which Holdings, the Borrower
or any Subsidiary is or may become obligated to make (a) any payment in
connection with a purchase by any third party from a person other than Holdings,
the Borrower or any Subsidiary of any Equity Interest or Restricted Indebtedness
or (b) any payment (other than on account of a permitted purchase by it of any
Equity Interest or Restricted Indebtedness) the amount of which is determined by
reference to the price or value at any time of any Equity Interest or Restricted
Indebtedness; PROVIDED that no phantom stock or similar plan providing for
payments only to current or former directors, officers or employees of Holdings,
the Borrower or any Subsidiary (or to their heirs or estates) shall be deemed to
be a Synthetic Purchase Agreement.
"TAXES" shall mean any present or future tax, levy, impost, duty,
assessment, charge, fee, deduction or withholding of any nature and whatever
called, by whomever, on whomever and wherever imposed, levied, collected,
withheld or assessed; provided, "Tax on the overall net income" of a person
shall be construed as a reference to a tax imposed by the jurisdiction in which
that person is organized or in which that person's applicable principal office
(and/or, in the case of a Lender, its lending office) is located or in which
that person (and/or, in the case of a Lender, its lending office) is deemed to
be doing business (other than a jurisdiction in which such person is treated as
doing business as a result of its entering into this Agreement or any Security
24
Document or its participation in the transactions governed thereby) on all or
part of the net income, profits or gains (whether worldwide, or only insofar as
such income, profits or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise) of that person (and/or, in the case of a
Lender, its applicable lending office).
"TERMINATION DATE" shall mean August 24, 2011; PROVIDED that if a
Successful Syndication has not occurred on or before September 30, 2007,
"TERMINATION DATE" shall mean February 24, 2009.
"TOTAL DEBT" shall mean, at any time, the Indebtedness of Holdings and
its subsidiaries on a consolidated basis at such time described under clauses
(a), (b), (c), (d), (e), (f), (g), (h), (i) and (j) of the definition of
Indebtedness; PROVIDED that "Total Debt" shall exclude any Indebtedness of
Holdings and its subsidiaries composed of (i) outstanding but undrawn letters of
credit or outstanding but undrawn performance bonds, (ii) Guarantees of
Indebtedness under the 2006 PERL Credit Agreement and (iii) Indebtedness under
the Subordinated Seller Note.
"TRANSACTIONS" shall mean, collectively, (a) the execution, delivery
and performance by the Loan Parties of the Loan Documents to which they are a
party, including the borrowing of Loans hereunder, (b) the execution, delivery
and performance by the Second Lien Loan Parties of the Second Lien Loan
Documents to which they are party and the borrowing of Second Lien Loans
thereunder, (c) the Acquisition and (d) the payment of fees and expenses in
connection with the foregoing.
"TRANSITION SERVICES AGREEMENT" shall mean the Intercompany Services
Agreement dated November 1, 2006 between Forest Oil Corporation and the Borrower
and referred to in Section 10.1 of the Membership Interest Purchase Agreement.
"TYPE", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "RATE" shall mean
the Adjusted LIBO Rate and the Alternate Base Rate.
"USA PATRIOT ACT" shall mean The Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).
"WHOLLY OWNED SUBSIDIARY" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the Equity Interests are, at the time
any determination is being made, owned, Controlled or held by such person or one
or more wholly owned subsidiaries of such person or by such person and one or
more wholly owned subsidiaries of such person.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 TERMS GENERALLY. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
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The word "will" shall be construed to have the same meaning and effect as the
word "shall"; and the words "asset" and "property" shall be construed as having
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented, waived or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; PROVIDED, HOWEVER, that if Holdings notifies the Agent that
Holdings wishes to amend any covenant in Article VI or any related definition to
eliminate the effect of any change in GAAP occurring after the date of this
Agreement on the operation of such covenant (or if the Agent notifies Holdings
that the Required Lenders wish to amend Article VI or any related definition for
such purpose), then Holding's compliance with such covenant shall be determined
on the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to Holdings and the Required Lenders. Unless
the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented, waived or otherwise modified (subject to any restrictions on such
amendments, supplements, waivers or modifications set forth herein), (b) any
definition of or reference to any statute, regulation or other law herein shall
be construed (i) as referring to such statute, regulation or other law as from
time to time amended, supplemented or otherwise modified (including by
succession of comparable successor statutes, regulations or other laws) and (ii)
to include all official rulings and interpretations thereunder, (c) any
reference herein to any person shall be construed to include such person's
successors and assigns and (d) the words "herein", "hereof' and "hereunder", and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof.
SECTION 1.03 CLASSIFICATION OF LOANS AND BORROWINGS. For
purposes of this Agreement, Loans may be classified and referred to by Type
(E.G., a "Eurodollar Loan"). Borrowings also may be classified and referred to
by Type (E.G., a "Eurodollar Borrowing").
ARTICLE II
THE CREDITS
SECTION 2.01 COMMITMENTS. On the terms and subject to the
conditions and relying upon the representations and warranties herein set forth,
each Lender agrees, severally and not jointly, to make Loans to the Borrower
during the Availability Period in an aggregate principal amount that will not
result in (a) such Lender's Revolving Credit Exposure exceeding such Lender's
Commitment or (b) the total Revolving Credit Exposures exceeding the total
Commitments. The Loans made on the Closing Date shall be disbursed to the
account designated by the Borrower in a writing delivered to the Agent prior to
the time of the initial Borrowing hereunder. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Loans.
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SECTION 2.02 LOANS. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their Commitments; PROVIDED, HOWEVER, that the failure of any Lender to make any
Loan shall not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible for
the failure of any other Lender to make any Loan required to be made by such
other Lender). The Loans comprising any Borrowing shall be in an aggregate
principal amount that is an integral multiple of $500,000 and not less than
$1,000,000.
(b) Subject to Sections 2.07 and 2.14, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.09. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; PROVIDED that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the same
time; PROVIDED, HOWEVER, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than seven Eurodollar Borrowings
outstanding hereunder at any time.
(c) Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds to such account in New York City as the Agent may designate not later than
1:00 p.m., New York City time, and the Agent shall promptly credit the amounts
so received to the account designated by the Borrower pursuant to Section 2.01
or, if a Borrowing shall not occur on such date because any condition precedent
herein specified shall not have been met, return the amounts so received to the
Lenders.
(d) Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Agent such Lender's portion of such Borrowing, the Agent may assume that
such Lender has made such portion available to the Agent on the date of such
Borrowing in accordance with paragraph (c) above and the Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Agent shall have so made funds available then, to
the extent that such Lender shall not have made such portion available to the
Agent, such Lender and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower to but
excluding the date such amount is repaid to the Agent at (i) in the case of the
Borrower, a rate per annum equal to the interest rate applicable at the time to
the Loans comprising such Borrowing and (ii) in the case of such Lender, a rate
determined by the Agent to represent its cost of overnight or short-term funds
(which determination shall be conclusive absent manifest error). If such Lender
shall repay to the Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
(e) Nothing in this Section shall be deemed to relieve any
Lender of its obligations in respect of its Commitment hereunder or to prejudice
any rights that the Borrower may have against any Lender as a result of a
default by such Lender under this Agreement.
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SECTION 2.03 EVIDENCE OF DEBT; REPAYMENT OF LOANS (a) The
Borrower hereby unconditionally promises to pay to the Agent for the account of
each Lender the principal amount of each Loan of such Lender as provided in
Section 2.10.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Agent shall maintain accounts in which it will record
(i) the amount of each Loan made hereunder, the Type thereof and, if applicable,
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Agent hereunder
from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) above shall be PRIMA facie evidence of the existence and
amounts of the obligations therein recorded; PROVIDED, HOWEVER, that the failure
of any Lender or the Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrower to repay the Loans in
accordance with their terms.
(e) Any Lender may request that Loans made by it hereunder be
evidenced by a promissory note in the form of Exhibit L. In such event, the
Borrower shall execute and deliver to such Lender a promissory note payable to
such Lender and its registered assigns and in a form and substance reasonably
acceptable to the Agent and the Borrower. Notwithstanding any other provision of
this Agreement, in the event any Lender shall request and receive such a
promissory note, the interests represented by such note shall at all times
(including after any assignment of all or part of such interests pursuant to
Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.04 REQUESTS FOR BORROWINGS. To request a Borrowing,
the Borrower shall notify the Agent of such request by telephone (a) in the case
of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, on the
date of the initial Borrowing hereunder, and not later than 12:00 noon, New York
City time, three Business Days before the date of the proposed Borrowing for
each Borrowing thereafter or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., New York City time, on the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Agent of a written Borrowing
Request in substantially the form of Exhibit G (a "BORROWING REQUEST") and
signed by the Borrower. Each such telephonic and written Borrowing Request shall
specify the following information:(i) the aggregate amount of the requested
Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
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(iv) the amount of the then effective Borrowing Base, the
current total Revolving Credit Exposures (without regard to the
requested Borrowing) and the PRO FORMA total Revolving Credit Exposures
(giving effect to the requested Borrowing); and
(v) the location and number of the account or accounts to
which funds are to be disbursed.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing.
Promptly following receipt of a Borrowing Request in accordance with this
Section 2.04, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.05 FEES; INTEREST ON LOANS.
(a) The Borrower agrees to pay to the Agent for the account of
each Lender a commitment fee, which shall accrue at a rate per annum equal to
the Applicable Margin for commitment fees on the average daily amount of the
unused amount of the Commitment of such Lender during the period from and
including the date of this Agreement to but excluding the Termination Date.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the Termination Date,
commencing on the first such date to occur after the date hereof. All commitment
fees shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).
(b) The Borrower agrees to pay to the Agent, for its own
account, the fees set forth in the Agency Fee Letter at the times and in the
amounts specified therein.
(c) Subject to the provisions of Section 2.06, the Loans
comprising each ABR Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be, when the Alternate Base Rate is determined by reference to the Prime Rate
and over a year of 360 days at all other times and calculated from and including
the date of such Borrowing to but excluding the date of repayment thereof) at a
rate per annum equal to the Alternate Base Rate plus the Applicable Margin.
(d) Subject to the provisions of Section 2.06, the Loans
comprising each Eurodollar Borrowing shall bear interest (computed on the basis
of the actual number of days elapsed over a year of 360 days and calculated from
and including the date of such Borrowing to but excluding the date of repayment
thereof) at a rate per annum equal to the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Margin.
(e) Interest on each Loan shall be payable in arrears on the
Interest Payment Dates applicable to such Loan except as otherwise provided in
this Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for
each day or each Interest Period, as the case may be, shall be determined by the
Agent, and such determination shall be conclusive absent manifest error.
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SECTION 2.06 DEFAULT INTEREST. Upon the occurrence and during
the continuance of an Event of Default or Borrowing Base Deficiency, all amounts
outstanding under this Agreement and the other Loan Documents shall bear
interest (after as well as before judgment), payable on demand, (a) in the case
of principal, at the rate otherwise applicable to such Loan pursuant to Section
2.05 PLUS 2.00% per annum and (b) in all other cases, at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to the Prime Rate
and over a year of 360 days at all other times) equal to the rate that would be
applicable to an ABR Loan plus 2.00% per annum.
SECTION 2.07 ALTERNATE RATE OF INTEREST. In the event, and on
each occasion, that on the day two Business Days prior to the commencement of
any Interest Period for a Eurodollar Borrowing the Agent shall have determined
that dollar deposits in the principal amounts of the Loans comprising such
Borrowing are not generally available in the London interbank market, or that
the rates at which such dollar deposits are being offered will not adequately
and fairly reflect the cost to Lenders representing the Required Lenders of
making or maintaining Eurodollar Loans during such Interest Period, or that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Agent
shall, as soon as practicable thereafter, give written or fax notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Agent shall have advised the Borrower and the Lenders
that the circumstances giving rise to such notice no longer exist, any request
by the Borrower for a Eurodollar Borrowing pursuant to Section 2.09 shall be
deemed to be a request for an ABR Borrowing. Each determination by the Agent
under this Section shall be conclusive absent manifest error.
SECTION 2.08 TERMINATION OF COMMITMENTS. Unless previously
terminated, the Commitments shall automatically terminate on the Termination
Date. If at any time the Aggregate Maximum Credit Amounts or the Borrowing Base
is terminated or reduced to zero, the Commitments shall terminate on the
effective date of such termination or reduction.
SECTION 2.09 CONVERSION AND CONTINUATION OF BORROWINGS. The
Borrower shall have the right at any time upon prior irrevocable notice to the
Agent (a) not later than 2:00 p.m., New York City time, one Business Day prior
to conversion, to convert any Eurodollar Borrowing into an ABR Borrowing and (b)
not later than 2:00 p.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Borrowing into a Eurodollar
Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for
an additional Interest Period, subject in each case to the following:(i) each
conversion or continuation of Loans shall be made PRO RATA among the Lenders in
accordance with the principal amounts of the Loans comprising the converted or
continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Agent by recording for the account of such Lender the new Loan of such
Lender resulting from such conversion and reducing the Loan (or portion
thereof) of such Lender being converted by an equivalent principal
amount; accrued interest on any Eurodollar Loan (or portion thereof)
being converted shall be paid by the Borrower at the time of
conversion;
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(iv) if any Eurodollar Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.15;
(v) any portion of a Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as
a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or continued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing;
(vii) no Interest Period may be selected for any Eurodollar
Borrowing that would end later than a date on which a repayment of
Loans pursuant to the applicable provision of Section 2.10 is due and
which occurs on or after the first day of such Interest Period if,
after giving effect to such selection, the aggregate outstanding amount
of (A) the Eurodollar Borrowings with Interest Periods ending on or
prior to such date and (B) the ABR Borrowings would not be at least
equal to the principal amount of Borrowings to be paid on such date;
and
(viii) after the occurrence and during the continuance of an
Event of Default or Borrowing Base Deficiency, no outstanding Loan may
be converted into, or continued as, a Eurodollar Loan.
Each notice pursuant to this Section 2.09 shall be irrevocable and shall refer
to this Agreement and specify (i) the identity and amount of the Borrowing that
the Borrower requests be converted or continued, (ii) whether such Borrowing is
to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing,
(iii) if such notice requests a conversion, the date of such conversion (which
shall be a Business Day) and (iv) if such Borrowing is to be converted to or
continued as a Eurodollar Borrowing, the Interest Period with respect thereto.
The Agent shall advise the Lenders of any notice given pursuant to this Section
and of each Lender's portion of any converted or continued Borrowing. If the
Borrower shall not have given notice in accordance with this Section to continue
any Borrowing into a subsequent Interest Period (and shall not otherwise have
given notice not later than 2:00 p.m., New York City time, three Business Days
prior to the end of such Interest Period, of its intent to convert such
Borrowing or to prepay such Borrowing at the end of such Interest Period), such
Borrowing shall, at the end of the Interest Period applicable thereto,
automatically be converted as an ABR Borrowing.
SECTION 2.10 REPAYMENT OF BORROWINGS. To the extent not
previously paid, all Loans shall be due and payable on the Termination Date,
together with accrued and unpaid interest on the principal amount to be paid to
but excluding the date of payment.
SECTION 2.11 OPTIONAL PREPAYMENTS; OPTIONAL TERMINATION AND
REDUCTION OF AGGREGATE MAXIMUM CREDIT AMOUNTS.
(a) The Borrower shall have the right at any time and from
time to time to prepay any Borrowing, in whole or in part, upon at least three
Business Days' prior written or fax notice (or telephone notice promptly
31
confirmed by written or fax notice) in the case of Eurodollar Loans or upon at
least one Business Day prior written or fax notice (or telephone notice promptly
confirmed by written or fax notice) in the case of ABR Loans, to the Agent
before 2:00 p.m., New York City time; PROVIDED, HOWEVER, that each partial
prepayment shall be in an amount that is an integral multiple of $500,000 and
not less than $1,000,000.
(b) The Borrower shall have the right to at any time
terminate, or from time to time reduce, the Aggregate Maximum Credit Amounts
upon at least three Business Days' prior written or fax notice; PROVIDED that
(A) each reduction of the Aggregate Maximum Credit Amounts shall be in an amount
that is an integral multiple of $500,000 and not less than $1,000,000 and (B)
the Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts
if, after giving effect to any concurrent prepayment of the Loans in accordance
with Section 2.12, the total Revolving Credit Exposures would exceed the total
Commitments.
(c) Each notice of prepayment shall specify the prepayment
date and the principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Borrowing by the amount stated therein on the date stated therein. Each notice
of reduction or termination shall specify such election and the effective date
thereof, shall be irrevocable and shall commit the Borrower to prepay such the
Borrowings as required by Section 2.12 on the date stated therein; PROVIDED that
a notice of termination may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Agent on or prior to the specified
effective date) if such condition is not satisfied.
(d) All prepayments under this Section 2.11 shall be subject
to Section 2.15, but shall otherwise be without premium or penalty. All
prepayments under this Section 2.11 shall be accompanied by accrued and unpaid
interest on the principal amount to be prepaid to but excluding the date of
payment.
SECTION 2.12 MANDATORY PREPAYMENTS.
(a) If, after giving effect to any termination or reduction of
the Aggregate Maximum Credit Amounts pursuant to Section 2.11, the total
Revolving Credit Exposures exceeds the total Commitments, then the Borrower,
simultaneously with such termination or reduction, shall prepay the Borrowings
on the date of such termination or reduction in an aggregate principal amount
equal to such excess in accordance with Section 2.12(c).
(b) Upon any redetermination of or adjustment to the amount of
the Borrowing Base in accordance with Section 2.21 or Section 5.17(c), if the
total Revolving Credit Exposures exceeds the redetermined or adjusted Borrowing
Base, then the Borrower shall prepay the Borrowings in an aggregate principal
amount equal to such excess in accordance with Sections 2.12(c), which
prepayment shall be made on or prior to the earlier of (i) the date which is
ninety (90) days following receipt by the Borrower of the New Borrowing Base
Notice in accordance with Section 2.21 and (ii) the date the adjustment occurs;
PROVIDED that all payments required to be made pursuant to this Section 2.12(b)
must be made on or prior to the Termination Date.
32
(c) All prepayments of Borrowings under this Section 2.12
shall be subject to Section 2.15, but shall otherwise be without
premium or penalty, and shall be accompanied by accrued and unpaid
interest on the principal amount to be prepaid to but excluding the
date of payment.
(i) In connection with any optional prepayments by the
Borrower of the Loans pursuant to Section 2.11, any optional prepayment
thereof shall be applied to Revolving Borrowings until paid in full and
shall be applied first to ABR Borrowings to the full extent thereof
before application to Eurodollar Borrowings, in each case in a manner
that minimizes the amount of any payments required to be made by the
Borrower pursuant to Section 2.15.
(ii) In connection with any mandatory prepayments by the
Borrower of the Loans pursuant to this Section 2.12, such prepayments
shall be applied on a PRO RATA basis to the Revolving Borrowings being
prepaid irrespective of whether such Borrowings are ABR Borrowings or
Eurodollar Borrowings.
SECTION 2.13 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) Notwithstanding any other provision of this Agreement, if
any Change in Law shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by any Lender (except any such reserve requirement
which is reflected in the Adjusted LIBO Rate) or shall impose on such Lender or
the London interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender, and the result of any of the foregoing
shall be to increase the cost to such Lender of making or maintaining any
Eurodollar Loan or to reduce the amount of any sum received or receivable by
such Lender hereunder (whether of principal, interest or otherwise) by an amount
deemed by such Lender to be material, then the Borrower will pay to such Lender
at the time the additional costs are incurred or reduction suffered such
additional amount or amounts as will compensate such Lender therefor.
(b) If any Lender shall have determined that any Change in Law
regarding capital adequacy has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by such
Lender pursuant hereto to a level below that which such Lender or such Lender's
holding company could have achieved but for such Change in Law (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time the Borrower shall pay to such Lender, such
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth (i) the amount or
amounts necessary to compensate such Lender or its holding company, as
applicable, as specified in Section 2.13(a) or (b) and (ii) in reasonable
detail, the manner in which the amount claimed was determined shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate delivered
by it within 10 days after its receipt of the same.
33
(d) Failure or delay on the part of any Lender to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's right to demand such compensation; PROVIDED that the Borrower
shall not be under any obligation to compensate any Lender under Section 2.13(a)
or (b) with respect to increased costs or reductions with respect to any period
prior to the date that is 180 days prior to such request if such Lender knew of
the circumstances giving rise to such increased costs or reductions and of the
fact that such circumstances would result in a claim for increased compensation
by reason of such increased costs or reductions; PROVIDED FURTHER that the
foregoing limitation shall not apply to any increased costs or reductions
arising out of the retroactive application of any Change in Law within such
180-day period. The protection of this Section shall be available to each Lender
regardless of any possible contention of the invalidity or inapplicability of
the Change in Law that shall have occurred or been imposed; provided, however,
that any amounts paid by the Borrower hereunder shall be promptly reimbursed if
the Change in Law is challenged and the challenge upheld.
SECTION 2.14 CHANGE IN LEGALITY.
(a) Notwithstanding any other provision of this Agreement, if
any Change in Law shall make it unlawful for any Lender to make or
maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods) and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans, whereupon any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to
such Lender only, be deemed a request for an ABR Loan (or a request to
continue an ABR Loan as such for an additional Interest Period or to
convert a Eurodollar Loan into an ABR Loan, as the case may be), unless
such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of
the effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section, a notice to the Borrower by
any Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period then applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
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SECTION 2.15 INDEMNITY. The Borrower shall indemnify each
Lender against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor
(including any Interest Period for which a Borrowing is automatically continued
pursuant to Section 2.09), (ii) the conversion of any Eurodollar Loan to an ABR
Loan, or the conversion of the Interest Period with respect to any Eurodollar
Loan, in each case other than on the last day of the Interest Period in effect
therefor or (iii) any Eurodollar Loan to be made by such Lender (including any
Eurodollar Loan to be made pursuant to a conversion or continuation under
Section 2.09) not being made after notice of such Loan shall have been given by
the Borrower hereunder (any of the events referred to in this clause (a) being
called a "BREAKAGE EVENT") or (b) any default in the making of any payment or
prepayment required to be made hereunder. In the case of any Breakage Event,
such loss shall include an amount equal to the excess, as reasonably determined
by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that
is the subject of such Breakage Event for the period from the date of such
Breakage Event to the last day of the Interest Period in effect (or that would
have been in effect) for such Loan over (ii) the amount of interest likely to be
realized by such Lender in redeploying the funds released or not utilized by
reason of such Breakage Event for such period. A certificate of any Lender
setting forth any amount or amounts which such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error.
SECTION 2.16 PRO RATA TREATMENT. Except as required under
Section 2.12 and 2.14, (a) each payment or prepayment of principal of any
Borrowing and each payment of interest on the Loans shall be allocated among the
Lenders on a PRO RATA basis in accordance with the principal amounts of their
outstanding Loans, and (b) each conversion of any Borrowing to or continuation
of any Borrowing as a Borrowing of any Type shall be allocated among the Lenders
on a PRO RATA basis in accordance with the principal amounts of their
outstanding Loans. Each Lender agrees that in computing such Lender's portion of
any Borrowing to be made hereunder, the Agent may, in its discretion, round each
Lender's percentage of such Borrowing to the next higher or lower whole dollar
amount.
SECTION 2.17 SHARING OF SETOFFS.
(a) Each Lender agrees that if it shall, through the exercise
of a right of banker's lien, setoff or counterclaim against the Borrower or any
other Loan Party, or pursuant to a secured claim under Section 506 of Title 11
of the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans as a result
of which the unpaid principal portion of its Loans shall be proportionately less
than the unpaid principal portion of the Loans of any other Lender, it shall be
deemed simultaneously to have purchased from such other Lender at face value,
and shall promptly pay to such other Lender the purchase price for, a
participation in the Loans of such other Lender, so that the aggregate unpaid
principal amount of the Loans and participations in Loans held by each Lender
shall be in the same proportion to the aggregate unpaid principal amount of all
Loans then outstanding as the principal amount of its Loans prior to such
exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Loans outstanding prior to such exercise of banker's
lien, setoff or counterclaim or other event.
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(b) Notwithstanding the foregoing Sections 2.17(a), if any
such purchase or purchases or adjustments shall be made pursuant to this Section
2.17 and the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustment restored without
interest.
(c) The Borrower and Holdings expressly consent to the
foregoing arrangements and agree that any Lender holding a participation in a
Loan deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower and Holdings to such Lender by reason thereof as fully as if
such Lender had made a Loan directly to the Borrower in the amount of such
participation.
SECTION 2.18 PAYMENTS.
(a) The Borrower shall make each payment (including principal
of or interest on any Borrowing or any fees or other amounts) hereunder and
under any other Loan Document not later than 2:00 p.m., New York City time, on
the date when due in immediately available dollars, without setoff, defense or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Agent, be deemed to have been received on the next succeeding
Business Day. Each such payment shall be made to the Agent at its offices at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Agent shall promptly
distribute to each Lender any payments received by the Agent on behalf of such
Lender.
(b) Except as otherwise expressly provided herein, whenever
any payment (including principal of or interest on any Borrowing or any fees or
other amounts) hereunder or under any other Loan Document shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or fees, if applicable.
SECTION 2.19 TAXES, WITHHOLDINGS, ETC.
(a) PAYMENTS TO BE FREE AND CLEAR. All sums payable by any
Loan Party hereunder and under the other Security Documents shall (except to the
extent required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall income of
the Lender) imposed, levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in or of the United States
of America or any other jurisdiction from or to which a payment is made (or
deemed made) by or on behalf of any Loan Party or by any federation or
organization of which the United States of America or any such jurisdiction is a
member at the time of payment.
(b) WITHHOLDING OF TAXES. If any Loan Party or any other
person is required by law to make any deduction or withholding on account of any
Tax (other than a Tax on the overall income of the Lender) from any sum paid or
payable under any of the Security Documents: (i) the Borrower shall notify the
Agent of any such requirement or any change in any such requirement as soon as
the Borrower becomes aware of it; (ii) the Borrower shall pay any such Tax
before the date on which penalties attach thereto, such payment to be made (if
the liability to pay is imposed on any Loan Party) for its own account or (if
36
that liability is imposed on the Agent or such Lender, as the case may be) on
behalf of and in the name of the Agent or such Lender; (iii) the sum payable by
such Loan Party in respect of which the relevant deduction, withholding or
payment, is required shall be increased to the extent necessary to ensure that,
after any such deduction, withholding or payment of all Taxes, the Agent or such
Lender, as the case may be, receives on the due date an amount equal to what it
would have received had no such deduction, withholding or payment been required
or made; and (iv) within thirty (30) days after the due date of payment of any
Tax which it is required by clause (ii) above to pay, the Borrower shall deliver
to the Agent evidence satisfactory to the other affected parties of such
deduction, withholding and payment and of the remittance thereof to the relevant
taxing or other authority; provided, no such additional amount shall be required
to be paid to any Lender under clause (iii) above except to the extent that any
change after the date hereof (in the case of each Lender listed on the signature
pages hereof on the Closing Date) or after the effective date of the Assignment
and Acceptance pursuant to which such Lender became a Lender (in the case of
each other Lender) in any such requirement for a deduction, withholding or
payment as is mentioned therein shall result in the imposition of or the
increase in the rate of such deduction, withholding or payment from that in
effect at the date hereof or at the date of such Assignment and Acceptance, as
the case may be, in respect of payments to such Lender.
(c) OTHER TAXES. In addition, the Loan Parties shall pay all
Other Taxes to the relevant Governmental Authorities in accordance with
applicable law. The Loan Parties shall deliver to the Agent official receipts or
other evidence of such payment reasonably satisfactory to the Agent in respect
of any Taxes or Other Taxes payable hereunder promptly after payment of such
Taxes or Other Taxes.
(d) INDEMNIFICATION. Without duplication of its obligations
under clauses (b)(iii) and (c) hereunder, the Loan Parties shall indemnify the
Agent and each Lender, within ten (10) days after written demand therefor, for
the full amount of any Taxes (other than any Tax on the overall net income of
the Agent or any Lenders) paid or incurred by the Agent or such Lender relating
to, arising out of, or in connection with any Transaction Document or any
payment or transaction contemplated hereby or thereby, whether or not such Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority and all reasonable expenses and costs incurred in enforcing the
provisions of this Section 2.19; provided, however, that the Loan Parties shall
not be required to indemnify the Agent, the Lenders and participants for any
Taxes that would be excluded from a gross-up under Section 2.17(b) or to the
extent such Taxes are covered by Sections 2.17(b) or (c). Such indemnification
shall be made on an after-Tax basis, such that after all required deductions and
payments of all Taxes (excluding any Tax on the overall net income of the Agent
or any Lenders except for Taxes and deductions applicable to amounts payable
under this Section 2.17(d) and payment of all reasonable expenses), the Agent or
such Lender receives and retains an amount equal to the sum it would have
received and retained had it not paid or incurred or been subject to such Taxes
or expenses and costs. A certificate from the relevant Lender or the Agent,
setting forth in reasonable detail the basis and calculation of such Taxes shall
be conclusive, absent manifest error.
(e) EVIDENCE OF EXEMPTION FROM U.S. WITHHOLDING TAX. Each
Lender that is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. federal income tax purposes (a "FOREIGN
Lender") shall deliver to the Agent for transmission to the Borrower, on or
prior to the Closing Date (in the case of each Lender listed on the signature
pages hereof on the Closing Date) or on or prior to the date of the Assignment
37
and Acceptance pursuant to which it becomes a Lender (in the case of each other
Lender), and at such other times as may be necessary in the determination of the
Borrower or the Agent (each in the reasonable exercise of its discretion), (i)
two original copies of Internal Revenue Service ("IRS") Form W-8BEN, W-8IMY or
W-8ECI (or any successor forms), properly completed and duly executed by such
Lender, and such other documentation required under the Code and reasonably
requested by the Borrower to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with respect to any
payments to such Lender of principal, interest, fees or other amounts payable
hereunder or under any of the Security Documents or is subject to deduction or
withholding at a reduced rate, or (ii) if such Lender is not a "bank" or other
person described in Section 881(c)(3) of the Code and cannot deliver IRS Form
W-8ECI pursuant to clause (i) above, a Certificate Regarding Non Bank Status
together with two original copies of IRS Form W-8BEN (or any successor form),
properly completed and duly executed by such Lender, and such other
documentation required under the Code and reasonably requested by the Borrower
to establish that such Lender is not subject to deduction or withholding of
United States federal income tax with respect to any payments to such Lender of
interest payable hereunder or under any of the Security Documents. Each Lender
required to deliver any forms, certificates or other evidence with respect to
United States federal income tax withholding matters pursuant to this Section
2.19(e) hereby agrees, from time to time after the initial delivery by such
Lender of such forms, certificates or other evidence, whenever a lapse in time
or change in circumstances renders such forms, certificates or other evidence
obsolete or inaccurate in any material respect, that such Lender shall promptly
deliver to the Agent for transmission to the Borrower two new original copies of
IRS Form W-8BEN, W-8IMY or W-8ECI, or a Certificate Regarding Non Bank Status
and two original copies of IRS Form W-8BEN (or any successor form), as the case
may be, properly completed and duly executed by such Lender, and such other
documentation required under the Code and reasonably requested by the Borrower
to confirm or establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to payments to such
Lender hereunder or under the Security Documents or is subject to deduction or
withholding at a reduced rate, or notify the Agent and the Borrower of its
inability to deliver any such forms, certificates or other evidence. The
Borrower shall not be required to pay any additional amount to any Foreign
Lender under Section 2.19(b)(iii) if such Lender shall have failed to deliver
the forms, certificates or other evidence referred to in the second sentence of
this Section 2.19(e) that it is legally entitled to deliver; provided, if such
Lender shall have satisfied the requirements of the first sentence of this
Section 2.19(e) on the Closing Date or on the date of the Assignment and
Acceptance pursuant to which it became a Lender, as applicable, nothing in this
last sentence of Section 2.19(e) shall relieve the Borrower of its obligation to
pay any additional amounts pursuant to this Section 2.19 in the event that, as a
result of any change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent date establishing the fact
that such Lender is not subject to withholding as described herein. Nothing in
this Section 2.19 shall be construed to require a Lender, the Agent or
participant to provide any forms or documentation that it is not legally
entitled to provide.
SECTION 2.20 ASSIGNMENT OF COMMITMENTS UNDER CERTAIN
CIRCUMSTANCES; DUTY TO MITIGATE.
(a) In the event (i) any Lender delivers a certificate
requesting compensation pursuant to Section 2.13, (ii) any Lender delivers a
notice described in Section 2.14, (iii) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority on account of any
38
Lender pursuant to Section 2.19, (iv) any Lender defaults in its obligations to
fund Loans hereunder or (v) any Lender refuses to consent to any amendment,
waiver or other modification of any Loan Document requested by the Borrower, the
Borrower may, with the written consent of the Agent and at its sole expense and
effort (including with respect to the processing and recordation fee referred to
in Section 9.04(b)), upon notice to such Lender, require such Lender to transfer
and assign, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all of its interests, rights and obligations under
this Agreement and the other Loan Documents to an assignee that shall assume
such assigned obligations and, with respect to clause (iv) above, shall consent
to such requested amendment, waiver or other modification of any Loan Documents
(which assignee may be another Lender, if a Lender accepts such assignment);
PROVIDED that (x) such assignment shall not conflict with any law, rule or
regulation or order of any court or other Governmental Authority having
jurisdiction, (y) the Borrower shall have received the prior written consent of
the Agent, which consent shall not unreasonably be withheld or delayed and (z)
the Borrower or such assignee shall have paid to the affected Lender in
immediately available funds an amount equal to the sum of the principal of and
interest accrued to the date of such payment on the outstanding Loans of such
Lender PLUS all fees and other amounts accrued for the account of such Lender
hereunder with respect thereto (including any amounts under Sections 2.14 and
2.16); PROVIDED FURTHER that, if prior to any such transfer and assignment the
circumstances or event that resulted in such Lender's claim for compensation
under Section 2.13, notice under Section 2.14 or the amounts paid pursuant to
Section 2.19, as the case may be, cease to cause such Lender to suffer increased
costs or reductions in amounts received or receivable or reduction in return on
capital, or cease to have the consequences specified in Section 2.14, or cease
to result in amounts being payable under Section 2.19, as the case may be
(including as a result of any action taken by such Lender pursuant to Section
2.20(b)), or if such Lender shall waive its right to claim further compensation
under Section 2.13 in respect of such circumstances or event or shall withdraw
its notice under Section 2.14 or shall waive its right to further payments under
Section 2.19 in respect of such circumstances or event or shall consent to the
proposed amendment, waiver, consent or other modification, as the case may be,
then such Lender shall not thereafter be required to make any such transfer and
assignment hereunder. Each Lender hereby grants to the Agent an irrevocable
power of attorney (which power is coupled with an interest) to execute and
deliver, on behalf of such Lender as assignor, any Assignment and Acceptance
necessary to effectuate any assignment of such Lender's interests hereunder in
the circumstances contemplated by this paragraph or by paragraph (c) below.
(b) If (i) any Lender shall request compensation under Section
2.13, (ii) any Lender delivers a notice described in Section 2.14 or (iii) the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority on account of any Lender, pursuant to Section 2.19, then
such Lender shall use reasonable efforts (which shall not require such Lender to
incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any
action inconsistent with its internal policies or legal or regulatory
restrictions or suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document reasonably requested in
writing by the Borrower or (y) to assign its rights and delegate and transfer
its obligations hereunder to another of its offices, branches or affiliates, if
such filing or assignment would reduce its claims for compensation under Section
2.13 or enable it to withdraw its notice pursuant to Section 2.14 or would
reduce amounts payable pursuant to Section 2.19, as the case may be, in the
future. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such filing or assignment,
delegation and transfer.
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(c) After the occurrence of a Successful Syndication, each of
Silver Point, ▇. ▇▇▇▇ & Company and any Affiliate of Silver Point or ▇. ▇▇▇▇ &
Company may, at its sole expense and effort (including with respect to the
processing and recordation fee referred to in Section 9.04(b)), upon notice to
any Lender, require such Lender to transfer and assign, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all
of its interests, rights and obligations under this Agreement and the other Loan
Documents to an assignee that shall assume such assigned obligations (which
assignee may be another Lender, if a Lender accepts such assignment); PROVIDED
that (x) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority having jurisdiction, (y) the
Borrower or such assignee shall have paid to the affected Lender in immediately
available funds an amount equal to the sum of the principal of and interest
accrued to the date of such payment on the outstanding Loans of such Lender PLUS
all fees and other amounts accrued for the account of such Lender hereunder with
respect thereto (including any amounts under Sections 2.14 and 2.16) and (z) so
long as the notice required by this Section 2.20(c) has been given and amounts
required by this Section 2.20(c) have been paid, such assignment shall be
effective regardless of whether has executed an Assignment and Acceptance.
(d) After the occurrence of a Successful Syndication, Silver
Point, ▇. ▇▇▇▇ & Company and any Affiliate of Silver Point or ▇. ▇▇▇▇ & Company
may, at their sole expense and effort (including with respect to the processing
and recordation fee referred to in Section 9.04(b)), upon notice to the Agent,
require the Agent to retire and appoint Silver Point, ▇. ▇▇▇▇ & Company, any
Affiliate of Silver Point or ▇. ▇▇▇▇ & Company or another person acceptable to
Silver Point and ▇. ▇▇▇▇ & Company as successor Agent hereunder in accordance
with the provisions of Article VIII and otherwise on terms and conditions
satisfactory to the successor Agent.
SECTION 2.21 BORROWING BASE.
(a) INITIAL BORROWING BASE. For the period from and including
the Effective Date to but excluding the first Redetermination Date, the amount
of the Borrowing Base shall be one hundred twenty million dollars
($120,000,000). Notwithstanding the foregoing, the Borrowing Base is subject to
further adjustments from time to time pursuant to Section 5.17(c) and Section
6.05(b).
(b) SCHEDULED AND INTERIM REDETERMINATIONS. The Borrowing Base
shall be redetermined semi-annually in accordance with this Section 2.21 (a
"SCHEDULED REDETERMINATION"), and, subject to Section 2.21(d), such redetermined
Borrowing Base shall become effective and applicable to the Borrower, the Agent
and the Lenders on April 1st and October 1st of each year, commencing on April
1, 2008. In addition, (i) the Borrower may, by notifying the Agent thereof, and
the Agent may, at the direction of the Required Lenders, by notifying the
Borrower thereof, one time during any calendar year, each elect to cause the
Borrowing Base to be redetermined between Scheduled Redeterminations in
accordance with this Section 2.21 and (ii) the Agent may, by notifying the
Borrower thereof, one time during the fiscal quarter ending September 30, 2007,
elect to cause the Borrowing Base to be redetermined in accordance with this
Section 2.21 (each such redetermination, an "INTERIM REDETERMINATION").
40
(c) SCHEDULED AND INTERIM REDETERMINATION PROCEDURE.
(i) Each Scheduled Redetermination and each Interim
Redetermination shall be effectuated as follows: Upon receipt by the
Agent of (A) the Reserve Report and the certificate required to be
delivered by the Borrower to the Agent, in the case of a Scheduled
Redetermination, pursuant to Section 5.16(a) or (b), and, in the case
of an Interim Redetermination, pursuant to Section 5.16(c), and (B)
such other reports, data and supplemental information as may, from time
to time, be reasonably requested by the Required Lenders (the Reserve
Report, such certificate and such other reports, data and supplemental
information being the "ENGINEERING REPORTS"), the Agent shall evaluate
the information contained in the Engineering Reports and shall, in good
faith, propose a new Borrowing Base (the "PROPOSED BORROWING BASE")
based upon such information and such other information (including,
without limitation, the status of title information with respect to the
Oil and Gas Properties as described in the Engineering Reports and the
existence of any other Indebtedness) as the Agent deems appropriate in
its sole discretion and consistent with its normal oil and gas lending
criteria as it exists at the particular time. In no event shall the
Proposed Borrowing Base exceed the Aggregate Maximum Credit Amounts.
(ii) The Administrative Agent shall notify the Borrower and
the Lenders of the Proposed Borrowing Base (the "PROPOSED BORROWING
BASE NOTICE"):
(1) in the case of a Scheduled Redetermination (1) if
the Agent shall have received the Engineering Reports required to be delivered
by the Borrower pursuant to Section 5.16(a) or (b) in a timely and complete
manner, then on or before the March 15th and September 15th of such year
following the date of delivery of the Engineering Reports or (2) if the Agent
shall not have received the Engineering Reports required to be delivered by the
Borrower pursuant to Section 5.16(a) or (b) in a timely and complete manner,
then promptly after the Agent has received complete Engineering Reports from the
Borrower and has had a reasonable opportunity to determine the Proposed
Borrowing Base in accordance with Section 2.21(c)(i) and in any event, within
fifteen (15) days after the Agent has received the required Engineering Reports;
and
(2) in the case of an Interim Redetermination,
promptly, and in any event, within fifteen (15) days after the Agent has
received the required Engineering Reports.
(iii) Any Proposed Borrowing Base must be approved or be
deemed to have been approved by the Required Lenders as provided in
this Section 2.21(c)(iii). Upon receipt of the Proposed Borrowing Base
Notice, each Lender shall have fifteen (15) days to agree with the
Proposed Borrowing Base or disagree with the Proposed Borrowing Base by
proposing an alternate Borrowing Base. If at the end of such fifteen
(15) days, any Lender has not communicated its approval or disapproval
in writing to the Agent, such silence shall be deemed to be an approval
of the Proposed Borrowing Base. If, at the end of such 15-day period,
the Required Lenders have approved or deemed to have approved, as
aforesaid, then the Proposed Borrowing Base shall become the new
41
Borrowing Base, effective on the date specified in Section 2.21(d). If,
however, at the end of such 15-day period, the Required Lenders have
not approved or been deemed to have approved, as aforesaid, of such
Proposed Borrowing Base, then the Agent shall poll the Lenders to
ascertain the highest Borrowing Base then acceptable to a number of
Lenders sufficient to constitute the Required Lenders and such amount
shall become the new Borrowing Base, effective on the date specified in
Section 2.21(d).
(iv) Notwithstanding the foregoing, the Commitment of any
Lender that disapproves of a Proposed Borrowing Base that increases the
Borrowing Base then in effect shall not be increased in connection with
such Proposed Borrowing Base even if such Proposed Borrowing Base
becomes the new Borrowing Base pursuant to Section 2.21(c)(iii).
(d) EFFECTIVENESS OF A REDETERMINED BORROWING BASE. After a
redetermined Borrowing Base is approved or is deemed to have been
approved by the Required Lenders pursuant to Section 2.21(c)(iii), the
Agent shall notify the Borrower and the Lenders of the amount of the
redetermined Borrowing Base (the "NEW BORROWING BASE NOTICE"), and such
amount shall become the new Borrowing Base, effective and applicable to
the Borrower, the Agent and the Lenders:
(i) in the case of a Scheduled Redetermination, (A) if the
Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 5.16(a) or (b) in a
timely and complete manner, then on the April 1st or October 1st, as
applicable, following such notice, or (B) if the Agent shall not have
received the Engineering Reports required to be delivered by the
Borrower pursuant to Section 5.16(a) or (b) in a timely and complete
manner, then on the Business Day next succeeding delivery of such
notice; and
(ii) in the case of an Interim Redetermination, on the
Business Day next succeeding delivery of such notice.
Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination pursuant to this Section
2.21(d) or the next adjustment to the Borrowing Base under Section 5.17(c) or
Section 6.05(b), whichever occurs first. Notwithstanding the foregoing, no
Scheduled Redetermination or Interim Redetermination shall become effective
until the New Borrowing Base Notice related thereto is received by the Borrower.
Notwithstanding anything in this Section 2.21 to the contrary, until a
Successful Syndication has occurred, the Borrowing Base will not be redetermined
except in the sole and absolute discretion of the Agent and Documentation Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of Holdings and the Borrower represents and warrants as of the
Closing Date and each Credit Date to the Agent and each of the Lenders that:
SECTION 3.01 ORGANIZATION; POWERS. Holdings, the Borrower and
each of the Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
42
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (c) is qualified to
do business, and is in good standing, in every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect and (d) has the
power and authority to execute, deliver and perform its obligations under each
of the Loan Documents to which it is a party and each other agreement or
instrument contemplated thereby to which it is or will be a party and, in the
case of the Borrower, to borrow hereunder.
SECTION 3.02 AUTHORIZATION. The Transactions (a) have been
duly authorized by all requisite corporate and, if required, member action and
(b) will not (i) violate (A) any law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of Holdings, the Borrower or any Subsidiary, (B) any order of any
Governmental Authority or (C) any provision of any indenture, agreement or other
instrument to which Holdings, the Borrower or any Subsidiary is a party or by
which any of them or any of their property is or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under,
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by Holdings, the Borrower or any
Subsidiary (other than any Lien permitted by Section 6.02).
SECTION 3.03 ENFORCEABILITY. This Agreement has been duly
executed and delivered by Holdings and the Borrower and constitutes, and each
other Loan Document when executed and delivered by each Loan Party party thereto
will constitute, a legal, valid and binding obligation of such Loan Party
enforceable against such Loan Party in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 3.04 APPROVALS. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority or
any other person is or will be required in connection with the Transactions,
except for (a) the filing of Uniform Commercial Code financing statements, (b)
recordation of the Mortgages, (c) those listed on SCHEDULE 3.04, and (d) such as
have been made or obtained and are in full force and effect.
SECTION 3.05 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED
LIABILITIES; RESERVE REPORTS.
(a) The Borrower has heretofore furnished to the Lenders (a)
the Borrower's statements of revenue and direct operating expenses for the
period ended December 31, 2006 and (b) the Borrower's pro forma statements of
revenue and direct operating expenses for the three-month period ended on June
30, 2007, in all cases giving effect to the Transactions to occur on or prior to
the Closing Date as if they had occurred at the beginning of the period
presented therein. Such pro forma statements have been prepared in good faith by
the Borrower based on assumptions that are believed by Holdings and the Borrower
on the Closing Date to be reasonable, are based on the best information
available to the Borrower as of the date of delivery thereof, accurately reflect
all adjustments required to be made to give effect to the Transactions and
present fairly, in all material respects, on a pro forma basis, the estimated
consolidated results of operations of the Borrower and its consolidated
subsidiaries for such periods.
43
(b) Except for (i) unrealized losses in respect of Hedging
Agreements set forth on Schedule 1.01(a), (ii) any plugging and abandonment
liabilities, after giving effect to the Transactions to occur on or prior to the
Closing Date, (iii) Indebtedness under this Agreement, (iv) Indebtedness under
the Second Lien Loan Documents and (v) Guarantees of Indebtedness under the
Subordinated Seller Note, none of Holdings, the Borrower or the Subsidiaries
will have, as of the Closing Date, any material contingent liabilities, other
undisclosed liabilities, unusual long-term commitments or unrealized losses.
(c) The Borrower has heretofore furnished to the Lenders a
reserve report prepared by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇ setting forth as of December
31, 2006, proved developed producing reserves and proved reserves of not less
than $152 million and $436 million, respectively, together with a projection of
the rate of production and future revenues less severance and ad valorem taxes,
operating expenses and capital expenditures with respect thereto as of such
date.
SECTION 3.06 NO MATERIAL ADVERSE CHANGE. Since December 31,
2006, no event, change or condition has occurred that has had, or could
reasonably be expected to have, a Material Adverse Effect.
SECTION 3.07 TITLE TO PROPERTIES; POSSESSION UNDER LEASES.
(a) Each of the Borrower and the Subsidiaries has good and
marketable title to, or valid leasehold interests, rights of way or
easement interests (where indicated) in, all of the properties and
assets set forth on Schedules A-1 and A-5 (as amended) to the
Membership Interest Purchase Agreement and Exhibit A-1 (as amended) to
the Asset Sales Agreement, and all its other material properties and
assets (including all Mortgaged Property), free and clear of any Lien,
except for (i) minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes, (ii) Liens in
favor of the Collateral Agent, (iii) Liens permitted under Section 6.02
and (iv) as follows:
(i) no representation respecting good or marketable title can
be made in connection with ADL-47567 and ADL-47562;
(ii) only exploration rights, not any rights to produce or
market oil or gas, have been granted under any exploration license;
only if and when one or more oil and gas leases have been issued will
Borrower have any rights to produce oil and gas.
(b) Each of the Borrower and the Subsidiaries has complied in
all material respects with all obligations under all material leases to
which it is a party and all such leases are in full force and effect.
Each of the Borrower and the Subsidiaries enjoys peaceful and
undisturbed possession under all such material leases.
(c) As of the Effective Date, neither Holdings nor the
Borrower has received any notice or has any knowledge of any pending or
contemplated condemnation proceeding affecting the Leases or the
Mortgaged Properties or any sale or disposition thereof in lieu of
condemnation.
44
SECTION 3.08 SUBSIDIARIES. SCHEDULE 3.08 sets forth as of the
Effective Date a list of all Subsidiaries and the percentage ownership interest
of Holdings, the Borrower and any Subsidiary therein. The shares of capital
stock or other Equity Interests so indicated on SCHEDULE 3.08 are fully paid
and, except as indicated on SCHEDULE 3.08, are owned by Holdings or the
Borrower, directly or indirectly, free and clear of all Liens (other than Liens
created under the Loan Documents or the Second Lien Loan Documents). None of
Holdings, the Borrower or any of their Subsidiaries own any Foreign Subsidiary
or conduct any international operations.
SECTION 3.09 LITIGATION; COMPLIANCE WITH LAWS.
(a) Except as set forth on SCHEDULE 3.09, there are no
actions, suits or proceedings at law or in equity or by or before any
Governmental Authority now pending or, to the knowledge of Holdings or the
Borrower, threatened against or affecting Holdings or the Borrower or any
Subsidiary or any business, property or rights of any such person (i) that
involve any Loan Document or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
(b) Since December 31, 2006, there has been no change in the
status of the matters disclosed on SCHEDULE 3.09 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
(c) None of Holdings, the Borrower or any of the Subsidiaries
or any of their material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permits) or any
restrictions of record or agreements affecting any Lease or Mortgaged Property,
or is in default with respect to any judgment, writ, injunction, decree or order
of any Governmental Authority, where such violation or default could reasonably
be expected to result in a Material Adverse Effect.
SECTION 3.10 AGREEMENTS.
(a) None of Holdings, the Borrower or any of the Subsidiaries
is a party to any agreement or instrument or subject to any corporate or other
restriction that has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(b) None of the Borrower or any of the Subsidiaries is in
default in any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect. None of the Borrower or any of the
Subsidiaries is in material default under any Lease.
45
SECTION 3.11 FEDERAL RESERVE REGULATIONS.
(a) None of Holdings, the Borrower or any of the Subsidiaries
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry Margin Stock, or to refinance Indebtedness originally incurred
for such purpose, or for any purpose that entails a violation of, or that is
inconsistent with, the provisions of the Regulations of the Board, including
Regulation T, U or X.
SECTION 3.12 INVESTMENT COMPANY ACT. None of Holdings, the
Borrower or any Subsidiary is an "investment company" as defined in, or subject
to regulation under, the Investment Company Act of 1940.
SECTION 3.13 USE OF PROCEEDS. The Borrower will use the
proceeds of the Loans only for the purposes specified in the recitals to this
Agreement and for general corporate purposes of the Borrower and the
Subsidiaries, including a payment of fees in connection with the Transaction to
Energy Capital Solutions, LP after the Closing Date in an amount not to exceed
$3,315,272.
SECTION 3.14 TAX RETURNS. Each of Holdings and its
subsidiaries has filed or caused to be filed all Federal, state, local and
foreign tax returns or materials required to have been filed by it and has paid
or caused to be paid all taxes due and payable by it and all assessments
received by it, except taxes that are being contested in good faith by
appropriate proceedings and for which Holdings, the Borrower or such Subsidiary,
as applicable, shall have set aside on its books adequate reserves.
SECTION 3.15 NO MATERIAL MISSTATEMENTS. None of the
information, reports, financial statements, exhibits or schedules furnished by
or on behalf of Holdings or the Borrower to the Agent or any Lender in
connection with the negotiation of any Loan Document or included therein or
delivered pursuant thereto contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which they were made; PROVIDED that to the extent any such information, report,
financial statement, exhibit or schedule was based upon or constitutes a
forecast or projection, each of Holdings and the Borrower represents only that
it was prepared in good faith based upon (i) assumptions that were reasonable at
the time made and at the time such information, report, financial statement,
exhibit or schedule was furnished to the Agent or such Lender and (ii)
accounting principles consistent with the accounting principles used to prepare
Holdings' historical audited financial statements (it being understood that
projections concerning volumes attributable to the Oil and Gas Properties and
production and cost estimates thereof are necessarily based upon professional
opinions, estimates and projections). There is no fact known to any Loan Party
(other than industry-wide risks normally associated with the types of businesses
conducted by the Loan Parties) that has not been disclosed to each Lender in
writing which is materially likely to cause a Material Adverse Effect. There are
no statements or conclusions in any Reserve Report which are based upon or
include misleading information or fail to take into account material information
regarding the matters reported therein, it being understood that each Reserve
Report is necessarily based upon professional opinions, estimates and
projections and that no Loan Party warrants that such opinions, estimates and
projections will ultimately prove to have been accurate. The Borrower has
heretofore delivered to each Lender true, correct and complete copies of the
initial Reserve Report.
46
SECTION 3.16 EMPLOYEE BENEFIT PLANS. Each Plan or
Multiemployer Plan is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in material liability of the Borrower or
any of its ERISA Affiliates. The present value of all benefit liabilities under
all Plans (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the last annual valuation date
applicable thereto, exceed the fair market value of the assets of all Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) by an amount which, if it constituted a direct liability of
the Borrower, could reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in SCHEDULE 3.17 and except with
respect to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, none of Holdings,
the Borrower or any of the Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(b) Since December 31, 2006 (or, with respect to matters
disclosed on SCHEDULE 3.17 that occurred after December 31, 2006, since the date
of the occurrence of such matters), there has been no change in the status of
the matters disclosed on SCHEDULE 3.17 that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.18 INSURANCE. The Borrower has, and has caused all
of the Subsidiaries to have, (a) all insurance policies sufficient for the
compliance by each of them with all material Governmental Requirements and all
material agreements and (b) insurance coverage in at least amounts and against
such risk (including, without limitation, public liability) that are
commercially reasonable and usually insured against by companies similarly
situated and engaged in the same or a similar business for the assets and
operations of the Borrower and the Subsidiaries. The Collateral Agent and the
Lenders have been named as additional insureds in respect of such liability
insurance policies and the Collateral Agent has been named as loss payee with
respect to Property loss insurance.
SECTION 3.19 SECURITY DOCUMENTS.
(a) The Collateral Agreement, upon execution and delivery
thereof by the parties thereto, will create in favor of the Agent, for the
ratable benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral (as defined in the Collateral Agreement) and the
proceeds thereof and (i) when control of the Pledged Collateral (as defined in
the Collateral Agreement) is obtained by the Agent, the Lien created under
Collateral Agreement shall constitute a perfected Lien on, and security interest
in, all right, title and interest of the Loan Parties in such Pledged Collateral
47
and (ii) when financing statements in appropriate form are filed in the offices
specified on SCHEDULE 3.19(A), the Lien created under the Collateral Agreement
will constitute a perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Collateral (other than Intellectual
Property, as defined in the Collateral Agreement) to the extent perfection can
be obtained by filing Uniform Commercial Code financing statements, in each case
prior and superior in right to any other person (other than Liens expressly
permitted by Section 6.02).
(b) Upon the recordation of the Collateral Agreement (or a
short-form security agreement in form and substance reasonably satisfactory to
the Borrower and the Agent) with the United States Patent and Trademark Office
and the United States Copyright Office, together with the financing statements
in appropriate form filed in the offices specified on SCHEDULE 3.19(B), the Lien
created under the Collateral Agreement shall constitute a perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Intellectual Property (as defined in the Collateral Agreement) in which a
security interest may be perfected by filing in the United States and its
territories and possessions, in each case prior and superior in right to any
other person (other than Liens expressly permitted by Section 6.02), it being
understood that subsequent recordings in the United States Patent and Trademark
Office and the United States Copyright Office may be necessary to perfect a Lien
on registered trademarks and patents, trademark and patent applications and
registered copyrights acquired by the Loan Parties after the Closing Date.
(c) The Mortgages are effective to create in favor of the
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of the Loan Parties' right, title and interest in and to
the Mortgaged Properties and the proceeds thereof, and when the Mortgages are
filed in the offices specified on SCHEDULE 3.19(C) the Mortgages shall
constitute perfected Liens on, and security interests in, all right, title and
interest of the Loan Parties in such Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other person (other
than Liens expressly permitted by Section 6.02).
(d) When Account Control Agreements in respect of the deposit
accounts specified on Schedule 5 to the Perfection Certificate and the
securities accounts specified on Schedule 6 to the Perfection Certificate are
executed and delivered by the applicable Loan Parties, the applicable depositary
banks or securities intermediaries and the Agent, the Account Control Agreements
will constitute fully perfected Liens on, and security interests in, all right,
title and interest of the Loan Parties in all deposit accounts and securities
accounts owned by any Loan Party, in each case prior and superior in right to
any other person.
SECTION 3.20 LOCATION OF REAL PROPERTY AND LEASED PREMISES.
(a) SCHEDULE 3.20(A) lists completely and correctly as of the
Effective Date all Real Properties owned by the Borrower and the Subsidiaries.
As of the Effective Date, the Borrower and the Subsidiaries own in fee all the
Real Properties set forth on SCHEDULE 3.20(A).
(b) SCHEDULE 3.20(B) lists completely and correctly all Real
Properties leased by the Borrower and the Subsidiaries as of the Effective Date
and the MMS Leases. As of the Effective Date, the Borrower and the Subsidiaries
have valid leases in all the Real Properties set forth on SCHEDULE 3.20(B).
48
SECTION 3.21 LABOR MATTERS.
(a) As of the Effective Date, there are no strikes, lockouts
or slowdowns against Holdings, the Borrower or any Subsidiary pending or, to the
knowledge of Holdings or the Borrower, threatened. The hours worked by and
payments made to employees of Holdings and its subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters. All payments due from
Holdings, the Borrower or any Subsidiary, or for which any claim may be made
against Holdings, the Borrower or any Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of Holdings, the Borrower or such
Subsidiary. The consummation of the Transactions will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which Holdings, the Borrower or any
Subsidiary is bound.
SECTION 3.22 SOLVENCY.
(a) Immediately after the consummation of the Transactions to
occur on or prior to the Closing Date and immediately following the incurrence
of any Credit Extension and after giving effect to the application of the
proceeds of such Credit Extension, (a) the fair value of the assets of each Loan
Party, at a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise, (b) the present fair saleable value of the property of
each Loan Party will be greater than the amount that will be required to pay the
probable liability of its debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured,
(c) each Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured and (d) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Closing Date.
SECTION 3.23 SANCTIONED PERSONS. None of Holdings, the
Borrower or any Subsidiary or, to the knowledge of the Borrower, any director,
officer, agent, employee or Affiliate of Holdings, the Borrower or any
Subsidiary is currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the
Borrower will not directly or indirectly use the proceeds of the Loans or
otherwise make available such proceeds to any person for the purpose of
financing the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
SECTION 3.24 MATERIAL CONTRACTS. SCHEDULE 3.24 contains a
true, correct and complete list of all the Material Contracts in effect on the
Effective Date. All such Material Contracts are in full force and effect and no
defaults exist thereunder (other than as described in SCHEDULE 3.24).
49
SECTION 3.25 RELATED AGREEMENTS.
(a) DELIVERY. Holdings, the Borrower and each of the
Subsidiaries have delivered to the Agent complete and correct copies of (i) each
Related Agreement and of all exhibits and schedules thereto in effect on the
date hereof, and (ii) copies of any material amendment, restatement, supplement
or other modification to or waiver of each Related Agreement entered into after
the date hereof.
(b) REPRESENTATIONS AND WARRANTIES. Except to the extent
otherwise expressly set forth herein or in the schedules hereto, and subject to
the qualifications set forth therein, each of the representations and warranties
given by any Loan Party in each Related Agreement is true and correct in all
material respects as of the Effective Date (or as of any earlier date to which
such representation and warranty specifically relates). Notwithstanding anything
in the Related Agreement to the contrary, the representations and warranties of
each Loan Party set forth in this Section 3.25 shall, solely for purposes
hereof, survive the Closing Date and the Effective Date for the benefit of
Lenders.
(c) GOVERNMENTAL APPROVALS. Except as set forth on SCHEDULE
3.25(C), all Governmental Authorizations and all other authorizations, approvals
and consents of any other Person required by the Related Agreements or to
consummate the Transactions have been obtained and are in full force and effect.
(d) CONDITIONS PRECEDENT. On the Effective Date, (i) all of
the conditions to effecting or consummating the Transactions set forth in the
Related Agreements have been duly satisfied or, with the consent of the Agent,
waived, and (ii) the Transactions have been consummated in accordance with the
Related Agreements and all applicable laws.
SECTION 3.26 EMPLOYMENT AGREEMENTS. SCHEDULE 3.26 sets forth a
true, correct and complete list of all employment contracts or agreements,
agency, independent contractor and sales representative agreements, golden
parachute agreements, change of control agreements and employee-related
non-competition and non-solicitation agreements, in each case to which any Loan
Party is a party. The Loan Parties have previously delivered true, correct and
complete copies of all such agreements, including all amendments thereto. Each
such agreement is in writing, is a valid and binding agreement enforceable
against the respective parties thereto in accordance with its terms, and no Loan
Party nor any other Person that is a party to any such agreement is in breach
of, or in default with respect to, any of its obligations thereunder, nor is any
Loan Party aware of any facts or circumstances which might give rise to any
breach or default thereunder which could reasonably be expected to have a
Material Adverse Effect.
SECTION 3.27 INTELLECTUAL PROPERTY. Holdings, the Borrower and
its Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property necessary to its business as
currently conducted, a correct and complete list of which, as of the date of
this Agreement, is set forth on SCHEDULE 3.27, and the use thereof by the Loan
Parties and its Subsidiaries does not infringe in any material respect upon the
rights of any other Person, and the Loan Parties rights thereto are not subject
to any licensing agreement or similar arrangement. Each Loan Party has taken
reasonable measures to protect the secrecy, confidentiality and value of all
trade secrets used in its business (collectively, the "BUSINESS TRADE Secrets").
To the best knowledge of each Loan Party, none of the Business Trade Secrets
have been disclosed to any Person other than employees or contractors of the
Loan Parties who had a need to know and use such Business Trade Secrets in the
50
ordinary course of employment or contract performance and who executed
appropriate confidentiality agreements prohibiting the unauthorized use or
disclosure of such Business Trade Secrets and containing other terms reasonably
necessary or appropriate for the protection and maintenance of such Business
Trade Secrets. To the best knowledge of each Loan Party, no unauthorized
disclosure of any Business Trade Secrets has been made.
SECTION 3.28 GAS IMBALANCES; PREPAYMENTS. Except as set forth
in SCHEDULE 3.28, on a net basis there are no gas imbalances, take-or-pay
arrangements or other prepayments (including deferred production agreements or
volumetric production payments) with respect to the Oil and Gas Properties or
production therefrom that would require the Borrower or any Subsidiary to
deliver Hydrocarbons either generally or produced from the Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor.
SECTION 3.29 MARKETING ARRANGEMENT. Except as set forth in
SCHEDULE 3.29, no Oil and Gas Property is subject to any contractual or other
arrangement (i) whereby payment for production is or can be deferred for a
substantial period after the month in which such production is delivered (in the
case of oil, not in excess of 60 days, and in the case of gas, not in excess of
90 days) or (ii) whereby payments are made to a Loan Party other than by checks,
drafts, wire transfer advises or other similar writings, instruments or
communications for the immediate payment of money. Except for production sales
contracts, processing agreements, transportation agreements and other agreements
relating to the marketing of production that are listed in SCHEDULE 3.29 in
connection with the Oil and Gas Properties to which such contract or agreement
relates: (i) no Oil and Gas Property is subject to any contractual or other
arrangement for the sale, processing or transportation of production (or
otherwise related to the marketing of production) which cannot be canceled on
120 days' (or less) notice and (ii) all contractual or other arrangements for
the sale, processing or transportation of production (or otherwise related to
the marketing of production) are bona fide arm's length transactions made on the
best terms reasonably available with third parties not affiliated with Loan
Parties. Each Loan Party is presently receiving a price for all production from
(or attributable to) each Oil and Gas Property covered by a production sales
contract or marketing contract listed in SCHEDULE 3.29 that is computed in
accordance with the terms of such contract, and no Loan Party is having
deliveries of production from such Oil and Gas Property curtailed by any
purchaser or transporter of production substantially below such property's
delivery capacity, except for curtailments caused (a) by an act or event of
force majeure not reasonably within the control of and not caused by the fault
or negligence of a Loan Party and which by the exercise of reasonable diligence
such Loan Party is unable to prevent or overcome, and (b) by routine maintenance
requirements in the ordinary course of business.
SECTION 3.30 RIGHT TO RECEIVE PAYMENTS FOR FUTURE PRODUCTION.
Except as set forth in SCHEDULE 3.30, no Loan Party, nor any Loan Party's
predecessors in title, has received prepayments (including payments for gas not
taken pursuant to "take or pay" or other similar arrangements) for any oil, gas
or other hydrocarbons produced or to be produced from any Oil and Gas Properties
after the date hereof. Except as set forth in SCHEDULE 3.30, no Oil and Gas
Property is subject to any "take or pay", gas imbalances or other similar
arrangement (i) which can be satisfied in whole or in part by the production or
transportation of gas from other properties or (ii) as a result of which
production from any Oil and Gas Property may be required to be delivered to one
or more third parties without payment (or without full payment) therefor as a
result of payments made, or other actions taken, with respect to other
51
properties. No Oil and Gas Property is subject to any regulatory refund
obligation and, to the best of Loan Party's knowledge, no facts exist which
might cause the same to be imposed.
SECTION 3.31 OPERATION OF OIL AND GAS PROPERTIES. The Oil and
Gas Properties (and all properties unitized therewith) are being (and, to the
extent the same could adversely affect the ownership or operation of the Oil and
Gas Properties after the date hereof, have in the past been) maintained,
operated and developed in a good and workmanlike manner, in accordance with
prudent industry standards and in conformity with all applicable Laws and in
conformity with all oil, gas or other mineral leases and other contracts and
agreements forming a part of the Oil and Gas Property and in conformity with the
Liens permitted by Section 6.02. No Oil and Gas Property is subject to having
allowable production after the date hereof reduced below the full and regular
allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) prior to
the date hereof and (ii) none of the ▇▇▇▇▇ located on the Oil and Gas Properties
(or properties unitized therewith) are or will be deviated from the vertical
more than the maximum permitted by applicable laws, regulations, rules and
orders, and such ▇▇▇▇▇ are bottomed under and producing from, with the well
bores wholly within, the Oil and Gas Properties (or, in the case of ▇▇▇▇▇
located on properties unitized therewith, such unitized properties). Each Loan
Party has all governmental licenses and permits necessary or appropriate to own
and operate its Oil and Gas Property, and no Loan Party has received notice of
any violations in respect of any such licenses or permits.
SECTION 3.32 AD VALOREM AND SEVERANCE TAXES, LITIGATION. Each
Loan Party has paid and discharged all ad valorem taxes assessed against its Oil
and Gas Property or any part thereof and all production, severance and other
taxes assessed against, or measured by, the production or the value, or
proceeds, of the production therefrom. Except as set forth on SCHEDULE 3.09,
there are no suits, actions, claims, investigations, inquiries, proceedings or
demands pending (or, to any Loan Party's knowledge, threatened) which might
affect the Oil and Gas Property, including any which challenge or otherwise
pertain to any Loan Party's title to any Oil and Gas Property or rights to
produce and sell oil and gas therefrom , which could reasonably be expected to
result in (i) liability of any Loan Party in an amount in excess of $2,500,000
or (ii) in injunctive relief against any Loan Party which could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.33 INSIDER INTERESTS. Except as disclosed on
SCHEDULE 3.33, no shareholder, director, officer, employee, or Affiliate of
Holdings, the Borrower or any Subsidiary or any associate of any such
shareholder, director, officer, employee, or Affiliate is presently, directly or
indirectly, a party to any transaction with Holdings the Borrower or any
Subsidiary, including any agreement, arrangement, or understanding, written or
oral, providing for the employment of, furnishing of services by, rental of real
or personal property from, or otherwise requiring payments to any such
shareholder, director, officer, employee, or associate. For purposes of this
Section only, an "associate" of any shareholder, director, officer, or employee
means any member of the immediate family of such shareholder, director, officer,
or employee or any corporation, partnership, trust, or other entity in which
such shareholder, director, officer, or employee has a substantial ownership or
beneficial interest (other than an interest in a public corporation which does
not exceed three percent of its outstanding securities) or is a director,
officer, partner, or trustee or person holding a similar position.
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ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01 CLOSING DATE. The obligations of the Lenders to
make the Loans on the Effective Date are subject to the satisfaction of the
following conditions:
(a) The Agent shall have received from (i) each party hereto
(A) a counterpart of this Agreement signed on behalf of such party or (B)
written evidence reasonably satisfactory to the Agent (which may include a
facsimile or other electronic imaging transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement, (ii)
each party to the Intercreditor Agreement (A) a counterpart of the Intercreditor
Agreement signed on behalf of such party or (B) written evidence reasonably
satisfactory to the Agent (which may include a facsimile or other electronic
imaging transmission of a signed signature page of the Intercreditor Agreement)
that such party has signed a counterpart of the Intercreditor Agreement and
(iii) each party to each other Loan Document (A) a counterpart of such Loan
Document signed on behalf of such party or (B) written evidence reasonably
satisfactory to the Agent (which may include a facsimile or other electronic
imaging transmission of a signed signature page of such Loan Document) that such
party has signed a counterpart of such Loan Document.
(b) The representations and warranties set forth in Article
III and in each other Loan Document shall be true and correct in all material
respects on and as of the date of the Effective Date with the same effect as
though made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date.
(c) At the time of and immediately after the making of the
Loans, no Default or Event of Default shall have occurred and be continuing.
(d) The Agent shall have received written opinions of ▇▇▇▇▇
and ▇▇▇▇▇▇, LLP, ▇▇▇▇▇▇ ▇▇▇▇▇ LLP, Schully, Roberts, ▇▇▇▇▇▇▇▇ and Marino and
Guess and ▇▇▇▇, special counsel for Holdings and the Borrower, substantially to
the effect set forth in EXHIBIT F, in each case (A) dated the Effective Date and
(B) addressed to the Agent, the Documentation Agent, and the Lenders.
(e) All legal matters incidental to this Agreement, the
Borrowings and extensions of credit hereunder and the other Loan Documents shall
be reasonably satisfactory to the Lenders, the Agent, and the Documentation
Agent.
(f) The Agent shall have received such documents and
certificates as the Agent or its counsel may reasonably request relating to the
organization, existence and good standing of each Loan Party, the authorization
of the Transactions and any other legal matters relating to the Loan Parties,
the Loan Documents or the Transactions, all in form and substance reasonably
satisfactory to the Agent and the Documentation Agent and their respective
counsel.
(g) The Agent shall have received a certificate, dated the
Effective Date and signed by a Financial Officer of the Borrower, confirming
compliance with the conditions precedent set forth in paragraphs (b), (c), (i),
(n), (o), (p) and (x) of this Article.
53
(h) The Agent shall have received all fees and other amounts
due and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder or under any other Loan Document.
(i) The Collateral and Guarantee Requirement shall have been
satisfied (except for (i) the requirement that Account Control Agreements shall
have been delivered, which requirement shall be satisfied in accordance with the
requirements of the Collateral Agreement and Section 5.22 and (ii) with respect
to consents and approvals set forth on SCHEDULES 3.04 and 3.25, the requirement
set forth in clause (i) of the definition of the Collateral and Guarantee
Requirement) and the Agent shall have received a completed Perfection
Certificate dated the Effective Date and signed by an executive officer or
Financial Officer of the Borrower, together with all attachments contemplated
thereby, including the results of searches of (A) Uniform Commercial Code
financing statements on file with the Secretary of State of the State of
Delaware and (B) real estate filings and Uniform Commercial Code financing
statements on file with the various recording districts of the State of Alaska
in which the Mortgaged Properties are situated, copies of such financing
statements and real estate filings disclosed by such searches and evidence
reasonably satisfactory to the Agent and the Documentation Agent that the Liens
indicated by such financing statements and real estate filings are permitted by
Section 6.02 or have been or will be simultaneously released or terminated.
(j) The Agent shall have received evidence that the Borrower
and each applicable Subsidiary is qualified to own oil, gas and mineral leases
and/or rights-of-way on Federal public lands and State lands in the State of
Alaska, in accordance with all applicable laws, rules, regulations and orders of
the Federal Bureau of Land Management and all applicable Governmental
Authorities of the State of Alaska (including the Division of Oil and Gas with
the State of Alaska Department of Natural Resources).
(k) Except as set forth on SCHEDULE 5.22, the Agent shall have
received a copy of, or a certificate as to coverage under, the insurance
policies required by Section 5.02, each of which shall be endorsed or otherwise
amended to include a customary lender's loss payable endorsement and to name the
Agent as additional insured, in form and substance reasonably satisfactory to
the Agent and the Documentation Agent.
(l) The Transition Services Agreement shall be in full force
and effect in the form certified by a Responsible Officer.
(m) The parties to the 2006 PERL Credit Agreement (and the
documents and agreements executed in connection therewith), shall have entered
into amendments in form and substance satisfactory to the Agent and the Lenders,
which amendments shall, inter alia, permit the Transactions, including the
transactions contemplated hereby and by the other Loan Documents.
(n) The Agent shall have received a final version of the
Environmental and Safety Audit dated as of July 17, 2007, prepared by Arctic
Regulatory Compliance and Technical Oilfield Services, LLC and in form and
substance satisfactory to the Agent and the Documentation Agent.
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(o) Except as set forth on SCHEDULE 5.22, the Agent and the
Documentation Agent shall each be satisfied, in its discretion, with the
commodity and financial hedging arrangements to which the Borrower is a party
and which will be effective from and after the Closing Date, such hedging
arrangements to be at least as favorable to the Borrower as the hedging
arrangements described on Schedule 4.28 to the Membership Interest Purchase
Agreement and the Borrower, the Agent and ▇. ▇▇▇▇ & Company shall have entered
into a consent and agreement in form and substance acceptable to the Agent.
(p) Immediately after giving effect to the Transactions to
occur on or prior to the Closing Date, Holdings and its subsidiaries shall have
outstanding no Indebtedness or preferred Equity Interests other than (a)
Indebtedness outstanding under this Agreement, (b) Indebtedness outstanding
under the Second Lien Credit Agreement, (c) Guarantees of Indebtedness
outstanding under the 2006 PERL Credit Agreement, (d) Guarantees of Indebtedness
under the Subordinated Seller Note, (e) Indebtedness set forth on SCHEDULE 6.01
and (f) Hedging Agreements set forth on SCHEDULE 1.01.
(q) The Lenders shall have received the financial statements
referred to in Section 3.05, none of which shall demonstrate a material adverse
change in the financial condition of Holdings and the Borrower from (and shall
not otherwise be materially inconsistent with) the financial statements or
forecasts previously provided to the Lenders.
(r) The Lenders shall have received the Reserve Report
referred to in Section 3.05, and such Reserve Report shall not be materially
inconsistent with the versions thereof previously provided to the Lenders.
(s) The Agent, the Documentation Agent, and the Lenders shall
have received results of customary individual background checks, the results of
which are satisfactory to the Agent, the Documentation Agent, and the Lenders.
(t) The Agent shall have received a financial accounting
review performed by FTI Consulting, Inc., the results of which shall be
satisfactory to the Agent, the Documentation Agent, and the Lenders.
(u) The Agent shall have received a solvency certificate from
a Financial Officer of Holdings, substantially in the form set forth on EXHIBIT
H, confirming the solvency of Holdings and its subsidiaries on a consolidated
basis after giving the Transactions to occur on the Closing Date.
(v) The Acquisition shall have been consummated in accordance
with applicable law and the terms of the Acquisition Documents, without waiver
or amendment (except as are not adverse to the Agent, the Documentation Agent or
the Lenders) thereof unless consented to by the Agent and the Documentation
Agent.
(w) All material requisite Governmental Authorities and third
parties shall have approved or consented to the Transactions and the other
transactions contemplated hereby to the extent required (other than consents and
approvals listed on SCHEDULE 3.25(C)), all applicable appeal periods shall have
expired and there shall not exist any pending or threatened action, suit,
investigation, litigation or proceeding, governmental, administrative or
judicial action or other legal or regulatory developments that could reasonably
be expected to restrain, prevent or impose burdensome conditions on the
Transactions or the other transactions contemplated hereby.
55
(x) There shall not have been, since December 31, 2006, any
material adverse change in, or affecting the general affairs, management,
financial position, assets, properties, liabilities, stockholders equity or
results of operations of Pacific Energy or the Borrower or their respective
Subsidiaries.
(y) The Lenders shall have received, to the extent requested,
all documentation and other information required by regulatory authorities under
applicable "know your customer" and anti-money laundering rules and regulations,
including the USA PATRIOT Act.
(a) After giving effect to all Borrowings to be made on the
Effective Date and payment of all fees and expenses due hereunder, and with all
of the Loan Parties' indebtedness, liabilities, and obligations current, the
Borrower shall have unused Borrowing Base availability hereunder of not less
than $12,000,000.
(b) The conditions precedent to the effectiveness of the
Second Lien Credit Agreement shall have been satisfied.
The making of the Loans shall be deemed to constitute a representation and
warranty by Holdings and the Borrower on the date of their making as to the
matters specified in this Section 4.01.
SECTION 4.02 CONDITIONS TO EACH CREDIT EXTENSION. The
obligations of the Lenders to make the Loans on the Effective Date are subject
to the satisfaction of the following conditions:
(a) CONDITIONS PRECEDENT. The obligation of each Lender to
make any Loan, to convert any Loan to, or continue any Loan as, a
Eurodollar Loan on any Credit Date, including the Closing Date, are
subject to the satisfaction, or waiver in accordance with Section 9.09,
of the following conditions precedent:
(i) Agent shall have received a Borrowing Request in
accordance with Section 2.04;
(ii) after making the Credit Extensions requested on such
Credit Date, the total Revolving Credit Exposures shall not exceed the
total Commitments (i.e., the lesser of the Aggregate Maximum Credit
Amounts and the then effective Borrowing Base);
(iii) as of such Credit Date, the representations and
warranties contained herein and in the other Credit Documents shall be
true and correct on and as of that Credit Date to the same extent as
though made on and as of that date (or to the extent such
representations and warranties specifically relate to an earlier date)
on and as of such earlier date;
56
(iv) as of such Credit Date, no event shall have occurred and
be continuing or would result from the consummation of the applicable
Credit Extension that would constitute an Event of Default or a
Default;
(v) if the making of any Loan is requested on such Credit Date
and such Credit Date is not the Closing Date, the Agent and the
Documentation Agent shall have approved the making of such Loan in
their sole discretion; PROVIDED that such approval shall not be
required after the occurrence of a Successful Syndication.
(b) ADDITIONAL INFORMATION. The Agent or Required Lenders
shall be entitled, but not obligated to, request and receive, prior to
the making of any Credit Extension, additional information reasonably
satisfactory to the requesting party confirming the satisfaction of any
of the foregoing if, in the good faith judgment of such Agent or
Required Lender such request is warranted under the circumstances.
(c) DEEMED REPRESENTATIONS. Each request for a Credit
Extension shall be deemed to constitute a representation and warranty
by the Borrower on the date thereof as to the matters specified in
Section 4.02(a).
ARTICLE V
AFFIRMATIVE COVENANTS
Each of Holdings and the Borrower covenants and agrees with each Lender
that so long as this Agreement shall remain in effect and until the Commitments
have been terminated and the principal of and interest on each Loan, all fees
and all other expenses or amounts payable under any Loan Document shall have
been paid in full, unless the Required Lenders shall otherwise consent in
writing, each of Holdings and the Borrower will, and will cause each of the
Subsidiaries to:
SECTION 5.01 EXISTENCE; COMPLIANCE WITH LAWS; BUSINESSES AND
PROPERTIES (a) Do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its legal existence, except as otherwise
expressly permitted under Section 6.05.
(b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect its rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names, except for failures to do so that, in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect; maintain and operate such
business in substantially the manner in which it is presently conducted and
operated; comply in all material respects with all applicable laws, rules,
regulations and decrees and orders of any Governmental Authority (including the
qualification and bonding requirements of MMS and the State of Alaska), whether
now in effect or hereafter enacted; and at all times maintain and preserve all
its property and keep such property in good repair, working order and condition
and from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times, except for failures to do so that, in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
57
SECTION 5.02 INSURANCE. The Borrower will, and will cause each Subsidiary to,
maintain, with financially sound and reputable insurance companies, insurance in
such amounts and against such risks as are customarily maintained by companies
engaged in the same or similar businesses operating in the same or similar
locations. The loss payable clauses or provisions in said insurance policy or
policies insuring any of the collateral for the Loans shall be endorsed in favor
of and made payable to the Collateral Agent as its interests may appear and such
liability policies shall name the Collateral Agent and the Lenders as
"additional insureds" and provide that the insurer will give at least 30 days
prior notice of any cancellation to the Collateral Agent.
SECTION 5.03 OBLIGATIONS AND TAXES. Pay its obligations (other
than Indebtedness) promptly and in accordance with their terms, and pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise that, if unpaid,
might give rise to a Lien upon such properties or any part thereof; PROVIDED,
HOWEVER, that such payment and discharge shall not be required with respect to
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
Holdings, the Borrower or the applicable Subsidiary shall have set aside on its
books adequate reserves with respect thereto in accordance with GAAP and such
contest operates to suspend collection of the contested obligation, tax,
assessment or charge and enforcement of a Lien and, in the case of a Mortgaged
Property, there is no risk of forfeiture of such property. No Loan Party will,
nor will it permit any of its Subsidiaries to, file or consent to the filing of
any combined, consolidated, or unitary income tax return with any person (other
than the Borrower or any of its Subsidiaries or Holdings).
SECTION 5.04 FINANCIAL STATEMENTS AND REPORTS. In the case of
Holdings, furnish to the Agent, which shall furnish to each Lender:(a) as soon
as available, but in any event in accordance with then applicable law and not
later than 120 days after the end of each fiscal year, its consolidated balance
sheet and related statements of income, members' equity and cash flows showing
the financial condition of Holdings and its subsidiaries as of the close of such
fiscal year and the results of its operations and the operations of such
subsidiaries during such year, together with comparative figures for the
immediately preceding fiscal year, all audited by independent public accountants
of recognized national standing and accompanied by an opinion of such
accountants (which opinion shall be without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
fairly present, in all material respects, the financial condition and results of
operations of Holdings and its subsidiaries on a consolidated basis in
accordance with GAAP consistently applied;
(b) as soon as available, but in any event in accordance with
then applicable law and not later than 60 days after the end of each of the
first three fiscal quarters of each fiscal year, its consolidated balance sheet
and related statements of income, members' equity and cash flows showing the
financial condition of Holdings and its subsidiaries as of the close of such
fiscal quarter and the results of its operations and the operations of such
Subsidiaries during such fiscal quarter and the then elapsed portion of the
58
fiscal year, and comparative figures for the same periods in the immediately
preceding fiscal year, all certified by one of its Financial Officers as fairly
presenting, in all material respects, the financial condition and results of
operations of Holdings and its subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of a Financial Officer of the
Borrower, substantially in the form of EXHIBIT I hereto, (A) certifying that no
Event of Default or Default has occurred or, if an Event of Default or Default
has occurred, specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto and (B) setting forth
computations in reasonable detail satisfactory to the Agent demonstrating
compliance with the covenants contained in Sections 6.11 and 6.12;
(d) concurrently with any delivery of each Reserve Report
hereunder, a certificate of a Financial Officer, in form and substance
satisfactory to the Agent, setting forth as of a recent date, a true and
complete list of all Hedging Agreements of the Borrower and the Subsidiaries,
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 previously
disclosed in writing to the Agent, any margin required or supplied under any
credit support document, and the counterparty to each such agreement;
(e) promptly upon receipt thereof, a copy of each other report
or letter submitted to the Borrower or any of the Subsidiaries by independent
accountants in connection with any annual, interim or special audit made by them
of the books of the Borrower or any such Subsidiary, and a copy of any response
by the Borrower or any such Subsidiary to such letter or report;
(f) promptly after the furnishing thereof, copies of any
material financial statement, report or notice furnished to or by any person
pursuant to the terms of any indenture, loan or credit or other similar
agreement regarding or with respect to any Material Indebtedness (including with
respect to the Second Lien Loan Documents and the 2006 PERL Credit Agreement)
not otherwise furnished to the Lenders pursuant to any other provision of this
Agreement;
(g) if Holdings or any of its subsidiaries becomes a publicly
traded company, then promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed by
Holdings or such subsidiary with the SEC, or with any national securities
exchange, or distributed by the Holdings or any of its subsidiaries to its
shareholders generally, as the case may be;
(h) concurrently with the delivery of any Reserve Report to
the Agent delivered hereunder, a list of all persons purchasing Hydrocarbons
from the Borrower or any Subsidiary;
(i) prompt written notice (and in any event within thirty (30)
days prior thereto) of any change (i) in the Borrower's or any other Loan
Party's corporate name or in any trade name used to identify such person in the
conduct of its business or in the ownership of its Properties, (ii) in the
location of the Borrower's or any other Loan Party's chief executive office or
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, (▇▇▇) in the Borrower's or any other Loan Party's
identity or corporate structure or in the jurisdiction in which such person is
incorporated or formed, (iv) in the Borrower's or any other Loan Party's
jurisdiction of organization or such person's organizational identification
number in such jurisdiction of organization, and (v) in the Borrower's or any
other Loan Party's federal taxpayer identification number, if any;
(j) within 60 days after the end of each fiscal quarter, a
report setting forth, for each calendar month during the then current fiscal
year to date, the volume of production and sales attributable to production (and
the prices at which such sales were made and the revenues derived from such
sales) for each such calendar month from the Oil and Gas Properties, and setting
forth the related ad valorem, severance and production taxes and lease operating
expenses attributable thereto and incurred for each such calendar month;
(k) promptly, but in any event within five (5) Business Days
after the execution thereof, copies of any amendment, modification or supplement
to the certificate of incorporation, by-laws or other organizational documents
of any Loan Party;
(l) promptly after the request by any Lender, all
documentation and other information that such Lender reasonably requests in
order to comply with its ongoing obligations under applicable "know your
customer" and anti-money laundering rules and regulations, including the USA
PATRIOT Act;
(m) promptly following receipt thereof, on and after the
effectiveness of the Pension Act, copies of (i) any documents described in
Section 101(k)(1) of ERISA that the Borrower and any of its ERISA Affiliates has
received following request thereof with respect to any Multiemployer Plan and
(ii) any notices described in Section 101(1)(1) of ERISA that the Borrower or
any of its ERISA Affiliates has received following request thereof with respect
to any Multiemployer Plan;
(n) promptly after any such occurrence, written notice of any
change in the board of directors (or similar governing body) of Holdings or the
Borrower;
(o) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of Holdings,
the Borrower or any Subsidiary, or compliance with the terms of any Loan
Document, as the Agent or any Lender may reasonably request; and
(p) concurrently with any delivery of financial statements
under Section 5.04(a), a certificate of insurance coverage from each insurer
with respect to the insurance required by Section 5.02, in form and substance
satisfactory to the Collateral Agent, and, if requested by the Collateral Agent
or any Lender, all copies of the applicable policies.
SECTION 5.05 LITIGATION AND OTHER NOTICES. Furnish to the
Agent and each Lender prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to be taken
with respect thereto;
(b) the acceleration of the maturity of any Indebtedness owed
by any Loan Party or of any default by any Loan Party under any indenture,
mortgage, agreement, contract or other instrument to which any of them is a
party or by which any of them or any of their properties is bound;
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(c) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or proceeding,
whether at law or in equity or by or before any Governmental Authority, against
the Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect;
(d) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected to
result in liability of Holdings and its subsidiaries in an aggregate amount
exceeding $2,500,000;
(e) the termination or amendment of any Material Contract of
Holdings, the Borrower or any of its Subsidiaries in a manner that is materially
adverse to Holdings, the Borrower or such Subsidiary, as the case may be;
(f) the entering into of any new Material Contract; and
(g) any development that has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect.
SECTION 5.06 INFORMATION REGARDING COLLATERAL (a) Furnish to
the Agent prompt written notice of any change (i) in any Loan Party's legal
name, as reflected in its organizational documents, (ii) in the jurisdiction of
organization or formation of any Loan Party, (iii) if it is not a registered
organization (as defined in the New York Uniform Commercial Code), in the
location of its chief executive office or its principal place of business, (iv)
in any Loan Party's organizational form or (v) in any Loan Party's Federal
Taxpayer Identification Number or organizational identification number assigned
by the jurisdiction of organization. Holdings and the Borrower agree to promptly
provide the Agent with certified organizational documents reflecting any of the
changes described in the first sentence of this paragraph. Holdings and the
Borrower agree not to effect or permit any change referred to in the preceding
sentence unless all filings have been made under the Uniform Commercial Code or
otherwise that are required in order for the Agent to continue at all times
following such change to have a valid, legal and perfected security interest in
all the Collateral. Holdings and the Borrower also agree promptly to notify the
Agent if any material portion of the Collateral is damaged or destroyed.
(b) In the case of the Borrower, upon request by the Agent, at
the time of delivery of annual financial statements pursuant to Section 5.04(a),
deliver to the Agent a certificate of a Financial Officer of the Borrower
setting forth the information required pursuant to Section 2 of the Perfection
Certificate or confirming that there has been no change in such information
since the date of the Perfection Certificate delivered on the Effective Date or
the date of the most recent certificate delivered pursuant to this Section.
SECTION 5.07 MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made of
all dealings and transactions in relation to its business and activities. Each
Loan Party will, and will cause each of its subsidiaries to, permit any
representatives designated by the Agent or any Lender, upon reasonable prior
notice, to visit and inspect the financial records and the properties of such
person at reasonable times and as often as reasonably requested and to make
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extracts from and copies of such financial records, and permit any
representatives designated by the Agent or any Lender to discuss the affairs,
finances and condition of such person with the officers thereof and independent
accountants therefor, all at the reasonable cost and expense of the Borrower.
SECTION 5.08 USE OF PROCEEDS (a) Use the proceeds of the Loans
only for the purposes specified in the recitals to this Agreement and for
general corporate purposes of the Borrower and the Subsidiaries, including a
payment of fees in connection with the Transaction to Energy Capital Solutions,
LP after the Closing Date in an amount not to exceed $3,315,272.
SECTION 5.09 EMPLOYEE BENEFITS. Furnish to the Agent as soon
as possible after, and in any event within ten days after any responsible
officer of Holdings, the Borrower or any ERISA Affiliate knows or has reason to
know that, any ERISA Event has occurred that, alone or together with any other
ERISA Event, could reasonably be expected to result in liability of Holdings,
the Borrower or any ERISA Affiliate in an aggregate amount exceeding $5,000,000,
a statement of a Financial Officer of Holdings or the Borrower setting forth
details as to such ERISA Event and the action, if any, that Holdings or the
Borrower proposes to take with respect thereto. Upon request by a Lender,
promptly request (a) the documents described in Section 101(k)(1) of ERISA with
respect to a Multiemployer Plan to which the Borrower or any of its ERISA
Affiliates contributes and (b) notices described in Section 101(1)(1) of ERISA
with respect to a Multiemployer Plan to which the Borrower or any of its ERISA
Affiliates contributes.
SECTION 5.10 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except to the
extent it could not reasonably be expected to cause a Material Adverse Effect,
(a) comply, and cause all lessees and other persons occupying its properties to
comply, in all material respects with all Environmental Laws applicable to its
operations and properties; obtain and renew all material permits, licenses or
other approvals necessary for its operations and properties pursuant to any
Environmental Law and (b) undertake and conduct any remedial action necessary to
remove or clean up any Hazardous Materials from any of its current and former
properties in accordance with Environmental Laws; PROVIDED, HOWEVER, that none
of Holdings, the Borrower or any Subsidiary shall be required to undertake any
remedial action required by Environmental Laws to the extent that its obligation
to do so is being contested in good faith and by proper proceedings and
appropriate reserves are being maintained with respect to such circumstances in
accordance with GAAP.
SECTION 5.11 PREPARATION OF ENVIRONMENTAL REPORTS. If a
Default caused by reason of a breach of Section 3.17 or Section 5.10 shall have
occurred and be continuing for more than 20 days without Holdings, the Borrower
or any Subsidiary commencing activities reasonably likely to remediate the
condition giving rise to such Default, at the written request of the Required
Lenders through the Agent, provide to the Lenders within 45 days after such
request, at the expense of the Loan Parties, an environmental site assessment
report regarding the matters which are the subject of such Default prepared by
an environmental consulting firm reasonably acceptable to the Agent and
indicating compliance or non-compliance with Environmental Laws and the presence
or absence of Hazardous Materials and the estimated cost of any corrective or
remedial action in connection with such Default.
SECTION 5.12 FURTHER ASSURANCES (a) Execute any and all
further documents, financing statements, agreements and instruments, and take
all further action (including filing and recording of Uniform Commercial Code
and other financing statements, fixture filings, mortgages and deeds of trust)
62
that may be required under applicable law, or that the Required Lenders or the
Agent may reasonably request, to cause the Mortgages (including all exhibits
thereto) to be in forms satisfactory to the Agent and to cause Collateral and
Guarantee Requirement to be and remain satisfied at all times, all at the
expense of the Loan Parties. If any additional Subsidiary is formed or acquired
after the Closing Date, the Borrower will, within 20 days after such Subsidiary
is formed or acquired, notify the Agent and the Lenders thereof and cause the
Collateral and Guarantee Requirement to be satisfied with respect to such
Subsidiary and with respect to any Equity Interest in or Indebtedness of such
Subsidiary owned by or on behalf of any Loan Party. In addition, from time to
time, each of Holdings and the Borrower will, at its cost and expense, promptly
secure the Obligations by pledging or creating, or causing to be pledged or
created, perfected Liens with respect to its and the Domestic Subsidiaries'
assets and properties as is necessary to cause the Collateral and Guarantee
Requirement to be and remain satisfied at all times. Such security interests and
Liens will be created under the Security Documents and other security
agreements, mortgages, deeds of trust and other instruments and documents in
form and substance satisfactory to the Agent, and the Borrower shall deliver or
cause to be delivered to the Lenders all such instruments and documents
(including legal opinions and lien searches) as the Agent shall reasonably
request to evidence compliance with this Section. The Borrower agrees to provide
such evidence as the Agent shall reasonably request as to the perfection and
priority status of each such security interest and Lien. In furtherance of the
foregoing, the Borrower will give prompt notice to the Agent of the acquisition
by it or any of the Subsidiaries of any real property (or any interest in real
property) having a value in excess of $500,000.
(b) the Borrower agrees to deliver, whenever requested by the
Agent in its sole and absolute discretion, provided that absent the continuance
of an Event of Default, Agent will be limited to two such requests in any twelve
month period, favorable title opinions or updates of title opinions from legal
counsel acceptable to the Agent with respect to any Loan Party's properties and
interests (sufficient to cause the Agent to have received the foregoing with
respect to ninety percent (90%) of the Proved PV-10% of the Loan Parties)
designated by the Agent, based upon abstract or record examinations to dates
acceptable to the Agent and (a) stating that such Loan Party has good and
defensible title to such properties and interests, free and clear of all Liens
other than Liens permitted by Section 6.02, confirming that such properties and
interests are subject to Security Documents securing the Loan Document
Obligations that constitute and create legal, valid and duly perfected deed of
trust or mortgage liens in such properties and interests and assignments of and
security interests in the oil and gas attributable to such properties and
interests and the proceeds thereof, and (c) covering such other matters as the
Agent may reasonably request.
SECTION 5.13 COMPLIANCE WITH LEASES. Maintain all Leases in
full force and effect (other than as a result of their expiration in accordance
with their terms), free of any material default by the Borrower or the
applicable Subsidiary.
SECTION 5.14 INTEREST RATE PROTECTION AGREEMENTS. As promptly
as practicable and in any event within 120 days after the Closing Date, enter
into, and for a period of not less than three years after the Closing Date
maintain in effect, one or more Hedging Agreements, the effect of which is to
fix or cap the interest rates applicable to at least 50% of the Indebtedness
that is projected to be outstanding under the Loan Documents and the Second Lien
Loan Documents, in each case on terms and conditions reasonably acceptable,
taking into account current market conditions, to the Agent. Each such Hedging
Agreement shall be entered into with a person that is reasonably acceptable to
the Agent.
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SECTION 5.15 INTENTIONALLY OMITTED
SECTION 5.16 DELIVERY OF RESERVE REPORTS.
(a) On or prior to September 1 of each year, commencing
September 1, 2008, the Borrower shall furnish to the Agent and the Lenders
reserve reports prepared by or under the supervision of a reserve engineer of
seniority reasonably acceptable to the Agent acting on behalf of the Borrower
setting forth as of July 1 of such year, the proved and probable oil and gas
reserves attributable to the Oil and Gas Properties, together with (i) a
projection of the rate of production and future revenues less severance and ad
valorem taxes, operating expenses and capital expenditures with respect thereto
as of such date and (ii) a writing from a Responsible Officer of the Borrower,
substantially in the form of EXHIBIT J hereto, certifying that (A) there are no
statements or conclusions in such reserve reports which are based upon or
include materially misleading information or fail to take into account material
information regarding the matters reported therein (it being understood that
projections concerning volumes attributable to the Oil and Gas Properties and
production and cost estimates contained in each reserve report are necessarily
based upon professional opinions, estimates and projections), (B) such reserve
reports were prepared in accordance with the procedures used to prepare the
reserve report as of July 1 of the immediately preceding year (or, in the case
of the reserve report as of July 1, 2008, the reserve reports referred to in
Section 3.05(c)) and (C) a writing from a Responsible Officer of the Borrower,
substantially in the form of EXHIBIT K hereto, certifying that there are no gas
imbalances, take-or-pay arrangements or other prepayments in excess of the
volume specified in SCHEDULE 3.24 or permitted by 6.16(b) with respect to the
Oil and Gas Properties evaluated in such reserve reports which would require the
Borrower or any Subsidiary to deliver Hydrocarbons either generally or produced
from the Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor.
(b) On or prior to March 1 of each year, commencing March 1,
2008, the Borrower shall furnish to the Agent and the Lenders a reserve report
prepared by an Independent Engineer setting forth as of January 1 of such year,
the proved and probable oil and gas reserves attributable to the Oil and Gas
Properties, together with (i) a projection of the rate of production and future
revenues less severance and ad valorem taxes, operating expenses and capital
expenditures with respect thereto as of such date, (ii) a writing from a
Responsible Officer of the Borrower, substantially in the form of EXHIBIT J
hereto, certifying that (x) there are no statements or conclusions in such
reserve reports which are based upon or include materially misleading
information or fail to take into account material information regarding the
matters reported therein (it being understood that projections concerning
volumes attributable to the Oil and Gas Properties and production and cost
estimates contained in each reserve report are necessarily based upon
professional opinions, estimates and projections) and (y) such reserve reports
were prepared in accordance with the procedures used to prepare the reserve
report as of January 1 of the immediately preceding year (or, in the case of the
reserve report as of January 1, 2008, the reserve reports referred to in Section
3.05(c)) and (iii) a writing from a Responsible Officer of the Borrower,
substantially in the form of EXHIBIT K hereto, certifying that there are no gas
imbalances, take-or-pay arrangements or other prepayments in excess of the
volume specified in SCHEDULE 3.24 or permitted by 6.16(b) with respect to the
Oil and Gas Properties evaluated in such reserve reports which would require the
Borrower or any Subsidiary to deliver Hydrocarbons either generally or produced
from the Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor.
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(c) In the event of an Interim Redetermination, the Borrower
shall furnish to the Agent and the Lenders as soon as reasonably practicable, a
reserve report prepared by or under the supervision of a reserve engineer of
seniority reasonably acceptable to the Agent acting on behalf of the Borrower
and audited by an Independent Engineer setting forth as of the date required by
the Agent, the proved and probable oil and gas reserves attributable to the Oil
and Gas Properties, together with (i) a projection of the rate of production and
future revenues less severance and ad valorem taxes, operating expenses and
capital expenditures with respect thereto as of such date, (ii) a writing from a
Responsible Officer of the Borrower, substantially in the form of EXHIBIT J
hereto, certifying that (x) there are no statements or conclusions in such
reserve reports which are based upon or include materially misleading
information or fail to take into account material information regarding the
matters reported therein (it being understood that projections concerning
volumes attributable to the Oil and Gas Properties and production and cost
estimates contained in each reserve report are necessarily based upon
professional opinions, estimates and projections) and (y) such reserve reports
were prepared in accordance with the procedures used to prepare the most
recently delivered Reserve Report) and (iii) a writing from a Responsible
Officer of the Borrower, substantially in the form of EXHIBIT K hereto,
certifying that there are no gas imbalances, take-or-pay arrangements or other
prepayments in excess of the volume specified in SCHEDULE 3.24 or permitted by
6.16(b) with respect to the Oil and Gas Properties evaluated in such reserve
reports which would require the Borrower or any Subsidiary to deliver
Hydrocarbons either generally or produced from the Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor.
SECTION 5.17 TITLE INFORMATION (a) On or prior to the delivery
to the Agent of each Reserve Report required to be delivered by Section 5.16,
the Borrower will deliver to the Agent title information, in form and substance
reasonably acceptable to the Agent, that, together with title information
previously delivered to the Agent, constitutes title information with respect to
Oil and Gas Properties representing at least 90% of Proved PV-10% as of the date
of such Reserve Report.
(b) Within 90 days after notice from the Agent that material
title defects or exceptions exist with respect to any Oil and Gas Properties,
the Borrower shall either (i) cure any such material title defects or
exceptions, (ii) create a fully perfected Lien on substitute Oil and Gas
Properties with no material title defects or exceptions theretofore not
composing the Mortgaged Properties that are reasonably acceptable to the Agent
or (iii) deliver title information, in form and substance reasonably acceptable
to the Agent, that, together with the title information previously delivered to
the Agent, constitutes title information with respect to Oil and Gas Properties
representing at least 90% of Proved PV-10% as of the date of the most recently
delivered Reserve Report (it being understood that any Oil and Gas Property with
material title defects or exceptions that have not been cured within 90 days
after notice from the Agent pursuant to this paragraph shall be excluded from
the determination of such Proved PV-10%).
(c) If the Borrower is unable to comply with paragraph (b) of
this Section, such failure to comply shall not constitute a Default. Any Oil and
Gas Property in respect of which paragraph (b) of this Section shall not have
been complied with shall be excluded from the Oil and Gas Properties for
purposes of calculating Proved PV-10% and PDP PV-10% to the extent of such title
65
defect until such time as the Borrower has complied with the paragraph (b) of
this Section in respect of such Oil and Gas Property, and the Agent may send a
notice to the Borrower and the Lenders that the then outstanding Borrowing Base
shall be reduced by an amount as determined by the Required Lenders to cause the
Borrower to be in compliance with the requirement to provide acceptable title
information with respect to Oil and Gas Properties representing at least 80% of
Proved PV-10%. This new Borrowing Base shall become effective immediately after
receipt of such notice.
SECTION 5.18 TITLE. Take such actions as are reasonably
requested by the Agent in order to vest good and marketable title or leasehold
interest in the Real Properties purported to be owned or leased by the Borrower
and the Subsidiaries as of the Closing Date.
SECTION 5.19 EVIDENCE OF COMPLIANCE. Furnish to each Lender at
such Loan Party's expense all evidence which Agent from time to time reasonably
requests in writing as to the accuracy and validity of or compliance with all
representations, warranties and covenants made by any Loan Party in the
Transaction Documents, the satisfaction of all conditions contained therein, and
all other matters pertaining thereto.
SECTION 5.20 LENDERS' MEETINGS. Upon the request of Agent,
participate in a meeting of Agent and Lenders once during each fiscal year to be
held at Borrower's corporate offices (or at such other location as may be agreed
to by Borrower and Agent) at such time as may be agreed to by Borrower and
Agent.
SECTION 5.21 HEDGING AGREEMENTS. At the request of the Agent,
the Documentation Agent or the Required Lenders:
(a) Maintain at any time one or more Hedging Agreements with
persons reasonably acceptable to the Agent or fixed price contracts, the effect
of which is to establish maximum fixed prices or caps on a notional volume of
crude oil and natural gas, calculated separately, greater than 80% of
Anticipated Production thereof for each month in the then ensuing 12 month
period.
(b) For purposes of this Section, a basis differential hedging
agreement will not be considered to be a Hedging Agreement.
SECTION 5.22 POST-CLOSING MATTERS. Within the time periods set
forth on SCHEDULE 5.22, do such things as are set forth on SCHEDULE 5.22.
ARTICLE VI
NEGATIVE COVENANTS
Each of Holdings and the Borrower covenants and agrees with each Lender
that, so long as this Agreement shall remain in effect and until the Commitments
have been terminated and the principal of and interest on each Loan, all fees
and all other expenses or amounts payable under any Loan Document have been paid
in full, unless the Required Lenders shall otherwise consent in writing, neither
Holdings nor the Borrower will, nor will they cause or permit any of the
Subsidiaries to:
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SECTION 6.01 INDEBTEDNESS. Incur, create, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness existing on the date hereof and set forth in
SCHEDULE 6.01 and any extensions or renewals of such Indebtedness to the extent
the principal amount of such Indebtedness is not increased, neither the final
maturity nor the weighted average life to maturity of such Indebtedness is
decreased, such Indebtedness, if subordinated to the Obligations, remains so
subordinated on terms no less favorable to the Lenders, and the original
obligors in respect of such Indebtedness remain the only obligors thereon;
(b) Indebtedness created under the Loan Documents;
(c) Indebtedness created under the Second Lien Loan Documents
and any Permitted Refinancing Indebtedness used to Refinance such Indebtedness;
(d) Indebtedness of the Borrower or any Subsidiary to Pacific
Energy or any of its subsidiaries; PROVIDED that (i) any such Indebtedness shall
not have been transferred or pledged to an third party, (ii) such Indebtedness
shall be unsecured, (iii) such Indebtedness shall be subordinated to the
Obligations on terms and conditions satisfactory to the Agent and the Lenders in
their sole discretion, (iv) such Indebtedness shall be permitted by Section
6.04(c) and (v) the aggregate principal amount of all Indebtedness of the
Borrower or any Subsidiary to Pacific Energy or to any subsidiary of Pacific
Energy that is not a Loan Party shall not exceed $5,000,000 at any time
outstanding;
(e) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of real property (other
than Oil and Gas Properties), improvements thereto and equipment, and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof; PROVIDED THAT (i) such
Indebtedness is incurred prior to or within 90 days after such acquisition or
the completion of such construction or improvement and (ii) the aggregate
principal amount of Indebtedness permitted by this paragraph (e), when combined
with the aggregate principal amount of all Capital Lease Obligations and
Synthetic Lease Obligations incurred pursuant to Section 6.01(f) shall not
exceed $7,500,000 at any time outstanding;
(f) Capital Lease Obligations and Synthetic Lease Obligations
in an aggregate principal amount, when combined with the aggregate principal
amount of all Indebtedness incurred pursuant to Section 6.01(e), not in excess
of $7,500,000 at any time outstanding;
(g) Indebtedness under performance bonds or with respect to
workers' compensation claims, in each case incurred in the ordinary course of
business;
(h) Guarantees permitted under Section 6.04;
(i) Indebtedness constituting Hedging Agreements permitted by
this Agreement;
(j) other Indebtedness of the Borrower or the Subsidiaries in
an aggregate outstanding principal amount not in excess $5,000,000 at any time.
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SECTION 6.02 LIENS. Create, incur, assume or permit to exist
any Lien on any property or assets (including Equity Interests in or other
securities of any person, including the Borrower or any Subsidiary) now owned or
hereafter acquired by it, or assign or sell any income or revenues (including
accounts receivable) or rights in respect of any thereof, except:(a) Liens on
property or assets of the Borrower and its Subsidiaries existing on the date
hereof and set forth in SCHEDULE 6.02; PROVIDED that such Liens shall secure
only those obligations which they secure on the date hereof and extensions,
renewals and replacements thereof permitted hereunder;
(b) any Lien created under the Loan Documents;
(c) any Lien created under the Second Lien Loan Documents and
Liens securing Permitted Refinancing Indebtedness used to Refinance the
Indebtedness under the Second Lien Loan Documents;
(d) Liens for taxes not yet due or which are being contested
in compliance with Section 5.03;
(e) carriers', maritime, warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business or Liens arising out of unit or joint operating agreements, in each
case securing obligations that are not due and payable or which are being
contested in compliance with Section 5.03;
(f) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment insurance and
other social security laws or regulations;
(g) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital Lease
Obligations and Synthetic Lease Obligations), statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(h) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances incurred in
the ordinary course of business which, in the aggregate, are not substantial in
amount and do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the Borrower
or any of its Subsidiaries;
(i) purchase money security interests in real property (other
than Oil and Gas Properties), improvements thereto or equipment hereafter
acquired (or, in the case of improvements, constructed) by the Borrower or any
Subsidiary; PROVIDED that (i) such security interests secure Indebtedness
permitted by Section 6.01(e), (ii) such security interests are incurred, and the
Indebtedness secured thereby is created, within 90 days after such acquisition
(or construction), (iii) the Indebtedness secured thereby does not exceed the
lesser of the cost or the fair market value of such real property, improvements
or equipment at the time of such acquisition (or construction) and (iv) such
security interests do not apply to any other property or assets of the Borrower
or any Subsidiary;
(j) Liens arising out of judgments or awards that do not
constitute an Event of Default under clause (i) of Article VII; and
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(k) other Liens securing obligations of the Borrower or the
Subsidiaries in an aggregate principal amount not in excess of $2,500,000 at any
time.
SECTION 6.03 SALE AND LEASE-BACK TRANSACTIONS. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred.
SECTION 6.04 INVESTMENTS, LOANS AND ADVANCES. Purchase, hold
or acquire any Equity Interests, evidences of indebtedness or other securities
of, make or permit to exist any loans or advances to, or make or permit to exist
any investment or any other interest in, any other person, except:(a) (i)
investments by Holdings and its subsidiaries existing on the Closing Date in the
Equity Interests of the Borrower and the Subsidiaries, (ii) additional
investments by Holdings and its subsidiaries in Equity Interests in the Borrower
and the Subsidiaries and (iii) investments by Holdings in Equity Interests of
▇▇▇▇ Inlet; PROVIDED that any such Equity Interests held by a Loan Party shall
be pledged pursuant to the Collateral Agreement;
(b) Permitted Investments;
(c) loans or advances made by Holdings or the Borrower to any
Subsidiary and made by any Subsidiary to the Borrower or any other Subsidiary;
(d) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(e) loans and advances in the ordinary course of business to
employees so long as the aggregate principal amount thereof at any time
outstanding (determined without regard to any write-downs or write-offs of such
loans and advances) shall not exceed $500,000;
(f) Hedging Agreements permitted or required by this
Agreement;
(g) Permitted Acquisitions;
(h) Investments in the form of non-cash consideration received
as a result of asset sales permitted by Section 6.05(b);
(i) Guarantees by the Borrower of Indebtedness and other
obligations of any Subsidiary and Guarantees by any Subsidiary of Indebtedness
and other obligations of the Borrower or any other Subsidiary; PROVIDED that a
Subsidiary that has not Guaranteed the Obligations pursuant to the Collateral
Agreement shall not Guarantee any Indebtedness or other obligations of any Loan
Party;
(j) investments in joint ventures for the purpose of
exploration, development, gathering and processing Hydrocarbons in an amount not
to exceed $5,000,000 in the aggregate during the term of this Agreement;
(k) investments in Oil and Gas Properties (A) made during any
fiscal year that, together with the total consideration paid in connection with
any acquisitions pursuant to Section 6.04(g) (including any Indebtedness of the
69
Acquired Entity that is assumed by the Borrower or any Subsidiary following such
acquisition and any payments following such acquisition pursuant to earn-out
provisions or similar obligations) made in such fiscal year, shall not in the
aggregate exceed $7,500,000 and (B) made during the term of this Agreement that,
together with the total consideration paid in connection with any acquisitions
pursuant to Section 6.04(g) (including any Indebtedness of the Acquired Entity
that is assumed by the Borrower or any Subsidiary following such acquisition and
any payments following such acquisition pursuant to earn-out provisions or
similar obligations) made during the term of this Agreement, shall not in the
aggregate exceed $25,000,000;
(l) in addition to investments permitted by paragraphs (a)
through (g) above, additional investments, loans and advances by the Borrower
and the Subsidiaries so long as the aggregate amount invested, loaned or
advanced pursuant to this paragraph (h) (determined without regard to any
write-downs or write-offs of such investments, loans and advances) does not
exceed $5,000,000 in the aggregate;
(m) Guarantees by Subsidiaries of the Borrower of Indebtedness
under the Subordinated Seller Note; PROVIDED that such Guarantees shall be
subordinated to the Obligations on the same terms as the Subordinated Seller
Note is subordinated to the Obligations; and
(n) Guarantees of Indebtedness under the 2006 PERL Credit
Agreement.
SECTION 6.05 MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND
ACQUISITIONS (a) Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
substantially all the assets (whether now owned or hereafter acquired) of the
Borrower or less than all the Equity Interests of any Subsidiary, or purchase,
lease or otherwise acquire (in one transaction or a series of transactions) all
or any substantial part of the assets of any other person, except that (i) the
Borrower and any Subsidiary may purchase and sell inventory in the ordinary
course of business and (ii) if at the time thereof and immediately after giving
effect thereto no Event of Default or Default shall have occurred and be
continuing (A) any wholly owned subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (B) any wholly
owned subsidiary may merge into or consolidate with any other wholly owned
subsidiary in a transaction in which the surviving entity is a wholly owned
subsidiary and no person other than the Borrower or a wholly owned subsidiary
receives any consideration (PROVIDED that if any party to any such transaction
is a Loan Party, the surviving entity of such transaction shall be a Loan Party)
and (C) the Borrower and the Subsidiaries may make Permitted Acquisitions
(including through mergers of Subsidiaries).
(b) Make any Asset Sale otherwise permitted under paragraph
(a) above unless (i) such Asset Sale is for consideration at least 75% of which
is cash, (ii) such consideration is at least equal to the fair market value of
the assets being sold, transferred, leased or disposed of and (iii) the fair
market value of all assets sold, transferred, leased or disposed of pursuant to
this paragraph (b) during any fiscal year shall not exceed an amount equal to
7.5% of the Proved PV-10% as of the end of the fiscal year most recently ended
prior to the date of such sale, transfer, lease or disposition for which a
Reserve Report has been delivered, calculated on a pro forma basis for
acquisitions consummated since the end of such fiscal year in the manner
70
specified in the definition of "Proved PV-10%"; PROVIDED, that if such sale or
other disposition is of Oil and Gas Property or of a Subsidiary owning Oil and
Gas Properties included in the most recently delivered Reserve Report during any
period between two successive Scheduled Redetermination Dates having a fair
market value (as determined by the Agent), individually or in the aggregate, in
excess of 5% of the Borrowing Base, the Borrowing Base shall be reduced,
effective immediately upon such sale or disposition, by an amount equal to the
value, if any, assigned such Oil and Gas Property in the most recently
determined Borrowing Base.
SECTION 6.06 RESTRICTED PAYMENTS; PAYMENT OF CERTAIN
INDEBTEDNESS; RESTRICTIVE AGREEMENTS (a) Declare or make, or agree to declare or
make, directly or indirectly, any Restricted Payment or enter into or be a party
to any Synthetic Purchase Agreement, or incur any obligation (contingent or
otherwise) to do so; PROVIDED, HOWEVER, that:
(i) any Subsidiary may declare and pay dividends or make other
distributions ratably to its equity holders,
(ii) so long as no Event of Default or Borrowing Base
Deficiency has occurred and is continuing and the Borrower shall have
unused Borrowing Base availability hereunder on a pro forma basis as of
the date of the consummation of such Restricted Payments (after giving
effect to all Loans to be funded as of such date) of not less than 10%
of the Borrowing Base then in effect:
(1) the Borrower may make Restricted Payments to
Holdings, and Holdings may in turn make Restricted Payments to Pacific Energy
(x) in an amount not to exceed $1,000,000 in any fiscal year, to the extent
necessary to pay general corporate and overhead expenses incurred by Holdings
and/or Pacific Energy in the ordinary course of business; PROVIDED, HOWEVER,
that all Restricted Payments made to Holdings and/or Pacific Energy pursuant to
this clause (ii) are used by Holdings and/or Pacific Energy for the purposes
specified herein within 20 days of the receipt thereof,
(2) the Borrower may make distributions to Holdings
and/or Pacific Energy to the extent necessary to permit Holdings and/or Pacific
Energy to discharge any tax liability of Holdings and/or Pacific Energy
attributable to the Borrower and its Subsidiaries, and
(3) the Borrower may make distributions to Holdings
and/or Pacific Energy pursuant to a management services agreement in an amount
not to exceed $200,000 in any month, in each case so long as Holdings and/or
Pacific Energy applies the amount of such distributions for such purpose.
(b) Neither Holdings nor the Borrower will, nor will they
permit any Subsidiary to, make or agree to pay or make, directly or indirectly,
any payment or other distribution (whether in cash, securities or other
property) of or in respect of principal of or interest on any Indebtedness, or
any payment or other distribution (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any Indebtedness, except:
(i) payment of Indebtedness created under the Loan Documents;
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(ii) payment of scheduled interest and principal payments as
and when due in respect of any Indebtedness; PROVIDED that in no event
shall any payment be made in respect of the Subordinated Seller Note in
violation of the subordination provisions thereof;
(iii) mandatory and voluntary prepayments of the Second Lien
Loans in accordance with the terms of the Second Lien Loan Documents;
(iv) payment when and as due of Indebtedness under Hedging
Agreements permitted under this Agreement;
(v) refinancings of Indebtedness to the extent permitted by
Section 6.01; PROVIDED that in no event shall any refinancing of the
Subordinated Seller Note be permitted; and
(vi) payments of secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets
securing such Indebtedness.
(c) Enter into, incur or permit to exist any agreement or
other arrangement that prohibits, restricts or imposes any condition
upon (i) the ability of Holdings, the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or
assets to secure Indebtedness under the Loan Documents or (ii) the
ability of any Subsidiary to pay dividends or other distributions with
respect to any of its Equity Interests or to make or repay loans or
advances to the Borrower or any other Subsidiary; PROVIDED that (A) the
foregoing shall not apply to restrictions and conditions imposed by law
or by any Loan Document, any Second Lien Loan Document or the 2006 PERL
Credit Agreement, (B) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such
sale is permitted hereunder, (C) clause (i) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating
to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets
securing such Indebtedness, (D) clause (i) of the foregoing shall not
apply to customary provisions in leases and other contracts restricting
the assignment thereof and (E) clause (ii) of the foregoing shall not
apply to restrictions and conditions imposed by the Subordinated Seller
Note.
SECTION 6.07 TRANSACTIONS WITH AFFILIATES. Except for
transactions between or among Loan Parties and transactions permitted by Section
6.01(d), 6.04(c) or 6.06, sell or transfer any property or assets to, or
purchase or acquire any property or assets from, or otherwise engage in any
other transactions with, any of its Affiliates, except that the Borrower or any
Subsidiary (a) may engage in any of the foregoing transactions in the ordinary
course of business at prices and on terms and conditions not less favorable to
the Borrower or such Subsidiary than could be obtained on an arm's-length basis
from unrelated third parties (including transactions on such terms and
conditions with ▇▇▇▇ Inlet) and (b) may make payments in accordance with the
Intercompany Services Agreement in accordance with its terms.
SECTION 6.08 BUSINESS OF HOLDINGS, BORROWER AND SUBSIDIARIES;
NO FOREIGN SUBSIDIARIES.
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(a) With respect to Holdings, engage in any business
activities or have any assets or liabilities other than its ownership of the
Equity Interests in the Borrower and other assets and liabilities incidental
thereto, including its liabilities under the Loan Documents and the Second Lien
Loan Documents and the Subordinated Seller Note and its Guaranty of Indebtedness
under the 2006 PERL Credit Agreement.
(b) With respect to the Borrower and the Subsidiaries, engage
at any time in any business or business activity other than the business
currently conducted by it and business activities reasonably related thereto.
(c) Neither Holdings nor the Borrower shall acquire or own any
Foreign Subsidiary or conduct any international operations.
SECTION 6.09 AMENDMENT OF CERTAIN INDEBTEDNESS AND AGREEMENTS.
Neither Holdings nor the Borrower will, nor will they permit any Subsidiary to,
amend, modify or waive any of its rights under (a) (i) the Intercompany Services
Agreement, (ii) the Master Conveyance, (iii) the Membership Interest Assignment
or (iv) its certificate of incorporation, by-laws or other organizational
documents, except, in each case, for amendments, modifications or waivers to any
of the foregoing documents that, when taken together will all prior amendments,
modifications and waivers to such document, are not material and adverse to the
Borrower or the Subsidiaries or to the rights or interests of the Lenders, (b)
the Second Lien Loan Documents, except to the extent permitted under the
Intercreditor Agreement or (c) the Subordinated Seller Note.
SECTION 6.10 MATERIAL CONTRACTS (a) Cancel or terminate any
Material Contract (or consent to or accept any cancellation or termination
thereof), (b) amend or otherwise modify any Acquisition Document or give any
consent, waiver or approval thereunder, or waive any breach of or default under
any Acquisition Document, or (c) amend or otherwise modify any other Material
Contract in any material respect or give any material consent, waiver or
approval thereunder, or waive any material breach of or default under any such
Material Contract. No Loan Party shall take any action (or omit to take any
action) in connection with any Material Contract that would materially impair
the value of the interests or rights of any Loan Party thereunder or that would
impair the interest or rights of the Agent and/or Lenders hereunder or under any
other Transaction Document.
SECTION 6.11 LEVERAGE RATIO. At the end of each fiscal
quarter, beginning with the fiscal quarter ending December 31, 2007, the
Leverage Ratio will not be greater than the ratio set out in such table opposite
such fiscal quarter:
------------------------------------------------------------- ------------------
FISCAL QUARTER MAXIMUM RATIO
------------------------------------------------------------- ------------------
December 31, 2007 7.5 to 1.0
------------------------------------------------------------- ------------------
1st, 2nd, 3rd and 4th Fiscal Quarters of 2008 6.0 to 1.0
------------------------------------------------------------- ------------------
1st, 2nd, 3rd and 4th Fiscal Quarters of 2009 and thereafter 4.0 to 1.0
------------------------------------------------------------- ------------------
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SECTION 6.12 CURRENT RATIO. Permit, as of the last day of any
fiscal quarter, commencing with the fiscal quarter ending on September 30, 2007,
the ratio of (i) Current Assets to (ii) Current Liabilities to be less than 1.0
to 1.0.
SECTION 6.13 FISCAL YEAR. With respect to Holdings and the
Borrower, change their fiscal year-end to a date other than December 31.
SECTION 6.14 CERTAIN EQUITY INTERESTS (a) In the case of
Holdings, issue any Equity Interest to any person other than Pacific Energy.
(b) In the case of the Borrower, issue any Equity Interests to
any person other than Holdings.
(c) In the case of any Subsidiary, issue any Equity Interests
to any person other than the Borrower or another Subsidiary.
SECTION 6.15 HEDGING AGREEMENTS (a) Enter into any Hedging
Agreement, other than (i) Hedging Agreements required by Sections 5.14 and 5.15
and (ii) subject to paragraph (b), Hedging Agreements entered into in the
ordinary course of business (and not for speculative purposes) to hedge or
mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct
of its business or the management of its liabilities.
(b) For purposes of this Section, a basis differential hedging
agreement will not be considered to be a Hedging Agreement.
SECTION 6.16 TAKE-OR-PAY OR OTHER PREPAYMENTS; GAS IMBALANCES
(a) Except as set forth in SCHEDULE 3.24, allow take-or-pay
arrangements or prepayments (including deferred production agreements or
volumetric production payments) with respect to the Oil and Gas Properties or
production therefrom that could require the Borrower or any Subsidiary to
deliver Hydrocarbons either generally or produced from the Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor.
(b) Allow, on a net basis, any gas imbalances that would
require the Borrower or any Subsidiary to deliver Hydrocarbons either generally
or produced from the Oil and Gas Properties in excess of 200 MMcf at some future
time without then or thereafter receiving full payment therefor.
(c) Allow gas imbalances, take-or-pay or other prepayments
with respect to the Oil and Gas Properties that would require the Borrower or
any of its subsidiaries to deliver Hydrocarbons at some future time without then
or thereafter receiving full payment therefore to exceed one half bcf of gas (on
an mcf equivalent basis) in the aggregate.
SECTION 6.17 LEASES. Create, incur, assume or suffer to exist
any obligation for the payment of rent or hire of property (whether real or
personal), under leases or lease agreements (other than Capital Leases and oil
and gas leases) which would cause the aggregate amount of all payments made by
the Borrower and the Subsidiaries pursuant to all such leases or lease
agreements, including, without limitation, any residual payments at the end of
any lease, to exceed $1,000,000 in any period of twelve consecutive calendar
months during the life of such leases.
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ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):
(a) any representation or warranty made or deemed made in or
in connection with any Loan Document or the borrowings hereunder, or any
representation, warranty, statement or information contained in any report,
certificate, financial statement or other instrument furnished in connection
with or pursuant to any Loan Document, any ORRI Conveyance or the Transactions,
shall prove to have been false or misleading in any material respect when so
made, deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or any fee or any other amount (other than an amount referred to in (b)
above) due under any Loan Document when and as the same shall become due and
payable and such default shall continue unremedied for a period of three
Business Days;
(d) default shall be made in the due observance or performance
by Holdings, the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 2.21, 5.01(a), 5.05 or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance
by Holdings, the Borrower or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those specified in (b), (c)
or (d) above) and such default shall continue unremedied for a period of 30 days
after notice thereof from the Agent or any Lender to the Borrower;
(f) (i) Holdings, the Borrower or any Subsidiary shall fail to
pay any principal, interest or other amount due in respect of any Material
Indebtedness (other than the Second Lien Obligations) when and as the same shall
become due and payable or (ii) any other event or condition shall occur that
results in any Material Indebtedness (other than the Second Lien Obligations)
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness (other than the Second Lien Obligations) or any
trustee or agent on its or their behalf to cause any Material Indebtedness
(other than the Second Lien Obligations) to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof prior to its scheduled
maturity or that results in the termination or permits any counterparty to
terminate any Hedging Agreement the obligations under which constitute Material
Indebtedness; PROVIDED that this clause (ii) shall not apply to (A) secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness and (B) Indebtedness that
becomes due as a result of a condition described in clause (c) of the definition
of "Change in Control" as long as the Borrower shall have advised the Lenders at
the time of the Change in Control offer that such event constitutes an event of
default under such Material Indebtedness;
75
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of Holdings, the Borrower or any Subsidiary, or of a
substantial part of the property or assets of Holdings, the Borrower or a
Subsidiary, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for Holdings,
the Borrower or any Subsidiary or for a substantial part of the property or
assets of Holdings, the Borrower or a Subsidiary or (iii) the winding-up or
liquidation of Holdings, the Borrower or any Subsidiary; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
(h) Holdings, the Borrower or any Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or the filing of any petition described
in (g) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for Holdings,
the Borrower or any Subsidiary or for a substantial part of the property or
assets of Holdings, the Borrower or any Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
become unable, admit in writing its inability or fail generally to pay its debts
as they become due or (vii) take any action for the purpose of effecting any of
the foregoing;
(i) one or more judgments shall be rendered against Holdings,
the Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of Holdings, the Borrower or
any Subsidiary to enforce any such judgment and such judgment either (i) is for
the payment of money in an aggregate amount in excess of $2,500,000 or (ii) is
for injunctive relief and could reasonably be expected to result in a Material
Adverse Effect;
(j) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA Events,
could reasonably be expected to result in liability of the Borrower and its
ERISA Affiliates in an aggregate amount exceeding $2,500,000;
(k) any Guarantee under the Collateral Agreement for any
reason shall cease to be in full force and effect (other than in accordance with
the terms of the Loan Documents), or any Guarantor shall deny in writing that it
has any liability under the Collateral Agreement (other than as a result of the
discharge of such Guarantor in accordance with the terms of the Loan Documents);
(l) any security interest purported to be created by any
Security Document shall cease to be, or shall be asserted by the Borrower or any
other Loan Party not to be, a valid, perfected, first priority (except as
otherwise expressly provided in this Agreement or such Security Document)
security interest in the securities, assets or properties covered thereby,
except as a result of the sale, transfer or other disposition of such assets in
a transaction permitted by the Loan Documents;
76
(m) any Loan Document, any ORRI Conveyance or, except during
any period during which the Borrower and the Subsidiaries are capable of
performing with their own employees and assets all the activities performed for
them under the Transition Services Agreement, the Transition Services Agreement
shall cease to be in full force and effect (other than pursuant to expiration by
its terms) or any consent or approval of any Governmental Authority required in
connection with the ORRI Conveyances shall not have been obtained within 60 days
after the Closing Date;
(n) any "Event of Default" (or any comparable term) under, and
as defined in, the Second Lien Loan Documents shall occur and be continuing;
(o) the subordination provisions of any agreement or
instrument governing any Subordinated Indebtedness are for any reason revoked or
invalidated, or otherwise cease to be in full force and effect, any person
subject to the subordination provisions contained therein contests in any manner
the validity or enforceability thereof, or the Indebtedness hereunder is for any
reason subordinated or does not have the priority contemplated by the Loan
Documents or such subordination provisions;
(p) a Change in Control shall occur; then, and in every such
event (other than an event with respect to Holdings or the Borrower described in
paragraph (g) or (h) above), and at any time thereafter during the continuance
of such event, the Agent may, and at the request of the Required Lenders shall,
by notice to the Borrower, take either or both of the following actions, at the
same or different times: (i) terminate forthwith the Commitments and (ii)
declare the Loans then outstanding to be forthwith due and payable in whole or
in part, whereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and any unpaid accrued fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding; and in any event with respect to Holdings or the
Borrower described in paragraph (g) or (h) above, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
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ARTICLE VIII
THE AGENT
Each of the Lenders hereby irrevocably appoints the Agent as its
administrative agent and collateral agent and authorizes the Agent to take such
actions on its behalf and to exercise such powers as are delegated to the Agent
by the terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto. Without limiting the generality of the foregoing,
the Agent is hereby expressly authorized to execute any and all documents
(including releases) with respect to the Collateral and the rights of the
Secured Parties with respect thereto, as contemplated by and in accordance with
the provisions of this Agreement and the Security Documents.
The person serving as the Agent hereunder shall have the same rights
and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Agent, and such bank and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with Holdings, the Borrower or any Subsidiary or other Affiliate thereof as if
it were not the Agent hereunder.
The Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) the Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby that the Agent is instructed in writing to
exercise by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.09) and (c) except as expressly set forth in the Loan Documents, the Agent
shall not have any duty to disclose, nor shall it be liable for the failure to
disclose, any information relating to Holdings, the Borrower or any of the
Subsidiaries that is communicated to or obtained by the bank serving as the
Agent or any of its Affiliates in any capacity. The Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.09) or in the
absence of its own gross negligence or willful misconduct. The Agent shall not
be deemed to have knowledge of any Default unless and until written notice
thereof is given to the Agent by Holdings, the Borrower or a Lender, and the
Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with any
Loan Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article IV or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to the Agent.
The Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper person. The Agent may also rely
upon any statement made to it orally or by telephone and believed by it to have
been made by the proper person, and shall not incur any liability for relying
78
thereon. The Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
The Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by it. The Agent
and any such sub-agent may perform any and all its duties and exercise its
rights and powers by or through their Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Agent and any such sub-agent, and shall apply to
their activities in connection with the syndication of the credit facilities
contemplated hereby as well as activities as the Agent.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right, in consultation with the Borrower, to appoint a successor. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Agent gives notice
of its resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent which shall be a bank with an office in New York, New
York, or an Affiliate of any such bank. Upon the acceptance of its appointment
as Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After an Agent's resignation hereunder, the
provisions of this Article and Section 9.06 shall continue in effect for the
benefit of such retiring Agent, its sub-agents and their Related Parties in
respect of any actions taken or omitted to be taken by any of them while acting
as Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
Except as expressly set forth in this Agreement, neither the
Syndication Agent nor any arranger, bookrunner or documentation agent listed on
the cover page hereof shall have, in any such capacity, any duty or
responsibility under any Loan Document.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 NOTICES. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
79
fax, as follows:(a) if to the Borrower or Holdings, to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇ ▇▇▇▇▇,
President (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇; e-mail ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇), WITH A COPY TO
▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇. ▇'▇▇▇▇, Esq. (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇; e-mail
▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇);
(b) if to the Agent, to Silver Point Finance, LLC, Silver
Point Finance, LLC (Borrowings, Paydowns, Interest, Fees, Rate Settings) ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention ▇▇▇ ▇▇▇▇▇▇▇ (Fax No.
(▇▇▇) ▇▇▇-▇▇▇▇; e-mail ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇); WITH A COPY TO Silver
Point Finance, LLC (Financials, Credit Agreements, Amendments, Waivers,
Compliance) ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇; e-mail creditadmin@silverpoint ▇▇▇▇▇▇▇.▇▇▇);
WITH A COPY TO Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (Fax No. (312)
▇▇▇-▇▇▇▇; e-mail ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇);
(c) if to the Documentation Agent, to ▇. ▇▇▇▇ & Company, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Fax No. (212)
▇▇▇-▇▇▇▇; e-mail ▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇.▇▇▇); WITH A COPY TO ▇. ▇▇▇▇ & Company, 1 New
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Fax
No. (▇▇▇) ▇▇▇-▇▇▇▇; e-mail ▇▇▇▇▇▇▇▇.▇▇▇▇▇@▇▇.▇▇▇); and
(d) if to a Lender, to it at its address (or fax number or
e-mail address) set forth on SCHEDULE 2.01 or in the Assignment and Acceptance
pursuant to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by fax or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section or in accordance with the
latest unrevoked direction from such party given in accordance with this
Section. As agreed to among Holdings, the Borrower, the Agent and the applicable
Lenders from time to time, notices and other communications may also be
delivered by e-mail to the e-mail address of a representative of the applicable
person provided from time to time by such person, including those provided
above.
SECTION 9.02 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower or Holdings herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans, regardless of any investigation made by the Lenders or on their
behalf, and shall continue in full force and effect as long as the principal of
or any accrued interest on any Loan or any fee or any other amount payable under
this Agreement or any other Loan Document is outstanding and unpaid and so long
as the Commitments have not been terminated. The provisions of Sections 2.13,
2.15, 2.16, 2.19, 2.20, 9.06 and, until the first anniversary of the Termination
Date, 9.17 shall remain operative and in full force and effect regardless of the
expiration of the term of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the expiration of the
Commitments, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document or any investigation made by or on behalf
of the Agent or any Lender.
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SECTION 9.03 BINDING EFFECT. This Agreement shall become
effective when it shall have been executed by the Borrower, Holdings and the
Agent and when the Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto.
SECTION 9.04 SUCCESSORS AND ASSIGNS (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower, Holdings,
the Agent or the Lenders that are contained in this Agreement shall bind and
inure to the benefit of their successors and assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement (including
all or a portion of the Loans at the time owing to it), with notice to the
Borrower by the Agent and, except in the case of an assignment to a Lender, to
an Affiliate of a Lender or to a Related Fund (which will require prior written
notice to the Agent), the prior written consent of the Agent (not to be
unreasonably withheld or delayed); PROVIDED, HOWEVER, that (i) the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Agent) shall be in an integral multiple of, and
not less than, $1,000,000 (or, if less, the entire remaining amount of such
Lender's Commitment or Loans); PROVIDED that the principal amount of concurrent
assignments to any assignee and its Related Funds shall be aggregated for
purposes of determining compliance with the foregoing minimum assignment amount,
(ii) the parties to each such assignment shall execute and deliver to the Agent
an Assignment and Acceptance via an electronic settlement system acceptable to
the Agent (or, if previously agreed with the Agent, manually), and shall pay to
the Agent a processing and recordation fee of $3,500 (which fee may be waived or
reduced in the sole discretion of the Agent), (iii) the assignee, if it shall
not be a Lender, shall deliver to the Agent an Administrative Questionnaire and
all applicable tax forms in accordance with Section 2.19(e) and (iv) failure to
deliver notice to the Borrower shall not affect the effectiveness of such
assignment. Upon acceptance and recording pursuant to paragraph (e) of this
Section, from and after the effective date specified in each Assignment and
Acceptance, (A) the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (B) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto but shall continue to be entitled
to the benefits of Sections 2.13, 2.15, 2.19 and 9.06, as well as to any fees
accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitment and the outstanding balances of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
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forth in such Assignment and Acceptance, (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of this Agreement are required to
be performed by it as a Lender.
(d) Upon its receipt of, and consent to, a duly completed
Assignment and Acceptance executed by an assigning Lender and an assignee, an
Administrative Questionnaire completed in respect of the assignee (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) above, if applicable, and the written consent
of the Agent and any applicable tax forms, the Agent shall promptly (i) accept
such Assignment and Acceptance and (ii) record the information contained therein
in the Register. No assignment shall be effective unless it has been recorded in
the Register as provided in this paragraph (d).
(e) Each Lender may without the consent of the Borrower or the
Agent sell participations to one or more banks or other persons in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of the Loans owing to it); PROVIDED, HOWEVER, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other persons shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.13, 2.15, and 2.19 to the same extent as if they were Lenders (but, with
respect to any particular participant, to no greater extent than the Lender that
sold the participation to such participant unless the sale of the participation
to such participant is made with the Borrower's prior written consent) and (iv)
the Borrower, the Agent and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable to such
participating bank or person hereunder or the amount of principal of or the rate
at which interest is payable on the Loans in which such participating bank or
person has an interest, extending any scheduled principal payment date or date
fixed for the payment of interest on the Loans in which such participating bank
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or person has an interest, increasing or extending the Commitments in which such
participating bank or person has an interest or releasing any Guarantor (other
than in connection with the sale of such Guarantor in a transaction permitted by
Section 6.05) or all or substantially all of the Collateral). A participant that
would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.19 unless the Borrower is notified of the participation
sold to such participant and such participant agrees, for the benefit of the
Borrower, to comply with Section 2.19(e) as though it were a Lender.
(f) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; PROVIDED that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.17.
(g) Any Lender may at any time assign all or any portion of
its rights under this Agreement to secure extensions of credit to such Lender or
in support of obligations owed by such Lender; PROVIDED that no such assignment
shall release a Lender from any of its obligations hereunder or substitute any
such assignee for such Lender as a party hereto.
(h) Notwithstanding anything to the contrary contained herein,
any Lender (a "GRANTING LENDER") may grant to a special purpose funding vehicle
(an "SPC"), identified as such in writing from time to time by the Granting
Lender to the Agent and the Borrower, the option to provide to the Borrower all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make to the Borrower pursuant to this Agreement; PROVIDED that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof In addition,
notwithstanding anything to the contrary contained in this Section, any SPC may
(i) with notice to, but without the prior written consent of, the Borrower and
the Agent and without paying any processing fee therefor, assign all or a
portion of its interests in any Loans to the Granting Lender or to any financial
institutions (consented to by the Borrower and Agent) providing liquidity and/or
credit support to or for the account of such SPC to support the funding or
maintenance of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPC.
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(i) Neither Holdings nor the Borrower shall assign or delegate
any of its rights or duties hereunder without the prior written consent of the
Agent and each Lender, and any attempted assignment without such consent shall
be null and void.
SECTION 9.05 THE REGISTER (a) The Agent, acting for this
purpose as an agent of the Borrower, shall maintain at one of its offices a
register for the recordation of the names and addresses of Lenders and the
Maximum Credit Amount and Loans of each Lender from time to time (the
"REGISTER"). The Register shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice. The Agent shall record in the Register the Loans, each repayment or
prepayment in respect of the principal amount of the Loans, and each payment of
interest thereon, and any such recordation shall be conclusive and binding on
the Borrower and each Lender, absent manifest error; provided, failure to make
any such recordation, or any error in such recordation, shall not affect the
Borrower's obligations in respect of any Loan. The Borrower hereby designates
the entity serving as the Agent to serve as the Borrower's agent solely for
purposes of maintaining the Register as provided in this Section, and the
Borrower hereby agrees that, to the extent such entity serves in such capacity,
the Agent and its officers, partners, directors, trustees, employees,
representatives and agents shall constitute "Indemnitees" for purposes of
Section 9.06.
(b) The Borrower, the Agent and Lenders shall deem and treat
the persons listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof, and
no assignment or transfer of any such Commitment or Loan shall be effective, in
each case, unless and until an Assignment and Acceptance effecting the
assignment or transfer thereof shall have been delivered to and accepted by the
Agent and recorded in the Register. Prior to such recordation, all amounts owed
with respect to the applicable Commitment or Loan shall be owed to the Lender
listed in the Register as the owner thereof, and any request, authority or
consent of any person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be conclusive
and binding on any subsequent holder, assignee or transferee of the
corresponding Commitments and Loans.
SECTION 9.06 EXPENSES; INDEMNITY (a) The Borrower and Holdings
agree, jointly and severally, to pay all reasonable out-of-pocket expenses
incurred by the Agent, the sole lead arranger listed on the cover page of this
Agreement, the Syndication Agent, the Documentation Agent, or the Affiliates of
the foregoing in connection with the arrangement and syndication of the credit
facilities contemplated hereby and the preparation, negotiation, delivery and
administration of this Agreement and the other Loan Documents or in connection
with any amendments, modifications or waivers of the provisions hereof or
thereof or incurred by the Agent or any Lender in connection with the
enforcement or protection of its rights in connection with this Agreement and
the other Loan Documents, including the fees, charges and disbursements of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Agent, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, LLP, counsel for the Documentation Agent, and, in connection with any
such enforcement or protection, the fees, charges and disbursements of any other
outside counsel for the Agent or any Lender.
(b) The Borrower and Holdings agree, jointly and severally, to
indemnify the Agent, each sole lead arranger listed on the cover page of this
Agreement, the Syndication Agent, each Lender and each Related Party of any of
the foregoing persons (each such person being called an "INDEMNITEE") against,
and to hold each Indemnitee harmless from, any and all losses, claims, damages,
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liabilities and related expenses, including reasonable fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in any way connected with, or as a result of (i)
the execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties thereto of their obligations thereunder or the consummation of the
Transactions and the other transactions contemplated hereby or thereby
(including the syndication of the credit facilities contemplated hereby), (ii)
the use of the proceeds of the Loans, (iii) any claim, litigation, investigation
or proceeding relating to any of the foregoing, whether or not any Indemnitee is
a party thereto (and regardless of whether such matter is initiated by a third
party or by the Borrower, any other Loan Party or any of their Affiliates) or
(iv) any actual or alleged presence or Release of Hazardous Materials on, at,
under or from any property currently or formerly owned or operated by the
Borrower or any of the Subsidiaries, or any Environmental Liability related in
any way to the Borrower or the Subsidiaries; PROVIDED that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted primarily from
the gross negligence or willful misconduct of such Indemnitee.
(c) To the extent that Holdings and the Borrower fail to pay
any amount required to be paid by them to the Agent under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the Agent such Lender's
PRO RATA share (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount; PROVIDED that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the Agent in
its capacity as such. For purposes hereof, a Lender's "PRO RATA SHARE" shall be
determined based upon its share of the outstanding Loans and unused Commitments
at the time.
(d) To the extent permitted by applicable law, neither
Holdings nor the Borrower shall assert, and each hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or the
use of the proceeds thereof.
(e) The provisions of this Section shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the invalidity
or unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Agent or any Lender.
All amounts due under this Section shall be payable on written demand therefor.
SECTION 9.07 RIGHT OF SETOFF. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, except to the extent prohibited by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of the Borrower or Holdings on any other
Loan Party against any of and all the obligations of the Borrower or Holdings on
any other Loan Party now or hereafter existing under this Agreement and other
Loan Documents held by such Lender, irrespective of whether or not such Lender
85
shall have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.
SECTION 9.08 APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
SECTION 9.09 WAIVERS; AMENDMENT (a) No failure or delay of the
Agent or any Lender in exercising any power or right hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agent and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. Subject to paragraph (c) below, no waiver of any
provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower or any other Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on the Borrower or Holdings in
any case shall entitle the Borrower or Holdings to any other or further notice
or demand in similar or other circumstances.
(b) Subject to paragraph (c) below, neither this Agreement nor
any other Loan Document nor any provision hereof may be waived, amended or
modified except, in the case of this Agreement, pursuant to an agreement or
agreements in writing entered into by the Borrower, Holdings and the Required
Lenders or, in the case of any other Loan Document, pursuant to an agreement or
agreements in writing entered into by the Agent and the Loan Parties that are
parties thereto, in each case with the consent of the Required Lenders;
PROVIDED, HOWEVER, that no such agreement shall (i) decrease the principal
amount of, or extend the maturity of or any scheduled principal payment date or
date for the payment of any interest on any Loan, or waive or excuse any such
payment or any part thereof, or decrease the rate of interest on any Loan,
without the prior written consent of each Lender directly adversely affected
thereby, (ii) increase or extend the Commitment or Maximum Credit Amount or
decrease the amount, or extend the date for payment of, any fees of any Lender
without the prior written consent of each Lender directly affected thereby,
(iii) amend or modify the PRO RATA requirements of Section 2.16, any other
provision of any Loan Document requiring that Loans be made by, or payments be
allocated among, the Lenders on a PRO RATA basis, the provisions of Section
9.04(i) or the provisions of this Section without the prior written consent of
each Lender, (iv) release substantially all the Guarantors (determined based on
the fair market value of the Guarantors) (other than in connection with the sale
of any Guarantor in a transaction permitted by Section 6.05) or all or
substantially all of the Collateral without the prior written consent of each
Lender and each beneficiary of Hedging Obligations, (iv) modify the protections
afforded to an SPC pursuant to the provisions of Section 9.04(h) without the
written consent of such SPC, (v) modify Section 2.21 in any manner without the
consent of each Lender, (vi) reduce the percentage contained in the definition
of the term "Required Lenders" or any other provision of any Loan Document
specifying the number or percentage of Lenders required to waive, amend or
modify any rights thereunder or make any determination or grant any consent
thereunder, without the prior written consent of each Lender, or (vii) amend or
86
modify the definition of the term "Obligations" or "Hedging Obligations",
without the prior written consent of each Lender; PROVIDED FURTHER that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Agent or under any other Loan Document without the prior written consent of the
Agent.
(c) Notwithstanding any other provisions of this Agreement to
the contrary, the Borrower covenants and agrees that after the Closing Date and
prior to the date that is 180 days following the Closing Date, the Agent shall
have the right to modify the terms, conditions, pricing and structure set forth
in this Agreement and the other Loan Documents in order to ensure a successful
syndication of the Commitments and Loans hereunder, including by way of
assignment of all or a substantial portion of the Commitments and Loans to one
or more banks or other financial institutions that, in turn, intend to further
syndicate the Commitments and Loans; PROVIDED that no such modifications shall
cause the Borrower to be in default under this Agreement (as so modified).
Borrower shall execute and deliver such documents as shall reasonably be
required by the Agent as promptly as possible under the circumstances in
connection with this Section 9.09(c), all in form and substance reasonably
satisfactory to the Agent. The Agent may demand specific performance of the
provisions of this Section 9.09(c) and the Borrower hereby irrevocably waives
any defense based on the adequacy of a remedy at law and any other defense that
might be asserted to bar the remedy of specific performance in any action which
may be brought by the Agent. In the event that any successor Agent is appointed
pursuant to the provisions of Article VIII, the provisions of this Section
9.09(c) shall inure to the benefit of such successor Agent.
SECTION 9.10 INTEREST RATE LIMITATION. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "CHARGES"), shall
exceed the maximum lawful rate (the "MAXIMUM RATE") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan, together with all Charges payable in respect thereof, shall be limited to
the Maximum Rate and, to the extent lawful, the interest and Charges that would
have been payable in respect of such Loan but were not payable as a result of
the operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.11 ENTIRE AGREEMENT. This Agreement and the other
Loan Documents constitute the entire contract between the parties relative to
the subject matter hereof. Any other previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Loan Documents. Nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any person (other than the
parties hereto and thereto, their successors and assigns permitted hereunder,
the Indemnitees and, to the extent expressly contemplated hereby, the Related
Parties of each of the Agent and the Lenders) any rights, remedies, obligations
or liabilities under or by reason of this Agreement or the other Loan Documents.
SECTION 9.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
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OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.
SECTION 9.13 SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.14 COUNTERPARTS. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission or other electronic imaging means shall be as effective as delivery
of a manually signed counterpart of this Agreement.
SECTION 9.15 HEADINGS. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
SECTION 9.16 JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
Each of Holdings and the Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any New
York State court or Federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the any other
party or their properties in the courts of any jurisdiction.
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(b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court (it being
understood that such waiver shall not require any suit, action or proceeding
initiated in any court to be remanded or removed to any New York State court or
any Federal court of the United States of America sitting in New York City).
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.17 CONFIDENTIALITY. Each of the Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
officers, directors, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority or quasi-regulatory authority (such as the National
Association of Insurance Commissioners), (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
in connection with the exercise of any remedies hereunder or under the other
Loan Documents or any suit, action or proceeding relating to the enforcement of
its rights hereunder or thereunder, (e) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any actual or
prospective assignee of or participant in any of its rights or obligations under
this Agreement and the other Loan Documents or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Borrower or any Subsidiary or any of their respective obligations, (f) with
the consent of the Borrower or (g) to the extent such Information becomes
publicly available other than as a result of a breach of this Section. For the
purposes of this Section, "INFORMATION" shall mean all information received from
the Borrower or Holdings and related to the Borrower or Holdings or their
business, other than any such information that was available to the Agent or any
Lender on a nonconfidential basis prior to its disclosure by the Borrower or
Holdings; PROVIDED that, in the case of Information received from the Borrower
or Holdings after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such person has exercised the
same degree of care to maintain the confidentiality of such Information as such
person would accord its own confidential information.
SECTION 9.18 TERMINATION OR RELEASE (a) Each Security
Document, the guarantees made therein and the security interests granted
thereunder shall terminate when all the Loan Document Obligations have been
indefeasibly paid in full in cash and the Commitments have expired or been
terminated.
(b) A Subsidiary Loan Party shall automatically be released
from its obligations under the Loan Documents, the guarantee of such Subsidiary
Loan Party made under the Collateral Agreement shall automatically be released
and the security interests granted in the Collateral of such Subsidiary Loan
Party under the Security Documents shall automatically be released upon the
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consummation of any transaction permitted by this Agreement as a result of which
such Subsidiary Loan Party ceases to be a Subsidiary pursuant to the terms of
this Agreement.
(c) Upon any sale or other transfer by any Loan Party of any
Collateral that is permitted under this Agreement to any person (other than a
Loan Party or an Affiliate of a Loan Party), or upon the effectiveness of any
written consent pursuant to Section 9.09 to the release of any security interest
granted in any Collateral of such Loan Party under to the Security Documents,
the security interests granted in such Collateral under the Security Documents
shall be automatically released.
(d) In connection with any termination or release pursuant to
this Section 9.18, the Agent shall execute and deliver to the applicable Loan
Party, at such Loan Party's expense, all documents that such Loan Party shall
reasonably request to evidence such release or termination. Any execution and
delivery of documents pursuant to this Section 9.18 shall be without recourse to
or warranty by the Agent.
SECTION 9.19 USA PATRIOT ACT NOTICE. Each Lender and the Agent
(for itself and not on behalf of any Lender) hereby notifies Holdings and the
Borrower that pursuant to the requirements of the USA PATRIOT Act, it is
required to obtain, verify and record information that identifies Holdings and
the Borrower, which information includes the name and address of Holdings and
the Borrower and other information that will allow such Lender or the Agent, as
applicable, to identify Holdings and the Borrower in accordance with the USA
PATRIOT Act.
SECTION 9.20 NO FIDUCIARY RELATIONSHIP; NON-RELIANCE. Each of
Holdings and the Borrower, on behalf of itself and the Subsidiaries, agrees that
in connection with all aspects of the transactions contemplated hereby or by the
other Loan Documents and any communications in connection therewith, the
Borrower, the Subsidiaries and their Affiliates, on the one hand, and the Agent,
the Lenders and their Affiliates, on the other hand, will have a business
relationship that does not create, by implication or otherwise, any fiduciary
duty on the part of the Agent the Lenders or their Affiliates, and no such duty
will be deemed to have arisen in connection with any such transaction or
communications. Each of Holdings and the Borrower, on behalf of itself and the
Subsidiaries, acknowledges that it has been represented by counsel with respect
to the Loan Documents and agrees that it has, independently and without reliance
upon the Agent, Documentation Agent or any other Lenders, and based upon such
documents, information and analyses as it has deemed appropriate, made its own
decision to enter into this Agreement.
SECTION 9.21 INTERCREDITOR AGREEMENT. Reference is made to the
Intercreditor Agreement. Each Lender (a) acknowledges that it has received a
copy of the Intercreditor Agreement, (b) acknowledges and agrees to Silver Point
acting as the Agent and the Second Lien Agent, (c) agrees that it will be bound
by and will take no actions contrary to the provisions of the Intercreditor
Agreement and (d) authorizes and instructs Silver Point to enter into the
Intercreditor Agreement as collateral agent for such Lender.
SECTION 9.22 SECURITY DOCUMENTS. Reference is made to the
Security Documents. Each Lender authorizes and instructs Silver Point to enter
into the Security Documents as collateral agent for such Lender.
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SECTION 9.23 PERSONAL OBLIGATIONS. BORROWER IS PERSONALLY
OBLIGATED AND FULLY LIABLE FOR THE AMOUNTS DUE UNDER THE LOAN DOCUMENTS. THE
AGENT HAS THE RIGHT TO ▇▇▇ ON EACH LOAN DOCUMENT AND TO OBTAIN A PERSONAL
JUDGMENT AGAINST BORROWER FOR THE AMOUNT DUE UNDER EACH LOAN DOCUMENT EITHER
BEFORE OR AFTER A JUDICIAL FORECLOSURE UNDER ALASKA STATUTES 09.45.170-09.45.220
OF ANY MORTGAGE GIVEN BY BORROWER TO SECURE PAYMENT OF THE AMOUNTS DUE UNDER THE
LOAN DOCUMENTS.
ARTICLE X
HEDGING
SECTION 10.01 VOTING. (a) The counterparty under each Hedging
Agreement which constitutes an Obligation hereunder, as well as each Lender,
shall be entitled to vote on: (i) any remedies proposed to be taken by the
holders of the Obligations, (ii) any matters relating to the Collateral and
(iii) any proposed amendment to or modification of the definition of the term
"Obligations" or "Hedging Obligations". The amount of Obligations to be voted by
each Lender and each other counterparty under each such Hedging Agreement will
equal
(i) the aggregate principal amount of Indebtedness held by
such person; provided that, (a) for purposes of this Article X, with respect to
clause (l) of the definition of "Indebtedness" the amount of such Indebtedness
in respect of any such Hedging Agreement at such time shall be the greater of
(i) the termination amount that would be payable by the applicable Loan Party or
Loan Parties thereunder (after giving effect to any legally enforceable netting
agreements) if all such Hedging Agreements were closed out and terminated (or
the applicable termination amount then due, in respect of any Hedging
Obligations thereunder that have been so closed out and terminated) and (ii)
$10,000,000 and (b) the amount of Hedging Obligation in respect of any such
Hedging Agreement at any time shall be the amount therof determined by the
applicable counterparty consistent with prevailing market practices, PLUS
(ii) other than in connection with an exercise of remedies,
the aggregate unfunded commitments to extend credit which, when funded, would
constitute Indebtedness of such person.
(b) Each Lender and any other counterparty under each Hedging
Agreement shall be entitled to request a re-vote with respect to any remedies
proposed to be taken or refrained from taking if it believes that (i) the voting
percentages of the various persons entitled to vote have changed in any material
respect or (ii) facts or circumstances with respect to the Borrower or the
Collateral have changed sufficiently to make such a re-vote worthwhile.
SECTION 10.02 ACKNOWLEDGEMENT RELATING TO HEDGING AGREEMENTS
WITH FIRST LIEN HEDGE COUNTERPARTIES. Lenders hereby acknowledge and agree that
any Hedging Agreement with a First Lien Hedge Counterparty constitutes an
Obligation hereunder, rather than a Second Lien Obligation.
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SECTION 10.03 AMENDMENT TO INTERCREDITOR PROVISIONS.
Notwithstanding any other provision herein, Lenders acknowledge and agree that
none of this Article X, the definition of the term "Obligations" or the
definition of the term "Hedging Obligations" may be modified or amended without
the consent each First Lien Hedge Counterparty, in its sole discretion.
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IN WITNESS WHEREOF, the parties hereto have caused this First Lien
Credit Agreement to be duly executed by their respective authorized officers as
of the day and year first above written.
PACIFIC ENERGY ALASKA OPERATING LLC,
by /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
PACIFIC ENERGY ALASKA HOLDINGS, LLC,
by /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
SILVER POINT FINANCE, LLC, as Administrative
Agent, Collateral Agent, Sole Lead Arranger,
Sole Bookrunner and Syndication Agent
by /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
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▇. ▇▇▇▇ & COMPANY, as Lender
by /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Attorny In Fact
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SPCP Group, L.L.C., as Lender
by /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
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SPF CDO I, Ltd., as Lender
by /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
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