EXHIBIT 10.4
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LOAN AGREEMENT
by and among
GREY WOLF EXPLORATION INC.,
as Borrower,
LENDERS THAT ARE SIGNATORIES HERETO,
as Lenders,
and
GUGGENHEIM CORPORATE FUNDING, LLC,
as the Arranger and Administrative Agent
Dated as of October 28, 2004
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LOAN AGREEMENT
LOAN AGREEMENT, dated as of October 28, 2004 (this "Agreement"), by and
among (i) on the one hand, the lenders identified on the signature pages hereof
(such lenders, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders") and GUGGENHEIM CORPORATE FUNDING, LLC, a Delaware limited liability
company, as the arranger and administrative agent for the Lenders ("Agent"), and
(ii) on the other hand, GREY WOLF EXPLORATION INC., a corporation incorporated
pursuant to the laws of the Province of Alberta ("Borrower").
RECITALS
WHEREAS, Borrower has requested that Lenders make available to it, and,
subject to and upon the terms and conditions hereinafter set forth, Lenders are
willing to make available to Borrower, the credit facility provided for herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall
have the following definitions:
"Abraxas" means Abraxas Petroleum Corporation and its successors and
permitted assigns.
"Abraxas Bridge Loan Facility" means the U.S. $25,000,000 bridge loan
facility evidenced by the Abraxas Bridge Loan Agreement.
"Abraxas Bridge Loan Agreement" means the loan agreement dated as of
October 28, 2004 among Abraxas, the Subsidiaries of Abraxas parties thereto,
GCF, in its capacity as Lender and Agent, and such other persons as may become
party to such agreement from time to time.
"Acceptable Commodity Hedging Agreement" means a Commodity Hedging
Agreement (i) with a counterparty rated A3 or better by Moody's and A- or better
by Standard & Poor's, or the equivalent by a rating agency acceptable to Agent,
(ii) pursuant to an agreement the terms of which are acceptable to Agent and
(iii) the arrangements of which are otherwise reasonably acceptable to Agent.
"Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper or a General
Intangible.
"Accounts" means all of Borrower's now owned or hereafter acquired
right, title and interest with respect to "accounts" (as that term is defined in
the PPSA) and any and all supporting obligations in respect thereof.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Shares, by contract or
otherwise; provided, however, that, for the purposes of Section 7.14: (a) any
Person which owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other members of the
governing body of a Person or 10% or more of the partnership or other ownership
interests of a Person (other than as a limited partner of such Person) shall be
deemed to control such Person, (b) each director (or comparable manager) of a
Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership or joint venture (other than joint ventures permitted under clause
(d) of the definition of Permitted Investments) in which a Person is a partner
or joint venturer shall be deemed to be an Affiliate of such Person.
"After-Acquired Property" has the meaning set forth in Section 4.5.
"Agent" means GCF, solely in its capacity as agent for Lenders
hereunder, and any successor thereto.
"Agent's Account" means an account identified on Schedule A-1.
"Agent's Liens" means the Liens granted by Borrower to Agent for the
benefit of the Lender Group pursuant to the Collateral Documents.
"Agent-Related Persons" means Agent, its Affiliates and the officers,
directors, employees and agents of Agent and such Affiliates.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Law" means, in relation to any Person, transaction or
event, all applicable provisions of laws, statutes, rules, regulations, official
directives and orders of and the terms of all judgments, orders and decrees
issued by any Authorized Authority by which such Person is bound or having
application to the transaction or event in question.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance in the
form of Exhibit A-1.
"Authorized Authority" means, in relation to any Person, transaction or
event, any (a) federal, provincial, municipal or local governmental body
(whether administrative, legislative, executive (or the equivalent) or
otherwise), both domestic and foreign, (b) agency, authority, commission,
instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government, (c) court, arbitrator, commission or
body exercising judicial, quasi-judicial, administrative or similar functions,
and (d) other body or entity created under the authority of or otherwise subject
to the jurisdiction of any of the foregoing, including any stock or other
securities exchange, in each case having jurisdiction over such Person,
transaction or event.
"Authorized Person" means, with respect to any Person, the President,
the Chief Executive Officer, the Chief Financial Officer, any Vice President or
the Treasurer of such Person.
"Bankruptcy Codes" means (i) (A) the United States Bankruptcy Code (B)
the Bankruptcy and Insolvency Act (Canada) or (C) the Companies' Creditors
Arrangement Act (Canada), as applicable, or (ii) any similar legislation in a
relevant jurisdiction, in each case as in effect from time to time.
"Base Rate" means with respect to each period commencing on an Interest
Payment Date (or, with respect to the period prior to the first Interest Payment
Date, the Closing Date) and ending on the day immediately before the Interest
Payment Date immediately following such date, the prime rate of interest
specified under the Bloomberg reference identified as "PRIMBB Index" on the date
that is two Business Days prior to the first day of such period; provided,
however, that if such rate is not available, "Prime Rate" shall mean such rate
of interest as is publicly announced by Citibank, N.A. in New York, New York on
such day as its prime or base rate and if Citibank, N.A. does not announce such
rate on such day, "Prime Rate" shall mean the Prime Rate in effect immediately
prior to the first day of such period.
"Basis Differential" means, in the case of any Oil and Gas Property,
the difference between the NYMEX futures contract prices and the sales prices at
the delivery point where the oil or gas, as the case may be, produced by such
Oil and Gas Property, is sold.
"Basis Point" or "bps" means one one-hundredth of 1%.
"Benefit Plan" means a benefit plan under Canadian Employee Benefit
Laws for which Borrower or any Subsidiary of Borrower has been an "employer"
under Canadian Employee Benefit Laws within the past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Person.
"Books" means Borrower's now owned or hereafter acquired books and
records (including all of its Records indicating, summarizing, or evidencing its
assets (including the Collateral) or liabilities, all of Borrower's Records
relating to its business operations or financial condition, and all of its goods
or General Intangibles related to such information).
"Borrower" has the meaning set forth in the preamble to this Agreement.
"Borrower Parties" means Borrower and its Subsidiaries collectively and
a "Borrower Party" means Borrower or any of its Subsidiaries individually.
"Borrowing" means a borrowing hereunder consisting of Advances made on
the same day by any of Lenders (or Agent on behalf thereof).
"Business Day" means any day other than a Saturday or Sunday, on which
Canadian chartered banks are open for domestic and foreign exchange business in
Calgary, Alberta.
"Canadian Dollars" or "Canadian $" or "Cdn. $" or "$" each mean such
currency of Canada which, as at the time of payment or determination, is legal
tender in Canada for the payment of public or private debts.
"Canadian Employee Benefits Laws" means the Canada Pension Plan
(Canada), the Pension Benefit Act (Ontario), the Health Insurance Act (Ontario),
the Employment Standard Act (Ontario) and any other applicable federal,
provincial or local counterparts or equivalents, to the extent same may be
applicable to Borrower.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents in the equity
interests (however designated) in such Person, and any rights (other than debt
securities convertible into an equity interest), warrants or options exercisable
for, exchangeable for or convertible into such an equity interest in such
Person.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or the Government of Canada or
issued by any agency thereof and backed by the full faith and credit of the
United States or the Government of Canada, in each case maturing within 1 year
from the date of acquisition thereof, (b) marketable direct obligations issued
by any state of the United States or any political subdivision of any such state
or any public instrumentality thereof maturing within 1 year from the date of
acquisition thereof and, at the time of acquisition, having the highest rating
obtainable from either S&P or Moody's, (c) commercial paper maturing no more
than 270 days from the date of acquisition thereof and, at the time of
acquisition, having a rating of A-1 or P-1, or better, from S&P or Moody's, (d)
certificates of deposit or bankers' acceptances maturing within 1 year from the
date of acquisition thereof either (i) issued by any bank organized under the
laws of Canada or the United States or any province or state thereof which bank
has a rating of A or A2, or better, from S&P or Moody's, or (ii) certificates of
deposit less than or equal to U.S. $100,000 in the aggregate issued by any other
bank insured by the Canada Deposit Corporation.
"Change of Control" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 35%, or more, of the Shares of Abraxas having the right to vote for the
election of members of the Board of Directors, or (b) a majority of the members
of the Board of Directors do not constitute Continuing Directors, (c) a "Change
of Control" (as defined in the Senior Notes Indenture) shall have occurred or
(d) Abraxas ceases to directly own and control 50% of the outstanding Shares of
Borrower.
"Closing Date" means the date of the making of the Loan hereunder.
"Collateral" means, the assets and properties of Borrower described in
Article 4 of the Debenture.
"Collateral Documents" means the Debenture, the Mortgages and any other
documents pursuant to which a security interest is granted by Borrower securing
the obligations under this Agreement.
"Collections" means all cash, cheques, notes, instruments and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds and tax refunds) of Borrower.
"Commitment" means, with respect to each Lender, its Commitment and,
with respect to all Lenders, all of their Commitments, in each case as such
Dollar amounts are set forth beside such Lender's name under the applicable
heading on Schedule C-1 or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of Section 14.1.
"Commodity Hedging Agreement" means a commodity hedging or purchase
agreement or similar arrangement entered into with the intent of protecting
against fluctuations in commodity prices or the exchange of notional commodity
obligations, either generally or under specific contingencies.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit C-1 delivered by the chief financial officer of Borrower to Agent.
"Consolidated Net Interest Expense" means, with respect to Borrower,
for any period, gross cash interest expense of Borrower for such period
determined on a consolidated basis and in accordance with GAAP (including,
without limitation, interest expense paid to Affiliates of Borrower, less (i)
the sum of (A) cash interest income for such period and (B) cash gains for such
period on Interest Rate Protection Agreements (to the extent not included in
cash interest income above and to the extent not deducted in the calculation of
gross cash interest expense), plus (ii) the sum of (A) cash losses for such
period on Interest Rate Protection Agreements (to the extent not included in
gross cash interest expense) and (B) the upfront cash costs or fees for such
period associated with Interest Rate Protection Agreements (to the extent not
included in gross cash interest expense), in each case.
"Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Borrower on the Closing Date and
(b) any individual who becomes a member of the Board of Directors of Borrower
after the Closing Date if such individual was recommended, appointed or
nominated for election to the Board of Directors of Borrower by a majority of
the Continuing Directors, but excluding any such individual originally proposed
for election in opposition to the Board of Directors in office at the Closing
Date in an actual or threatened election contest relating to the election of the
directors (or comparable managers) of Borrower (as such terms are used in Rule
14a-11 under the Exchange Act) and whose initial assumption of office resulted
from such contest or the settlement thereof.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by Borrower, Agent and the
applicable securities intermediary with respect to a Securities Account or bank.
"Currency Protection Agreement" means a currency swap, cap or collar
agreement or similar arrangement entered into with the intent of protecting
against fluctuations in currency values, either generally or under specific
contingencies.
"Daily Balance" means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any chequing or other demand deposit account maintained by
Borrower.
"Debenture" has the meaning set forth in Section 4.1(a).
"Default" means an event, condition or default that, with the giving of
notice, the passage of time or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance (or
other extension of credit (if any)) that it is required to make hereunder on the
date that it is required to do so hereunder.
"Designated Account" means that certain DDA of Borrower identified on
Schedule D-1.
"Designated Account Bank" has the meaning set forth on Schedule D-1.
"EBITDA" means, with respect to any fiscal period, Borrower's
consolidated net earnings (or loss), minus extraordinary gains, plus interest
expense, income taxes, non-cash expenses incurred in connection with the payment
of Share compensation, non-cash expenses incurred in connection with the
issuance of warrants or options to purchase the Shares of Borrower, and
depletion depreciation and amortization for such period, as determined in
accordance with GAAP.
"Eligible Transferee" means (a) a commercial bank organized under the
laws of the United States or Canada, or any state or province thereof, (b) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development or a political
subdivision of any such country and which has total assets in excess of U.S.
$50,000,000, provided that such bank is acting through a branch or agency
located in Canada or the United States, (c) a finance company, insurance company
or other financial institution or fund that is engaged in making, purchasing or
otherwise investing in commercial loans or securities in the ordinary course of
its business and (together with its Affiliates) having total assets in excess of
U.S. $50,000,000, (d) any Affiliate (other than individuals) of a Lender that
was party hereto as of the Closing Date, including, without limitation, a fund
or account managed by such Lender or an Affiliate of such Lender or its
investment manager (a "Related Fund"), and (e) so long as no Event of Default or
Unmatured Default has occurred and is continuing, any other Person approved by
Agent and Borrower (which approval by the Borrower shall not be unreasonably
withheld or delayed) and (f) during the continuation of an Event of Default or
Unmatured Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
Releases of Hazardous Materials from (a) any assets, properties, or businesses
of Borrower or any predecessor in interest, (b) from adjoining properties or
businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrower, relating
to the environment, employee health and safety, or Hazardous Materials,
including the Canadian Environmental Protection Act (Canada); the Fisheries Act
(Canada); the Environmental Protection and Enhancement Act (Alberta); the
Environmental Protection Act (Ontario); the Water Resource Act (Ontario); the
Waste Management Act (British Columbia); and any state, provincial and local or
foreign counterparts or equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants and costs of
investigation and feasibility studies), fines, penalties, sanctions and interest
incurred as a result of any claim or demand by any Governmental Authority or any
third party and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrower's now owned or hereafter acquired
right, title and interest with respect to equipment, machinery, machine tools,
motors, furniture, furnishings, fixtures, vehicles (including motor vehicles),
tools, parts, goods (other than consumer goods, farm products or Inventory),
wherever located, including all attachments, accessories, accessions,
replacements, substitutions, additions and improvements to any of the foregoing.
"Event of Default" has the meaning set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934.
"Existing Credit Agreement" means the Loan and Security Agreement,
dated as of January 22, 2003, among Abraxas, the subsidiaries of Abraxas party
thereto, the lenders thereunder, the Existing Credit Agreement Agent and GCF, as
the specified appointee thereunder.
"Existing Credit Agreement Agent" means ▇▇▇▇▇ Fargo Foothill, Inc., as
agent for Lenders under the Existing Credit Agreement, and any successor thereto
as may be appointed pursuant to the terms of the Existing Credit Agreement.
"Farmout" means an arrangement whereby the owner(s) of one or more oil,
gas and/or mineral lease or other oil and natural gas working interest with
respect to Farmout Property (referred to as the "farmor") agrees to transfer or
assign an interest in such Farmout Property to one or more other Persons
(referred to as the "farmee") in exchange for the farmee (1) drilling, or
participating in the cost of the drilling of, one or more oil and/or natural gas
▇▇▇▇▇, or undertaking other exploration or development activity or participating
in the cost of such other activity, to attempt to obtain production of
hydrocarbons from such Farmout Property, (2) agreeing to so drill or undertake
such other activity, or agreeing to participate in the cost of such drilling or
such other activity, with respect to such Farmout Property, or (3) obtaining
production of Hydrocarbons from such Farmout Property, or participating in the
costs of obtaining such production.
"Farmout Agreement" means, with respect to a Farmout, the agreement or
agreements governing such Farmout.
"Farmout Property" means, with respect to a Farmout, the property from
which production of Hydrocarbons is sought to be obtained through such Farmout.
The Farmout Property with respect to a Farmout may consist of only certain
specified depths, strata, zones or geological formations under one or more
tracts of land, but shall not include any depths, strata, zones or geological
formations under such tract(s) of land (i) that, at the time of such Farmout,
are being produced or developed by the farmor or any of its Affiliates in the
same field or area or (ii) that have been subject to production or development
activity by the farmor or any of its Affiliates in the same field or area and
such activity was discontinued with the desire or expectation of entering into a
Farmout.
"Farmout Property Value" means, with respect to a Farmout, the value of
the Farmout Property of Borrower at the time the relevant Farmout Agreement is
entered into determined as follows:
(1) with respect to Farmout Property with a value not exceeding U.S.
$500,000, as determined in good faith by the chief executive officer of Borrower
and evidenced by an officers' certificate delivered to Agent;
(2) with respect to Farmout Property with a value exceeding U.S.
$500,000 but not exceeding U.S. $2.5 million, as determined in good faith by the
Board of Directors of Borrower and evidenced by a resolution of such Board of
Directors delivered to Agent; and
(3) with respect to Farmout Property with a value exceeding U.S. $2.5
million, as reflected in an opinion or appraisal issued by an independent
accounting or investment banking firm which is nationally recognized in Canada,
or by a reputable independent appraisal or petroleum engineering firm, as
appropriate under the circumstances, delivered to Borrower.
"Fee Letter" means that certain fee letter, dated as of the Closing
Date, between Borrower and Agent, in form and substance satisfactory to Agent.
"GAAP" means generally accepted accounting principles as in effect from
time to time in Canada, consistently applied.
"GCF" means Guggenheim Corporate Funding, LLC, a Delaware limited
liability company.
"General Intangibles" means all of Borrower's now owned or hereafter
acquired right, title and interest with respect to general intangibles
(including payment intangibles, contract rights, rights to payment, judgments,
rights arising under common law, statutes or regulations, choses or things in
action, goodwill, patents, designs, inventions, trade names, trade secrets,
d/b/a's, Internet domain names, logos, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds and
tax refund claims) and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts and Negotiable
Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws or other organizational
documents of such Person.
"Governmental Authority" means any Canadian or foreign federal,
provincial, state, municipal, local or other governmental or administrative
body, instrumentality, department, or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission or other similar
dispute-resolving panel or body.
"Hazardous Materials" means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances", "hazardous materials", "hazardous wastes", "toxic
substances" or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity" under Environmental Laws, (b) Hydrocarbons, including, without
limitation, oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedging Agreement" means any Currency Protection Agreement, Interest
Rate Protection Agreement or Commodity Hedging Agreement.
"Hydrocarbons" means oil, gas, coal seam gas, casinghead gas,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons, all products
and byproducts refined, separated, settled and dehydrated therefrom and all
products and byproducts refined therefrom, including, without limitation,
kerosene, liquefied petroleum gas, refined lubricating oils, diesel fuel, drip
gasoline, natural gasoline, helium, sulfur, geothermal steam, water, carbon
dioxide and all other minerals.
"Hydrocarbon Interests" means all rights, titles, interests and estates
now owned or hereafter acquired in and to oil and gas leases, oil, gas and
mineral leases, oil, gas and casinghead gas leases or other liquid or gaseous
hydrocarbon leases, mineral fee or lease interests, farm-outs, overriding
royalty and royalty interests, net profit interests, oil payments, production
payment interests and similar mineral interests, including any reserved or
residual interest of whatever nature.
"Income Tax Act (Canada)" means the Income Tax Act, R.S.C. 1985, c.1
(5th Supp.) including the regulations made and, from time to time, in force
under that Act.
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of Borrower or its Subsidiaries, irrespective of
whether such obligation or liability is assumed, (e) all obligations for the
deferred purchase price of assets, including trade debt (other than trade debt
incurred in the ordinary course of business and paid in accordance with
customary trade practices) and (f) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted or sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Initial Reserve Report" means the report of the Petroleum Engineers
dated June 30, 2004 with respect to the Oil and Gas Properties of Borrower.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Codes or under any other
foreign federal, state, provincial or other bankruptcy or insolvency law,
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extensions generally with creditors or proceedings seeking
reorganization, arrangement or other similar relief.
"Interest Act (Canada)" means the Interest Act, R.S.C. 1985, c.1-15, as
amended from time to time, including the regulations made and, from time to
time, in force under that Act.
"Interest Payment Date" has the meaning set forth in Section 2.5(c)(i).
"Interest Rate" means, at any time of determination, the sum of the
then applicable Base Rate and Spread.
"Interest Rate Protection Agreement" means an interest rate swap, cap
or collar agreement or similar arrangement entered into with the intent of
protecting against fluctuations in interest rates or the exchange of notional
interest obligations, either generally or under specific contingencies.
"Inventory" means all Borrower's now owned or hereafter acquired right,
title and interest with respect to inventory, including extracted Hydrocarbons
and other goods held for sale or lease or to be furnished under a contract of
service, goods that are leased by Borrower as lessor, goods that are furnished
by Borrower under a contract of service and raw materials, work in process, or
materials used or consumed in Borrower's business.
"Investment" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances or capital contributions (excluding (a) commission, travel
and similar advances to officers and employees of such Person made in the
ordinary course of business and (b) bona fide Accounts arising in the ordinary
course of business consistent with past practices), purchases, or other
acquisitions for consideration, of Indebtedness or Shares and any other item
that is or would be classified as an investment on a balance sheet prepared in
accordance with GAAP.
"Judgment Interest Act (Alberta)" means the Judgment Interest Act,
R.S.A. 2000, ▇.▇-1, as amended from time to time, including the regulations made
and from time to time in force under that Act.
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of Lenders
and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes and insurance premiums) required to be paid by Borrower under any of the
Loan Documents that are paid or incurred by any one or more members of the
Lender Group, (b) reasonable fees and charges paid or incurred by any one or
more members of the Lender Group in connection with any one or more members of
the Lender Group's transactions with Borrower, including fees and charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien and judgment searches and searches for
registrations under the PPSA and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including periodic Collateral
appraisals, business valuations or examinations of Borrower's Oil and Gas
Properties to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement) and environmental audits, (c) costs and
expenses incurred by any one or more members of the Lender Group in the
disbursement of funds to Borrower (by wire transfer or otherwise), (d)
reasonable charges paid or incurred by any one or more members of the Lender
Group resulting from the dishonor of cheques, (e) reasonable costs and expenses
paid or incurred by the Lender Group to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) reasonable audit fees and expenses of any one
or more members of the Lender Group related to audit examinations of the Books
to the extent of the fees and charges (and up to the amount of any limitation)
contained in this Agreement, (g) reasonable costs and expenses of third party
claims or any other suit paid or incurred by any one or more members of the
Lender Group in enforcing or defending the Loan Documents or in connection with
the transactions contemplated by the Loan Documents or any one or more members
of the Lender Group's relationship with Borrower or any guarantor of the
Obligations, (h) Agent's reasonable fees and expenses (including reasonable
lawyers' fees and disbursements on a solicitor and their own client basis)
incurred in advising, structuring, drafting, reviewing, administering, or
amending the Loan Documents and (i) Agent's and each Lender's reasonable fees
and expenses (including reasonable lawyers' fees and disbursements on a
solicitor and their own client basis) incurred in terminating, enforcing
(including reasonable lawyers' fees, disbursements and expenses on a solicitor
and their own client basis incurred in connection with a "workout", a
"restructuring" or an Insolvency Proceeding concerning Borrower or any of its
Subsidiaries or in exercising rights or remedies under the Loan Documents) or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such Lender,
such Lender's Affiliates and the officers, directors, employees and agents of
such Lender and such Affiliates.
"Lien" means any interest in an asset securing an obligation owed to,
or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including (a) the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including, purchase options, reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting any Oil and Gas
Properties or Real Property and (b) production or royalty payments or the like
payable from Oil and Gas Properties.
"Loan" has the meaning set forth in Section 2.2.
"Loan Account" has the meaning set forth in Section 2.9.
"Loan Amount" means U.S. $35,000,000.
"Loan Documents" means this Agreement, the Collateral Documents, the
Control Agreements, the Fee Letter, the Officers' Certificate, any note or notes
executed by Borrower in connection with this Agreement or any of the other Loan
Documents and payable to a member of the Lender Group and any other agreement
entered into, now or in the future, by Borrower, on the one hand, and one or
more members of the Lender Group, on the other hand, in connection with this
Agreement or any of the other Loan Documents.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower, individually, or Borrower
Parties taken as a whole, (b) a material impairment of Borrower's ability to
perform its or their obligations under the Loan Documents to which it is or they
are a party or of the Lender Group's or Agent's ability to enforce the
Obligations or realize upon the Collateral or (c) a material impairment of the
enforceability or priority of Agent's, as the case may be, Liens with respect to
the Collateral as a result of an action or failure to act on the part of
Borrower.
"Material Contract" means, with respect to any Person, (i) each
contract, agreement, note, indenture, mortgage, instrument, guaranty or other
evidence of indebtedness to which such Person or any of its Subsidiaries is a
party involving aggregate consideration payable to or by such Person or such
Subsidiary of U.S. $250,000 or more (other than purchase orders in the ordinary
course of the business of such Person or such Subsidiary and other than
contracts that by their terms may be terminated by such Person or Subsidiary in
the ordinary course of its business upon less than 60 days' notice without
penalty or premium) and (ii) all other contracts, agreements, notes, indentures,
mortgages, instruments, guarantees or evidences of indebtedness material to the
business, operations, condition (financial or otherwise), performance, prospects
or properties of such Person or such Subsidiary.
"Maturity Date" has the meaning set forth in Section 3.2.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor
thereto.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, debentures or deeds to secure debt, including without
limitation, the Debenture, executed and delivered by Borrower in favor of Agent,
for the benefit of, among other Persons, the Lender Group, in form and substance
satisfactory to Agent, that encumber the Real Property Collateral, the Oil and
Gas Properties and the related improvements thereto.
"Negotiable Collateral" means all of Borrower's now owned and hereafter
acquired right, title and interest with respect to letters of credit, letter of
credit rights, instruments, promissory notes, drafts, documents and chattel
paper (including electronic chattel paper and tangible chattel paper) and any
and all supporting obligations in respect thereof.
"Net Cash Interest Coverage Ratio" means, as of any date of
determination, the ratio of (i) EBITDA for such period to (ii) the Consolidated
Net Interest Expense for such period.
"New Notes" means Abraxas's Floating Rate Senior Secured Notes due 2009
issued by Abraxas pursuant to the New Notes Indenture.
"New Notes Indenture" means the Indenture, dated as of the Closing
Date, among Abraxas, each guarantor of the New Notes and the New Notes Trustee,
as such may from time to time be amended, restated, supplemented, modified or
otherwise changed in accordance with the terms of this Agreement.
"New Notes Trustee" means U.S. Bank, N.A., as trustee to the holders of
the New Notes, and any successor thereto, as may be appointed pursuant to the
terms of the New Notes Indenture.
"Non-Resident Lender" means any Lender which is a non-resident as
defined in subsection 248(1) of the Income Tax Act (Canada).
"NYMEX" means the New York Mercantile Exchange or its successor entity.
"NYMEX Strip Price" means the lower of (i) as of any date of
determination the average of the 24 succeeding monthly futures contract prices,
commencing with the month during which the determination date occurs, for each
of the appropriate crude oil and natural gas categories included in the most
recent Reserve Report provided by Borrower to Agent pursuant to Section 6.2(e),
as quoted on the NYMEX; provided, that if the NYMEX no longer provides futures
contract price quotes or has ceased to operate, the future contract prices used
shall be the comparable futures contract prices quoted on such other nationally
recognized commodities exchange as Agent shall designate and (ii) U.S. $27.43
per barrel of oil and U.S. $4.43 per MmBTU of natural gas produced from Oil and
Gas Properties of Borrower provided, that with respect to the volume of
Borrower's Hydrocarbons for which prices are fixed under an Acceptable Commodity
Hedging Agreement, the NYMEX Strip Price for such volume of Hydrocarbons, if
greater than the price determined above, shall be the price fixed under such
Acceptable Commodity Hedging Agreement then in effect.
"Obligations" means all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Codes,
would have accrued), premiums, liabilities (including all amounts charged to
Borrower's Loan Account pursuant hereto), obligations, fees (including the fees
provided for in the Fee Letter), charges, costs, Lender Group Expenses
(including any fees or expenses that, but for the provisions of the Bankruptcy
Codes, would have accrued), lease payments, guarantees, covenants and duties of
any kind and description owing by Borrower to the Lender Group pursuant to or
evidenced by the Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all Lender Group Expenses that Borrower is required to pay or reimburse by
the Loan Documents, by law or otherwise. Any reference in this Agreement or in
the Loan Documents to the Obligations shall include all amendments, changes,
extensions, modifications, renewals replacements, substitutions and supplements
thereto and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"Officers' Certificate" means the representations and warranties of
officers form submitted by Agent to Borrower, together with Borrower's completed
responses to the inquiries set forth therein, the form and substance of such
responses to be satisfactory to Agent.
"Oil and Gas Business" means (a) the acquisition, exploration,
exploitation, development, operation and disposition of interests in Oil and Gas
Properties and Hydrocarbons, (b) the gathering, marketing, treating, processing,
storage, selling and transporting of any production from such interests or
properties, including, without limitation, the marketing of Hydrocarbons
obtained from unrelated Persons, (c) any business relating to or arising from
exploration for or development, production, treatment, processing, storage,
transportation or marketing of oil, gas and other minerals and products produced
in association therewith, (d) any business relating to oilfield sales and
service and (e) any activity that is ancillary or necessary or desirable to
facilitate the activities described in clauses (a) through (d) of this
definition.
"Oil and Gas Properties" means all (a) Hydrocarbon Interests, (b)
personal property and/or real property now or hereafter pooled or unitized with
Hydrocarbon Interests, (c) presently existing or future unitization, pooling
agreements and declarations of pooled units and the units created thereby
(including without limitation all units created under orders, regulations and
rules of any Governmental Authority having jurisdiction) which may affect all or
any portion of the Hydrocarbon Interests, (d) pipelines, gathering lines,
compression facilities, tanks and processing plants, (e) oil ▇▇▇▇▇, gas ▇▇▇▇▇,
water well, injection ▇▇▇▇▇, platforms, spars or other offshore facilities,
casings, rods, tubing, pumping units and engines, Christmas trees, derricks,
separators, gun barrels, flow lines, gas systems (for gathering, treating and
compression) and water systems (for treating, disposal and injection), (f)
interests held in royalty trusts whether presently existing or hereafter
created, (g) Hydrocarbons in and under and which may be produced, saved,
processed or attributable to the Hydrocarbon Interests, the lands covered
thereby and all Hydrocarbons in pipelines, gathering lines, tanks and processing
plants and all rents, issues, profits, proceeds, products, revenues and other
incomes from or attributable to the Hydrocarbon Interests, (h) tenements,
hereditaments, appurtenances and personal property and/or real property in any
way appertaining, belonging, affixed or incidental to the Hydrocarbon Interests
and all rights, titles, interests and estates described or referred to above,
including any and all real property, now owned or hereafter acquired, used or
held for use in connection with the operating, working or development of any of
such Hydrocarbon Interests or personal property and/or Real Property and
including any and all surface leases, rights-of-way, easements and servitudes
together with all additions, substitutions, replacements, accessions and
attachments to any and all of the foregoing and (i) oil, gas and mineral
leasehold, fee and term interests, overriding royalty interests, mineral
interests, royalty interests, net profits interests, net revenue interests, oil
payments, production payments, carried interests, leases, subleases, farm-outs
and any and all other interests in Hydrocarbons, in each case whether now owned
or hereafter acquired directly or indirectly.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Participant" has the meaning set forth in Section 14.1(e).
"Participant Register" has the meaning set forth in Section 14.1(i).
"Permitted Discretion" means a determination made in good faith and in
the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by
Borrower or its Subsidiaries of Equipment that is substantially worn, damaged,
no longer used, surplus, or obsolete in the ordinary course of Borrower's or its
Subsidiaries' business, (b) sales by Borrower or its Subsidiaries of Inventory,
including Hydrocarbons, to buyers in the ordinary course of business, (c) the
use or transfer of money or Cash Equivalents by Borrower in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents, (d) the
licensing by Borrower or its Subsidiaries, on a non-exclusive basis, of patents,
trademarks, copyrights and other intellectual property rights in the ordinary
course of Borrower's or its Subsidiaries' business, (e) releases or surrenders
(in accordance with the terms of the relevant lease, where applicable) and sales
or other dispositions of properties or leasehold interests in properties with no
Proved Reserves, (f) releases or surrenders (in accordance with the terms of the
relevant lease, where applicable) and sales or other dispositions of properties
or leasehold interests in properties with Proved Undeveloped Reserves to the
extent Agent consents to such releases, surrenders, sales or dispositions, (g)
transfers or assignments of interests in Farmout Properties in accordance with
the terms of Permitted Farmout Agreements, (h) sales or other dispositions of
properties or leasehold interests in properties with Proved Reserves, other than
Farmouts, with an aggregate PV-10 attributable to such reserves of less than
$100,000, provided that the aggregate net cash proceeds received upon the
consummation of such transaction pursuant to this clause (g) shall not exceed
$500,000 in any 12 calendar month period, (i) Permitted PUD/PDNP Dispositions,
(j) the disposition contemplated in the PrimeWest Farmout Agreements, and (k)
such other sales or other dispositions as may be agreed to by Agent in its
Permitted Discretion.
"Permitted Farmout Agreement" means (i) the PrimeWest Farmout
Agreements; and (ii) any other Farmout Agreement entered into by Borrower, as
the farmor, in the ordinary course of business, (a) covering Farmout Property of
Borrower that does not include proved oil or natural gas properties (other than
those (i) proved by the efforts to obtain production taken pursuant to such
Farmout Agreement or (ii) that are not then otherwise included in the Borrower's
PV-10 or as a proved reserve in any reserve or other report prepared by or on
behalf of us in amount which exceeds either U.S. $150,000 with respect to any
individual property subject to such Farmout Agreement or U.S. $500,000 when
aggregated with any other proved oil or natural gas property then subject to
such Farmout Agreement or any other Farmout Agreement) and (b) that, as
determined in good faith by the Board of Directors of Borrower and evidenced by
a resolution of such Board of Directors delivered to Agent (or, solely with
respect to any Farmout with a Farmout Property Value not exceeding U.S.
$1,000,000, as determined in good faith by the chief executive officer of
Borrower and evidenced by an officers' certificate delivered to Agent), is in
the best interests of Borrower and does not adversely affect the ability of
Borrower to perform its respective obligations under the Loan Documents.
"Permitted Investments" means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) investments made in the ordinary course of, and of a nature that
is customary in, the Oil and Gas Business as a means of actively exploiting,
exploring for, acquiring, developing, processing, gathering, marketing or
transporting oil and gas through agreements, transactions, interests or
arrangements which permit one to share risks or costs, comply with regulatory
requirements regarding local ownership or satisfy other objectives customarily
achieved through the conduct of the Oil and Gas Business jointly with third
parties, including, without limitation, the entry into operating agreements,
working interests, royalty interests, mineral leases, processing agreements,
Farmout Agreements, division orders, contracts for the sale, transportation or
exchange of oil or natural gas, unitization and pooling declarations and
agreements and area of mutual interest agreements, production sharing agreements
or other similar or customary agreements, transactions, properties, interests
and investments and expenditures in connection therewith; provided that for
purposes of this clause (d), an investment in Shares, partnership or joint
venture interests (other than interests arising from Permitted Farmout
Agreements or other similar operating agreements entered into in the ordinary
course of the Oil and Gas Business), limited liability company interests or
other similar equity interests in a Person shall not constitute a Permitted
Investment and (e) other Investments by Borrower in any Person so long as the
aggregate fair market value of all such Investments (determined in good faith by
the chief financial officer of the Company and measured as of the date each such
Investment is made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause (e)
(net of returns of capital, dividends and interest paid on Investments and
sales, liquidations and redemptions of Investments), does not exceed $100,000
after the Closing Date and (f) other Investments as may be agreed to by Agent.
"Permitted Liens" means (a) Liens held by Agent for the benefit of
Lender Group, (b) Liens for unpaid taxes that either (i) are not yet delinquent,
or (ii) do not constitute an Event of Default or an Unmatured Default hereunder
and are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1,
(d) the interests of lessors under operating leases, (e) purchase money Liens or
the interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of business and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted
Protests, (g) Liens arising from deposits made in connection with obtaining
worker's compensation or other unemployment insurance, (h) Liens or deposits to
secure performance of bids, tenders, performance bonds, regulatory compliance in
connection with the Oil and Gas Business or leases incurred in the ordinary
course of business and not in connection with the borrowing of money, (i) Liens
granted as security for surety bonds, performance bonds or appeal bonds in
connection with obtaining such bonds in the ordinary course of business, (j)
Liens resulting from any judgment or award that is not an Event of Default or an
Unmatured Default hereunder, (k) Liens with respect to the Real Property (not
including Oil and Gas Properties) constituting easements, rights of way, zoning
restrictions and other minor imperfections of title that do not materially
interfere with or impair the use or operation thereof, (l) with respect to the
Oil and Gas Properties, imperfections of title as described in title opinions
delivered and which are acceptable to Agent, (m) Liens for royalties, overriding
royalties, net profit interests, reversionary interests, operating agreements
and other similar interests, properties, arrangements and agreements as they
relate to Hydrocarbon Interests of Borrower, to the extent such Liens are
customary in the Oil and Gas Business, are incurred in the ordinary course of
business, do not secure Indebtedness for borrowed money and which secure sums
which are not then required to be paid, (n) Liens in favor of collecting or
payor banks having a right of setoff, revocation, refund or chargeback with
respect to money or instruments of Borrower on deposit with or in possession of
such bank to the extent such Liens secure Indebtedness under Section 7.1(g), (o)
Liens on cash and Cash Equivalents securing the performance obligations of
Borrower under Hedging Agreements so long as the aggregate amount of obligations
secured by such Liens at any time outstanding does not exceed $100,000, (p)
Liens in favor of Persons financing unpaid insurance premiums so long as such
Liens are limited to insurance policies with respect to which such premiums are
financed, (q) non-consensual statutory Liens on pipeline or pipeline facilities,
Hydrocarbons or properties and assets of Borrower which arise out of operation
of law and are not in connection with the borrowing of money, (r) Liens pursuant
to documents governing Permitted Farmout Agreements, (s) Liens not otherwise
permitted under this Agreement incurred in the ordinary course of business of
Borrower securing Indebtedness of Borrower in an aggregate principal amount at
any time outstanding not to exceed $20,000 and (t) other Liens securing other
obligations of Borrower to the extent permitted by Agent in its Permitted
Discretion.
"Permitted Protest" means the right of Borrower or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a Canadian federal or provincial deemed trust) or rental payment,
provided that (a) a reserve with respect to such obligation is established on
the Books in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Borrower or any of its
Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that,
while any such protest is pending, there will be no impairment of the
enforceability, validity or priority of any of the Liens of Agent.
"Permitted PUD/PDNP Dispositions" means releases, surrenders, sales or
other dispositions of properties or leasehold interests in properties with
Proved Developed Non-Producing Reserves and Proved Undeveloped Reserves so long
as (i) no Default, Unmatured Default or Event of Default shall have occurred and
be continuing prior to and after giving effect to such release, surrender, sale
or disposition, (ii) the ratio of (A) the net cash proceeds received by Borrower
on the date of the consummation of such transaction as consideration for any
such release, surrender, sale or disposition to (B) the PV-10 of the applicable
Proved Developed Non-Producing Reserves and Proved Undeveloped Reserves subject
to such release, surrender, sale or disposition, as shown on the most recent
Reserve Report, equals or exceeds 1.25 to 1.00, and (iii) the aggregate net cash
proceeds received in connection with such releases, surrenders, sales or other
dispositions do not exceed $200,000 after the Closing Date.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate principal amount outstanding at any one time not in excess of U.S.
$500,000 (or such higher amount as may be agreed to by Agent).
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Petroleum Engineers" means (i) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, (ii) ▇▇▇▇▇▇▇▇ &
Associates Consultants Ltd. or (iii) such other petroleum engineers of
recognized national standing as may be selected by Borrower with the prior
consent of Agent.
"PPSA" means the Personal Property Security Act (Alberta), R.S.A. 2000,
c. P-7, as amended.
"PrimeWest Farmout Agreements" means the farmout agreements dated
January 23, 2003 between the Borrower and PrimeWest Energy Inc. as provided to
the Agent by the Borrower prior to the Closing Date.
"Projections" means forecasted (a) balance sheets, (b) profit and loss
statements and (c) cash flow statements of Borrower Parties, all prepared on a
basis consistent with Borrower Parties' historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make the Loan and receive payments
of principal, interest, fees, costs and expenses with respect thereto, (i) prior
to the making of the Loan, the percentage obtained by dividing (x) such Lender's
Commitment by (y) the aggregate amount of all Lenders' Commitments and (ii) from
and after the making of the Loan, the percentage obtained by dividing (x) the
principal amount of such Lender's portion of the Loan Amount by (y) the Loan
Amount, and
(b) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 16.7), the
percentage obtained by dividing (i) the unpaid principal amount of such Lender's
portion of the outstanding Loan by (ii) the aggregate unpaid principal amount of
the outstanding Loan.
"Proved Developed Non-Producing Reserves" means those Oil and Gas
Properties designated as "proved developed non-producing" (in accordance with
the Definitions for Oil and Gas Reserves approved by the board of directors of
the Society for Petroleum Engineers, Inc. from time to time) in the Reserve
Report.
"Proved Developed Producing Reserves" means those Oil and Gas
Properties designated as "proved developed producing" (in accordance with the
Definitions for Oil and Gas Reserves approved by the board of directors of the
Society for Petroleum Engineers, Inc. from time to time) in the Reserve Report.
"Proved Reserves" means those Oil and Gas Properties designated as
"proved" (in accordance with the Definitions for Oil and Gas Reserves approved
by the board of directors of the Society for Petroleum Engineers, Inc. from time
to time) in the Reserve Report.
"Proved Undeveloped Reserves" means those Oil and Gas Properties
designated as "proved undeveloped" (in accordance with the Definitions for Oil
and Gas Reserves approved by the board of directors of the Society for Petroleum
Engineers, Inc. from time to time) in the Reserve Report.
"PV-10" means, as of any date of determination, the sum of the present
values of the amounts of net revenues before income taxes expected to be
received in each of the months following the date of determination on the basis
of estimated production from Proved Reserves during such months determined as
follows:
(i) each such monthly net revenue amount shall be calculated (x) on the
basis of the applicable NYMEX Strip Price for the appropriate category of oil or
gas as of such date of determination, adjusting such price to reflect (A) the
appropriate Basis Differential with respect to Hydrocarbons produced from
specific Oil and Gas Properties of Borrower and as set forth on Exhibit PV-10,
as such Exhibit may from time to time be amended at the request of Borrower with
the written consent of Agent, (B) the prices for fixed price contracts for such
month and (C) Btu content, (y) assuming that production costs remain constant
throughout the periods of the calculation of such monthly net revenues and (z)
otherwise applying the financial accounting and reporting standards prescribed
by the SEC for application of the successful efforts method of accounting for
such revenues under Rule 4-10 of Regulation S-X as promulgated by the SEC from
time to time; and
(ii) the present value of each such monthly net revenue amount shall be
determined by discounting each such monthly net revenue amount from the month in
which it is expected to be received, on a monthly basis, to such date of
determination at a rate of 10% per annum.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after (or such other period as may be agreed to by Agent),
the acquisition of any fixed assets for the purpose of financing all or any part
of the acquisition cost thereof.
"Qualified Capital" means (a) common Shares of Borrower or (b) other
Shares of Borrower that is not (i) stock which, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is mandatorily redeemable at the
sole option of the holder thereof, in whole or in part, in either case, or on
prior to 91 days after the payment in full in cash of all Obligations after the
termination of the Commitments or (ii) Shares that, by its terms, by the terms
of any security into which it is convertible or exchangeable, by contract or
otherwise, requires, or upon the happening of an event or passage of time would
require, the payment of dividends (other than dividends paid (A) in Qualified
Capital and/or (B) from a segregated reserve account funded solely from the
amounts paid by the purchaser or purchasers of such Shares in connection with
the issuance and sale thereof) on or prior to 91 days after the payment in full
in cash of all Obligations after the termination of the Commitments.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by Borrower and the improvements thereto.
"Real Property Collateral" means (i) the parcel or parcels of Real
Property identified on Parts A and C of Schedule 5.22 and (ii) any Real Property
hereafter (A) acquired by Borrower in the case of Real Property constituting Oil
and Gas Properties or (B) owned in fee in the case of Real Property not
constituting Oil and Gas Properties.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Refinancing Documents" means, collectively, (i) this Agreement and the
other Loan Documents, (ii) the New Notes; and the New Notes Indenture, (iii) the
Revolving Credit Facility, (iv) the Abraxas Bridge Loan Credit Facility and (v)
all agreements, instruments and other documents delivered in connection with the
foregoing.
"Register" has the meaning set forth in Section 14.1(h).
"Registered Loan" has the meaning set forth in Section 2.12.
"Registered Note" has the meaning set forth in Section 2.12.
"Related Fund" has the meaning set forth in the definition of "Eligible
Transferee".
"Related Indebtedness" means (i) Indebtedness under the Loan Documents
related to any fees and expenses incurred by any Borrower Party incurred in
connection with the Loan Documents (including, but not limited to, those owed to
any Person not an Affiliate of any Borrower Party) in connection with any
amendment (including any amendment and restatement thereof), supplement,
replacement, restatement or other modification from time to time, including any
agreements (and related instruments and documents) extending the maturity of,
refinancing, replacement or other restructuring of all or any portion of the
Indebtedness under the Loan Documents (and related instruments and documents) or
any successor or replacement agreements (and related instruments and documents)
and (ii) any capitalized interest, fees or other expenses incurred by any
Borrower Party whether or not charged to the Loan Account or any similar account
created under the Loan Documents.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, seeping, migrating,
dumping or disposing of any Hazardous Material (including the abandonment or
discarding of barrels, containers and other closed receptacles containing any
Hazardous Material) into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through or in the ambient air,
soil, surface or ground water, or property.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations or post-remedial operation and maintenance activities.
"Report" has the meaning set forth in Section 16.17.
"Required Lenders" means, at any time, Agent, if at such time Agent or
an Affiliate of Agent is a Lender, together with Lenders whose Pro Rata Shares
(as determined pursuant to paragraph (a) of the definition thereof) aggregate
more than 50%.
"Reserve Report" means a report of the Petroleum Engineers in the form
of the Initial Reserve Report, setting forth, as of June 30 or December 31 of
any calendar year, and as of any other date on which a Reserve Report is
required or permitted to be obtained pursuant to this Agreement, (i) the
volumetric quantity (calculated using the same pricing assumptions as used in
the calculation of PV-10) and the PV-10 (and, solely with respect to the Reserve
Report dated December 31 of any year, the SEC Value), of the oil and gas
reserves attributable to the Oil and Gas Properties of Borrower, 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, and (ii)
such other information as Agent may reasonably request, all in form and
substance satisfactory to Agent. Any reference herein to a Reserve Report
without reference to the date thereof shall, unless the context otherwise
requires, refer to the most recent Reserve Report.
"Reserve Report Delivery Date" means the date on which Agent receives
from Borrower the most recent Reserve Report required to be delivered by
Borrower in accordance with Section 6.2(e).
"Revolving Credit Facility" means the loan agreement, dated as of the
Closing Date, among Abraxas, the Subsidiaries of Abraxas party thereto, the
lenders thereunder and as such may from time to time be amended, restated,
supplemented, modified or otherwise changed in accordance with the terms of the
Abraxas Bridge Loan Agreement.
"Revolving Credit Facility Administration Agent" means ▇▇▇▇▇ Fargo
Foothill, Inc., as agent for the lenders under the Revolving Credit Facility and
any successor thereto as may be appointed pursuant to the terms of the Revolving
Credit Facility.
"Revolving Credit Facility Documents" means the Revolving Credit
Facility and each other agreement, instrument and document related thereto, as
such may from time to time be amended, restated, supplemented, modified or
otherwise changed in accordance with the terms of this Agreement.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"SEC Value" means the future net revenues before income taxes from
Proved Reserves, estimated utilizing the actual price for the appropriate
category of oil or gas as of the date of determination and assuming that oil and
natural gas prices and production costs thereafter remain constant, then
discounted at the rate of 10% per year to obtain the present value and otherwise
applying the financial accounting and reporting standards prescribed by the SEC
for application of the successful efforts method of accounting under Rule 4-10
and Regulation S-X as promulgated by the SEC from time to time.
"Section" means a section or subsection of this Agreement.
"Securities Account" means a "securities account" as that term is
defined in the Abraxas Bridge Loan Agreement.
"Security" has the meaning attributed to it in Section 4.1 and includes
any other Lien hereafter granted by Borrower to secure the payment of
Indebtedness.
"Shares" means all shares, options, warrants, interests, participations
or other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common Shares, preferred Shares or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
"Solvent" means, with respect to any Person on a particular date, that
such Person is not an "insolvent person" as defined in the Bankruptcy and
Insolvency Act (Canada).
"Spread" means initially 625 bps (6.25%) and shall increase by 75 bps
(0.75%) on April 29, 2005 and on the last day of each six month period
thereafter during which any Obligation is outstanding.
"Standard & Poor's" means Standard & Poor's Rating Services, a division
of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and any successor thereto.
"Subsidiary" means, with respect to any Person, a corporation,
partnership, limited liability company or other entity in which that Person
directly or indirectly owns or controls the Shares having ordinary voting power
to elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company or other
entity.
"Tax Payments" has the meaning set forth in Section 6.5.
"Taxes" means all taxes of any kind or nature whatsoever including
income taxes, capital taxes, minimum taxes, levies, imposts, stamp taxes,
royalties, duties, charges to tax, value added taxes, commodity taxes, goods and
services taxes, and all fees, deductions, compulsory loans, withholdings and
restrictions or conditions resulting in a charge imposed, levied, collected,
withheld or assessed as of the date hereof or at any time in the future by any
Authorized Authority of or within any jurisdiction whatsoever having power to
tax, together with penalties, fines, additions to tax and interest thereon and
any instalments in respect thereof.
"Unmatured Default" means an event, condition or default under Sections
8.2 or 8.11 that, after giving of notice by Agent to Borrower, would be an Event
of Default.
"U.S. Dollars" "U.S. $" means United States dollars.
"Voidable Transfer" has the meaning set forth in Section 18.7.
"Withholding Tax" means any amount on account of Taxes imposed or
levied by or on behalf of the Government of Canada or any province or territory
thereof or by any Authorized Authority therein or thereof having power to tax
which the Borrower is required to deduct or withhold under Applicable Law in
connection with the payment of any Obligations and all penalties, interest and
other liabilities related thereto.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial or related covenant or a
related definition, it shall be understood to mean Borrower and its Subsidiaries
on a consolidated basis unless the context clearly requires otherwise.
1.3 Construction. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or". The words "hereof",
"herein", "hereby", "hereunder" and similar terms in this Agreement or any other
Loan Document refer to this Agreement or such other Loan Document, as the case
may be, as a whole and not to any particular provision of this Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule
and exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Agreement or in the other Loan Documents to any agreement,
instrument or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders and
supplements thereto and thereof, as applicable (subject to any restriction on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders and supplements set forth therein or
herein). Any reference herein to any law or other legislation or to any
provision of any law or other legislation shall include any amendment,
modification or re-enactment thereof, any law or other legislative provision
substituted therefor and all regulations, rules and interpretations issued
thereunder or pursuant thereto. Any reference herein to any Person shall be
construed to refer to and include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
1.4 Schedules and Exhibits. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference, and all
references herein to this Agreement shall include such schedules and exhibits as
so incorporated.
2. LOANS AND TERMS OF PAYMENT.
2.1 Loan.
(a) Advance. Subject to the terms and conditions of this Agreement,
each Lender agrees (severally, not jointly or jointly and severally) to make
loans (the "Advances" and, collectively, the "Loan") to Borrower on the Closing
Date in an amount equal to such Lender's Pro Rata Share of the Loan Amount; (b)
Use of Proceeds. The Borrower shall use the proceeds of the Loan for a onetime
cash distribution to Abraxas, which shall include the repayment of existing debt
to Abraxas.
2.2 Borrowing Procedures.
(a) Making of Advances.
(i) Each Lender shall make the amount of such Lender's Pro Rata
Share of the Borrowing available to Agent in immediately available funds,
to Agent's Account, not later than 10:00 a.m. (Calgary time) on the Closing
Date. After Agent's receipt of the proceeds of such Advances, upon
satisfaction of the conditions precedent set forth in Section 3, Agent
shall make the proceeds thereof available to Borrower on the Closing Date
by transferring immediately available funds equal to such proceeds received
by Agent to Borrower's Designated Account; provided, however, that, Agent
shall not request any Lender to make, and no Lender shall make, any Advance
if Agent shall have actual knowledge that one or more of the conditions
precedent set forth in Section 3 will not be satisfied on the Closing Date
unless such condition has been waived.
(ii) Agent may assume that each Lender will make the amount of
that Lender's Pro Rata Share of the Loan available to Agent in immediately
available funds on the Closing Date pursuant to Section 2.2(a)(i), and
Agent may (but shall not be so required), in reliance upon such assumption,
make available to Borrower on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount available to
Agent in immediately available funds pursuant to Section 2.2(a)(i) and
Agent in such circumstances has made available to Borrower such amount,
that Lender shall on the Business Day following the Closing Date make such
amount available to Agent, together with interest at the Interest Rate for
each day during such period. A notice submitted by Agent to any Lender with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made available, such payment to Agent
shall constitute such Lender's Advance on the date of the Borrowing for all
purposes of this Agreement. If such amount is not made available to Agent
on the Business Day following the Closing Date, Agent will notify Borrower
of such failure to fund and, upon demand by Agent, Borrower shall pay such
amount to Agent for Agent's account, together with interest thereon for
each day elapsed since the date of the Borrowing, at a rate per annum equal
to the Interest Rate. The failure of any Lender to make any Advance on the
Closing Date shall not relieve any other Lender of any obligation hereunder
to make an Advance on the Closing Date, but no Lender shall be responsible
for the failure of any other Lender to make the Advance to be made by such
other Lender on the Closing Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payment made by Borrower to Agent for the Defaulting Lender's
benefit and, in the absence of such transfer to the Defaulting Lender,
Agent shall transfer any such payment to each other non-Defaulting Lender
member of the Lender Group ratably in accordance with their Commitments
(but only to the extent that such Defaulting Lender's Advance was funded by
the other members of the Lender Group) or, if so directed by Borrower and
if no Default or Event of Default had occurred and is continuing (and to
the extent such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrower as if such Defaulting
Lender had made Advances to Borrower. Subject to the foregoing, Agent may
hold and, in its Permitted Discretion, re-lend to Borrower for the account
of such Defaulting Lender the amount of all such payments received and
retained by it for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to the Loan
Documents, such Defaulting Lender shall be deemed not to be a "Lender" and
such Lender's Commitment shall be deemed to be zero. This Section
2.2(a)(iii) shall remain effective with respect to such Lender until (x)
the Obligations under this Agreement shall have been declared or shall have
become immediately due and payable, (y) the non-Defaulting Lenders, Agent
and Borrower shall have waived such Defaulting Lender's default in writing
or (z) the Defaulting Lender makes its Pro Rata Share of the Advance and
pays to Agent all amounts owing by such Defaulting Lender in respect
thereof. The operation of this Section 2.2(a)(iii) shall not be construed
to increase or otherwise affect the Commitment of any Lender, to relieve or
excuse the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder or to relieve or excuse the performance by
Borrower of its duties and obligations hereunder to Agent or to Lenders
other than such Defaulting Lender. Any such failure to fund by any
Defaulting Lender shall constitute a material breach by such Defaulting
Lender of this Agreement and shall entitle Borrower at its option, upon
written notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the arrangement of such a
substitute Lender, the Defaulting Lender shall have no right to refuse to
be replaced hereunder and agrees to execute and deliver a completed form of
Assignment and Acceptance Agreement in favor of the substitute Lender (and
agrees that it shall be deemed to have executed and delivered such document
if it fails to do so) subject only to being repaid its share of the
outstanding Obligations without any premium or penalty of any kind
whatsoever; provided further, however, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute a
waiver of any of the Lender Groups' or Borrower's rights or remedies
against any such Defaulting Lender arising out of or in relation to such
failure to fund.
(b) Notation. Agent shall record on its books the principal amount and
type of the Advances owing to each Lender from time to time. In addition, each
Lender is authorized, at such Lender's option, to note the date and amount of
each payment or prepayment of principal of such Lender's Advances in its books
and records, including computer records, such books and records constituting
conclusive evidence, absent manifest error, of the accuracy of the information
contained therein.
(c) Lenders' Failure to Perform. All Advances shall be made by the
Lenders contemporaneously and in accordance with their Pro Rata Shares. It is
understood that (i) no Lender shall be responsible for any failure by any other
Lender to perform its obligation to make any Advance (or other extension of
credit (if any)) hereunder, nor shall any Commitment of any Lender be increased
or decreased as a result of any failure by any other Lender to perform its
obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.
2.3 Payments.
(a) Payments by Borrower.
(i) Except as otherwise expressly provided herein, all payments
by Borrower shall be made to Agent's Account for the account of the Lender
Group and shall be made in immediately available funds, no later than 11:00
a.m. (Calgary time) on the date specified herein. Any payment received by
Agent later than 11:00 a.m. (Calgary time) shall be deemed to have been
received on the following Business Day and any applicable interest or fee
shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Borrower prior to the date
on which any payment is due to Lenders that Borrower will not make such
payment in full as and when required, Agent may assume that Borrower has
made (or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on such due
date an amount equal to the amount then due such Lender. If and to the
extent Borrower does not make such payment in full to Agent on the date
when due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents (including
letter agreements, if any, between and/or among Agent and/or individual
Lenders), aggregate principal and interest payments shall be apportioned
ratably among the Lenders (according to the unpaid principal balance of the
Obligations held by each Lender) and payments of fees and expenses shall be
apportioned ratably among the Lenders (other than payments received while
no Unmatured Default or Event of Default has occurred and is continuing and
which relate to the payment of principal or interest of specific
Obligations), and all proceeds of Accounts or other Collateral received by
Agent, shall be applied (unless otherwise agreed by the Required Lenders)
as follows:
(A) first, to pay any Lender Group Expenses then due to
Agent under the Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses then due to the
Lenders under the Loan Documents, on a ratable basis, until paid in
full,
(C) third, to pay any fees then due to Agent (in each case
for its separate account and after giving effect to any letter
agreements between Agent and individual Lenders) under the Loan
Documents, until paid in full,
(D) fourth, to pay any fees then due to any or all of the
Lenders (after giving effect to any letter agreements between Agent
and individual Lenders) under the Loan Documents, on a ratable basis,
until paid in full,
(E) fifth, to pay interest due in respect of the Advances,
until paid in full,
(F) sixth, to pay the principal of all Advances, until paid
in full,
(G) seventh, to pay any other Obligations, until paid in
full, and
(H) eighth, to Borrower (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant to
the applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive.
(iii) In each instance, so long as no Unmatured Default or Event
of Default has occurred and is continuing, Section 2.3(b)(i) shall not be
deemed to apply to any payment by Borrower specified by Borrower to be for
the payment of specific Obligations then due and payable (or prepayable
under any provision of this Agreement).
(iv) For purposes of the foregoing, "paid in full" means payment
of all amounts owing under the Loan Documents according to the terms
thereof, including loan fees, service fees, professional fees, interest
(and specifically including interest accrued after the commencement of any
Insolvency Proceeding), default interest, interest on interest and expense
reimbursements, whether or not the same would be or is allowed or
disallowed in whole or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.3 and other provisions contained in any other
Loan Document, it is the intention of the parties hereto that such priority
provisions in such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of
any actual, irreconcilable conflict that cannot be resolved as aforesaid,
the terms and provisions of this Section 2.3 shall control and govern.
2.4 Repayment of Obligations.
(a) Promise to Pay. Borrower hereby promises to pay the Obligations
(including principal, interest, fees, costs and expenses) in U.S. Dollars in
full to the Lender Group as and when due and payable under the terms of this
Agreement and the other Loan Documents.
(b) Scheduled Principal Payments. Without limiting Sections 2.13 or
9.1(a), Borrower will make the following scheduled principal payments:
(i) on the first anniversary hereof, U.S. $1,750,000;
(ii) on the second anniversary hereof, U.S. $1,750,000;
(iii) on the third anniversary hereof, U.S. $1,750,000;
(iv) on the fourth anniversary hereof, U.S. $3,500,000; and
(v) on the Maturity Date, the principal and any other
amounts that remain outstanding hereunder.
2.5 Interest Rates; Payments and Calculations.
(a) Interest Rates. Except as provided in clause (b) below, all
Obligations, whether or not charged to the Loan Account pursuant to the terms
hereof, shall bear interest on the Daily Balance thereof at a per annum rate
equal to the Interest Rate.
(b) Default Rate. Upon the occurrence and during the continuation of an
Event of Default (and at the election of Agent or the Required Lenders), all
Obligations, whether or not charged to the Loan Account pursuant to the terms
hereof, shall bear interest on the Daily Balance thereof at a per annum rate
equal to 4.00 percentage points above the per annum rate otherwise applicable
hereunder.
(c) Payment.
(i) Interest in respect of the Obligations shall be due and
payable, in arrears, on the first Business Day of each calendar quarter,
beginning on January 1, 2005, at any time that Obligations are outstanding
(each such date, an "Interest Payment Date"). All fees payable hereunder
shall be due and payable on the date upon which such fees are due and
payable hereunder. Borrower hereby authorizes Agent, from time to time
without prior notice to Borrower, to, and Agent agrees that it may (at its
sole and absolute discretion), charge such interest and fees, all Lender
Group Expenses (as and when incurred), the fees and costs provided for in
Section 2.10 (as and when accrued or incurred) and all other payments as
and when due and payable under any Loan Document, to Borrower's Loan
Account, which amounts thereafter shall be deemed to constitute Advances
hereunder and shall accrue interest at the rate then applicable to Advances
hereunder. Any interest not paid when due shall be compounded by being
charged to Borrower's Loan Account and shall thereafter be deemed to
constitute an Advance hereunder and shall accrue interest at a per annum
rate equal to the Interest Rate in existence from time to time.
(ii) All interest accruing on Obligations pursuant to the terms
of this Agreement shall be payable in immediately available funds on the
respective Interest Payment Date.
(d) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360-day year for the actual number
of days elapsed. The rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to any change in the Base Rate.
(e) Maximum Rate of Return. Notwithstanding any provision herein to the
contrary, in no event will the aggregate "interest" (as defined in Section 347
of the Criminal Code (Canada)) payable under this Agreement exceed the maximum
effective annual rate of interest on the "credit advanced" (as defined in that
Section 347) permitted under that section and, if any payment, collection or
demand pursuant to this Agreement in respect of "interest" (as defined in that
Section 347) is determined to be contrary to the provisions of that Section 347,
such payment, collection or demand will be deemed to have been made by mutual
mistake of Borrower and the applicable Lenders and the amount of such payment or
collection will be refunded to Borrower. For purposes of this Agreement, the
effective annual rate of interest will be determined in accordance with
generally accepted actuarial practices and principles over the term of this
Agreement on the basis of annual compounding of the lawfully permitted rate of
interest and, in the event of dispute, a certificate of a Fellow of the Canadian
Institute of Actuaries appointed by Agent will be prima facie evidence, for the
purposes of such determination.
2.6 Cash Management. The Borrower shall establish and maintain cash
management services in accordance with the terms of the Collateral Documents.
2.7 Crediting Payments. The receipt of any payment item by Agent shall
not be considered a payment on account unless such payment item is a wire
transfer of immediately available funds made to Agent's Account or unless and
until such payment item is honored when presented for payment. Should any
payment item not be honored when presented for payment, then Borrower shall be
deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into
Agent's Account on a Business Day on or before 11:00 a.m. (Calgary time). If any
payment item is received into Agent's Account on a non-Business Day or after
11:00 a.m. (Calgary time) on a Business Day, it shall be deemed to have been
received by Agent as of the opening of business on the immediately following
Business Day.
2.8 Designated Account. Agent is authorized to make the Advances under
this Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.5(c). Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances made hereunder. Unless otherwise agreed by Agent and Borrower, any
Advance made hereunder shall be made to the Designated Account.
2.9 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrower (the "Loan Account") on
which Borrower will be charged with all Advances made by (or deemed to be made
by) Agent or the Lenders to Borrower or for Borrower's account and all other
payment Obligations hereunder or under the other Loan Documents, including
accrued interest, fees and expenses and Lender Group Expenses. In accordance
with Section 2.7, the Loan Account will be credited with all payments received
by Agent from Borrower or for Borrower's account. Agent shall render statements
regarding the Loan Account to Borrower, including principal, interest, fees and
an itemization of all charges and expenses constituting Lender Group Expenses
owing, and each such statement shall be conclusively presumed to be correct and
accurate and constitute an account stated between Borrower and the Lender Group
unless, within 30 days after receipt thereof by Borrower, Borrower shall deliver
to Agent written objection thereto describing the error or errors contained in
any such statements.
2.10 Fees and Charges. Borrower shall pay to Agent the following fees
and charges, which fees and charges shall be non-refundable when paid
(irrespective of whether this Agreement is terminated thereafter):
(a) Closing Fees. Borrower will pay or cause to be paid to Agent
a closing fee as and when due and payable under the terms of the Fee Letter.
(b) Audit, Appraisal and Valuation Charges. For the separate
account of Agent, Borrower shall pay audit, appraisal and valuation fees and
charges as follows, a fee of U.S. $850 per day, per auditor (such fees for all
auditors for any single financial audit not to exceed U.S. $5,000 in the
aggregate), plus out-of-pocket expenses for each financial audit of Borrower
performed by personnel employed by Agent, (ii) a fee of U.S. $1,500 per day per
appraiser, plus out-of-pocket expenses, for each appraisal of the Collateral
performed by personnel employed by Agent, and (iii) the actual charges paid or
incurred by Agent if it elects to employ the services of one or more third
Persons to perform financial audits of Borrower, to appraise the Collateral, or
any portion thereof, to review or examine the Oil and Gas Properties of Borrower
or to assess Borrower's business valuation, provided, that, (x) with respect of
clause (i) above, so long as no Event of Default shall have occurred and be
continuing, Borrower shall not be obligated to pay for more than four financial
audits during any calendar year and (y) with respect to any Reserve Report
requested by Borrower or Agent (in addition to the Reserve Reports required to
be delivered semi-annually by Borrower to Agent pursuant to Section 6.2(e)), the
party requesting the issuance of such Reserve Report shall pay the costs and
expenses associated therewith in the absence of a continuing Default or Event of
Default (and during a continuing Default, Unmatured Default or Event of Default,
such Reserve Report shall be at Borrower's sole cost and expense).
(c) Lender Group Expenses. Lender Group Expenses in accordance
with Section 16.17, or, if earlier, upon demand of Agent or any Lender entitled
thereto.
2.11 Capital Requirements. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender's or such
holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof. Following receipt of such notice,
Borrower agrees to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
2.12 Registered Loans and Registered Notes. Borrower agrees to record
each Advance on the Register referred to in Section 14.1(h). Each Advance
recorded on the Register (a "Registered Loan") may not be evidenced by
promissory notes other than Registered Notes (as defined below). Upon the
registration of any Advance, Borrower agrees, at the request of any Lender, to
execute and deliver to such Lender a promissory note, in conformity with the
terms of this Agreement, in registered form to evidence such Registered Loan, in
form and substance reasonably satisfactory to Agent and such Lender, and
registered as provided in Section 14.1(h) (a "Registered Note"), payable to the
order of such Lender and otherwise duly completed. Once recorded on the
Register, each Advance may not be removed from the Register so long as it or
they remain outstanding, and a Registered Note may not be exchanged for a
promissory note that is not a Registered Note.
2.13 Repayment of Advances. Without limiting Section 2.4(b), Borrower
may prepay Advances at any time without payment of any prepayment premium or
other prepayment fee, but subject to Section 3.4, if applicable, and to the
following terms and conditions:
(a) Borrower shall have provided 10 days' prior written notice to
Agent of the prepayment date and the amount of such prepayment;
(b) any such prepayment shall be in a minimum amount equal to the
lesser of (x) U.S. $1,000,000 and (y) the aggregate unpaid principal amount of
the Loan then outstanding;
(c) except for any such prepayment in connection with the
termination of this Agreement pursuant to Section 3.4, each such prepayment
shall occur on and be effective as of an Interest Payment Date; and
(d) any such prepayment shall be applied to the principal amounts
payable in accordance with Section 2.4 in reverse order of maturity.
3. CONDITIONS; TERM OF AGREEMENT; TERMINATION OF AGREEMENT AND REDUCTION OF
COMMITMENTS.
3.1 Conditions Precedent to the Making of the Loan. The obligation of
the Lender Group (or any member thereof) to make the Loan (or otherwise to
extend any credit provided for hereunder) is subject to the fulfillment, to the
satisfaction of Agent, of each of the conditions precedent set forth below:
(a) Agent shall have received and filed all personal property
registry or other financing statements required by the Agent, duly executed or
otherwise authorized by Borrower and Agent shall have received evidence
reflecting the filing of all such financing statements;
(b) Agent shall have received all personal property registry,
Alberta Energy or other discharge documents relating to the security
registrations made by the Existing Credit Agreement Agent along with an
authorization to discharge addressed to Agent and its' legal counsel authorizing
the filing of such discharge documents in respect of such security
registrations;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent, duly executed, and each such document
shall be in full force and effect:
(i) the Control Agreement,
(ii) the Debenture,
(iii) the Fee Letter,
(iv) if the Closing Date is not the same date that this
Agreement is executed and delivered by Borrower and the Lender Group,
the Officers' Certificate;
(d) Agent shall have received a certificate from an Authorized
Person of Borrower (i) attesting to the resolutions of Borrower's Board of
Directors authorizing its execution, delivery and performance of this Agreement
and the other Loan Documents to which Borrower is a party and authorizing
specific officers of Borrower to execute the same;
(e) Agent shall have received copies of Borrower's Governing
Documents, as amended, modified or supplemented to the Closing Date, certified
by an Authorized Person of Borrower;
(f) Agent shall have received a certificate of status with
respect to Borrower, dated within 10 days of the Closing Date, such certificates
to be issued by the appropriate officer of the jurisdiction of organization of
Borrower, along with any other jurisdictions in which Borrower is registered to
carry on business, which certificates shall indicate that Borrower is in good
standing in such jurisdictions;
(g) Agent shall have received certificates of insurance, together
with the endorsements thereto, as are required by Section 6.6, the form and
substance of which shall be satisfactory to Agent;
(h) Agent shall have received an opinion of Borrower's counsel in
form and substance satisfactory to Agent;
(i) Agent shall have received satisfactory evidence (including a
certificate of an Authorized Person of Borrower) that all tax returns required
to be filed by Borrower have been timely filed and all taxes upon Borrower or
its properties, assets, income and franchises (including Real Property taxes and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest;
(j) Borrower shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(k) (i) Agent shall have received updated land records and/or
title searches and abstracts of Oil and Gas Properties of Borrower, the review
of which shall be satisfactory to Agent and (ii) Agent shall have received
Mortgages on such Oil and Gas Properties of Borrower, for the benefit of the
Lender Group, that are valid and enforceable first priority mortgage Liens on
such Oil and Gas Properties of Borrower free and clear of all Liens except
Permitted Liens;
(l) Agent shall have received the Initial Reserve Report, which
shall be satisfactory to the Lender Group;
(m) Agent shall have received satisfactory evidence verifying all
production taxes and royalty payments pertaining to each well comprising a part
of the Oil and Gas Properties of Borrower are current;
(n) Agent shall have received satisfactory evidence (including a
certificate of an Authorized Person or Abraxas) that Abraxas shall have
consummated the Abraxas Bridge Loan Facility pursuant to the terms and
conditions of the Abraxas Bridge Loan Facility and is in compliance with all
applicable laws, and all conditions precedent to the making of the "Loan"
thereunder are met;
(o) no Material Adverse Change shall have occurred;
(p) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed
or recorded and shall be in form and substance satisfactory to Agent;
(q) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct on and as of
the Closing Date, as though made on and as of the Closing Date (except to the
extent that such representations and warranties relate solely to an earlier
date, in which case such representations and warranties shall have been true and
correct on and as of such earlier date);
(r) no Default or Event of Default shall have occurred and be
continuing on the Closing Date, nor shall either result from the making of the
Loan; and
(s) no injunction, writ, restraining order or other order of any
nature prohibiting, directly or indirectly, the extending of the Loan shall have
been issued and remain in force by any Governmental Authority against Borrower,
Agent, any Lender or any of their Affiliates.
3.2 Term. This Agreement shall become effective upon the execution and
delivery hereof by Borrower, Agent and Lenders and shall continue in full force
and effect for a term ending the day after the fifth (5th) anniversary of the
Closing Date (the "Maturity Date"). The foregoing notwithstanding, the Lender
Group, upon the election of the Required Lenders, shall have the right to
terminate its obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.
3.3 Effect of Termination. On the date of termination of this
Agreement, all Obligations immediately shall become due and payable without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrower of its respective duties, Obligations or covenants hereunder
and Agent's Liens in the Collateral (with respect to the Obligations) shall
remain in effect until all Obligations have been fully and finally discharged
and any obligation of Lender to provide additional credit hereunder has been
terminated. When this Agreement has been terminated and all of the Obligations
have been fully and finally discharged and any obligation of Lender to provide
additional credit under the Loan Documents has been terminated irrevocably,
Agent will, at Borrower's sole expense, execute and deliver any personal
property registry discharge statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests and other similar
discharge or release documents (and, if applicable, in recordable form) as are
reasonably necessary to release, as of record, the Liens of Agent, and all
notices of security interests and liens previously filed, with respect to the
Obligations.
3.4 Early Termination. Without limiting Section 2.13, Borrower shall
have the option, at any time upon 10 days' prior written notice to Agent, to
terminate this Agreement by paying to Agent, on any Business Day (which need not
be an Interest Payment Date), in cash, the then outstanding Obligations, in
full. If Borrower has sent a notice of termination pursuant to the provisions of
this Section 3.4, then Borrower shall be irrevocably obligated to repay the
Obligations, in full, on the date set forth as the date of termination of this
Agreement in such notice.
4. SECURITY.
4.1 Security. The present and future Indebtedness of Borrower to Agent
and Lenders under the Loan and all other Indebtedness of Borrower to Agent and
Lenders, howsoever arising or incurred hereunder and under the Documents, will
be secured by the following (collectively, the "Security"):
(a) a demand debenture (the "Debenture") in the amount of Cdn.
$75,000,000 from Borrower (the Debenture to be substantially in the form of
Schedule 4.1), to be registered in all appropriate jurisdictions; and
(b) such documents and instruments, as may be requested by Agent,
in its sole discretion, providing a fixed Lien, including without limitation,
caveats, security notices and such other similar documentation, to be filed or
registered in such public registry offices in Canada or any province thereof.
4.2 Sharing of Security. Borrower and Lenders agree and acknowledge
that the Security is being shared equally among Lenders to secure Indebtedness
of Borrower under the Loan and any hedging transactions with any Lender on a
pari passu basis; and that Agent will hold the Security for the benefit of Agent
and Lenders hereunder.
4.3 Exclusivity of Remedies. Nothing herein contained or in the
Security now held or hereafter acquired by Agent and Lenders, nor any act or
omission of Agent and Lenders with respect to any such Security, will in any way
prejudice or affect the rights, remedies or powers of Agent and Lenders with
respect to any other security at any time held by Agent and Lenders.
4.4 Form of Security. The Security will be in such form or forms as
will be required by Agent, acting reasonably, and will be registered in such
offices in Canada or the U.S. or any province or state thereof as Agent may from
time to time reasonably require to protect the Liens created thereby. Should
Agent determine at any time and from time to time that the form and nature of
the then existing Security is deficient in any way or does not fully provide
Agent and Lenders with the Liens and priority to which each is entitled
hereunder, Borrower will forthwith execute and deliver or cause to be executed
and delivered to Agent, at Borrower's expense, such amendments to the Security
or provide such new security as Agent may reasonably request.
4.5 After-Acquired Property. All property acquired by or on behalf of
Borrower after the date of execution of the Security which forms part of the
property of Borrower or any Subsidiary (hereafter collectively referred to as
"After-Acquired Property"), will be subject to the Security without any further
conveyance, mortgage, pledge, charge, assignment or other act on the part of the
parties hereto. Without limiting the effect of the preceding sentence, Borrower
will, or will cause such Subsidiary to, from time to time execute and deliver
and Agent will register, all at Borrower's expense, such instruments
supplemental to the Security, in form and substance satisfactory to Agent,
acting reasonably, as may be necessary or desirable to ensure that the Security
as amended and supplemented constitutes in favour of Agent and Lenders an
effective Lien (including without limitation, a fixed Lien pursuant to Section
4.6) to the extent created by the Security over such After-Acquired Property as
required hereunder, subject only to Permitted Encumbrances which under
applicable law rank in priority thereto.
4.6 Undertaking to Grant Fixed Charge Security. If Lenders, acting
reasonably, determine in their sole discretion that it is necessary for their
adequate protection, Borrower, at the request of Agent, will forthwith grant or
cause to be granted to Agent for the benefit of Agent and Lenders a further
fixed Lien (subject only to Permitted Encumbrances which under applicable law
rank in priority thereto) in such of Borrower's property as Agent will, in its
sole discretion, determine as security for all then present and future
Indebtedness of Borrower to Agent and Lenders under the Loan. In this
connection, Borrower will:
(a) provide Agent with such information as is reasonably required
by Agent to identify the property to be charged pursuant to this Section 4.6;
(b) do all such things as are reasonably required to grant, in
favour of Agent and Lenders, a fixed Lien (subject only to Permitted
Encumbrances which under applicable law rank in priority thereto) in respect of
such property to be so charged pursuant to this Section 4.6;
(c) provide Agent with all corporate or partnership resolutions
and other action, as reasonably required, for Borrower or such Subsidiary to
grant the fixed Lien (subject only to Permitted Encumbrances which under
applicable law rank in priority thereto) in the property identified by Agent to
be so charged;
(d) provide Agent with such security instruments and other
documents which Agent, acting reasonably, deems are necessary to give full force
and effect to the provisions of this Section 4.6;
(e) assist Agent in the registration or recording of such
agreements and instruments in such public registry offices in Canada or any
province thereof as Agent, acting reasonably, deems necessary to give full force
and effect to the provisions of this Section 4.6; and
(f) pay all reasonable costs and expenses incurred by Agent in
connection with the preparation, execution and registration of all agreements,
documents and instruments, including any amendments to the Security, made in
connection with this Section 4.6.
4.7 Discharge of Security. Agent and Lenders will discharge the
Security at Borrower's expense forthwith after all of Borrower's Indebtedness
under the Loan has been unconditionally and irrevocably paid or satisfied in
full and each such facility has been cancelled.
4.8 Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, Borrower, immediately upon the request of Agent,
shall endorse and deliver physical possession of such Negotiable Collateral to
Agent.
4.9 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrower that the Accounts, chattel paper or General Intangibles have been
assigned to Agent or that Agent has a security interest therein or (b) collect
the Accounts, chattel paper or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Borrower agrees that it will
hold in trust for Lender Group, as Lender Group's trustee, any Collections that
it receives and immediately will deliver said Collections to Agent in their
original form as received by Borrower.
4.10 Power of Attorney. Borrower hereby irrevocably makes, constitutes
and appoints Agent (and any of Agent's officers, employees or agents designated
by Agent), as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower's name on any invoice or ▇▇▇▇ of lading
relating to the Collateral, drafts against Account Debtors or notices to Account
Debtors, (c) send requests for verification of Accounts, (d) endorse Borrower's
name on any Collection item that may come into Lender Group's possession, (e) at
any time that an Event of Default has occurred and is continuing, make, settle
and adjust all claims under Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance and (f)
at any time that an Event of Default has occurred and is continuing, settle and
adjust disputes and claims respecting the Accounts, chattel paper or General
Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group's obligations to extend credit hereunder are terminated.
4.11 Right to Inspect. Agent and each Lender (through any of their
respective officers, employees or agents) shall have the right, upon notice to
Borrower, which notice shall not be required upon the occurrence and during the
continuance of an Event of Default, from time to time hereafter to inspect the
Books and to check, test and appraise the Collateral and review and examine the
Oil and Gas Properties of Borrower and its Subsidiaries in order to verify
Borrower's financial condition or the amount, quality, value, condition of, or
any other matter relating to, the Collateral.
4.12 Control Agreements. Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless Borrower, Agent and the
substitute securities intermediary have entered into a Control Agreement.
Borrower hereby agrees to take any and all action that Agent requests in order
for Agent to obtain control in accordance with Sections 9-104, 9-105, 9-106 and
9-107 of the New York Uniform Commercial Code with respect to any Securities
Accounts, DDA's, chattel paper, investment property and letter-of-credit rights.
No arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other investment property or DDA, electronic chattel
paper or letter-of-credit rights shall be modified by Borrower without the prior
written consent of Agent. Upon the occurrence and during the continuance of a
Default or Event of Default, the Agent may notify any securities intermediary or
depository to liquidate the applicable Securities Account or any related
investment property maintained or held thereby and remit the proceeds thereof to
Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
Borrower, makes the following representations and warranties to the Lender
Group, which shall be true, correct and complete on and as of the Closing Date,
as though made on and as of the Closing Date (except to the extent that such
representations and warranties relate solely to an earlier date, in which case
such representations and warranties shall have been true and correct on and as
of such earlier date), and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1 No Encumbrances. Borrower has good and indefeasible title to the
Collateral and the Real Property (other than Oil and Gas Properties constituting
Real Property) or good and defensible title to Oil and Gas Properties
constituting Real Property, free and clear of Liens except for Permitted Liens.
5.2 Equipment. All of the Equipment is used or held for use in the
business of Borrower and is fit for such purposes.
5.3 Location of Inventory and Equipment. The Equipment is located only
at the locations identified on Schedule 5.3, other than such Equipment in
transit or temporarily removed to a location not identified therein for
refurbishment or repair. There is no location at which Borrower has any
Inventory, including Hydrocarbon products (except for Hydrocarbon products in
transit), other than the locations identified on Schedules 5.3 and 5.22. Each of
Schedule 5.3 and 5.22 contains a true, correct and complete list of each
location at which Hydrocarbon products of Borrower are stored.
5.4 Inventory Records. Borrower keeps correct and accurate records
itemizing and describing the type and quantity of its Inventory and the book
value thereof.
5.5 Location of Chief Executive Office. The chief executive office of
Borrower is located at the address indicated on Schedule 5.5.
5.6 Due Organization and Qualification; Subsidiaries.
(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in each jurisdiction where the failure to be so qualified reasonably
could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.6(b) is a complete and accurate
description of the authorized Share capital of Borrower, by class, and a
description of the number of shares of each such class that are issued and
outstanding. Other than as described on Schedule 5.6(b), there are no
subscriptions, options, warrants or calls relating to any of Borrower's Share
capital, including any right of conversion or exchange under any outstanding
security or other instrument. Borrower is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
Shares or any security convertible into or exchangeable for any of its Shares.
(c) Except as set forth in Schedule 5.6(c), Borrower has no
Subsidiaries or other ownership interest (including the right to share in the
profits and losses) of any other Person. Set forth on Schedule 5.6(c) is a
complete and accurate list of Borrower's direct and indirect Subsidiaries and
any other person in which Borrower otherwise has an ownership interest, showing
(i) the jurisdiction of their organization, (ii) the number of shares of each
class of common and preferred Shares authorized for each of such Subsidiaries
and (iii) the number and the percentage of the outstanding Shares of each such
class owned directly or indirectly by Borrower. All of the outstanding Shares of
each such Subsidiary has been validly issued and is fully paid and
non-assessable.
5.7 Due Authorization; No Conflict.
(a) Borrower has full corporate power and authority to execute
and deliver this Agreement and each other Loan Document to which it is a party
and to perform its obligations hereunder and thereunder. The execution, delivery
and performance by Borrower of this Agreement and the other Loan Documents to
which it is a party have been duly authorized by all necessary action on the
part of Borrower.
(b) The execution, delivery and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party do not and will
not (i) violate any provision of any law or regulation applicable to Borrower,
the Governing Documents of Borrower or any order, judgment or decree of any
court or other Governmental Authority binding on Borrower or its properties or
assets, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, any material contractual
obligation of Borrower (including, without limitation, any Material Contract of
Borrower), (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of Borrower, other than
Liens granted pursuant to this Agreement or (iv) require any approval of
Borrower's interestholders or any approval or consent of any Person under any
material contractual obligation of Borrower that has not been obtained by
Borrower on or prior to the Closing Date.
(c) Other than the filing of personal property registry or other
financing statements, security notices and Mortgages, the execution, delivery
and performance by Borrower of this Agreement and the other Loan Documents to
which Borrower is a party do not and will not require any registration with,
consent or approval of, or notice to, or other action with or by, any
Governmental Authority or other Person.
(d) Borrower has duly executed and delivered this Agreement and,
on the Closing Date, each other Loan Document to which Borrower is a party and
each other document contemplated hereby and thereby to which Borrower is a party
will be duly and validly executed by Borrower. This Agreement constitutes, and
each other Loan Document to which Borrower is a party and each other document
contemplated hereby and thereby to which Borrower is a party, when executed and
delivered by Borrower will constitute, a legally valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally.
(e) On and after the Closing Date, Agent will have a validly
created, first priority perfected (except for certain real property filings)
Lien on all of the Collateral, subject only to Permitted Liens.
5.8 Litigation. Other than those matters disclosed on Schedule 5.8,
there are no actions, suits or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower except for matters that are fully covered
by insurance (subject to customary deductibles).
5.9 No Material Adverse Change. All financial statements relating to
Borrower that have been delivered by Borrower to the Lender Group have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, Borrower's financial
condition as of the date thereof and results of operations for the period then
ended. There has not been a Material Adverse Change.
5.10 Fraudulent Transfer.
(a) Borrower is Solvent.
(b) No transfer of property is being made by Borrower and no
obligation is being incurred by Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay or defraud either present or future creditors of Borrower.
5.11 Employee Benefits. Borrower does not maintain or contribute to any
Benefit Plan. Borrower has satisfied the minimum funding standards of the
Canadian Employee Benefit Laws and any other applicable law relating to employee
benefits with respect to each Benefit Plan to which it is obligated to
contribute. No event has occurred with respect to such Benefit Plan that
reasonably could be expected to result in a Material Adverse Change. Borrower is
not required to provide security to any Benefit Plan under Canadian Employee
Benefit Laws.
5.12 Environmental Condition. Except as set forth on Schedule 5.12, (a)
to Borrower's knowledge, no assets of Borrower have ever been used by Borrower
or by previous owners or operators in the disposal of, or to produce, store,
handle, treat, release or transport, any Hazardous Materials, where such
production, storage, handling, treatment, release or transportation was in
violation, in any material respect, of applicable Environmental Law, (b) to
Borrower's knowledge, no properties or assets of Borrower have ever been
designated or identified in any manner pursuant to environmental protection
statute as a Hazardous Materials disposal site, (c) Borrower has not received
notice that a Lien arising under any Environmental Law has attached to any
revenues or to any Real Property owned or operated by Borrower and (d) Borrower
has not received a summons, citation, notice or directive from any Governmental
Authority concerning any action or omission by Borrower resulting in the
releasing or disposing of Hazardous Materials into the environment.
5.13 Brokerage Fees. Other than GCF and its Affiliates, neither Abraxas
nor Borrower has utilized the services of any broker or finder in connection
with Borrower's obtaining financing from the Lender Group under this Agreement,
and, other than GCF and its Affiliates, no brokerage commission or finders' fee
is payable by Borrower in connection herewith.
5.14 Intellectual Property. Borrower owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights and licenses that
are necessary to the conduct of its business as currently conducted. Attached
hereto as Schedule 5.14 is a true, correct and complete listing of all material
patents, patent applications, trademarks, trademark applications, copyrights and
copyright registrations as to which Borrower is the owner or an exclusive
licensee.
5.15 Leases. Borrower enjoys peaceful and undisturbed possession under
all leases material to the business of Borrower and to which it is a party or
under which it is operating. All of such leases are valid and subsisting and no
material default by Borrower exists under any of them. There are no leases,
subleases, contracts or other operating agreements with respect to any Oil and
Gas Property that allocate operating expenses to Borrower in excess of Borrower
working interest of record in the particular Oil and Gas Property subject to
such lease, the sublease, contract or other operating agreement.
5.16 DDAs. Set forth on Schedule 5.16 are all of Borrower's DDAs,
including, with respect to each depository (i) the name and address of such
depository and (ii) the account numbers of the accounts maintained with such
depository.
5.17 Compliance with the Law. Borrower has not violated any law or
failed to obtain any material license, permit, franchise or other authorization
from any Governmental Authority necessary for the ownership of any of its Oil
and Gas Properties or the conduct of its business. The Oil and Gas Properties of
Borrower (and assets and properties utilized therewith) have been maintained,
operated and developed in a good and workmanlike manner and in substantial
conformity with all applicable laws and all rules, regulations and orders of all
Governmental Authorities having jurisdiction and in substantial conformity with
the provisions of all leases, subleases or other contracts comprising a part of
the Hydrocarbon Interests and other contracts and agreements forming a part of
such Oil and Gas Properties; specifically in this connection, (i) except as set
forth on Schedule 5.17, after the Closing Date, no such Oil and Gas Property is
subject to having allowable production reduced below the full and regular
allowable production (including the maximum permissible tolerance) because of
any overproduction (whether or not the same was permissible at the time) prior
to the Closing Date and (ii) none of the ▇▇▇▇▇ comprising a part of such Oil and
Gas Properties (or assets and properties utilized therewith) is deviated from
the vertical by more than the maximum permitted by applicable laws, regulations,
rules and orders of any Governmental Authority.
5.18 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrower in writing to Agent or any Lender
(including all information contained in the schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein does not, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of Borrower in writing to Agent or any Lender will not on the date as
of which such information is dated or certified contain any untrue statement of
a material fact, and does not or will not on such date, as the case may be, omit
to state any material fact necessary to make such information (taken as a whole)
not misleading in any material respect at such time in light of the
circumstances under which such information was provided. As of the date on which
any Projections are delivered to Agent, such Projections will represent
Borrower's good faith best estimate of its future performance for the periods
covered thereby.
5.19 Indebtedness. Set forth on Schedule 5.19 is a true and complete
list of all Indebtedness of Borrower which will be outstanding on the Closing
Date (after giving effect to the Loan), and Schedule 5.19 accurately reflects
the aggregate principal amount of such Indebtedness and the principal terms
thereof.
5.20 Oil and Gas Imbalances. Except as set forth on Schedule 5.20, on a
net basis there are not gas imbalances, take-or-pay oil and gas or other
prepayments with respect to the Oil and Gas Properties of Borrower which would
require Borrower either to make cash settlements for such production or deliver
Hydrocarbons produced from such Oil and Gas Properties at some future time
without then or thereafter receiving full payments therefor exceeding two
percent (2%) of the current monthly production of oil and gas from the Oil and
Gas Properties of Borrower in the aggregate.
5.21 Hedging Agreements. Schedule 5.21 sets forth a true and complete
list of all Hedging Agreements (including commodity price swap agreements,
forward agreements or contracts of sale which provide for prepayment for
deferred shipment or delivery of Hydrocarbons or other commodities) of Borrower,
the material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), all credit support agreements
relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.
5.22 Location of Real Property and Leased Premises.
(a) (i) Part A of Schedule 5.22 lists completely and correctly
all Real Property (other than Oil and Gas Properties) owned in fee by Borrower
and the respective addresses thereof, (ii) Part B of Schedule 5.22 lists
completely and correctly all Real Property (other than Oil and Gas Properties)
leased by Borrower and the respective addresses thereof and (iii) Part C of
Schedule 5.22 lists completely and correctly all Oil and Gas Properties of
Borrower with a PV-10 of at least U.S. $50,000, whether leased or owned by
Borrower, and the respective legal descriptions, addresses (if any), counties
and states thereof.
(b) Borrower has a valid leasehold interest in each of the
respective leases described on Schedule 5.22 and such schedule sets forth with
respect to each such lease, the commencement date, termination date, renewal
options (if any) and annual base rents. Each such lease is valid and enforceable
in accordance with its terms in all material respects and is in full force and
effect. No consent or approval of any landlord or other third party in
connection with any such lease is necessary for Borrower to enter into and
execute the Loan Documents to which it is a party, except as set forth on
Schedule 5.22. Borrower is not in default of its obligations under any such
lease and, to the knowledge of Borrower, no other party to any such lease is in
default of its obligations thereunder, and neither Borrower nor any other party
to any such lease has at any time delivered or received any notice of default
which remains uncured under any such lease and no event has occurred which, with
the giving of notice or the passage of time or both, would constitute a default
under any such lease.
(c) Borrower has good and defensible title to all of its Oil and
Gas Properties set forth on Schedule 5.22 which constitute Real Property, and
good and indefeasible title to all of its Oil and Gas Properties which
constitute personal property, except for (i) such imperfections of title which
do not in the aggregate materially detract from the value thereof to, or the use
thereof in, the business of Borrower and (ii) Permitted Liens. The quantum and
nature of the interest of Borrower in and to the Oil and Gas Properties as set
forth in the Initial Reserve Report includes the entire interest of Borrower in
such Oil and Gas Properties as of the date of the Initial Reserve Report and are
complete and accurate in all material respects as of the date of the Initial
Reserve Report; and there are no "back-in" or "reversionary" interests held by
third parties which could materially reduce the interest of Borrower in such Oil
and Gas Properties except as expressly set forth in the Initial Reserve Report.
The ownership of the Oil and Gas Properties by Borrower shall not in any
material respect obligate any Borrower to bear the costs and expenses relating
to the maintenance, development or operations of each such Oil and Gas Property
in an amount in excess of the working interest of record of Borrower in each Oil
and Gas Property set forth in the Initial Reserve Report.
(d) Borrower marketing, gathering, transportation, processing and
treating facilities and equipment, together with any marketing, gathering,
transportation, processing and treating contract in effect between and/or among
Borrower and any other Person, are sufficient to gather, transport, process
and/or treat reasonably anticipated volumes of production of Hydrocarbons from
the Oil and Gas Properties of Borrower.
5.23 Material Contracts. Set forth on Schedule 5.24 is a complete and
accurate list of all Material Contracts of Borrower, showing the parties and
subject matter thereof and amendments and modifications thereto. Each such
Material Contract (i) is in full force and effect and is binding upon and
enforceable against Borrower thereto and, to the knowledge of Borrower, all
other parties thereto in accordance with its terms, (ii) has not been otherwise
amended or modified and (iii) is not in default due to the action of Borrower
or, to the knowledge of Borrower, any other party thereto.
5.24 Permits, Etc. Borrower has, and is in compliance with, all
permits, licenses, authorizations, approvals, entitlements and accreditations
required for Borrower lawfully to own, lease, manage or operate, or to acquire,
each business and the Real Property currently owned, leased, managed or
operated, or to be acquired, by Borrower, except for such permits, licenses,
authorizations, approvals, entitlements and accreditations the absence of which
could not reasonably be expected to result in a Material Adverse Change. No
condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such permit, license,
authorization, approval, entitlement or accreditation, and, to Borrower's
knowledge, there is no claim that any thereof is not in full force and effect.
5.25 Employee and Labor Matters. Except as set forth on Schedule 5.26,
there is (a) no unfair labor practice complaint pending or, to Borrower's
knowledge, threatened against Borrower before any Governmental Authority and no
grievance or arbitration proceeding pending or threatened against Borrower which
arises out of or under any collective bargaining agreement, (b) no strike, labor
dispute, slowdown, stoppage or similar action or grievance pending or, to the
knowledge of Borrower, threatened against Borrower and (c) no union
representation question existing with respect to the employees of Borrower and
no union organizing activity taking place with respect to any of the employees
of any of them. The hours worked and payments made to employees of Borrower have
not been in violation of the applicable Canadian provincial employment standards
legislation or any other applicable legal requirements. All material payments
due from Borrower on account of workers compensation, wages and employee health
and welfare insurance and other benefits have been paid or accrued as a
liability on the books of Borrower.
5.26 Bonds and Insurance. Schedule 5.27 contains an accurate and
complete description of all performance bonds related to operations on or
pertaining to the Oil and Gas Properties of Borrower Parties and all material
policies of insurance owned or held by Borrower Parties. Except as set forth on
Schedule 5.27, all such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the Closing Date have
been paid, and no notice of cancellation or termination has been received with
respect to any such policy. Such bonds and policies (i) are sufficient for
compliance with all requirements of law and of all agreements to which Borrower
is a party, (ii) are valid, outstanding and enforceable policies, (iii) provide
adequate coverage in at least such amounts and against at least such risks (but
including in any event public liability) as are required by Governmental
Authorities and/or usually insured or bonded against in the same general area by
companies engaged in the same or a similar business for the assets and
operations of the Borrower Parties, (iv) will remain in full force and effect
through the respective dates set forth on Schedule 5.27 without the payment of
additional premiums except as set forth on Schedule 5.27 and (v) will not in any
way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. Borrower has not been refused any bonds or
insurance with respect to its assets or operations, nor has its coverage been
limited below usual and customary bond or policy limits, by any bonding company
or insurance carrier to which it has applied for any such bond or insurance or
with which it has carried insurance during the last three years.
5.27 Nature of Business. Borrower is not engaged in any business other
than the Oil and Gas Business within Canada.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations and the
termination of this Agreement, Borrower shall and shall cause each of its
Subsidiaries to do all of the following (unless otherwise agreed to by Agent or
the Required Lenders):
6.1 Accounting System. Maintain a system of accounting that enables it
to produce financial statements in accordance with GAAP and maintain records
pertaining to the Collateral that contain information as from time to time
reasonably may be requested by Agent. Borrower also shall keep a joint interest
billing and remittance system with respect to each of the Oil and Gas Properties
on which a Borrower Party is the operator and a reporting system that shows,
among other things, the value, revenues and profits/losses of the Oil and Gas
Properties of Borrower Parties, volume of production and value of sales of
Hydrocarbon production, the location and condition of the Equipment and the
positions and liability exposure of Borrower Parties under all Hedging
Agreements.
6.2 Collateral Reporting. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
(a) daily notices of any dispute or claim that, if adversely
determined, would, individually or in the aggregate, result in a liability to a
Borrower Party in excess of U.S. $100,000;
(b) as soon as available, but in any event within 30 days after
the end of each month, (i) a detailed aging, by total, of the Accounts,
including, among other things, lease operating expenses and royalty payments and
(ii) a summary, by vendor of each Borrower Party's accounts payable and any book
overdraft;
(c) as soon as available, but in any event within 30 days after
the end of each month, a report, in form and substance satisfactory to Agent,
setting forth on a well-by-well or unit-by-unit basis and also on an aggregated
basis (i) a statement of gross and net sales proceeds of all Hydrocarbons
produced from the Oil and Gas Properties of each Borrower Party and pricing
information (and in the aggregate only on a hedged and unhedged basis) relating
thereto, (ii) the volume and/or quantity of Hydrocarbon products sold for the
previous month, (iii) the severance, gross production, occupation and/or
gathering taxes deducted from or paid out of the proceeds payable to Borrower
Parties, (iv) the operating expenses, drilling costs and capital expenditures,
(v) the number of ▇▇▇▇▇ operated (or the numbers of pooled units), drilled or
abandoned, (vi) a statement of all funds received from the sale of Hydrocarbons
representing amounts attributable to trust fund taxes or Hydrocarbon Interests
of third parties and (vii) such other information as Agent may reasonably
request;
(d) as soon as available, but in any event within 30 days after
the end of each month, a report, in form and substance satisfactory to Agent,
setting forth, as of the last Business Day of such month, a summary of the
hedging positions of each Borrower Party under all Hedging Agreements
(including, without limitation, any contract of sale which provides for
prepayment for deferred shipment or delivery of oil, gas or other commodities),
including the type, term, effective date, termination date and notional
principal amounts or volumes, the hedged price(s), interest rate(s) or exchange
rate(s), as applicable, and any new credit support agreements relating thereto;
(e) as soon as available, but in any event not later than 75 days
after June 30th and December 31st of each year, a Reserve Report, prepared under
the supervision of the chief engineer of Borrower who shall certify such Reserve
Report to be true and accurate and to have been prepared in accordance with the
procedures used in the Initial Reserve Report, and together with each such
Reserve Report, a certificate of an Authorized Person of Borrower certifying
that, to such Authorized Person's knowledge (i) the information contained in the
Reserve Report and any other information delivered in connection therewith is
true and correct, (ii) each Borrower Party owns good and defensible title to its
Oil and Gas Properties evaluated in such Reserve Report and such Oil and Gas
Properties are free and clear of all Liens except for Permitted Liens, (iii)
except as set forth on an exhibit to the certificate, on a net basis there are
no gas imbalances, take-or-pay or other prepayments with respect to the Oil and
Gas Properties evaluated in such Reserve Report which would require any Borrower
Party to deliver Hydrocarbons produced from such Oil and Gas Properties or make
cash payments at some future time without then or thereafter receiving full
payment therefor, (iv) except as set forth on an exhibit to the certificate,
none of the Oil and Gas Properties of Borrower Parties have been sold since the
date of the Reserve Report most recently delivered pursuant to this Section
6.2(e) (or if no such Reserve Report has been so delivered, since the date of
the Initial Reserve Report), which exhibit shall list all of the Oil and Gas
Properties of Borrower Parties sold and in such detail as is reasonably required
by Agent, (v) attached as an exhibit to the certificate is a list of the Oil and
Gas Properties of Borrower Parties added to and deleted from the Reserve Report
most recently delivered pursuant to this Section 6.2(e) (or if no such Reserve
Report has been so delivered, from the Initial Reserve Report) and a list of all
Persons disbursing proceeds to a Borrower Party from its Oil and Gas Properties,
(vi) all of the Oil and Gas Properties of each Borrower Party evaluated by such
Reserve Report are subject to a Mortgage, and registered financing statements or
security notices, that in each case create a first priority perfected Lien in
such Oil and Gas Properties in favor of Agent for the benefit of the Lender
Group, subject only to Permitted Liens that arise by operation of law and are
Liens securing obligations for the payment of money not delinquent, (vii) none
of the Oil and Gas Properties evaluated by such Reserve Report are subject to
any Farmout or similar arrangement other than pursuant to a Permitted Farmout
Agreement and (viii) except as set forth on an exhibit to such certificate,
there has not been any change in the working interest or net revenue interest of
any Borrower Party in any of the Oil and Gas Properties included on such Reserve
Report;
(f) as soon as available, but in any event not later than 45 days
after the end of each quarter, a report, certified by an Authorized Person of
Borrower: (i) setting forth the total amount actually paid by each Borrower
Party during the preceding quarter for (A) plugging and abandonment costs for
previous or ongoing plugging and abandonment operations pertaining to its Oil
and Gas Properties and (B) general bond and supplemental bond payments
pertaining to plugging and abandonment costs; and (ii) estimating the future
payments for (A) and (B), above, for each of the succeeding two quarters; and
(g) upon request by Agent, such other reports as to the Oil and
Gas Properties of any Borrower Party, the other Collateral or the financial
condition of any Borrower Party.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Borrower's
fiscal years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering the operations of the
Borrower Parties during such period,
(ii) a certificate signed by the chief financial officer of
Borrower to the effect that:
(A) the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and fairly
present in all material respects the financial condition of the
Borrower Parties;
(B) the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents were true and
correct on and as of the Closing Date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such representations and warranties were true and correct
on and as of such earlier date); and
(C) there does not exist any condition or event that
constitutes a Default, Unmatured Default or Event of Default (or, to
the extent of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrower has taken,
is taking or proposes to take with respect thereto), and
(iii) for each month that is the date on which a covenant in
Section 7.20 is to be tested, a Compliance Certificate demonstrating, in
reasonable detail, compliance at the end of such period with the applicable
covenants contained in Section 7.20;
(b) as soon as available, but in any event within 90 days after the end
of each of Borrower's fiscal years,
(i) consolidated financial statements of the Borrower
Parties for each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualification (including, without limitation, (A) any going concern or like
qualification or exception or (B) any qualification as to the scope of such
audit), by such accountants to have been prepared in accordance with GAAP
(such audited financial statements to include a balance sheet, income
statement and statement of cash flow and, if prepared, such accountants'
letter to management),
(ii) a certificate of such accountants addressed to Agent
and the Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under Section 7.20;
(c) as soon as available, but in any event within 30 days prior
to the start of each of Borrower's fiscal years, copies of Borrower's
Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent, in its sole discretion, for the forthcoming
3 years, year by year, and for the forthcoming fiscal year, month by month,
certified by the chief financial officer of Borrower as being such officer's
good faith best estimate of the financial performance of Borrower during the
period covered thereby;
(d) if and when filed by Borrower,
(i) all prospectuses, material change reports, press
releases and other documents as required to be filed with any securities
commission from time to time having jurisdiction over the Borrower;
(ii) copies of Borrower's federal income tax returns, and
any amendments thereto, filed with the Canada Revenue Agency, and
(iii) any other information that is provided by Borrower to
its shareholders;
(e) if and when filed by any Borrower Party and as requested by
Agent, satisfactory evidence of payment of applicable excise taxes in each
jurisdiction in which (i) such Borrower Party conducts business or is required
to pay any such excise tax, (ii) where such Borrower Party's failure to pay any
such applicable excise tax would result in a Lien on the properties or assets of
such Borrower Party or (iii) where such Borrower Party's failure to pay any such
applicable excise tax reasonably could be expected to result in a Material
Adverse Change;
(f) promptly after sending or receipt thereof, copies of any
material notice or other correspondence sent to, or received from, any
Governmental Authority related to the Oil and Gas Properties of any Borrower
Party, including, without limitation, notice of any new plugging and abandonment
or other performance or other assurance bond requirements related to such Oil
and Gas Properties;
(g) promptly after the commencement thereof, but in any event
within five (5) days after the service of process with respect thereto on any
Borrower Party, notice of all actions, suits or proceedings brought by or
against any Borrower Party before any Governmental Authority which, if
determined adversely to such Borrower Party, could result in a Material Adverse
Change;
(h) as soon as Borrower has knowledge of any event or condition
that constitutes a Default or an Unmatured Default or Event of Default, notice
thereof and a statement of the curative action that Borrower proposes to take
with respect thereto; and
(i) upon the request of Agent, any other report reasonably
requested relating to the financial condition of any of the Borrower Parties.
In addition to the financial statements referred to above, Borrower
agrees to deliver financial statements prepared on both a consolidated and
consolidating basis and agrees that no Subsidiary of Borrower will have a fiscal
year different from that of Borrower. Borrower agrees that its independent
chartered accountants are authorized to communicate with Agent and to release to
Agent whatever financial information concerning the Borrower Parties that Agent
reasonably may request. Borrower waives the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by Agent pursuant to or in accordance
with this Agreement, and agrees that Agent may contact directly any such
accounting firm or service bureau in order to obtain such information.
6.4 Maintenance of Properties.
(a) Maintain and preserve all of its properties which are
necessary or useful in the proper conduct to its business in good working order
and condition, ordinary wear and tear excepted, and comply at all times with the
provisions of all leases to which it is a party as lessee, so as to prevent any
loss or forfeiture thereof or thereunder.
(b) Cause to be done all things necessary to preserve and keep in
good repair, working order and efficiency all the Oil and Gas Properties of each
Borrower Party and other material assets including, without limitation, all
equipment, machinery, facilities and marketing, gathering, transportation and
processing assets and, from time to time, will make all the reasonably necessary
repairs, renewals and replacements so that at all times the state and conditions
of such Oil and Gas Properties and other material assets will be fully preserved
and maintained, except to the extent a portion of such assets is no longer
capable of producing Hydrocarbons in economically reasonable amounts.
(c) Promptly (i) pay and/or discharge or cause to be paid and/or
discharged, all rentals, royalties, expenses, taxes and Indebtedness accruing
under the lease or other agreements affecting or pertaining to the Oil and Gas
Properties of each Borrower Party, (ii) perform, observe and comply, or make
reasonable and customary efforts to cause to be performed, observed and complied
with, in accordance with usual and customary industry standards, the obligations
required by each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in such Oil and Gas Properties
and the accompanying elements therefrom and other material properties so long as
such properties are capable of producing Hydrocarbons and the accompanying
elements in quantities and at prices providing for continued efficient and
profitable operations of business and (iii) do all other things necessary to
keep unimpaired, except for Permitted Liens, its rights with respect thereto and
prevent any forfeiture thereof or a default thereunder, except to the extent a
portion of such properties is no longer capable of producing Hydrocarbons in
economically reasonable amounts.
(d) Operate its Oil and Gas Properties and other material
properties or cause or make reasonable and customary efforts to cause such Oil
and Gas Properties and other material properties to be operated on a continuous
basis for the production of Hydrocarbons and in a careful and efficient manner
in accordance with the usual and customary practices of the industry and in
substantial compliance with all applicable contracts and agreements and in
compliance in all material respects with all material laws.
(e) Operate and produce, as a reasonably prudent operator, the
Oil and Gas Properties of Borrower Parties in accordance with good engineering
practices and the following requirements: (i) the amount of Hydrocarbons
produced from any well shall not exceed in any month the lower of (A) the
maximum amount that such well is capable of producing at its maximum efficient
rate of flow and (B) the respective allowable rate of flow under applicable
orders, rules, regulations or laws, if any; (ii) the amount of Hydrocarbons
produced from Borrower' Parties ▇▇▇▇▇ shall be sufficient to prevent a net
migration of Hydrocarbons from the reservoirs to which Proved Reserves are
attributed; and (iii) subject to field rules established by any Governmental
Authority having or asserting jurisdiction, the amount of Hydrocarbons produced
from Borrower' Parties ▇▇▇▇▇ shall be equitable and ratable, based on factors
used in determining such field rules.
(f) To the extent the interests in Oil and Gas Properties of a
Borrower Party (other than working interests of record) are operated by Persons
other than a Borrower Party, Borrower shall cause any owner or operator of such
Oil and Gas Properties to comply with this Section 6.4; provided, however, that
it shall not be a breach of this Section 6.4 if such owners or operators are not
in compliance with this Section 6.4 on Oil and Gas Properties of a Borrower
Party with an aggregate PV-10 for all such Oil and Gas Properties of less than
U.S. $100,000.
6.5 Taxes.
Cause all assessments, remittances, source deductions and taxes
(including, without limitation, withholding taxes), whether real, personal or
otherwise, due or payable by, or imposed, levied, or assessed against ("Tax
Payments"), any Borrower Party or any of such Borrower Party's assets to be paid
in full, before delinquency or before the expiration of any extension period,
except to the extent that the validity of such Tax Payment shall be the subject
of a Permitted Protest. Each Borrower Party will make timely payment or deposit
of all Tax Payments required of it by Applicable Laws, including those laws
concerning local, municipal, provincial and federal income taxes, and will, upon
request, furnish Agent with proof satisfactory to Agent indicating that such
Borrower Party has made such Tax Payments or deposits. Borrower shall deliver
satisfactory evidence of payment of applicable excise taxes in each jurisdiction
in which a Borrower Party is required to pay any such excise tax.
6.6 Insurance.
(a) At Borrower's expense, maintain insurance respecting its
assets wherever located, covering loss or damage by fire, theft, explosion and
all other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Borrower also shall maintain public
liability insurance, as well as insurance against larceny, embezzlement and
criminal misappropriation to the extent Borrower maintains such insurance on the
Closing Date or is otherwise required by Agent, in its reasonable discretion, to
maintain such insurance after the Closing Date to the extent the premiums
related thereto are not at levels commercially unreasonable. All such policies
of insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Borrower shall deliver copies of all such
policies to Agent with a satisfactory lender's loss payable endorsement naming
Agent as first loss payee. Each policy of insurance or endorsement shall contain
a Section requiring the insurer to give not less than 30 days' prior written
notice to Agent in the event of cancellation of the policy for any reason
whatsoever. During the period of the drilling of ▇▇▇▇▇ and the construction of
any other improvements comprising a part of the Oil and Gas Properties of any
Borrower Party, Borrower shall, or, as applicable, shall cause its contractors
or subcontractors to, obtain and maintain well control insurance (including
coverage for costs and redrilling) and builder's risk insurance, as applicable,
in such form and amounts as is customary in the industry and worker's
compensation insurance covering all Persons employed by any Borrower Party or
its agents or subcontractors of any tier in connection with any construction
affecting such Oil and Gas Properties, including, without limitation, all agents
and employees of any Borrower Party and such Borrower Party's subcontractors
with respect to whom death or bodily injury claims could be asserted against any
Borrower Party.
(b) Borrower shall give Agent prompt notice of any loss covered
by such insurance. So long as no Event of Default has occurred and is
continuing, Borrower shall have the right to adjust losses of up to U.S.
$100,000 in the aggregate. If an Event of Default shall have occurred and is
continuing, Agent shall have the exclusive right to adjust any losses payable
under any such insurance policies, and in any event shall have the exclusive
right to adjust all losses in excess of U.S. $100,000 in the aggregate without
any liability to any Borrower Party whatsoever in respect of such adjustments
absent Agent's gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction. Any monies received as payment for any loss
under any insurance policy mentioned above (other than liability insurance
policies) or as payment of any award or compensation for condemnation or taking
by eminent domain, (i) in an amount not to exceed U.S. $600,000 per year and
U.S. $1,800,000 in the aggregate over the term of this Agreement, shall, so long
as no Default or Event of Default has occurred and is continuing, be paid to
Borrower for repair, replacement or restoration of the assets to which the loss
relates and (ii) relating to other properties or in excess of such amounts,
shall be paid over to Agent to be applied at the option of the Required Lenders
either to the prepayment of the Obligations or shall be disbursed to Borrower
under staged payment terms reasonably satisfactory to the Required Lenders for
application to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items of
property destroyed prior to such damage or destruction.
(c) No Borrower Party will take out separate insurance concurrent
in form or contributing in the event of loss with that required to be maintained
under this Section 6.6, unless Agent is included thereon as named insured with
the loss payable to the Agent under a lender's loss payable endorsement or its
equivalent. Borrower immediately shall notify Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Agent.
6.7 Location of Inventory and Equipment. Keep the Equipment only at the
locations identified on Schedule 5.3 and 5.22; provided, however, that Borrower
may amend Schedule 5.3 so long as such amendment occurs by written notice to
Agent not less than 30 days prior to the date on which Equipment is moved to
such new location, so long as such new location is within Canada, and so long
as, at the time of such written notification, Borrower provides any personal
property registry or other financing statements or fixture filings necessary to
perfect and continue perfected Agent's Liens on such assets and also provides to
Agent a Collateral Access Agreement.
6.8 Compliance with Laws. Comply with the requirements of all
Applicable Laws, rules, regulations and orders of any Governmental Authority,
and other than laws, rules, regulations and orders the non-compliance with
which, individually or in the aggregate, would not result in and reasonably
could not be expected to result in a Material Adverse Change.
6.9 Leases. Pay when due all rents and other amounts payable under any
lease to which any Borrower Party is a party or by which any of the properties
and assets of a Borrower Party are bound, unless such payments are the subject
of a Permitted Protest.
6.10 Brokerage Commissions. Pay any and all brokerage commission or
finders' fees incurred in connection with or as a result of Borrower's obtaining
financing from the Lender Group under this Agreement. Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders' fees
shall be the sole responsibility of Borrower, and Borrower agrees to indemnify,
defend and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrower's obtaining financing from the
Lender Group under this Agreement.
6.11 Existence. At all times preserve and keep in full force and effect
each Borrower Party's valid existence and good standing and any rights and
franchises material to each Borrower Party's businesses.
6.12 Environmental. (a) Keep any property either owned or operated by
any Borrower Party free of any Environmental Liens or post bonds or other
financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in a quantity which is in violation of any Environmental Law
from or onto property owned or operated by any Borrower Party and take any
Remedial Actions required to ▇▇▇▇▇ said release or otherwise to come into
compliance with applicable Environmental Law and (d) promptly provide Agent with
written notice within 10 days of the receipt of any of the following: (i) notice
that an Environmental Lien has been filed against any of the real or personal
property of any Borrower Party, (ii) commencement of any Environmental Action or
notice that an Environmental Action will be filed against any Borrower Party and
(iii) notice of a violation, citation, or other administrative order which
reasonably could be expected to result in a Material Adverse Change.
6.13 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing or recordation thereof.
6.14 After Acquired Properties. With respect to any Oil and Gas
Property of Borrower with a PV-10 of at least U.S. $50,000 acquired after the
Closing Date by Borrower or any discovery and/or confirmation of the existence
of Hydrocarbons in any property owned or leased by Borrower, promptly (and in
any event within 30 days after the acquisition thereof): execute and deliver to
Agent such amendments to the Mortgages or such other documents as Agent shall
deem necessary or advisable to grant to Agent, for the benefit of the Lender
Group, a perfected first priority Lien on such Oil and Gas Property; take all
actions necessary or advisable to cause such Lien to be duly perfected in
accordance with all applicable law, including, without limitation, the filing of
Mortgages or personal property registry or other financing statements in such
jurisdictions as may be requested by Agent; and (C) deliver to Agent title
opinions and/or legal opinions relating to the matters described in Sections (A)
and (B) immediately preceding, which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to Agent.
6.15 Protection Against Drainage. To the extent that the Oil and Gas
Properties of any Borrower Party (i) are operated by a Borrower Party, Borrower
Parties shall act as a reasonably prudent operator in an effort to identify and
prevent the occurrence of any drainage of Hydrocarbons from such Oil and Gas
Properties and (ii) are not operated by a Borrower Party, Borrower Parties shall
utilize their property and contractual rights as a reasonably prudent owner in
an effort to identify and prevent the occurrence of any drainage of Hydrocarbons
from such Oil and Gas Properties.
6.16 Additional Collateral Reviews. Borrower shall, from time to time
upon the reasonable request of Agent, take such actions and execute and deliver
such documents and instruments as Agent, as applicable, shall require to ensure
that Agent shall, at all times, have received satisfactory title reviews
(including, if requested, supplemental or new title opinions addressed to it),
which title opinions shall be in form and substance acceptable to Agent in their
sole discretions and shall include opinions regarding the before payout and
after payout ownership interests held by Borrower, for all ▇▇▇▇▇ located on the
Oil and Gas Properties covered thereby as to the ownership of Oil and Gas
Properties of Borrower.
6.17 Hedging Agreements. Commencing two weeks after the Closing Date,
maintain in effect one or more Commodities Hedging Agreements with respect to
its Hydrocarbon production with one or more counterparties rated investment
grade by ▇▇▇▇▇'▇ and Standard & Poor's, or the equivalent by a rating agency
acceptable to Agent or with a counterparty otherwise reasonably acceptable to
Agent. The aggregate notional volumes of Hydrocarbons covered by such
Commodities Hedging Agreements shall constitute not less than 25% and not more
than 75% of the Borrower's Parties' aggregate estimated Hydrocarbon production
volumes on an mcf equivalent basis (where one barrel of oil is equal to six mcf
of gas) for the succeeding six calendar months on a rolling six calendar month
basis for such period from Oil and Gas Properties classified as Proved Developed
Producing Reserves as of the date of the most recent Reserve Report delivered
pursuant to Section 6.2(e) plus the estimated production from anticipated
drilling by Borrower Parties during such succeeding six months. Borrower shall
use such Commodities Hedging Agreements solely as a part of its normal business
operations as a risk management strategy and/or hedge against changes resulting
from market conditions related to the oil and gas operations of Borrower Parties
and not as a means to speculate for investment purposes on trends and shifts in
financial or commodities markets.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations and the
termination of this Agreement, Borrower will not and will not permit any of its
Subsidiaries to do any of the following (unless otherwise agreed to by Agent or
the Required Lenders):
7.1 Indebtedness. Create, incur, assume, permit, guarantee or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents,
(b) Indebtedness set forth on Schedule 5.19;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as (i) the terms
and conditions of such refinancings, renewals or extensions do not, in Agent's
judgment, materially impair the prospects of repayment of the Obligations by
Borrower or materially impair Borrower's creditworthiness, (ii) such
refinancings, renewals or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed or extended, (iii) such refinancings, renewals or extensions
do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed or extended, nor are they on terms or
conditions that, taken as a whole, are materially more burdensome or restrictive
to Borrower, (iv) if the Indebtedness that is refinanced, renewed or extended
was subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal or extension Indebtedness must include
subordination terms and conditions that are at least as favorable to the Lender
Group as those that were applicable to the refinanced, renewed or extended
Indebtedness and (v) if the Permitted Liens securing the Indebtedness that is
refinanced, renewed or extended was subordinated to the Liens of Agent securing
the Obligations, then the terms and conditions of such refinancing, renewal or
extension shall include subordination terms and conditions that are at least as
favorable to the Lender Group as those that were applicable to the Indebtedness
being refinanced, renewed or extended;
(e) Indebtedness under Hedging Agreements incurred in the
ordinary course of business of Borrower consistent with prudent business
practice and not for speculative purposes and in accordance with this Agreement;
(f) Indebtedness associated with bonds or surety obligations
required by applicable law in connection with the operation of the Oil and Gas
Properties of Borrower;
(g) unsecured Indebtedness of the Borrower to Abraxas in an
amount not to exceed at any time, U.S.$1,000,000;
(h) Indebtedness arising from the honoring by a bank or other
financial institution of a cheque, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, however, that the aggregate amount of
such Indebtedness is extinguished within two (2) Business Days of incurrence and
does not at any time exceed U.S. $50,000 in the aggregate (or such longer period
or greater amount which may be agreed to by Agent);
(i) Indebtedness of Borrower or any of its Subsidiaries
represented by letters of credit for the account of Borrower or any of its
Subsidiaries, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance or
similar requirements in the ordinary course of business, to the extent such
letters of credit are unsecured and subordinated, in form and substance
satisfactory to Agent, to the Obligations; and
(j) other unsecured Indebtedness of Borrower or any of its
Subsidiaries in an aggregate principal amount at any time outstanding not to
exceed U.S. $100,000 (or such greater amount which may be agreed to by Agent).
7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization or
recapitalization or reclassification of its Shares.
(b) Liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
(d) Create or acquire any new Subsidiary.
7.4 Disposal of Assets. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer or otherwise dispose of any of Borrower's
or any of its Subsidiaries' assets, including, without limitation, sell, lease,
license, assign, Farmout, convey or otherwise transfer any Oil and Gas Property
or any interest in any Oil and Gas Property.
7.5 Change Name. Change Borrower's or any of its Subsidiaries' name,
province of incorporation, corporate structure or identity or add any new
fictitious name; provided, however, that a Borrower Party may change its name
upon at least 30 days' prior written notice to Agent of such change and so long
as, at the time of such written notification, Borrower provides any personal
property registry or other financing statements, filings or Mortgages necessary
to perfect and continue perfected the Liens of Agent in the Collateral.
7.6 Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Agent.
7.7 Nature of Business. Make any change in the principal nature or
location of its business as described in Section 5.27.
7.8 Payments, Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section
7.1(d), or prior to a Default, Unmatured Default or Event of Default has
occurred and is continuing, with respect to Indebtedness permitted by Section
7.1(g) or with respect to scheduled payments of principal and interest on any
other Indebtedness permitted hereunder; prepay, redeem, defease, purchase or
otherwise acquire any Indebtedness of Borrower or any of its Subsidiaries, other
than the Obligations in accordance with this Agreement.
(b) Except in connection with a refinancing permitted by Section
7.1(d), directly or indirectly, amend, modify, alter, increase or change any of
the terms or conditions of any agreement, instrument, document, indenture or
other writing evidencing or concerning Indebtedness permitted under Sections
7.1(b) and (c).
(c) (i) Except to remove private company restrictions or to
implement a stock split, amend, modify or otherwise change its or its
Subsidiaries' Governing Documents, including, without limitation, by the filing
or modification of any certificate of designation, or any agreement or
arrangement entered into by it with respect to any of its Shares (including any
shareholders' agreement), or enter into any new agreement with respect to any of
its Shares, or (ii) amend, modify or otherwise change any Material Contract,
except any such amendments, modifications or changes or any such new agreements
or arrangements pursuant to this paragraph (c) that, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Change.
7.9 Change of Control. Except upon an issuance of Capital Stock where
the proceeds are in accordance with Section 7.24, used to prepay all obligations
outstanding hereunder, cause, permit or suffer, directly or indirectly, any
Change of Control.
7.10 Forward Sales. Except in accordance with the ordinary course of
the Oil and Gas Business, and except for Permitted Dispositions, enter into or
permit to exist any advance payment agreement or other arrangement pursuant to
which any Borrower Party, having received full or substantial payment of the
purchase price for a specified quantity of Hydrocarbons upon entering such
agreement or arrangement, is required to deliver, in one or more installments
subsequent to the date of such agreement or arrangement, such quantity of
Hydrocarbons pursuant to and during the terms of such agreement or arrangement.
7.11 Distributions. Except for the proceeds of the Loan, make any
distribution or declare or pay any dividends (in cash or other property, other
than Shares) on, or purchase, acquire, redeem or retire any of Borrower's
Shares, of any class, whether now or hereafter outstanding.
7.12 Accounting Methods. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify or
terminate any agreement currently existing, or at any time hereafter entered
into, with any third party accounting firm or service bureau for the preparation
or storage of any Borrower Party's accounting records without said accounting
firm or service bureau agreeing to provide Agent information regarding the
Collateral or any Borrower Party's financial condition.
7.13 Investments. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment.
7.14 Transactions with Affiliates. Other than with respect to the
transactions contemplated by the agreement identified in Part B of Schedule
5.24, directly or indirectly enter into or permit to exist any transaction with
any Affiliate of Borrower except for transactions that are (i) in the ordinary
course of Borrower's business, (ii) upon fair and reasonable terms, (iii) fully
disclosed to Agent and (iv) no less favorable to Borrower than would be obtained
in an arm's length transaction with a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
7.16 Compensation. Increase the annual fee or per-meeting fees paid to
any member of its Board of Directors during any year by more than 20% (or such
greater amount which may be agreed to by Agent) over the prior year; pay or
accrue total cash compensation, during any year, to its officers and senior
management employees in an aggregate amount in excess of 120% (or such greater
amount which may be agreed to by Agent) of that paid or accrued in the prior
year.
7.17 Use of Proceeds. Use the proceeds of the Advances for any purpose
other than (i) as specified in Section 2.1(b) and (ii) to pay transactional
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
7.18 Change in Location of Chief Executive Office; Equipment with
Bailees. Relocate its chief executive office to a new location without providing
30 days' prior written notification thereof to Agent and so long as, at the time
of such written notification, each Loan Party provides any personal property
registry or other financing statement or fixture filing necessary to perfect and
continue perfected the Liens of Agent in the Collateral and also provides to
Agent a Collateral Access Agreement with respect to such new location. The
Equipment shall not at any time now or hereafter be stored with a bailee,
warehouseman or similar party without Agent's prior written consent.
7.19 Securities Accounts. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Accounts; provided, that Borrower may maintain a Securities Account
not subject to a Control Agreement if (x) the only asset in such account is the
common Shares of Borrower which Shares are subject to a prospectus filed with
the applicable securities commission and which class is publicly traded on a
national securities exchange in the United States or Canada and (y) Shares held
in all such accounts will be limited to Shares held in such accounts on the
Closing Date and proceeds thereof. Borrower shall not transfer assets out of any
Securities Account; provided, however, that, so long as no Event of Default has
occurred and is continuing or would result therefrom, Borrower may use such
assets (and the proceeds thereof) to the extent not prohibited by this Agreement
or any Collateral Document.
7.20 Financial Covenants.
Net Cash Interest Coverage Ratio. Permit the Net Cash Interest Coverage
Ratio of Borrower to be less than the amount set forth in the following table
for the applicable period set forth opposite thereto:
Applicable Period Cash Interest Coverage Ratio
For the 4 fiscal quarters ending at the end
of each fiscal quarter 1.25 to 1.00
7.21 Oil and Gas Imbalances. Enter into any contracts or agreements
which warrant production of Hydrocarbons (other than Hedging Agreements
otherwise permitted hereunder) and will not hereafter allow gas imbalances,
take-or-pay or other prepayments with respect to its Oil and Gas Properties
which would require any Borrower Party to deliver Hydrocarbons produced on Oil
and Gas Properties at some future time without then or thereafter receiving full
payment therefor to exceed, during any monthly period two percent (2%) of the
current aggregate monthly gas production for such monthly period from the Oil
and Gas Properties of any Borrower Party.
7.22 Environmental. Permit the use, handling, generation, storage,
treatment, Release or disposal of Hazardous Materials at any Real Property
owned, operated or leased by any Borrower Party, except in compliance in all
material respects with Environmental Laws.
7.23 Limitation on Leases. Create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Oil and Gas Properties of any kind
whatsoever (real or personal, including capital leases but excluding leases of
Hydrocarbon Interests and leases directly related to oil and gas field
operations), under leases or lease agreements which would cause the aggregate
amount of all payments made by such Person pursuant to such leases or lease
agreements to exceed U.S. $450,000 (or such greater amount agreed to by Agent),
in any period of twelve (12) consecutive calendar months in the aggregate.
7.24 Issuance of Capital Stock.
(a) Borrower agrees that for so long as any Obligation remains
outstanding, Borrower shall not enter into any arrangement or to consummate any
transaction pursuant to which any shares of Capital Stock of Borrower will be
issued (other than issuances of stock options and common stock pursuant to stock
option exercises by employees, officers and directors of Borrower and issuance
of shares of common stock to employees, officers and directors of Borrower in
the ordinary course of business), whether in a public or private transaction and
whether as an initial or follow-on issuance, unless such issuance is of
Qualified Stock and all of the net proceeds from such issuance are first applied
to satisfy any Obligations then outstanding.
(b) Borrower agrees that it will not enter into any contract,
instrument, agreement or other arrangement which conflicts with, or otherwise
restricts, the obligations of Borrower under this Section 7.24.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (other than any event described in Sections 8.2 or 8.11, which shall
constitute an event of default upon notice to Borrower by Agent of any such
event) (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable, or when declared due
and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Codes, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses or other amounts constituting
Obligations);
8.2 (i) If Borrower fails to perform, keep or observe any term,
provision, condition, covenant or agreement contained in Sections 6.1, 6.4, 6.5,
6.8 and 6.15 of this Agreement, or comparable provisions of the other Loan
Documents, and such failure continues for 15 days, (ii) if Borrower fails to
perform, keep, or observe any term, provision, condition, covenant or agreement
contained in Sections 6.2, 6.3, 6.7 and 6.9 of this Agreement, or comparable
provisions of the other Loan Documents, and such failure continues for 5 days or
(iii) if Borrower otherwise fails to perform, keep or observe any other term,
provision, condition, covenant or agreement contained in this Agreement or in
any of the other Loan Documents;
8.3 If any material portion of a Borrower Party's assets is attached,
seized, subjected to a writ or distress warrant, levied upon or comes into the
possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by a Borrower Party;
8.5 If an Insolvency Proceeding is commenced against a Borrower Party
and any of the following events occur: (a) such Borrower Party consents to the
institution of such Insolvency Proceeding against it, (b) the petition
commencing the Insolvency Proceeding is not timely controverted, (c) the
petition commencing the Insolvency Proceeding is not dismissed within 45
calendar days of the date of the filing thereof; provided, however, that, during
the pendency of such period, Agent (including any successor agent) and each
other member of the Lender Group shall be relieved of their obligations (if any)
to extend credit hereunder, (d) an interim trustee is appointed to take
possession of all or any substantial portion of the properties or assets of, or
to operate all or any substantial portion of the business of, a Borrower Party
or (e) an order for relief shall have been entered therein;
8.6 If a Borrower Party is enjoined, restrained or in any way prevented
by court order from continuing to conduct all or any material part of its
business affairs;
8.7 If a notice of Lien, levy or assessment is filed of record with
respect to (a) any of Borrower's assets (other than their Proved Developed
Producing Reserves) in an amount or with respect to assets in excess of U.S.
$100,000, or (b) any of Borrower Party's Proved Developed Producing Reserves, by
the Province of Alberta or any department, agency or instrumentality thereof, or
by any state, county, municipal or governmental agency , or if any taxes or
debts owing at any time hereafter to any one or more of such entities becomes a
Lien, whether ▇▇▇▇▇▇ or otherwise, upon (x) any of a Borrower Party's assets
(other than their Proved Developed Producing Reserves), in an amount or with
respect to assets in excess of U.S. $100,000 or (y) any of a Borrower Party's
Proved Developed Producing Reserves, and the same is not paid before such
payment is delinquent;
8.8 If a judgment or other claim in excess of U.S. $100,000 (to the
extent not bonded or insured by a bonding or insurance company acceptable to
Agent) in the aggregate becomes a Lien or encumbrance upon any material portion
of a Borrower Party's assets;
8.9 If there is a continuing default under any material agreement to
which a Borrower Party is a party and such default (a) occurs at the final
maturity of the obligations thereunder or (b) results in a right by the other
party thereto, irrespective of whether exercised, to accelerate the maturity of
the obligations of a Borrower Party thereunder, to terminate such agreement, or
to refuse to renew such agreement pursuant to an automatic renewal right
therein;
8.10 If Borrower makes any payment on account of Indebtedness that has
been contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness and except as permitted
under Section 7.8;
8.11 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement or Record made to any
member of the Lender Group by Borrower or any officer, employee, agent or
director of a Borrower Party;
8.12 If there is a loss, suspension or revocation of, or failure to
renew, any license or permit now held or hereafter acquired by a Borrower Party
and such loss, suspension, revocation or failure to renew could reasonably be
expected to have a Material Adverse Change;
8.13 If this Agreement, any Collateral Document or any other agreement,
instrument or document that purports to create a Lien in favor of Agent, for the
benefit of the Lender Group, shall for any reason, fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral covered
hereby or thereby; or
8.14 Any provision of any Loan Document shall at any time for any
reason be declared by a court of competent jurisdiction to be null and void or
invalid or unenforceable, or the validity or enforceability thereof shall be
contested in a proceeding by Borrower, or a proceeding shall be commenced by
Borrower, or by any Governmental Authority having jurisdiction over Borrower,
seeking to establish the invalidity or unenforceability thereof, or Borrower
shall deny that it has any liability or obligation purported to be created under
any Loan Document.
8.15 If any Borrower Party fails to perform, keep, or observe any term,
provision, condition, covenant or agreement contained in clause (h) of Section
6.3.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the
continuation, of an Unmatured Default or Event of Default, the Required Lenders
(at their election but without notice of their election and without demand) may
authorize and instruct Agent to do any one or more of the following on behalf of
the Lender Group (and Agent, acting upon the instructions of the Required
Lenders, shall do the same on behalf of the Lender Group), all of which are
authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the Loan Documents or
under any other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of the Lender Group, but without
affecting any of the Liens of Agent in the Collateral and without affecting the
Obligations;
(d) Exercise any of its remedies under the Debenture;
(e) Without notice to Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation, set off and apply to the Obligations any and all (i) balances
and deposits of Borrower held by the Lender Group or (ii) Indebtedness at any
time owing to or for the credit or the account of Borrower held by the Lender
Group;
(f) Hold, as cash collateral, any and all balances and deposits
of Borrower held by the Lender Group, to secure the full and final repayment of
all of the Obligations and apply, to the extent permitted by applicable law,
such cash collateral to repay the Obligations;
(g) Without limitation or exclusion to any other rights granted
hereunder, Agent and the Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document.
9.2 Remedies Cumulative. The rights and remedies of Agent and the
Lender Group under this Agreement, the other Loan Documents and all other
agreements shall be cumulative. Agent and the Lender Group shall have all other
rights and remedies not inconsistent with this Agreement as provided, by law or
in equity. No exercise by Agent or the Lender Group of one right or remedy shall
be deemed an election, and no waiver by Agent or the Lender Group of any Event
of Default shall be deemed a continuing waiver. No delay by Agent or the Lender
Group shall constitute a waiver, election or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments,
remittances, source deductions, insurance premiums or, in the case of leased
properties or assets, rents or other amounts payable under such leases) due to
third Persons, or fails to make any deposits or furnish any required proof of
payment or deposit, all as required under the terms of this Agreement, then,
Agent, in its sole discretion and without prior notice to Borrower, may do any
or all of the following: (a) make payment of the same or any part thereof, (b)
set up such reserves in Borrower's Loan Account as Agent deems necessary to
protect the Lender Group from the exposure created by such failure or (c) in the
case of the failure to comply with Section 6.6 hereof, obtain and maintain
insurance policies of the type described in Section 6.6 and take any action with
respect to such policies as Agent deems prudent. Any such amounts paid by Agent
shall constitute Lender Group Expenses and any such payments shall not
constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Unmatured Default or Event of
Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax or Lien and the receipt of the usual official
notice for the payment thereof shall be conclusive evidence that the same was
validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by
Agent or the Lender Group on which Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Borrower hereby
agrees that the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency or other Person and (b) all risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.
11.3 Indemnification. Borrower shall pay, indemnify, defend and hold
Agent-Related Persons, the Lender-Related Persons with respect to each Lender,
each Participant (subject to Section 14.1(e)(v)), and each of their respective
officers, directors, employees, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable lawyers fees (on a solicitor and
their own client basis) and disbursements and other costs and expenses actually
incurred in connection therewith (as and when they are incurred and irrespective
of whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, amendment, waiver or
administration of this Agreement, any of the other Loan Document or the
transactions contemplated hereby or thereby and (b) with respect to any
investigation, litigation or proceeding related to this Agreement, any other
Loan Document or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the
contrary notwithstanding, Borrower shall have no obligation to any Indemnified
Person under this Section 11.3 with respect to any Indemnified Liability that a
court of competent jurisdiction finally determines to have resulted from the
gross negligence or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and the repayment of
the Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which Borrower
was required to indemnify the Indemnified Person receiving such payment, the
Indemnified Person making such payment is entitled to be indemnified and
reimbursed by Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT
ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
11.4 Annual Rates of Interest. For the purposes of the Interest Act
(Canada), whenever interest payable pursuant to this Agreement is calculated on
the basis of a period other than a calendar year (the "Interest Period"), each
rate of interest determined pursuant to such calculation expressed as an annual
rate is equivalent to such rate as so determined multiplied by the actual number
of days in the calendar year in which the same is to be ascertained and divided
by the number of days in the Interest Period.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices, demands or
service of documents by Borrower or Agent to the other relating to this
Agreement, any other Loan Document and any action or proceeding related thereto
shall be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, electronic mail (at such email
addresses as Borrower or Agent, as applicable, may designate to each other in
accordance herewith), or telefacsimile to Borrower or Agent, as the case may be,
at its address set forth below:
If to Borrower: GREY WOLF EXPLORATION INC.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: OSLER, ▇▇▇▇▇▇ & HARCOURT LLP
Suite 1900, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent: GUGGENHEIM CORPORATE FUNDING, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Managing Director - Abraxas
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Agent and Borrower may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12
shall be deemed given when received.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE PROVINCE OF ALBERTA WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
(b) EACH OF THE PARTIES HEREBY AGREES THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST BORROWER WITH RESPECT TO THIS AGREEMENT, OR ANY OF THE LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE PROVINCE OF ALBERTA OR IN THE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK
AND EACH PARTY SUBMITS AND ATTORNS TO, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS.
(c) EACH PARTY WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR
PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER GROUP TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE LENDER GROUP
TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY JURISDICTION.
(d) BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
13.2 Waiver of Judgment Interest Act (Alberta). To the extent permitted
by applicable Law, the provisions of the Judgment Interest Act (Alberta) will
not apply to the Loan Documents and are hereby expressly waived by Borrower.
13.3 Deemed Reinvestment Not Applicable. For the purposes of the
Interest Act (Canada), the principle of deemed reinvestment of interest will not
apply to any interest calculation under the Loan Documents, and the rates of
interest stipulated in this Agreement are intended to be nominal rates and not
effective rates or yields.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
(a) Any Lender may, with the written consent of Agent (provided
that no written consent of Agent shall be required in connection with any
assignment and delegation by a Lender to an Eligible Transferee), assign and
delegate to one or more assignees (each an "Assignee") all, or any part of all,
of the Obligations, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of U.S.
$1,000,000 (except such minimum amount shall not apply to any Affiliate of a
Lender or to a Related Fund or account managed by a Lender); provided, however,
that Borrower and Agent may continue to deal solely and directly with such
Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions,
addresses, and related information with respect to the Assignee, have been given
to Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Borrower and Agent a fully executed Assignment and
Acceptance, and (iii) the assignor Lender or Assignee has paid to Agent for
Agent's separate account a processing fee in the amount of U.S. $5,000. Anything
contained herein to the contrary notwithstanding, the consent of Agent shall not
be required (and payment of any fees shall not be required) if (x) such
assignment is in connection with any merger, consolidation, sale, transfer or
other disposition of all or any substantial portion of the business or loan
portfolio of such Lender or (y) the assignee is an Affiliate of a Lender or a
Related Fund.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Borrower) that it has received a fully executed
Assignment and Acceptance and payment (if applicable) of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 11.3 hereof) and be released from its
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall affect
a novation between Borrower and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, 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 or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto, (3)
such Assignee confirms that it has received a copy of this Agreement, together
with 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, (4) such Assignee will, independently and without reliance upon
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, (5)
such Assignee appoints and authorizes Agent to take such actions and to exercise
such powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgement by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations owing to such Lender, the Commitment of such Lender, and the
other rights and interests of that Lender (the "Originating Lender") hereunder
and under the other Loan Documents (provided that no written consent of Agent
shall be required in connection with any sale of any such participating
interests by a Lender to an Eligible Transferee); provided, however, that (i)
the Originating Lender shall remain a "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations, the Commitments, and the other rights
and interests of the Originating Lender hereunder shall not constitute a
"Lender" hereunder or under the other Loan Documents and the Originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
Originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrower, Agent, and Lenders shall continue to deal solely
and directly with the Originating Lender in connection with the Originating
Lender's rights and obligations under this Agreement and the other Loan
Documents, (iv) no originating Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or
substantially all of the Collateral (except to the extent expressly provided
herein or in any of the Loan Documents) supporting the Obligations hereunder in
which such Participant is participating, (D) postpone the payment of, or reduce
the amount of, the interest or fees payable to such Participant, (E) change the
amount or due dates of scheduled principal repayments or prepayments or premiums
in respect of the Obligations hereunder in which such Participant is
participating or (F) subordinate the Liens of Agent to the Liens of any other
creditor of Borrower, and all amounts payable by Borrower hereunder shall be
determined as if such Lender had not sold such participation, except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an
Unmatured Default or Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement. The rights
of any Participant only shall be derivative through the Originating Lender with
whom such Participant participates and no Participant shall have any rights
under this Agreement or the other Loan Documents or any direct rights as to the
other Lenders, Agent, Borrower, the Collections or the Collateral or otherwise
in respect of the Obligations. No Participant shall have the right to
participate directly in the making of decisions by Lenders among themselves. The
provisions of this Section 14.1(e) are solely for the benefit of the Lender
Group, and Borrower shall not have any rights as a third party beneficiary of
such provisions.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose to a third party all
documents and information which it now or hereafter may have relating to
Borrower or Borrower's business.
(g) Any other provision in this Agreement notwithstanding, any
Lender residing in the United States may at any time create a security interest
in, or pledge, all or any portion of its rights under and interest in this
Agreement in favor of any Federal Reserve Bank in accordance with Regulation A
of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR ss. 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
(h) Borrower shall maintain, or cause to be maintained, a
register (the "Register") on which it enters the name of a Lender as the
registered owner of each Advance held by such Lender. A Registered Loan (and the
Registered Note, if any, evidencing the same) may be assigned or sold in whole
or in part only by registration of such assignment or sale on the Register (and
each Registered Note shall expressly so provide). Any assignment or sale of all
or part of such Registered Loan (and the Registered Note, if any, evidencing the
same) may be effected only by registration of such assignment or sale on the
Register, together with the surrender of the Registered Note, if any, evidencing
the same duly endorsed by (or accompanied by a written instrument of assignment
or sale duly executed by) the holder of such Registered Note, whereupon, at the
request of the designated assignee(s) or transferee(s), one or more new
Registered Notes in the same aggregate principal amount shall be issued to the
designated assignee(s) or transferee(s). Prior to the registration of assignment
or sale of any Registered Loan (and the Registered Note, if any evidencing the
same), Borrower shall treat the Person in whose name such Registered Loan (and
the Registered Note, if any, evidencing the same) is registered as the owner
thereof for the purpose of receiving all payments thereon and for all other
purposes, notwithstanding notice to the contrary. In the case of an assignment
or delegation covered by Section 14.1(a)(y), the assigning Lender shall maintain
a comparable Register on behalf of Borrower.
(i) In the event that a Lender sells participations in the
Registered Loan, such Lender shall maintain a register on which it enters the
name of all participants in the Registered Loans held by it (the "Participant
Register"). A Registered Loan (and the Registered Note, if any, evidencing the
same) may be participated in whole or in part only by registration of such
participation on the Participant Register (and each Registered Note shall
expressly so provide). Any participation of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected only by the
registration of such participation on the Participant Register.
14.2 Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties hereto; provided,
however, that Borrower may not assign this Agreement or any rights or duties
hereunder without Lenders' prior written consent and any prohibited assignment
shall be absolutely void ab initio. No consent to assignment by Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment or consent shall,
unless in writing and signed (or otherwise authorized) by all of the Lenders
affected thereby and Borrower, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan
or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to
take any action hereunder,
(e) amend, modify or waive this Section 15 or any provision of
the Agreement providing for consent or other action by all Lenders,
(f) [Intentionally omitted],
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) [Intentionally omitted],
(i) release Borrower from any obligation for the payment of
money,
(j) change, modify or waive the definition of "PV-10", "Related
Indebtedness" or "Proved Developed Reserves Amount", or
(k) amend, modify or waive any of the provisions of Sections
2.3(b), 3.4 or 16 (or change any definition of a term used in such Section in a
manner adverse to any such Lender),
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, affect the rights or duties of Agent, as
applicable, under this Agreement or any other Loan Document. The foregoing
notwithstanding, any amendment, modification, waiver, consent, termination or
release of, or with respect to, any provision of this Agreement or any other
Loan Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of Borrower,
shall not, subject to Section 14.1(a), require consent by or the agreement of
Borrower.
15.2 Replacement of Holdout Lender.
(a) If any action to be taken by the Lender Group, Agent
hereunder or under any other Loan Document requires the unanimous consent,
authorization or agreement of all Lenders, and a Lender ("Holdout Lender") fails
to give its consent, authorization or agreement, then Agent, upon at least 5
Business Days' prior irrevocable notice to the Holdout Lender, may permanently
replace the Holdout Lender with one or more substitute Lenders (each, a
"Replacement Lender"), and the Holdout Lender shall have no right to refuse to
be replaced hereunder. Such notice to replace the Holdout Lender shall specify
an effective date for such replacement, which date shall not be later than 15
Business Days after the date such notice is given.
(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments and the other rights and obligations of the Holdout Lender hereunder
and under the other Loan Documents, the Holdout Lender shall remain obligated to
make the Holdout Lender's Pro Rata Share of Advances (if any).
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender
to exercise any right, remedy or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement or any other Loan Document. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.
16. AGENT; LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby
designates and appoints GCF as its representative under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
Except as otherwise specifically provided in Section 16.17, the provisions of
this Section 16 are solely for the benefit of Agent and Lenders, and Borrower
shall have no rights as a third party beneficiary of any of the provisions
contained herein. Any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document notwithstanding, Agent shall not have
any duties or responsibilities, except those expressly set forth herein, nor
shall Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that GCF is
merely the representative of Lenders, and only has the contractual duties set
forth herein. Except as expressly otherwise provided in this Agreement, Agent
shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrower, the Obligations, the Collateral or the Collections or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 Liability of Agent Persons. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby or thereby (except for its own gross negligence
or willful misconduct) or (ii) be responsible in any manner to any of the
Lenders for any recital, statement, representation or warranty made by Borrower
or any Subsidiary or Affiliate of Borrower, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
Borrower or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the Books or properties of Borrower or the
books or records or properties of any of Borrower's Subsidiaries or Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default, Unmatured Default
or Event of Default, except with respect to defaults in the payment of
principal, interest, fees and expenses required to be paid to Agent for the
account of the Lenders and with respect to Defaults, Unmatured Defaults and
Events of Default of which Agent has actual knowledge, unless Agent shall have
received written notice from a Lender or Borrower referring to this Agreement,
describing such Default, Unmatured Default or Event of Default, and stating that
such notice is a "notice of default". Agent promptly will notify the Lenders of
its receipt of any such notice or of any Unmatured Default or Event of Default
of which Agent has actual knowledge. If any Lender obtains actual knowledge of
any Unmatured Default or Event of Default, such Lender promptly shall notify the
other Lenders and Agent of such Unmatured Default or Event of Default. Each
Lender shall be solely responsible for giving any notices to its Participants,
if any. Subject to Section 16.4, Agent shall take such action with respect to
such Unmatured Default or Event of Default as may be requested by the Required
Lenders in accordance with Section 9; provided, however, that unless and until
Agent has received any such request, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default, Unmatured Default or Event of Default as it shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers and
obligations pursuant to the Loan Documents, including court costs, reasonable
lawyers' fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrower is obligated to reimburse Agent
or Lenders for such expenses pursuant to the Loan Agreement or otherwise. Agent
is authorized and directed to deduct and retain sufficient amounts from received
by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to
the distribution of any amounts to Lenders. In the event Agent is not reimbursed
for such costs and expenses from Collections received by Agent, each Lender
hereby agrees that it is and shall be obligated to pay to or reimburse Agent for
the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrower and without limiting the obligation of Borrower to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Agent-Related Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder (if
any). Without limitation of the foregoing, each Lender shall reimburse Agent
upon demand for such Lender's ratable share of any costs or out-of-pocket
expenses (including lawyers fees' and expenses on a solicitor and their own
client basis) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations or legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document or any document contemplated by or referred to herein, to the extent
that Agent is not reimbursed for such expenses by or on behalf of Borrower. The
undertakings in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.
16.8 Agent-Related Persons in Individual Capacity. Agent-Related
Persons may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in, and generally engage in any kind of
banking, lending, trust, financial advisory, underwriting or other business with
Borrower and its Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Document as though GCF was not a party
hereto, and, in each case, without notice to or consent of the other members of
the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, Agent-Related Persons may receive information
regarding Borrower or its Affiliates and any other Person (other than the Lender
Group) party to any Loan Document that is subject to confidentiality obligations
in favor of Borrower or such other Person and that prohibit the disclosure of
such information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include GCF in its individual capacity.
16.9 Successor Agent.
(a) Agent may resign as Agent upon 45 days' notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders and Agent
shall appoint a successor Agent for the Lenders. If no successor Agent is
appointed prior to the effective date of the resignation of Agent, Agent may
appoint a successor Agent. If Agent has materially breached or failed to perform
any material provision of this Agreement or of applicable law, the Required
Lenders may agree in writing to remove and replace Agent with a successor Agent
from among the Lenders.
(b) Nothing contained in this Section 16.9 shall be construed to
limit or eliminate Agent's right to resign as an Agent in accordance with this
Section 16.9. In any such event, upon the acceptance of its appointment as
successor Agent hereunder, such successor Agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent" shall mean such
successor Agent and the retiring Agent's appointment, powers and duties as Agent
shall be terminated. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Section 16 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement. If
no successor Agent has accepted appointment as Agent by the date which is 45
days following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above. Each of the resigning
Agent and Borrower agrees to cooperate with the successor Agent in effecting the
appointment of such successor Agent, including executing such documents and
instruments of transfer, and taking such other actions, in each case without
recourse, representation or warranty to the resigning Agent, as reasonably
requested by such successor Agent.
16.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Loan Document as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender Group.
The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrower or its Affiliates and any other Person (other than the Lender
Group) party to any Loan Document that is subject to confidentiality obligations
in favor of Borrower or such other Person and that prohibit the disclosure of
such information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them.
16.11 Withholding Taxes.
(a) Until the Agent is delivered an opinion, acceptable to it in
its sole discretion, of a nationally recognized Canadian law firm that no amount
is required to be withheld or deducted pursuant to Part XIII of the Income Tax
Act (Canada) with respect to payment of the Obligations; for the purposes of
Subsection 16.11(b), the Borrower acknowledges and agrees that subject to the
application of the Canada - United States Tax Convention (1980), it is required
to withhold and remit pursuant to Part XIII of the Income Tax Act (Canada), 25%
of the amount of each payment of the Obligations (other than a repayment of
principal) made to a Non-Resident Lender; and further the Borrower agrees that
it shall withhold and remit such amounts in accordance with the provision of
Subsection 16.11(b) and Part XIII of the Income Tax Act (Canada).
(b) All payments of the Obligations made hereunder or under the
other Loan Documents by or on behalf of the Borrower to Non-Resident Lenders or
to Agent on their behalf will be made free and clear of and without withholding
or deduction for or on account of any Withholding Tax unless the Borrower is
required to withhold or deduct Taxes by Applicable Law or by the interpretation
or administration thereof. If the Borrower or Agent is so required to withhold
or deduct any amount for or on account of Withholding Taxes from any payment of
the Obligations, the Borrower will pay as additional interest such additional
amounts ("Additional Amounts") as may be necessary so that the net amount
received by each affected Non-Resident Lender after such withholding or
deduction (including with respect to Additional Amounts) will not be less than
the amount such Lender would have received if such Withholding Taxes had not
been withheld or deducted; provided, however, that no Additional Amounts will be
payable with respect to a payment made to a Non-Resident Lender (an "Excluded
Lender") (i) with which the Borrower does not deal at arm's length (for purposes
of the Income Tax Act (Canada)) at the time of the making of such payment, (ii)
which is subject to such Withholding Taxes by reason of its failure to comply
with any certification, identification, information, documentation or other
reporting requirement if compliance is required by Applicable Law, regulation,
administrative practice or an applicable treaty as a precondition to exemption
from, or a reduction in the rate of deduction or withholding of, such
Withholding Taxes, or (iii) which is subject to such Withholding Taxes by reason
of its carrying on business in or being connected with Canada or any province or
territory thereof otherwise than by the mere holding of its interest in the Loan
to which payments relate or the receipt of payments thereunder. The Borrower
will make such withholding or deduction and remit the full amount deducted or
withheld to the relevant Authorized Authority as and when required in accordance
with Applicable Law. The Borrower will pay all Taxes, interest and other
liabilities which arise by virtue of any failure of the Borrower to withhold,
deduct and remit to the relevant Authorized Authority on a timely basis the full
amount required in accordance with Applicable Law. The Borrower will furnish to
the relevant Non-Resident Lender and Agent, within 30 days after the date the
payment of any Withholding Taxes is due pursuant to Applicable Law, certified
copies of tax receipts evidencing such payment by the Borrower.
(c) If any Non-Resident Lender is required to pay Tax under Part
XIII of the Income Tax Act (Canada) or any successor provisions in respect of
any payment of the Obligations by or on behalf of the Borrower in circumstances
where the Borrower is not required to make a withholding with respect to such
Tax (for instance, in accordance with Section 803 of the Regulations to the
Income Tax Act (Canada)), then the Borrower shall, upon demand by any such
Non-Resident Lender indemnify such Non-Resident Lender (other than a Lender (i)
with which the Borrower does not deal at arm's length (for purposes of the
Income Tax Act (Canada)) at the time of the making of such payment, (ii) which
is subject to such Taxes by reason of its failure to comply with any
certification, identification, information, documentation or other reporting
requirement if compliance is required by Applicable Law, regulation,
administrative practice or an applicable treaty as a precondition to exemption
from, or a reduction in the rate of deduction of withholding of, such Taxes, or
(iii) which is subject to such Withholding Taxes by reason of its carrying on
business in or being connected with Canada or any province or territory thereof
otherwise than by the mere holding of its interest in the Credit Facility to
which payments relate or the receipt of payments thereunder for the payment of
any such Taxes, together with any interest, penalties and expenses in connection
therewith. All such amounts shall be payable by the Borrower on demand and shall
bear interest at the rate borne by the Credit Facility calculated from the date
incurred by the applicable Non-Resident Lender to the date paid by the Borrower.
(d) If the Borrower pays any amount pursuant to Section 16.11(b)
with respect to any payment to a Non-Resident Lender or, with the prior written
consent of such Lender, provides any security therefor pursuant to Applicable
Law, and the Borrower at its expense wishes to contest the exigibility of the
relevant Taxes and furnishes to such Non-Resident Lender an opinion of tax
counsel satisfactory to such Non-Resident Lender, acting reasonably, to the
effect that there exists a reasonable basis for contesting such Taxes, the
Borrower may contest such Taxes, provided that:
(i) the Borrower has otherwise complied with this Section 16.11;
(ii) the Borrower has delivered to such Non-Resident Lender such
additional security or assurances as such Non-Resident Lender may require,
acting reasonably, in order to be satisfied that such Non-Resident Lender will
not incur any liability by reason of any contestation, including legal fees,
disbursements, interest and penalties; and
(iii) the institution, conduct and continuation of such
proceedings (including the settlement or compromise of same) will remain within
the sole discretion of such Non-Resident Lender and will forthwith be abandoned
if such Non-Resident Lender so requires, acting reasonably, having regard to its
overall tax and related interests.
(e) If, following any payment made by the Borrower pursuant
to Section 16.11(b) hereof to a Non-Resident Lender, any such Non-Resident
Lender shall receive or be granted a material credit against or remission for
any other tax payable by it by reason of the payment of the tax which the
Borrower has indemnified the Non-Resident Lender for (and such Non-Resident
Lender is able to readily identify such credit or remission as being
attributable to its loan hereunder), such Non-Resident Lender shall, to the
extent that it can do so without prejudice to the retention of the amount of
such credit or remission and without prejudice to the right of such Non-Resident
Lender to obtain any other relief or allowance which may be available to it,
reimburse the Borrower with such amount as such Non-Resident Lender, acting
reasonably, determines to be the amount of money attributable to such credit or
remission that may be paid by such Non-Resident Lender to leave it (after such
reimbursement) in no worse position than it would have been in had there been no
such deduction or withholding or payment of tax which resulted in the payment
under Section 16.11(b) above. Such Non-Resident Lender may charge to the
Borrower (and may deduct from amounts reimbursable to the Borrower hereunder) a
fee reasonably determined by such Non-Resident Lender to compensate it for any
additional effort expended or cost incurred in determining such credit or
remission or allocating it to the Borrower. Notwithstanding the foregoing, no
Non-Resident Lender shall be obligated to disclose to the Borrower, or any of
its agents, any computation made by such Non-Resident Lender in connection with
this Section 16.11(e) or any information regarding such Non-Resident Lender's
tax status or affairs.
16.12 Collateral Matters
(a) Lenders hereby irrevocably authorize Agent, at its option and
in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is not prohibited under Section
7.4 (and Agent may rely conclusively on any such certificate, without further
inquiry), (iii) constituting property in which Borrower owned no interest at the
time the security interest was granted or at any time thereafter or (iv)
constituting property leased to Borrower under a lease that has expired or is
terminated in a transaction permitted under this Agreement. Notwithstanding the
foregoing, so long no Unmatured Default or Event of Default shall have occurred
and be continuing, Agent shall, for the benefit and at the request of Borrower,
release its Lien on Collateral in a transaction constituting a Permitted
Disposition. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or substantially all of the Collateral, all of the
Lenders or (z) otherwise, the Required Lenders. Upon request by Agent or
Borrower at any time, the Lenders will confirm in writing Agent's authority, as
the case may be, to release any such Liens on particular types or items of
Collateral pursuant to this Section 16.12; provided, however, that (1) the Agent
shall not be required to execute any document necessary to evidence such release
on terms that, in Agent's opinion, as the case may be, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation or warranty and (2) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
Borrower in respect of) all interests retained by Borrower, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(b) Agent shall not have any obligation whatsoever to any of
Lenders to assure that the Collateral exists or is owned by Borrower or is cared
for, protected or insured or has been encumbered, or that Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, absent Agent's, as the case may be,
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction, in its sole discretion given Agent's own interest in the
Collateral in its capacity as one of Lenders and that Agent shall have no other
duty or liability whatsoever to any Lender as to any of the foregoing, except as
otherwise provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrower or any deposit accounts of Borrower
now or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by Agent, take or
cause to be taken any action, including, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral the purpose of which is, or could
be, to give such Lender any preference or priority against the other Lenders
with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure or setoff or otherwise any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's Pro Rata Share portion of
all such distributions by Agent, such Lender promptly shall (1) turn the same
over to Agent, in kind, and with such endorsements as may be required to
negotiate the same to Agent, or in immediately available funds, as applicable,
for the account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
16.14 Agency for Perfection. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Liens of Agent in assets which, in accordance with Section 35 of
the PPSA can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon the request of Agent therefor shall deliver such Collateral to
Agent.
16.15 Payments to Lenders. All payments to be made by Agent to Lenders
shall be made by bank wire transfer or internal transfer of immediately
available funds pursuant to such wire transfer instructions as each party may
designate for itself by written notice to Agent. Concurrently with each such
payment, Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement,
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement, or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of Lenders.
16.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by or at the
request of Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrower
and will rely significantly upon the Books, as well as on representations of
Borrower's personnel,
(d) agrees, for the benefit of the Lender Group and,
notwithstanding Section 16.1, the Loan Parties, to keep all Reports and other
material, non-public information regarding Borrower and its Subsidiaries and
their operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Borrower that in any
event such Lender may make disclosures (a) to counsel for and other advisors,
accountants and auditors to such Lender, (b) reasonably required by any bona
fide potential or actual Assignee or Participant in connection with any
contemplated or actual assignment or transfer by such Lender of an interest
herein or any participation interest in such Lender's rights hereunder, (c) of
information that has become public by disclosures made by Persons other than
such Lender, its Affiliates, assignees, transferees or Participants or (d) as
required or requested by any court, governmental or administrative agency,
pursuant to any subpoena or other legal process, or by any law, statute,
regulation or court order; provided, however, that, unless prohibited by
applicable law, statute, regulation, or court order, such Lender shall notify
Borrower of any request by any court governmental or administrative agency, or
pursuant to any subpoena or other legal process for disclosure of any such
non-public material information concurrent with, or where practicable, prior to
the disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrower, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrower, and (ii) to pay and protect, and indemnify, defend and hold Agent, and
any such other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses, and other amounts (including,
attorneys fees and costs) incurred by Agent and any such other Lender preparing
a Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time
request of Agent in writing that Agent provide to such Lender a copy of any
report or document provided by Borrower to Agent that has not been
contemporaneously provided by Borrower to such Lender, and, upon receipt of such
request, Agent promptly shall provide a copy of same to such Lender, (y) to the
extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from Borrower, any Lender may, from
time to time, reasonably request Agent to exercise such right as specified in
such Lender's notice to Agent, whereupon Agent promptly shall request of
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide a
copy of same to such Lender, and (z) any time that Agent renders to Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.
16.18 Several Obligations; No Liability. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of the Lenders to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.7, no member of the Lender Group shall have any
liability for the acts or any other member of the Lender Group. No Lender shall
be responsible to Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.
17. JUDGMENT CURRENCY.
17.1 Deficiency. If, for the purposes of obtaining judgment in any
court or any other related purpose hereunder, it is necessary to convert an
amount due hereunder in the currency in which it is due (the "Original
Currency") into another currency (the "Second Currency"), the rate of exchange
applicable will be the daily noon day rate quoted by the Bank of Canada on the
relevant date to purchase in Calgary, Alberta the Original Currency with the
Second Currency and includes any premium and costs of exchange payable by the
purchaser in connection with such purchase. Each Party (the "First Party")
agrees that its obligations in respect of any Original Currency due from it to
another Party hereunder will, notwithstanding any judgment or payment in the
Second Currency, be discharged only to the extent that on the Banking Day
following the receipt of any sum so paid in the Second Currency, the other
Parties may, in accordance with normal banking procedures, purchase in the
Calgary, Alberta foreign exchange market the Original Currency with the amount
of the second Currency so paid; and if the amount of the Original Currency so
purchased is less than the amount originally due in the Original Currency, the
First Party agrees that the deficiency will be a separate and continuing
obligation of it, independent from its obligations under this Agreement, and
will constitute in favour of the other Parties a cause of action which will
continue in full force and effect notwithstanding any such judgment, or order to
the contrary, and the First Party agrees, notwithstanding any such judgment, or
order to the contrary, and the First Party agrees, notwithstanding any such
payment or judgment, to indemnify the other Parties against any such loss or
deficiency. The Borrower acknowledges and agrees that any Indebtedness it may
incur or suffer under this Section 17 will be secured by the Security unless
earlier discharged as provided herein.
17.2 Excess. The Lenders through the Agent will pay to the Borrower the
amount, if any, after netting out all amounts due by the Borrower hereunder,
which the Lenders may realize in excess of what is owed to them by virtue of the
conversion of the Original Currency into the Second Currency.
18. GENERAL PROVISIONS.
18.1 Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrower, Agent and each Lender whose signature is
provided for on the signature pages hereof.
18.2 Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
18.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
18.4 Severability of Provisions. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
18.5 Amendments in Writing. This Agreement only can be amended by a
writing signed by Agent (on behalf of the requisite Lenders) and Borrower.
18.6 Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or electronic mail shall be equally as effective as delivery of an
original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile or electronic mail also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement. The foregoing shall apply
to each other Loan Document mutatis mutandis.
18.7 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by Borrower or Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Codes relating to fraudulent
conveyances, preferences or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrower or Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
18.8 Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
BORROWER:
GREY WOLF EXPLORATION INC.
By:
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Name:
Title:
AGENT AND LENDERS:
GUGGENHEIM CORPORATE FUNDING, LLC,
as Agent and as a Lender
By:
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Name:
Title:
SOF INVESTMENTS, L.P.
as a Lender
By:
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Name:
Title: