EXHIBIT 10.6
CREDIT AGREEMENT
DATED AS OF
SEPTEMBER 29, 2006
AMONG
EV ENERGY PARTNERS, L.P.,
AS PARENT
EV PROPERTIES, L.P.,
AS BORROWER,
JPMORGAN CHASE BANK, N.A.,
AS ADMINISTRATIVE AGENT,
BNP PARIBAS,
AND
WACHOVIA BANK, NATIONAL ASSOCIATION,
AS CO-SYNDICATION AGENTS,
COMPASS BANK
AND
UNION BANK OF CALIFORNIA, N.A.,
AS CO-DOCUMENTATION AGENTS,
AND
THE LENDERS PARTY HERETO
SOLE LEAD ARRANGER AND SOLE BOOK RUNNER
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
SECTION 1.01 TERMS DEFINED ABOVE................................................. 1
SECTION 1.02 CERTAIN DEFINED TERMS............................................... 1
SECTION 1.03 TYPES OF LOANS AND BORROWINGS....................................... 21
SECTION 1.04 TERMS GENERALLY..................................................... 21
SECTION 1.05 ACCOUNTING TERMS AND DETERMINATIONS; GAAP........................... 21
ARTICLE II
THE CREDITS
SECTION 2.01 COMMITMENTS......................................................... 22
SECTION 2.02 LOANS AND BORROWINGS................................................ 22
SECTION 2.03 REQUESTS FOR BORROWINGS............................................. 24
SECTION 2.04 INTEREST ELECTIONS.................................................. 25
SECTION 2.05 FUNDING OF BORROWINGS............................................... 26
SECTION 2.06 TERMINATION, REDUCTION AND INCREASE OF AGGREGATE MAXIMUM
CREDIT AMOUNTS...................................................... 27
SECTION 2.07 BORROWING BASE...................................................... 29
SECTION 2.08 LETTERS OF CREDIT................................................... 31
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
SECTION 3.01 REPAYMENT OF LOANS.................................................. 36
SECTION 3.02 INTEREST............................................................ 36
SECTION 3.03 ALTERNATE RATE OF INTEREST.......................................... 37
SECTION 3.04 PREPAYMENTS......................................................... 38
SECTION 3.05 FEES................................................................ 39
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.
SECTION 4.01 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS......... 41
SECTION 4.02 PRESUMPTION OF PAYMENT BY THE BORROWER.............................. 42
SECTION 4.03 CERTAIN DEDUCTIONS BY THE ADMINISTRATIVE AGENT...................... 42
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
SECTION 5.01 INCREASED COSTS..................................................... 42
SECTION 5.02 BREAK FUNDING PAYMENTS.............................................. 43
SECTION 5.03 TAXES............................................................... 44
SECTION 5.04 DESIGNATION OF DIFFERENT LENDING OFFICE............................. 45
SECTION 5.05 ILLEGALITY.......................................................... 45
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ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01 EFFECTIVE DATE...................................................... 45
SECTION 6.02 EACH CREDIT EVENT................................................... 48
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.01 ORGANIZATION; POWERS................................................ 49
SECTION 7.02 AUTHORITY; ENFORCEABILITY........................................... 49
SECTION 7.03 APPROVALS; NO CONFLICTS............................................. 49
SECTION 7.04 FINANCIAL POSITION; NO MATERIAL ADVERSE CHANGE...................... 50
SECTION 7.05 LITIGATION.......................................................... 50
SECTION 7.06 ENVIRONMENTAL MATTERS............................................... 51
SECTION 7.07 COMPLIANCE WITH THE LAWS AND AGREEMENTS; NO DEFAULTS................ 52
SECTION 7.08 INVESTMENT COMPANY ACT.............................................. 52
SECTION 7.09 TAXES............................................................... 52
SECTION 7.10 ERISA............................................................... 53
SECTION 7.11 DISCLOSURE; NO MATERIAL MISSTATEMENTS............................... 54
SECTION 7.12 INSURANCE........................................................... 54
SECTION 7.13 RESTRICTION ON LIENS................................................ 54
SECTION 7.14 SUBSIDIARIES........................................................ 54
SECTION 7.15 LOCATION OF BUSINESS AND OFFICES.................................... 54
SECTION 7.16 PROPERTIES; TITLES, ETC............................................. 55
SECTION 7.17 MAINTENANCE OF PROPERTIES........................................... 56
SECTION 7.18 GAS IMBALANCES, PREPAYMENTS......................................... 56
SECTION 7.19 MARKETING OF PRODUCTION............................................. 56
SECTION 7.20 SWAP AGREEMENTS..................................................... 57
SECTION 7.21 USE OF LOANS AND LETTERS OF CREDIT.................................. 57
SECTION 7.22 SOLVENCY............................................................ 57
ARTICLE VIII
AFFIRMATIVE COVENANTS
SECTION 8.01 FINANCIAL STATEMENTS; RATINGS CHANGE; OTHER INFORMATION............. 58
SECTION 8.02 NOTICES OF MATERIAL EVENTS.......................................... 61
SECTION 8.03 EXISTENCE; CONDUCT OF BUSINESS...................................... 61
SECTION 8.04 PAYMENT OF OBLIGATIONS.............................................. 61
SECTION 8.05 PERFORMANCE OF OBLIGATIONS UNDER LOAN DOCUMENTS..................... 62
SECTION 8.06 OPERATION AND MAINTENANCE OF PROPERTIES............................. 62
SECTION 8.07 INSURANCE........................................................... 63
SECTION 8.08 BOOKS AND RECORDS; INSPECTION RIGHTS................................ 63
SECTION 8.09 COMPLIANCE WITH LAWS................................................ 63
SECTION 8.10 ENVIRONMENTAL MATTERS............................................... 63
SECTION 8.11 FURTHER ASSURANCES.................................................. 64
SECTION 8.12 RESERVE REPORTS..................................................... 65
SECTION 8.13 TITLE INFORMATION................................................... 66
SECTION 8.14 ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS........................ 66
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SECTION 8.15 ERISA COMPLIANCE.................................................... 67
SECTION 8.16 MARKETING ACTIVITIES................................................ 68
SECTION 8.17 CLEAN-DOWN.......................................................... 68
ARTICLE IX
NEGATIVE COVENANTS
SECTION 9.01 FINANCIAL COVENANTS................................................. 68
SECTION 9.02 DEBT................................................................ 69
SECTION 9.03 LIENS............................................................... 70
SECTION 9.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS............................ 70
SECTION 9.05 INVESTMENTS, LOANS AND ADVANCES..................................... 71
SECTION 9.06 NATURE OF BUSINESS; INTERNATIONAL OPERATIONS........................ 72
SECTION 9.07 LIMITATION ON LEASES................................................ 72
SECTION 9.08 PROCEEDS OF NOTES................................................... 73
SECTION 9.09 ERISA COMPLIANCE.................................................... 73
SECTION 9.10 SALE OR DISCOUNT OF RECEIVABLES..................................... 74
SECTION 9.11 MERGERS, ETC........................................................ 74
SECTION 9.12 SALE OF PROPERTIES.................................................. 74
SECTION 9.13 ENVIRONMENTAL MATTERS............................................... 75
SECTION 9.14 TRANSACTIONS WITH AFFILIATES........................................ 75
SECTION 9.15 SUBSIDIARIES........................................................ 75
SECTION 9.16 NEGATIVE PLEDGE AGREEMENTS; DIVIDEND RESTRICTIONS................... 75
SECTION 9.17 GAS IMBALANCES, TAKE-OR-PAY OR OTHER PREPAYMENTS.................... 76
SECTION 9.18 SWAP AGREEMENTS..................................................... 76
SECTION 9.19 TAX STATUS AS PARTNERSHIP........................................... 76
SECTION 9.20 COVENANTS OF PARENT................................................. 77
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
SECTION 10.01 EVENTS OF DEFAULT................................................... 77
SECTION 10.02 REMEDIES............................................................ 80
SECTION 10.03 DISPOSITION OF PROCEEDS............................................. 80
ARTICLE XI
THE ADMINISTRATIVE AGENT
SECTION 11.01 APPOINTMENT; POWERS................................................. 81
SECTION 11.02 DUTIES AND OBLIGATIONS OF ADMINISTRATIVE AGENT...................... 81
SECTION 11.03 ACTION BY AGENT..................................................... 82
SECTION 11.04 RELIANCE BY AGENT................................................... 82
SECTION 11.05 SUBAGENTS........................................................... 83
SECTION 11.06 RESIGNATION OR REMOVAL OF AGENTS.................................... 83
SECTION 11.07 AGENTS AND LENDERS.................................................. 83
SECTION 11.08 NO RELIANCE......................................................... 83
SECTION 11.09 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM....................... 84
SECTION 11.10 AUTHORITY OF ADMINISTRATIVE AGENT TO RELEASE COLLATERAL
AND LIENS........................................................... 85
SECTION 11.11 THE ARRANGER, THE CO-SYNDICATION AGENTS AND THE
CO-DOCUMENTATION AGENTS............................................. 85
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ARTICLE XII
MISCELLANEOUS
SECTION 12.01 NOTICES............................................................. 85
SECTION 12.02 WAIVERS; AMENDMENTS................................................. 86
SECTION 12.03 EXPENSES, INDEMNITY; DAMAGE WAIVER.................................. 87
SECTION 12.04 SUCCESSORS AND ASSIGNS.............................................. 89
SECTION 12.05 SURVIVAL; REVIVAL; REINSTATEMENT.................................... 92
SECTION 12.06 COUNTERPARTS; INTEGRATION; EFFECTIVENESS............................ 93
SECTION 12.07 SEVERABILITY........................................................ 93
SECTION 12.08 RIGHT OF SETOFF..................................................... 94
SECTION 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.......... 94
SECTION 12.10 HEADINGS............................................................ 95
SECTION 12.11 CONFIDENTIALITY..................................................... 95
SECTION 12.12 INTEREST RATE LIMITATION............................................ 96
SECTION 12.13 EXCULPATION PROVISIONS.............................................. 97
SECTION 12.14 COLLATERAL MATTERS; SWAP AGREEMENTS................................. 97
SECTION 12.15 NO THIRD PARTY BENEFICIARIES........................................ 97
SECTION 12.16 USA PATRIOT ACT NOTICE.............................................. 98
SECTION 12.17 GENERAL PARTNER LIABILITY........................................... 98
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ANNEXES, EXHIBITS AND SCHEDULES
Annex I List of Maximum Credit Amounts
Exhibit A Form of Note
Exhibit B Form of Compliance Certificate
Exhibit C-1 Security Instruments
Exhibit C-2 Form of Guarantee and Collateral Agreement
Exhibit D Form of Assignment and Assumption
Exhibit E-1 Form of Maximum Credit Amount Increase Certificate
Exhibit E-2 Form of Additional Lender Certificate
Schedule 1.02 Approved Counterparties
Schedule 7.05 Litigation
Schedule 7.11 Material Agreements
Schedule 7.14 Subsidiaries and Partnerships
Schedule 7.18 Gas Imbalances
Schedule 7.19 Marketing Contracts
Schedule 7.20 Swap Agreements
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THIS CREDIT AGREEMENT dated as of September 29, 2006, is among EV Energy
Partners, L.P., a limited partnership duly formed and existing under the laws of
the State of Delaware (the "Parent"), EV Properties, L.P., a limited partnership
duly formed and existing under the laws of the State of Delaware (the
"Borrower"), each of the Lenders from time to time party hereto; JPMORGAN CHASE
BANK, N.A. (in its individual capacity, "JPMorgan"), as administrative agent for
the Lenders (in such capacity, together with its successors in such capacity,
the "Administrative Agent"); BNP PARIBAS and (in its individual capacity, "BNP
Paribas") and WACHOVIA BANK, NATIONAL ASSOCIATION (in its individual capacity,
"Wachovia"), as co-syndication agents for the Lenders (in such capacity,
together with each of their successors in such capacity, the "Co-Syndication
Agents"); and COMPASS BANK (in its individual capacity, "Compass") and UNION
BANK OF CALIFORNIA, N.A. (in its individual capacity, "UBOC"), as
co-documentation agents for the Lenders (in such capacity, together with each of
their successors in such capacity, the "Documentation Agent").
R E C I T A L S
A. The Parent and the Borrower have requested that the Lenders provide
certain loans to and extensions of credit on behalf of the Borrower.
B. The Lenders have agreed to make such loans and extensions of credit
subject to the terms and conditions of this Agreement.
C. In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above. As used in this Agreement, each term
defined above has the meaning indicated above.
Section 1.02 Certain Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Additional Lender" has the meaning assigned to such term in Section
2.06(c)(i).
"Additional Lender Certificate" has the meaning assigned to such term in
Section 2.06(c)(ii)(F).
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affected Loans" has the meaning assigned such term in Section 5.05.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agents" means, collectively, the Administrative Agent, the Co-Syndication
Agents and the Co-Documentation Agents; and "Agent" shall mean either the
Administrative Agent, the Co-Syndication Agents or the Co-Documentation Agents,
as the context requires.
"Aggregate Maximum Credit Amounts" at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be increased, reduced or terminated
pursuant to Section 2.06.
"Agreement" means this Credit Agreement, as the same may from time to time
be amended, modified, supplemented or restated.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus -1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, for any day, with respect to any ABR Loan or
Eurodollar Loan, as the case may be, the rate per annum set forth in the
Borrowing Base Utilization Grid below based upon the Borrowing Base Utilization
Percentage then in effect:
BORROWING BASE UTILIZATION GRID
Borrowing Base Utilization
Percentage < or = 50% > 50% < or = 75% > 75% < or = 90% > 90%
---------- ---------- ---------------- ---------------- -----
ABR Loans 0.000% 0.000% 0.000% 0.250%
Eurodollar Loans 1.000% 1.250% 1.500% 1.750%
Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change, provided,
however, that if at any time the Borrower fails to deliver a Reserve Report
pursuant to Section 8.12(a), then the "Applicable Margin" means the rate per
annum set forth on the grid when the Borrowing Base Utilization Percentage is at
its highest level.
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"Applicable Percentage" means, with respect to any Lender, the percentage
of the Aggregate Maximum Credit Amounts represented by such Lender's Maximum
Credit Amount as such percentage is set forth on Annex I.
"Approved Counterparty" means (a) any Lender or any Affiliate of a Lender;
(b) any other Person whose long term senior unsecured debt rating is A/A2 by S&P
or ▇▇▇▇▇'▇ (or their equivalent) or higher; (c) any Person listed on Schedule
1.02; or (d) any other Person approved by the Required Lenders.
"Arranger" means ▇.▇. ▇▇▇▇▇▇ Securities Inc., in its sole capacity as
arranger and book runner hereunder.
"Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit D or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the Effective
Date to but excluding the Termination Date.
"Available Cash" means, with respect to any fiscal quarter ending prior to
the Termination Date:
(a) the sum of (i) all cash and cash equivalents of the Parent and
its Consolidated Subsidiaries on hand at the end of such fiscal quarter, and
(ii) if the General Partner so determines, all or any portion of any additional
cash and cash equivalents of the Partnership Group on hand on the date of
determination of Available Cash with respect to such fiscal quarter, including
cash from Working Capital Borrowings (as defined in the Parent LP Agreement),
less
(b) the amount of any cash reserves established by the General
Partner to (i) provide for the proper conduct of the business of the Partnership
Group (including reserves for future capital expenditures and for anticipated
future credit needs of the Partnership Group) subsequent to such fiscal quarter,
(ii) comply with applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which any Group
Member is a party or by which it is bound or its assets are subject or (iii)
provide funds for distributions under Section 6.4 or Section 6.5 of the Parent
LP Agreement in respect of any one or more of the next four fiscal quarters;
provided, however, that the General Partner may not establish cash reserves
pursuant to (iii) above if the effect of such reserves would be that the Parent
is unable to distribute the Minimum Quarterly Distribution (as defined in the
Parent LP Agreement) on all Common Units (as defined in the Parent LP
Agreement), plus any Cumulative Common Unit Arrearage (as defined in the Parent
LP Agreement) on all Common Units, with respect to such fiscal quarter; and,
provided further, that disbursements made by a Group Member or cash reserves
established, increased or reduced after the end of such fiscal quarter but on or
before the date of determination of Available Cash with respect to such fiscal
quarter shall be deemed to have been made, established, increased or reduced,
for purposes of determining Available Cash, within such fiscal quarter if the
General Partner so determines.
3
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America or any successor Governmental Authority.
"Borrowing" means Loans of the same Type, made, converted or continued on
the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Base" means at any time an amount equal to the amount
determined in accordance with Section 2.07, as the same may be adjusted from
time to time pursuant to Section 8.13(c) or Section 9.12(d).
"Borrowing Base Deficiency" occurs if at any time the total Revolving
Credit Exposures exceeds the Borrowing Base then in effect.
"Borrowing Base Utilization Percentage" means, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of the Revolving
Credit Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day
on which commercial banks in New York City or Houston, Texas are authorized or
required by law to remain closed; and if such day relates to a Borrowing or
continuation of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice
by the Borrower with respect to any such Borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day on which
dealings in dollar deposits are carried out in the London interbank market.
"Capital Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.
"Casualty Event" means any loss, casualty or other insured damage to, or
any nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of its Subsidiaries
having a fair market value in excess of $100,000 in the aggregate for any
calendar year.
"Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof), other than Enervest Management
Partners, Ltd., EnCap Investments, L.P. and any of their respective Affiliates,
of Equity Interests representing more than 50% of the aggregate ordinary voting
power represented by the issued and outstanding Equity Interests of the Parent,
(b) occupation of a majority of the seats (other than vacant seats) on the board
of directors of EV Management by Persons who were neither (i) nominated by the
board of directors of EV Management nor (ii) appointed by directors so nominated
or (c) the Parent fails to own directly or indirectly all of the Equity
Interests of the Borrower.
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"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or any Issuing
Bank (or, for purposes of Section 5.01(b), by any lending office of such Lender
or by such Lender's or such Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Working Capital
Revolving Loans or General Revolving Loans.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans, including Working Capital Revolving Loans, and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Credit
Exposure hereunder, as such commitment may be (a) modified from time to time
pursuant to Section 2.06 and (b) modified from time to time pursuant to
assignments by or to such Lender pursuant to Section 12.04(b). The amount
representing each Lender's Commitment shall at any time be the lesser of such
Lender's Maximum Credit Amount and such Lender's Applicable Percentage of the
then effective Borrowing Base.
"Commitment Fee Rate" means, for any day, the rate per annum set forth
below based upon the Borrowing Base Utilization Percentage then in effect:
Borrowing Base Utilization
Percentage < or =50% >50% < or =75% >75%
---------- --------- -------------- ----
Commitment Fee Rate 0.250% 0.300% 0.375%
"Consolidated Net Income" means with respect to the Parent and the
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Parent and the Consolidated Subsidiaries after allowances for taxes
for such period determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (a) the net income of any Person in
which the Parent or a Consolidated Subsidiary has an interest (which interest
does not cause the net income of such other Person to be consolidated with the
net income of the Borrower and the Consolidated Subsidiaries in accordance with
GAAP), except to the extent of the amount of dividends or distributions actually
paid in cash during such period by such other Person to the Parent or to a
Consolidated Subsidiary, as the case may be; (b) the net income (but not loss)
during such period of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated
5
Subsidiary is not at the time permitted by operation of the terms of its charter
or any agreement, instrument or Governmental Requirement applicable to such
Consolidated Subsidiary or is otherwise restricted or prohibited, in each case
determined in accordance with GAAP; (c) the net income (or loss) of any Person
acquired in a pooling-of-interests transaction for any period prior to the date
of such transaction; (d) any extraordinary gains or losses during such period;
(e) non-cash gains, losses or adjustments under FASB Statement No. 133 as a
result of changes in the fair market value of derivatives; and (f) any gains or
losses attributable to writeups or writedowns of assets, including ceiling test
writedowns; and provided further that if the Parent or the Borrower or any
Consolidated Subsidiary shall acquire or dispose of any Property during such
period, then Consolidated Net Income shall be calculated after giving pro forma
effect to such acquisition or disposition, as if such acquisition or disposition
had occurred on the first day of such period.
"Consolidated Subsidiaries" means each Subsidiary of the Parent (whether
now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Parent in accordance with GAAP.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to "control" such other Person. "Controlling" and
"Controlled" have meanings correlative thereto.
"Debt" means, for any Person, the sum of the following (without
duplication): (a) all obligations of such Person for borrowed money or evidenced
by bonds, bankers' acceptances, debentures, notes or other similar instruments;
(b) all obligations of such Person (whether contingent or otherwise) in respect
of letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable, accrued expenses, liabilities or other obligations of such
Person, in each such case to pay the deferred purchase price of Property or
services; (d) all obligations under Capital Leases; (e) all obligations under
Synthetic Leases; (f) all Debt (as defined in the other clauses of this
definition) of others secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) a Lien on any
Property of such Person, whether or not such Debt is assumed by such Person,
provided, however, if not assumed, the amount of any such Debt shall not exceed
the fair market value of the Property subject to such Lien; (g) all Debt (as
defined in the other clauses of this definition) of others guaranteed by such
Person or in which such Person otherwise assures a creditor against loss of the
Debt (howsoever such assurance shall be made) to the extent of the lesser of the
amount of such Debt and the maximum stated amount of such guarantee or assurance
against loss; (h) all obligations or undertakings of such Person to maintain or
cause to be maintained the financial position or covenants of others or to
purchase the Debt or Property of others; (i) obligations to deliver commodities,
goods or services, including, without limitation, Hydrocarbons, in consideration
of one or more advance payments, other than gas balancing or pipeline
transportation arrangements in the ordinary course of business; (j) obligations
to pay for goods or services whether or not such goods or services are actually
received or utilized by such
6
Person, other than retainers paid for professional services or similar
arrangements entered into in the ordinary course of business; (k) any Debt of a
partnership for which such Person is liable either by agreement, by operation of
law or by a Governmental Requirement but only to the extent of such liability;
(l) Disqualified Capital Stock; and (m) the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment. The Debt of any Person shall
include all obligations of such Person of the character described above to the
extent such Person remains legally liable in respect thereof notwithstanding
that any such obligation is not included as a liability of such Person under
GAAP.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disqualified Capital Stock" means any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.
"dollars" or "$" refers to lawful money of the United States of America.
"Domestic Subsidiary" means any Subsidiary that is organized under the
laws of the United States of America or any state thereof or the District of
Columbia.
"EBITDAX" means, for any period, the sum of Consolidated Net Income for
such period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, income taxes, depreciation,
depletion, amortization, exploration expenses and all noncash charges, minus all
noncash income added to Consolidated Net Income.
"Effective Date" means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).
"Engineering Reports" has the meaning assigned such term in Section
2.07(c)(i).
"Environmental Laws" means any and all Governmental Requirements
pertaining in any way to health, safety the environment or the preservation or
reclamation of natural resources, in effect in any and all jurisdictions in
which the Borrower or any of its Subsidiaries is conducting or at any time has
conducted business, or where any Property of the Borrower or any of its
Subsidiaries is located, including without limitation, the Oil Pollution Act of
1990 ("OPA"), as amended, the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the
7
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe
Drinking Water Act, as amended, the Toxic Substances Control Act, as amended,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, and other environmental
conservation or protection Governmental Requirements. The term "oil" shall have
the meaning specified in OPA, the terms "hazardous substance" and "release" (or
"threatened release") have the meanings specified in CERCLA, the terms "solid
waste" and "disposal" (or "disposed") have the meanings specified in RCRA and
the term "oil and gas waste" shall have the meaning specified in Section 91.1011
of the Texas Natural Resources Code ("Section 91.1011"); provided, however, that
(a) in the event either OPA, CERCLA, RCRA or Section 91.1011 is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment and (b) to the extent
the laws of the state or other jurisdiction in which any Property of the
Borrower or any of its Subsidiaries is located establish a meaning for "oil,"
"hazardous substance," "release," "solid waste," "disposal" or "oil and gas
waste" which is broader than that specified in either OPA, CERCLA, RCRA or
Section 91.1011, such broader meaning shall apply.
"Environmental Permit" means any permit, registration, license, approval,
consent, exemption, variance, or other authorization required under or issued
pursuant to applicable Environmental Laws.
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Borrower or any of its Subsidiaries would
be deemed to be a "single employer" within the meaning of section 4001(b)(1) of
ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" means (a) a "Reportable Event" described in section 4043 of
ERISA and the regulations issued thereunder, (b) the withdrawal of the Borrower
or any of its Subsidiaries or any ERISA Affiliate from a Plan during a plan year
in which it was a "substantial employer" as defined in section 4001(a)(2) of
ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment
of a Plan amendment as a termination under section 4041 of ERISA, (d) the
institution of proceedings to terminate a Plan by the PBGC, (e) receipt of a
notice of withdrawal liability pursuant to Section 4202 of ERISA or (f) any
other event or condition which might constitute grounds under section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
8
"EV Management" means EV Management, L.L.C., and its successors and
permitted assigns that are admitted as the general partner of the General
Partner, and in its capacity as the general partner of the General Partner
(except where the context otherwise requires).
"Event of Default" has the meaning assigned such term in Section 10.01.
"Excepted Liens" means: (a) Liens for Taxes, assessments or other
governmental charges or levies which are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (b) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (c) statutory landlord's
liens, operators', vendors', carriers', warehousemen's, repairmen's, mechanics',
suppliers', workers', materialmen's, construction or other like Liens arising by
operation of law in the ordinary course of business or incident to the
exploration, development, operation and maintenance of Oil and Gas Properties
each of which is in respect of obligations that are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been maintained in accordance with GAAP; (d) contractual Liens
which arise in the ordinary course of business under operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements, overriding royalty agreements,
marketing agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any of its Subsidiaries or materially
impair the value of such Property subject thereto; (e) Liens arising solely by
virtue of any statutory or common law provision relating to banker's liens,
rights of set-off or similar rights and remedies and burdening only deposit
accounts or other funds maintained with a creditor depository institution,
provided that no such deposit account is a dedicated cash collateral account or
is subject to restrictions against access by the depositor in excess of those
set forth by regulations promulgated by the Board and no such deposit account is
intended by the Borrower or any of its Subsidiaries to provide collateral to the
depository institution; (f) easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any Property of the
Borrower or any of its Subsidiaries for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the removal of
gas, oil, coal or other minerals or timber, and other like purposes, or for the
joint or common use of real estate, rights of way, facilities and equipment,
that do not secure any monetary obligations and which in the aggregate do not
materially impair the use of such Property for the purposes of which such
Property is held by the Borrower or any of its Subsidiaries or materially impair
the value of such Property subject thereto; (g) Liens on cash or securities
pledged to secure performance of
9
tenders, surety and appeal bonds, government contracts, performance and return
of money bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations and other obligations of a like nature incurred in the ordinary
course of business and (h) judgment and attachment Liens not giving rise to an
Event of Default, provided that any appropriate legal proceedings which may have
been duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated shall not
have expired and no action to enforce such Lien has been commenced; provided,
further that Liens described in clauses (a) through (e) shall remain "Excepted
Liens" only for so long as no action to enforce such Lien has been commenced and
no intention to subordinate the first priority Lien granted in favor of the
Administrative Agent and the Lenders is to be hereby implied or expressed by the
permitted existence of such Excepted Liens.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, any Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America or such other jurisdiction
under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower or any Guarantor is located and (c) in the case of a Foreign Lender any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender's failure to comply
with Section 5.03(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts with respect to such
withholding tax pursuant to Section 5.03(a) or Section 5.03(c).
"Existing Credit Agreement" means that certain Credit Agreement dated
September 12, 2000, by and among Compass Bank, Enervest Management Partners,
Ltd., Enervest Production Partners, Ltd., Enervest Operating, L.L.C., Enervest -
Cargas, Ltd., and Lower Cargas Operating Company, LLC, as the same has been from
time to time modified or amended.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references to a Financial Officer shall mean a
Financial Officer of EV Management.
"Financial Statements" means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).
10
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time subject to the terms and conditions
set forth in Section 1.05.
"General Partner" means EV Energy GP, L.P., a Delaware limited
partnership, and its successors and permitted assigns that are admitted to the
Parent as general partner of the Parent, in its capacity as general partner of
the Partnership (except as the context otherwise requires).
"General Revolving Loan" means a Loan made pursuant to Section 2.01(a)
which is not a Working Capital Revolving Loan.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government over the Borrower or any of its Subsidiaries, any of their
Properties, any Agent, any Issuing Bank or any Lender.
"Governmental Requirement" means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
"Group Member" means a member of the Partnership Group.
"Guarantors" means (a) the Parent, (b) EV Properties GP, LLC, a Delaware
limited liability company, (c) Enervest Production Partners, Ltd., a Texas
limited partnership, (d) CGas Properties, L.P., a Delaware limited partnership,
(e) Enervest-Cargas, Ltd., a Texas limited partnership, (f) Lower Cargas
Operating Company LLC, a Louisiana limited liability company, and (g) each other
Material Domestic Subsidiary or other Domestic Subsidiary that guarantees the
Indebtedness pursuant to Section 8.14(b).
"Guarantee Agreement" means an agreement executed by the Guarantors in
form and substance reasonably satisfactory to the Administrative Agent
unconditionally guarantying on a joint and several basis, payment of the
Indebtedness, as the same may be amended, modified or supplemented from time to
time.
"Hazardous Material" means any substance regulated or as to which
liability might arise under any applicable Environmental Law and including,
without limitation: (a) any chemical, compound, material, product, byproduct,
substance or waste defined as or included in the
11
definition or meaning of "hazardous substance," "hazardous material," "hazardous
waste," "solid waste," "toxic waste," "extremely hazardous substance," "toxic
substance," "contaminant," "pollutant," or words of similar meaning or import
found in any applicable Environmental Law; (b) petroleum hydrocarbons, petroleum
products, petroleum substances, natural gas, oil, oil and gas waste, crude oil,
and any components, fractions, or derivatives thereof; and (c) radioactive
materials, asbestos containing materials, polychlorinated biphenyls, or radon.
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.
"Hydrocarbon Interests" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests and production
payment interests, including any reserved or residual interests of whatever
nature.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
"Indebtedness" means any and all amounts owing or to be owing by the
Borrower, any of its Subsidiaries or any Guarantor (whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising): (a) to the Administrative Agent,
any Issuing Bank or any Lender under any Loan Document; (b) to any Lender or any
Affiliate of a Lender under any Swap Agreements among such Person and the
Borrower or any Subsidiary or assigned to such Person while such Person (or in
the case of its Affiliate, the Lender affiliated therewith) is a Lender
hereunder and (c) all renewals, extensions and/or rearrangements of any of the
above.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Initial Public Offering" shall mean the initial public offering of common
units of the Parent.
"Initial Reserve Reports" means the report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ &
Associates, Inc. dated as of June 24, 2006, with respect to the value of the Oil
and Gas Properties of the Borrower and its Subsidiaries as of December 31, 2005.
"Interest Election Request" means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.
"Interest Expense" means, for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such
12
period, including (a) to the extent included in interest expense under GAAP: (i)
amortization of debt discount, (ii) capitalized interest and (iii) the portion
of any payments or accruals under Capital Leases allocable to interest expense,
plus the portion of any payments or accruals under Synthetic Leases allocable to
interest expense whether or not the same constitutes interest expense under GAAP
and (b) cash dividend payments by the Borrower in respect of any Disqualified
Capital Stock.
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
"Interim Redetermination" has the meaning assigned such term in Section
2.07(b).
"Investment" means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale); (b) the
making of any deposit with, or advance, loan or capital contribution to,
assumption of Debt of, purchase or other acquisition of any other Debt or equity
participation or interest in, or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person, but excluding any such advance, loan or extension of credit having
a term not exceeding ninety (90) days representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business);
or (c) the entering into of any guarantee of, or other contingent obligation
(including the deposit of any Equity Interests to be sold) with respect to, Debt
or other liability of any other Person and (without duplication) any amount
committed to be advanced, lent or extended to such Person.
"Issuing Bank" means JPMorgan, in its capacity as an issuer of Letters of
Credit hereunder, and its successors in such capacity as provided in Section
2.08(i). The Issuing Bank may, in its discretion, arrange for one or more
Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case
the term "Issuing Bank" shall include any such Affiliate with respect to Letters
of Credit issued by such Affiliate.
"LC Commitment" at any time means Twenty Million Dollars ($20,000,000).
13
"LC Disbursement" means a payment made by any Issuing Bank pursuant to a
Letter of Credit issued by such Issuing Bank.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Annex I, and any Person that shall
have become a party hereto pursuant to an Assignment and Assumption, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption, and any Person that shall have become a party hereto as an
Additional Lender pursuant to Section 2.06(c).
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"Letter of Credit Agreements" means all letter of credit applications and
other agreements (including any amendments, modifications or supplements
thereto) submitted by the Borrower, or entered into by the Borrower, with any
Issuing Bank relating to any Letter of Credit issued by such Issuing Bank.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow ▇▇▇▇▇ Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate (rounded
upwards, if necessary, to the next 1/100th of 1%) at which dollar deposits of
$1,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties. The term "Lien" shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed to
be the owner of any Property which they have acquired or hold subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to
14
which title to the Property has been retained by or vested in some other Person
in a transaction intended to create a financing.
"Limited Partnership Agreement" means the Agreement of Limited Partnership
of the Borrower.
"Loan Documents" means this Agreement, the Notes, the Letter of Credit
Agreements, the Letters of Credit and the Security Instruments.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Managers" means the members of the Board of Managers or Board of
Directors (however designated from time to time) of EV Management as constituted
from time to time.
"Material Adverse Effect" means a material adverse change in, or material
adverse effect on (a) the business, operations, Property, liabilities (actual or
contingent) or condition (financial or otherwise) of the Borrower and its
Guarantors taken as a whole, (b) the ability of the Borrower and its Guarantors,
taken as a whole, to perform their obligations under the Loan Documents, (c) the
validity or enforceability of any Loan Document or (d) the rights and remedies
of or benefits available to the Administrative Agent, any other Agent, any
Issuing Bank or any Lender under any Loan Document.
"Material Domestic Subsidiary" means, as of any date, any Domestic
Subsidiary that (a) is a Wholly-Owned Subsidiary and (b) together with its
Subsidiaries, owns Property having a fair market value of $1,000,000 or more.
"Material Indebtedness" means Debt (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $1,000,000. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Borrower or any of its Subsidiaries
in respect of any Swap Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower or such
Subsidiary would be required to pay if such Swap Agreement were terminated at
such time.
"Maturity Date" means September 30, 2011.
"Maximum Credit Amount" means, as to each Lender, the amount set forth
opposite such Lender's name on Annex I under the caption "Maximum Credit
Amounts", as the same may be (a) reduced or terminated from time to time in
connection with a reduction or termination of the Aggregate Maximum Credit
Amounts pursuant to Section 2.06(b), (b) increased from time to time pursuant to
Section 2.06(c) or (c) modified from time to time pursuant to any assignment
permitted by Section 12.04(b).
"Maximum Credit Amount Increase Certificate" has the meaning assigned to
such term in Section 2.06(c)(ii)(E).
15
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor thereto
that is a nationally recognized rating agency.
"Mortgaged Property" means any Property owned by the Borrower or any
Guarantor which is subject to the Liens existing and to exist under the terms of
the Security Instruments.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in section 3(37) or 4001 (a)(3) of ERISA.
"New Borrowing Base Notice" has the meaning assigned such term in Section
2.07(d).
"Notes" means the promissory notes of the Borrower described in Section
2.02(d) and being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.
"Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c)
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, injection ▇▇▇▇▇
or other ▇▇▇▇▇, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.
"Parent" means EV Energy Partners, L.P., a Delaware limited partnership.
16
"Parent LP Agreement" means the First Amended and Restated Agreement of
Limited Partnership of the Parent dated as of September 29, 2006, as the same
may be amended, modified, supplemented or restated from time to time.
"Partnership Group" means the Parent and its Consolidated Subsidiaries.
"Participant" has the meaning set forth in Section 12.04(c)(i).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan, as defined in section 3(2)
of ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, any of its Subsidiaries or an ERISA Affiliate or
(b) was at any time during the six calendar years preceding the date hereof,
sponsored, maintained or contributed to by the Borrower, any of its Subsidiaries
or an ERISA Affiliate.
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by JPMorgan as its prime rate in effect at its principal office in
New York City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective. Such
rate is set by JPMorgan as a general reference rate of interest, taking into
account such factors as JPMorgan may deem appropriate; it being understood that
many of JPMorgan's commercial or other loans are priced in relation to such
rate, that it is not necessarily the lowest or best rate actually charged to any
customer and that JPMorgan may make various commercial or other loans at rates
of interest having no relationship to such rate.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.
"Proposed Borrowing Base" has the meaning assigned to such term in Section
2.07(c)(i).
"Proposed Borrowing Base Notice" has the meaning assigned to such term in
Section 2.07(c)(ii).
"Proved Developed Producing Properties" means Oil and Gas Properties which
are categorized as "Proved Reserves" that are both "Developed" and "Producing",
as such terms are defined in the Definitions for Oil and Gas Reserves as
promulgated by the Society of Petroleum Engineers (or any generally recognized
successor) as in effect at the time in question.
"Redemption" means with respect to any Debt, the repurchase, redemption,
prepayment, repayment or defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the foregoing) of any
such Debt. "Redeem" has the correlative meaning thereto.
17
"Redetermination Date" means, with respect to any Scheduled
Redetermination or any Interim Redetermination, the date that the redetermined
Borrowing Base related thereto becomes effective pursuant to Section 2.07(d).
"Register" has the meaning assigned such term in Section 12.04(b)(iv).
"Regulation D" means Regulation D of the Board, as the same may be
amended, supplemented or replaced from time to time.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors (including attorneys, accountants and experts) of such Person and
such Person's Affiliates.
"Release" means any depositing, spilling, leaking, pumping, pouring,
placing, emitting, discarding, abandoning, emptying, discharging, migrating,
injecting, escaping, leaching, dumping, or disposing.
"Remedial Work" has the meaning assigned such term in Section 8.10(a).
"Required Lenders" means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least sixty-six and two-thirds percent (66-2/3%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure is outstanding, Lenders holding at least sixty-six and two-thirds
percent (66-2/3%) of the outstanding aggregate principal amount of the Loans or
participation interests in Letters of Credit (without regard to any sale by a
Lender of a participation in any Loan under Section 12.04(c)).
"Reserve Report" means a report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, as of each January 1st
or July 1st (or such other date in the event of an Interim Redetermination) the
oil and gas reserves attributable to the Oil and Gas Properties of the Borrower
and its Subsidiaries, together with a projection of the rate of production and
future net income, taxes, operating expenses and capital expenditures with
respect thereto as of such date, based upon the economic assumptions consistent
with the Administrative Agent's lending requirements at the time.
"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President, any Financial Officer or any Vice President of such
Person. Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of EV Management.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other Property) with respect to any Equity Interests in the
Borrower, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any option, warrant or other right to
acquire any such Equity Interests in the Borrower.
18
"Revolving Credit Exposure" means, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender's Loans and its LC
Exposure at such time.
"S-1" means the Form S-1 of the Parent filed with the United States
Securities and Exchange Commission as of May 15, 2006, as amended through the
Effective Date.
"Scheduled Redetermination" has the meaning assigned such term in Section
2.07(b).
"Scheduled Redetermination Date" means the date on which a Borrowing Base
that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).
"Security Instruments" means the Guarantee Agreement, and all mortgages,
deeds of trust and other agreements, instruments or certificates described or
referred to in Exhibit C-1, and any and all other agreements, instruments,
consents or certificates now or hereafter executed and delivered by the Parent,
the Borrower or any other Person (other than Swap Agreements with the Lenders or
any Affiliate of a Lender or participation or similar agreements between any
Lender and any other lender or creditor with respect to any Indebtedness
pursuant to this Agreement) in connection with, or as security for the payment
or performance of the Indebtedness, the Notes, this Agreement, or reimbursement
obligations under the Letters of Credit, as such agreements may be amended,
modified, supplemented or restated from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subordinated Debt" means any subordinated Debt of the Borrower or any
Guarantor issued pursuant to Section 9.02(e).
"Subsidiary" means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the
19
Borrower and one or more of its Subsidiaries and (b) any partnership of which
the Borrower or any of its Subsidiaries is a general partner. Unless otherwise
indicated herein, each reference to the term "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement, whether
exchange traded, "over-the-counter" or otherwise, involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of Enervest Management
Partners, Ltd., EV Management, the Borrower or any of their respective
Subsidiaries shall be a Swap Agreement.
"Synthetic Leases" means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, treated as operating
leases on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Termination Date" means the earlier of the Maturity Date and the date of
termination of the Commitments.
"Total Debt" means, at any date, all Debt described in clauses (a), (d),
(e), (g), (h), (l) and (m) of the definition of Debt herein, of the Parent and
its Consolidated Subsidiaries, excluding all non-cash obligations under FAS 133.
"Transactions" means, with respect to (a) the Borrower, the execution,
delivery and performance by the Borrower of this Agreement, and each other Loan
Document to which it is a party, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder, and the grant of Liens
by the Borrower on Mortgaged Properties and other Properties pursuant to the
Security Instruments and (b) any Guarantor, the execution, delivery and
performance by such Guarantor of each Loan Document to which it is a party, the
guaranteeing of the Indebtedness and the other obligations under the Guarantee
Agreement by such Guarantor and such Guarantor's grant of the security interests
and provision of collateral under the Security Instruments, and the grant of
Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to
the Security Instruments.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.
20
"Wholly-Owned Subsidiary" means any Subsidiary of which all of the
outstanding Equity Interests (other than any directors' qualifying shares
mandated by applicable law), on a fully-diluted basis, are owned by the Borrower
or one or more of the Wholly-Owned Subsidiaries or are owned by the Borrower and
one or more of the Wholly-Owned Subsidiaries.
"Working Capital Revolving Sub-Commitment" means, with respect to each
Lender, the commitment of such Lender to make Working Capital Revolving Loans
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Working Capital Revolving Loans hereunder, as such commitment may
be reduced or increased from time to time pursuant to Section 2.06. The initial
aggregate amount of the Lenders' Working Capital Revolving Sub-Commitments shall
at any time be equal to the lesser of (i) 90% of the Borrowing Base and (ii) the
total Commitments. The Working Capital Revolving Sub-Commitments are a subset of
the Commitments. Each Lender's Working Capital Revolving Sub-Commitment shall be
pro rata to its Applicable Percentage of the total Commitments.
"Working Capital Revolving Loan" has the meaning assigned to such term in
Section 2.01(b).
Section 1.03 Types of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "General
Revolving Loan") or by Type (e.g., a "Eurodollar Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "General Revolving Borrowing") or
by Type (e.g., a "Eurodollar Borrowing").
Section 1.04 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth in the Loan Documents
herein), (b) any reference herein to any law shall be construed as referring to
such law as amended, modified, codified or reenacted, in whole or in part, and
in effect from time to time, (c) any reference herein to any Person shall be
construed to include such Person's successors and assigns (subject to the
restrictions contained in the Loan Documents herein), (d) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (e) with respect to the determination of any time period, the word
"from" means "from and including" and the word "to" means "to and including" and
(f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Annexes, Exhibits
and Schedules to, this Agreement. No provision of this Agreement or any other
Loan Document shall be interpreted or construed against any Person solely
because such Person or its legal representative drafted such provision.
Section 1.05 Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with
21
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
furnished to the Administrative Agent or the Lenders hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
Financial Statements except for changes in which the Borrower's independent
certified public accountants concur and which are disclosed to Administrative
Agent on the next date on which financial statements are required to be
delivered to the Lenders pursuant to Section 8.01(a); provided that, unless the
Borrower and the Required Lenders shall otherwise agree in writing, no such
change shall modify or affect the manner in which compliance with the covenants
contained herein is computed such that all such computations shall be conducted
utilizing financial information presented consistently with prior periods.
ARTICLE II
THE CREDITS
Section 2.01 Commitments.
(a) Subject to the terms and conditions set forth herein, each
Lender agrees to make Loans to the Borrower during the Availability Period in an
aggregate principal amount that will not result in (i) such Lender's Revolving
Credit Exposure exceeding such Lender's Commitment or (ii) the total Revolving
Credit Exposures exceeding the total Commitments.
(b) Subject to the terms and conditions set forth herein, each
Lender agrees to make revolving credit loans (the "Working Capital Revolving
Loans") to the Borrower from time to time during the Availability Period, in an
aggregate principal amount that will not result in (i) such Lender's Working
Capital Revolving Loans exceeding such Lender's Working Capital Revolving
Sub-Commitment, (ii) the sum of all Working Capital Revolving Loans exceeding
the total Working Capital Revolving Sub-Commitments, or (iii) the sum of the
total Revolving Credit Exposure exceeding the total Commitments.
(c) The Working Capital Revolving Sub-Commitment of each Lender
constitutes a subset of such Lender's Commitment such that (i) the availability
of the Commitments of such Lender shall be reduced by the outstanding principal
amount of such Lender's Working Capital Revolving Loans as of the time of
determination and (ii) the Working Capital Revolving Sub-Commitment of each
Lender shall be reduced by the amount, if any, by which (A) the outstanding
principal amount of such Lender's Revolving Credit Exposure as of the time of
determination exceeds (B) the amount equal to such Lender's Commitment minus
such Lender's Working Capital Revolving Sub-Commitment.
(d) Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans
during the Availability Period.
Section 2.02 Loans and Borrowings.
(a) Borrowings; Several Obligations. Each Loan shall be made as part
of a Borrowing comprised entirely of General Revolving Loans or Working Capital
Revolving Loans as the Borrower may request in accordance herewith and made by
the Lenders ratably in
22
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments are several and no Lender
shall be responsible for any other Lender's failure to make Loans as required.
(b) Types of Loans. Subject to Section 3.03, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.
(c) Minimum Amounts; Limitation on Number of Borrowings. At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$500,000 and not less than $1,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $250,000 and not less than $1,000,000; provided that an ABR
Borrowing may be in an aggregate amount that does not exceed (i) with respect to
Working Capital Revolving Borrowings, the entire unused and available balance of
the Working Capital Revolving Sub-Commitments, (ii) with respect to General
Revolving Borrowings, (A) the total Commitments less total Revolving Credit
Exposure, or (B) amounts required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.08(e). Borrowings of more than one
Type or Class may be outstanding at the same time; provided that there shall not
at any time be more than a total of ten (10) Eurodollar Borrowings outstanding.
Notwithstanding any other provision of this Agreement, the Borrower shall not be
entitled to request, or to elect to convert or continue, any Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.
(d) Notes. The Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A,
dated, in the case of (i) any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement, (ii) any Lender that becomes a
party hereto pursuant to an Assignment and Assumption, as of the effective date
of the Assignment and Assumption or (iii) any Lender that becomes a party hereto
in connection with an increase in the Aggregate Maximum Credit Amounts pursuant
to Section 2.06(c), as of the effective date of such increase, payable to the
order of such Lender in a principal amount equal to its Maximum Credit Amount as
in effect on such date, and otherwise duly completed. In the event that any
Lender's Maximum Credit Amount increases or decreases for any reason (whether
pursuant to Section 2.06, Section 12.04(b) or otherwise), the Borrower shall
deliver or cause to be delivered on the effective date of such increase or
decrease, a new Note payable to the order of such Lender in a principal amount
equal to its Maximum Credit Amount after giving effect to such increase or
decrease, and otherwise duly completed. The date, amount, Type, Class, interest
rate and, if applicable, Interest Period of each Loan made by each Lender, and
all payments made on account of the principal thereof, shall be recorded by such
Lender on its books for its Note, and, prior to any transfer, may be endorsed by
such Lender on a schedule attached to such Note or any continuation thereof or
on any separate record maintained by such Lender. Failure to make any such
notation or to attach
23
a schedule shall not affect any Lender's or the Borrower's rights or obligations
in respect of such Loans or affect the validity of such transfer by any Lender
of its Note.
Section 2.03 Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., Houston time, three
Business Days before the date of the proposed Borrowing or (b) in the case of an
ABR Borrowing, not later than 12:00 noon, Houston time, on the date of the
proposed Borrowing; provided that no such notice shall be required for any
deemed request of an ABR Borrowing to finance the reimbursement of an LC
Disbursement as provided in Section 2.08(e). Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be comprised of Working Capital
Revolving Loans or General Revolving Loans;
(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period";
(vi) the amount of the then effective Borrowing Base, the current
total Revolving Credit Exposures (without regard to the requested Borrowing) and
the pro forma total Revolving Credit Exposures (giving effect to the requested
Borrowing); and
(vii) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of Section
2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no election as to the Class of Borrowing
is specified, then the requested Borrowing shall be a General Revolving
Borrowing. If no Interest Period is specified with respect to any requested
Eurodollar Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month's duration. Each Borrowing Request shall constitute
a representation that the amount of the requested Borrowing shall not cause the
total Revolving Credit Exposures to exceed the total Commitments (i.e., the
lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing
Base).
24
Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
Section 2.04 Interest Elections.
(a) Conversion and Continuance. Each Borrowing initially shall be of
the Type and Class specified in the applicable Borrowing Request and, in the
case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrower may elect to
convert such Borrowing to a different Type or to continue such Borrowing and, in
the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as
provided in this Section 2.04. The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.
(b) Interest Election Requests. To make an election pursuant to this
Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Interest Election Request in a form approved by the Administrative Agent
and signed by the Borrower.
(c) Information in Interest Election Requests. Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to Section
2.04(c)(iii) and (iv) shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
25
(d) Notice to Lenders by the Administrative Agent. Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender's portion of
each resulting Borrowing.
(e) Effect of Failure to Deliver Timely Interest Election Request
and Events of Default and Borrowing Base Deficiencies on Interest Election. If
the Borrower fails to deliver a timely Interest Election Request with respect to
a Eurodollar Borrowing prior to the end of the Interest Period applicable
thereto, then, unless such Borrowing is repaid as provided herein, at the end of
such Interest Period such Borrowing shall be converted to an ABR Borrowing.
Notwithstanding any contrary provision hereof, if an Event of Default or a
Borrowing Base Deficiency has occurred and is continuing: (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing (and any
Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective)
and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
Section 2.05 Funding of Borrowings.
(a) Funding by Lenders. Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 1:00 p.m., Houston time, to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the Lenders.
The Administrative Agent will make such Loans available to the Borrower by
promptly crediting the amounts so received, in like funds, to an account of the
Borrower and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.08(e) shall be remitted by the Administrative Agent to
the Issuing Bank that made such LC Disbursement. Nothing herein shall be deemed
to obligate any Lender to obtain the funds for its Loan in any particular place
or manner or to constitute a representation by any Lender that it has obtained
or will obtain the funds for its Loan in any particular place or manner.
(b) Presumption of Funding by the Lenders. Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
Section 2.05(a) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
26
Section 2.06 Termination, Reduction and Increase of Aggregate Maximum
Credit Amounts.
(a) Scheduled Termination of Commitments. Unless previously
terminated, the Commitments shall terminate on the Maturity Date. If at any time
the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or
reduced to zero, then the Commitments shall terminate on the effective date of
such termination or reduction.
(b) Optional Termination and Reduction of Aggregate Credit Amounts.
(i) The Borrower may at any time terminate, or from time to
time reduce, the Aggregate Maximum Credit Amounts; provided that (A) each
reduction of the Aggregate Maximum Credit Amounts shall be in an amount that is
an integral multiple of $500,000 and not less than $1,000,000, (B) any such
reduction shall not apply to the Working Capital Revolving Sub-Commitments until
such time that the amount of the aggregate Commitments equals the amount of the
aggregate Working Capital Revolving Sub-Commitments and, thereafter, shall
reduce both the aggregate Commitments and the aggregate Working Capital
Revolving Sub-Commitments, and (C) the Borrower shall not terminate or reduce
the Aggregate Maximum Credit Amounts if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 3.04(c), the total Revolving
Credit Exposures would exceed the total Commitments.
(ii) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.06(b)(i) at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable. Any
termination or reduction of the Aggregate Maximum Credit Amounts shall be
permanent and may not be reinstated. Each reduction of the Aggregate Maximum
Credit Amounts shall be made ratably among the Lenders in accordance with each
Lender's Applicable Percentage.
(c) Optional Increase in Aggregate Maximum Credit Amounts.
(i) Subject to the conditions set forth in Section
2.06(c)(ii), the Borrower may increase the Aggregate Maximum Credit Amounts then
in effect by increasing the Maximum Credit Amount of a Lender or by causing a
Person that at such time is not a Lender to become a Lender (an "Additional
Lender").
(ii) Any increase in the Aggregate Maximum Credit Amounts
shall be subject to the following additional conditions:
(A) such increase shall not be less than $5,000,000 unless
the Administrative Agent otherwise consents, and no such increase shall be
permitted if after giving effect thereto the Aggregate Maximum Credit Amounts
would exceed $225,000,000.
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(B) no Default shall have occurred and be continuing at the
effective date of such increase;
(C) on the effective date of such increase, no Eurodollar
Borrowings shall be outstanding or if any Eurodollar Borrowings are outstanding,
then the effective date of such increase shall be the last day of the Interest
Period in respect of such Eurodollar Borrowings unless the Borrower pays
compensation to the extent required by Section 5.02;
(D) no Lender's Maximum Credit Amount may be increased
without the consent of such Lender;
(E) if the Borrower elects to increase the Aggregate Maximum
Credit Amounts by increasing the Maximum Credit Amount of a Lender, the Borrower
and such Lender shall execute and deliver to the Administrative Agent a
certificate substantially in the form of Exhibit E-1 (a "Maximum Credit Amount
Increase Certificate"), and the Borrower shall deliver a new Note payable to the
order of such Lender in a principal amount equal to its Maximum Credit Amount
after giving effect to such increase, and otherwise duly completed; and
(F) If the Borrower elects to increase the Aggregate Maximum
Credit Amounts by causing an Additional Lender to become a party to this
Agreement, then (1) the Borrower must obtain the prior written consent of the
Administrative Agent, (2) the Borrower and such Additional Lender shall execute
and deliver to the Administrative Agent a certificate substantially in the form
of Exhibit E-2 (an "Additional Lender Certificate"), together with an
Administrative Questionnaire and a processing and recordation fee of $3,500, and
(3) the Borrower shall deliver a Note payable to the order of such Additional
Lender in a principal amount equal to its Maximum Credit Amount, and otherwise
duly completed.
(iii) Subject to acceptance and recording thereof pursuant to
Section 2.06(c)(iv), from and after the effective date specified in the Maximum
Credit Amount Increase Certificate or the Additional Lender Certificate (or if
any Eurodollar Borrowings are outstanding, then the last day of the Interest
Period in respect of such Eurodollar Borrowings, unless the Borrower has paid
compensation required by Section 5.02): (A) the amount of the Aggregate Maximum
Credit Amounts shall be increased as set forth therein, and (B) in the case of
an Additional Lender Certificate, any Additional Lender party thereto shall be a
party to this Agreement and the other Loan Documents and have the rights and
obligations of a Lender under this Agreement and the other Loan Documents. In
addition, the Lender or the Additional Lender, as applicable, shall purchase a
pro rata portion of the outstanding Loans (and participation interests in
Letters of Credit) of each of the other Lenders (and such Lenders hereby agree
to sell and to take all such further action to effectuate such sale) such that
each Lender (including any Additional Lender, if applicable) shall hold its
Applicable Percentage of the outstanding Loans (and participation interests)
after giving effect to the increase in the Aggregate Maximum Credit Amounts.
(iv) Upon its receipt of a duly completed Maximum Credit
Amount Increase Certificate or an Additional Lender Certificate, executed by the
Borrower and the Lender or the Borrower and the Additional Lender party thereto,
as applicable, the processing
and recording fee referred to in Section 2.06(c)(ii), the Administrative
Questionnaire referred to in Section 2.06(c)(ii), if applicable, and the written
consent of the Administrative Agent to such increase required by Section
2.06(c)(i), the Administrative Agent shall accept such Maximum Credit Amount
Increase Certificate or Additional Lender Certificate and record the information
contained therein in the Register required to be maintained by the
Administrative Agent pursuant to Section 12.04(b)(iv). No increase in the
Aggregate Maximum Credit Amounts shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
Section 2.06(c)(iv).
Section 2.07 Borrowing Base.
(a) Initial Borrowing Base. For the period from and including the
Effective Date to but excluding the first Redetermination Date, the amount of
the Borrowing Base shall be $50,000,000. Notwithstanding the foregoing, the
Borrowing Base may be subject to further adjustments from time to time pursuant
to Section 8.13(c) or Section 9.12(d).
(b) Scheduled and Interim Redeterminations. Subject to Section
2.07(d), the Borrowing Base shall be redetermined (a "Scheduled
Redetermination") on April 1st and October 1st of each year, commencing April
1st, 2007. In addition, either the Borrower or the Administrative Agent, at the
direction of the Required Lenders, may once during each calendar year, each
elect to cause the Borrowing Base to be redetermined between the Effective Date
and the first Scheduled Redetermination and thereafter, between Scheduled
Redeterminations (an "Interim Redetermination") in accordance with this Section
2.07. The Borrower shall have the right, once during each calendar year, to
initiate an Interim Redetermination in addition to the one otherwise provided in
this Section 2.07(b) upon the proposed acquisition of Proved Developed Producing
Properties whose purchase price is greater than 10% of the Borrowing Base,
provided such Interim Redetermination is in accordance with this Section 2.07.
(c) Scheduled and Interim Redetermination Procedure.
(i) Each Scheduled Redetermination and each Interim
Redetermination shall be effectuated as follows: Upon receipt by the
Administrative Agent of (A) the Reserve Report and the certificate
required to be delivered by the Borrower to the Administrative Agent, in
the case of a Scheduled Redetermination, pursuant to Section 8.12(a) and
(c), and, in the case of an Interim Redetermination, pursuant to Section
8.12(b) and (c), and (B) such other reports, data and supplemental
information, including, without limitation, the information provided
pursuant to Section 8.12(c), as may, from time to time, be reasonably
requested by the Required Lenders (the Reserve Report, such certificate
and such other reports, data and supplemental information being the
"Engineering Reports"), the Administrative Agent shall evaluate the
information contained in the Engineering Reports and shall, in good faith,
propose a new Borrowing Base (the "Proposed Borrowing Base") based upon
such information and such other information (including, without
limitation, the status of title information with respect to the Oil and
Gas Properties as described in the Engineering Reports and the existence
of any other Debt) as the Administrative Agent deems appropriate in its
sole discretion and consistent with its normal oil and gas lending
criteria as it exists at
29
the particular time. In no event shall the Proposed Borrowing Base exceed
the Aggregate Maximum Credit Amounts.
(ii) The Administrative Agent shall notify the Borrower and
the Lenders of the Proposed Borrowing Base (the "Proposed Borrowing Base
Notice"):
(A) in the case of a Scheduled Redetermination (1) if
the Administrative Agent shall have received the Engineering Reports
required to be delivered by the Borrower pursuant to Section 8.12(a)
and (c) in a timely and complete manner, then on or before the March
15th and September 15th of such year following the date of delivery
of such Engineering Report or (2) if the Administrative Agent shall
not have received the Engineering Reports required to be delivered
by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then promptly after the Administrative Agent has
received complete Engineering Reports from the Borrower and has had
a reasonable opportunity to determine the Proposed Borrowing Base in
accordance with Section 2.07(c)(i) and in any event, within fifteen
(15) days after the Administrative Agent has received the required
Engineering Report; and
(B) in the case of an Interim Redetermination, promptly,
and in any event, within fifteen (15) days after the Administrative
Agent has received the required Engineering Reports.
(iii) Any Proposed Borrowing Base that would increase the
Borrowing Base then in effect must be approved or deemed to have been
approved by all of the Lenders as provided in this Section 2.07(c)(iii);
and any Proposed Borrowing Base that would decrease or maintain the
Borrowing Base then in effect must be approved or be deemed to have been
approved by the Required Lenders as provided in this Section 2.07(c)(iii).
Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have
fifteen (15) days to agree with the Proposed Borrowing Base or disagree
with the Proposed Borrowing Base by proposing an alternate Borrowing Base.
If at the end of such fifteen (15) days, any Lender has not communicated
its approval or disapproval in writing to the Administrative Agent, such
silence shall be deemed to be an approval of the Proposed Borrowing Base.
If, at the end of such 15-day period, all of the Lenders, in the case of a
Proposed Borrowing Base that would increase the Borrowing Base then in
effect, or the Required Lenders, in the case of a Proposed Borrowing Base
that would decrease or maintain the Borrowing Base then in effect, have
approved or deemed to have approved, as aforesaid, then the Proposed
Borrowing Base shall become the new Borrowing Base, effective on the date
specified in Section 2.07(d). If, however, at the end of such 15-day
period, all of the Lenders or the Required Lenders, as applicable, have
not approved or deemed to have approved, as aforesaid, then the
Administrative Agent shall poll the Lenders to ascertain the highest
Borrowing Base then acceptable to a number of Lenders sufficient to
constitute the Required Lenders and, so long as such amount does not
increase the Borrowing Base then in effect, such amount shall become the
new Borrowing Base, effective on the date specified in Section 2.07(d).
30
(d) Effectiveness of a Redetermined Borrowing Base. After a
redetermined Borrowing Base is approved or is deemed to have been approved by
all of the Lenders or the Required Lenders, as applicable, pursuant to Section
2.07(c)(iii), the Administrative Agent shall notify the Borrower and the Lenders
of the amount of the redetermined Borrowing Base (the "New Borrowing Base
Notice"), and such amount shall become the new Borrowing Base, effective and
applicable to the Borrower, the Administrative Agent, each Issuing Bank and the
Lenders:
(i) in the case of a Scheduled Redetermination, (A) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on the April 1st or October 1st, as applicable, following
delivery of the New Borrowing Base Notice, or (B) if the Administrative Agent
shall not have received the Engineering Reports required to be delivered by the
Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner,
then on the Business Day next succeeding delivery of the New Borrowing Base
Notice; and
(ii) in the case of an Interim Redetermination, on the
Business Day next succeeding delivery of such notice.
Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination date or the next
adjustment to the Borrowing Base under Section 8.13(c) or Section 9.12(d),
whichever occurs first.
(e) Reduction of Borrowing Base Upon Issuance of Subordinated Debt.
Notwithstanding anything to the contrary contained herein, if the Borrower
issues any Subordinated Debt during the period between Scheduled Redetermination
dates or not in conjunction with an Interim Redetermination, then on the date on
which such Subordinated Debt is issued, the Borrowing Base then in effect shall
be reduced by an amount equal to the product of 0.30 multiplied by the stated
principal amount of such Subordinated Debt. The Borrowing Base as so reduced
shall become the new Borrowing Base immediately upon the date of such issuance,
effective and applicable to the Borrower, the Agents, the Issuing Bank and the
Lenders on such date until the next redetermination or modification thereof
hereunder. For purposes of this Section 2.07(e), if any such Debt is issued at a
discount or otherwise sold for less than "par", the reduction shall be
calculated based upon the stated principal amount without reference to such
discount.
Section 2.08 Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein,
the Borrower may request any Issuing Bank to issue Letters of Credit for its own
account or for the account of the Borrower or any of its Subsidiaries, in a form
reasonably acceptable to the Administrative Agent and such Issuing Bank, at any
time and from time to time during the Availability Period; provided that the
Borrower may not request the issuance, amendment, renewal or extension of
Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time
or would exist as a result thereof. In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of any
form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the
31
Borrower with, an Issuing Bank relating to any Letter of Credit, the terms and
conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
deliver as permitted by Section 12.01(a) (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to any Issuing Bank and the Administrative Agent (not less than three (3)
Business Days in advance of the requested date of issuance, amendment, renewal
or extension) a notice:
(i) requesting the issuance of a Letter of Credit or
identifying the Letter of Credit issued by such Issuing Bank to be amended,
renewed or extended;
(ii) specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day);
(iii) specifying the date on which such Letter of Credit is to
expire (which shall comply with Section 2.08(c));
(iv) specifying the amount of such Letter of Credit;
(v) specifying the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit; and
(vi) specifying the amount of the then effective Borrowing
Base and whether a Borrowing Base Deficiency exists at such time, the current
total Revolving Credit Exposures (without regard to the requested Letter of
Credit or the requested amendment, renewal or extension of an outstanding Letter
of Credit) and the pro forma total Revolving Credit Exposures (giving effect to
the requested Letter of Credit or the requested amendment, renewal or extension
of an outstanding Letter of Credit).
Each notice shall constitute a representation that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the LC
Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the lesser of the Aggregate Maximum Credit Amounts
and the then effective Borrowing Base.
If requested by any Issuing Bank, the Borrower also shall submit a letter of
credit application on such Issuing Bank's standard form in connection with any
request for a Letter of Credit.
(c) Expiration Date. Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
32
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank that issues such Letter of Credit
or the Lenders, each Issuing Bank that issues a Letter of Credit hereunder
hereby grants to each Lender, and each Lender hereby acquires from such Issuing
Bank, a participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of any Issuing Bank that issues a Letter of Credit hereunder, such
Lender's Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by the Borrower on the date due as provided in Section
2.08(e), or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this Section 2.08(d) in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default, the existence
of a Borrowing Base Deficiency or reduction or termination of the Commitments,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 1:00 p.m., Houston time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 11:00 a.m., Houston time, on such date, or, if such notice
has not been received by the Borrower prior to such time on such date, then not
later than 1:00 p.m., Houston time, on (1) the Business Day that the Borrower
receives such notice, if such notice is received prior to 11:00 a.m., Houston
time, on the day of receipt, or (2) the Business Day immediately following the
day that the Borrower receives such notice, if such notice is not received prior
to such time on the day of receipt; provided that if such LC Disbursement is not
less than $1,000,000, the Borrower shall, subject to the conditions to Borrowing
set forth herein, be deemed to have requested, and the Borrower does hereby
request under such circumstances, that such payment be financed with an ABR
Borrowing in an equivalent amount and, to the extent so financed, the Borrower's
obligation to make such payment shall be discharged and replaced by the
resulting ABR Borrowing. If the Borrower fails to make such payment when due,
the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect thereof and such
Lender's Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this Section
2.08(e), the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Lenders have made payments pursuant to this Section
2.08(e) to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank
as their interests may appear. Any payment made
33
by a Lender pursuant to this Section 2.08(e) to reimburse the Issuing Bank for
any LC Disbursement (other than the funding of ABR Loans as contemplated above)
shall not constitute a Loan and shall not relieve the Borrower of its obligation
to reimburse such LC Disbursement. Any LC Disbursement not reimbursed by the
Borrower or funded as a Loan prior to 1:00 p.m., Houston time, shall bear
interest for such day at the ABR plus the Applicable Margin.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in Section 2.08(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by any Issuing Bank under a
Letter of Credit issued by such Issuing Bank against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or
any Letter of Credit Agreement, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section 2.08(f), constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder. Neither the Administrative Agent, the Lenders nor any Issuing Bank,
nor any of their Related Parties shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of any Issuing Bank; provided that the foregoing shall not be
construed to excuse any Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by such Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of any Issuing Bank (as finally determined by a court of
competent jurisdiction), such Issuing Bank shall be deemed to have exercised all
requisite care in each such determination. In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank that issued such Letter
of Credit may, in its sole discretion, either accept and make payment upon such
documents without responsibility for further investigation, regardless of any
notice or information to the contrary, or refuse to accept and make payment upon
such documents if such documents are not in strict compliance with the terms of
such Letter of Credit.
(g) Disbursement Procedures. Each Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under
34
a Letter of Credit issued by such Issuing Bank. Such Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether such Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse such Issuing Bank and the Lenders with respect to any such LC
Disbursement.
(h) Interim Interest. If any Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed such Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section
2.08(e)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall
be for the account of such Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse
such Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of an Issuing Bank. Any Issuing Bank may be replaced
or resign at any time by written agreement among the Borrower, the
Administrative Agent, such resigning or replaced Issuing Bank and, in the case
of a replacement, the successor Issuing Bank. The Administrative Agent shall
notify the Lenders of any such resignation or replacement of an Issuing Bank. At
the time any such resignation or replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the resigning or
replaced Issuing Bank pursuant to Section 3.05(b). In the case of the
replacement of an Issuing Bank, from and after the effective date of such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the replaced Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the resignation or replacement of an Issuing Bank hereunder, the
resigning or replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
resignation or replacement, but shall not be required to issue additional
Letters of Credit.
(j) Cash Collateralization. If (i) any Event of Default shall occur
and be continuing and the Borrower receives notice from the Administrative Agent
or the Required Lenders demanding the deposit of cash collateral pursuant to
this Section 2.08(j), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect
35
to the Borrower or any of its Subsidiaries described in Section 10.01(h) or
Section 10.01(i). The Borrower hereby grants to the Administrative Agent, for
the benefit of each Issuing Bank and the Lenders, an exclusive first priority
and continuing perfected security interest in and Lien on such account and all
cash, checks, drafts, certificates and instruments, if any, from time to time
deposited or held in such account, all deposits or wire transfers made thereto,
any and all investments purchased with funds deposited in such account, all
interest, dividends, cash, instruments, financial assets and other Property from
time to time received, receivable or otherwise payable in respect of, or in
exchange for, any or all of the foregoing, and all proceeds, products,
accessions, rents, profits, income and benefits therefrom, and any substitutions
and replacements therefor. The Borrower's obligation to deposit amounts pursuant
to this Section 2.08(j) shall be absolute and unconditional, without regard to
whether any beneficiary of any such Letter of Credit has attempted to draw down
all or a portion of such amount under the terms of a Letter of Credit, and, to
the fullest extent permitted by applicable law, shall not be subject to any
defense or be affected by a right of set-off, counterclaim or recoupment which
the Borrower or any of its Subsidiaries may now or hereafter have against any
such beneficiary, any Issuing Bank, the Administrative Agent, the Lenders or any
other Person for any reason whatsoever. Such deposit shall be held as collateral
securing the payment and performance of the Borrower's and any Guarantor's
obligations under this Agreement and the other Loan Documents. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account; provided that investments of
funds in such account in investments permitted by Section 9.05(c) or (e) may be
made at the option of the Borrower at its direction, risk and expense. Interest
or profits, if any, on such investments shall accumulate in such account. Moneys
in such account shall be applied by the Administrative Agent to reimburse, on a
pro rata basis, each Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated, be applied to
satisfy other obligations of the Borrower and the Guarantors, if any, under this
Agreement or the other Loan Documents. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, and the Borrower is not otherwise required to pay to the Administrative
Agent the excess attributable to an LC Exposure in connection with any
prepayment pursuant to Section 3.04(c), then such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
Section 3.01 Repayment of Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date.
Section 3.02 Interest.
(a) ABR Loans. Each ABR Loan comprising an ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.
36
(b) Eurodollar Loans. Each Eurodollar Loan comprising a Eurodollar
Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period
in effect for such Eurodollar Loan plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.
(c) Post-Default and Borrowing Base Deficiency Rate. Notwithstanding
the foregoing, (i) if an Event of Default has occurred and is continuing, or if
any principal of or interest on any Loan or any fee or other amount payable by
the Borrower or any Guarantor hereunder or under any other Loan Document is not
paid when due, whether at stated maturity, upon acceleration or otherwise, and
including any payments in respect of a Borrowing Base Deficiency under Section
3.04(c), then all Loans outstanding, in the case of an Event of Default, and
such overdue amount, in the case of a failure to pay amounts when due, shall
bear interest, after as well as before judgment, at a rate per annum equal to
two percent (2%) plus the rate applicable to ABR Loans as provided in Section
3.02(a), but in no event to exceed the Highest Lawful Rate, and (ii) during any
Borrowing Base Deficiency, all Loans outstanding at such time shall bear
interest, after as well as before judgment, at the rate then applicable to such
Loans, plus the Applicable Margin, if any, plus an additional two percent (2%),
but in no event to exceed the Highest Lawful Rate.
(d) Interest Payment Dates. Accrued interest on each Loan shall be
payable in arrears on: (i) with respect to any ABR Loan, the last day of each
March, June, September and December; (ii) with respect to any Eurodollar Loan,
the last day of the Interest Period applicable to the Borrowing of which such
Loan is a part and (iii) in any case, on the Termination Date; provided that (x)
interest accrued pursuant to Section 3.02(c)(i) shall be payable on demand, (y)
in the event of any repayment or prepayment of any Loan (other than an optional
prepayment of an ABR Loan prior to the Termination Date), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, and (z) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(e) Interest Rate Computations. All interest hereunder shall be
computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), except that interest
computed by reference to the Alternate Base Rate shall be computed on the basis
of a year of 365 days (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO
Rate shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error, and be binding upon the parties
hereto.
Section 3.03 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the LIBO Rate or the Adjusted LIBO Rate for such Interest
Period; or
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(b) the Administrative Agent is advised by the Required Lenders that
the LIBO Rate or Adjusted LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
Section 3.04 Prepayments.
(a) Optional Prepayments. The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with Section 3.04(b).
(b) Notice and Terms of Optional Prepayment. The Borrower shall
notify the Administrative Agent by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing,
not later than 12:00 noon, Houston time, three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later
than 12:00 noon, Houston time, one Business Day before the date of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date and
the principal amount of each Borrowing or portion thereof to be prepaid.
Promptly following receipt of any such notice relating to a Borrowing, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 3.02.
(c) Mandatory Prepayments.
(i) If, after giving effect to any termination or reduction of
the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), the total
Revolving Credit Exposures exceeds the total Commitments, then the Borrower
shall (A) prepay the Borrowings on the date of such termination or reduction in
an aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Borrowings as a result of an LC Exposure, pay
to the Administrative Agent on behalf of the Lenders an amount equal to such
excess to be held as cash collateral as provided in Section 2.08(j).
(ii) Upon any redetermination of or adjustment to the amount
of the Borrowing Base in accordance with Section 2.07 or Section 8.13(c), if the
total Revolving Credit Exposures exceeds the redetermined or adjusted Borrowing
Base, then the Borrower shall (A) prepay the Borrowings in an aggregate
principal amount equal to such excess, and (B) if any
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excess remains after prepaying all of the Borrowings as a result of an LC
Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
equal to such excess to be held as cash collateral as provided in Section
2.08(j). The Borrower shall be obligated to (a) make at least half of such
prepayment and/or deposit of cash collateral within forty-five days (45)
following the later of its receipt of the New Borrowing Base Notice in
accordance with Section 2.07(d) or the date the adjustment occurs and (b) to
make the remaining portion of such prepayment and/or deposit of cash collateral
within ninety (90) days following the later of its receipt of the New Borrowing
Base Notice in accordance with Section 2.07(d) or the date the adjustment
occurs; provided that all payments required to be made pursuant to this Section
3.04(c)(ii) must be made on or prior to the Termination Date.
(iii) Upon any adjustments to the Borrowing Base pursuant to
Section 9.12(d), if the total Revolving Credit Exposures exceeds the Borrowing
Base as adjusted, then the Borrower shall (A) prepay the Borrowings in an
aggregate principal amount equal to such excess, and (B) if any excess remains
after prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(j). The Borrower shall be
obligated to make such prepayment and/or deposit of cash collateral on the date
it or any Subsidiary receives cash proceeds as a result of such disposition;
provided that all payments required to be made pursuant to this Section
3.04(c)(iii) must be made on or prior to the Termination Date.
(iv) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding,
and, second, to any Eurodollar Borrowings then outstanding, and if more than one
Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in
order of priority beginning with the Eurodollar Borrowing with the least number
of days remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.
(v) Each prepayment of Borrowings pursuant to this Section
3.04(c) shall be applied ratably to the Loans included in the prepaid
Borrowings. Prepayments pursuant to this Section 3.04(c) shall be accompanied by
accrued interest to the extent required by Section 3.02.
(d) No Premium or Penalty. Prepayments permitted or required under
this Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.
Section 3.05 Fees.
(a) Commitment Fees. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the applicable Commitment Fee Rate on the average daily amount
of the unused amount of the Commitment of such Lender during the period from and
including the date of this Agreement to but excluding the Termination Date.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the Termination Date,
commencing on the first such date to occur after the date hereof. All commitment
fees shall be
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computed on the basis of a year of 360 days, unless such computation would
exceed the Highest Lawful Rate, in which case interest shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date of this Agreement to but excluding
the later of the date on which such Lender's Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate of 0.125% per annum on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the date of
this Agreement to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC Exposure, provided
that in no event shall such fee be less than $500 during any quarter and (iii)
to each Issuing Bank, for its own account, its standard fees with respect to the
amendment, renewal or extension of any Letter of Credit issued by such Issuing
Bank or processing of drawings thereunder. Participation fees accrued through
and including the last day of March, June, September and December of each year
shall be payable on the third Business Day following such last day, commencing
on the first such date to occur after the date of this Agreement and fronting
fees with respect to any Letter of Credit shall be payable at the time of
issuance of such Letter of Credit; provided that all such fees shall be payable
on the Termination Date and any such fees accruing after the Termination Date
shall be payable on demand. Any other fees payable to an Issuing Bank pursuant
to this Section 3.05(b) shall be payable within 10 days after demand. All
participation fees and fronting fees shall be computed on the basis of a year of
360 days, unless such computation would exceed the Highest Lawful Rate, in which
case such fees shall be computed on the basis of a year of 365 days (or 366 days
in a leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(c) Administrative Agent Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.
(d) Borrowing Base Increase Fees. The Borrower agrees to pay to the
Administrative Agent, for the account of each Lender then party to this
Agreement, ratably in accordance with its Applicable Percentage, a Borrowing
Base increase fee equal to 0.25% on the amount of any increase of the Borrowing
Base over the highest Borrowing Base previously in effect, payable on the day a
New Borrowing Base Notice is given.
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ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.
Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Payments by the Borrower. The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 1:00 p.m., Houston time, on
the date when due, in immediately available funds, without defense, deduction,
recoupment, set-off or counterclaim. Fees, once paid, shall be fully earned and
shall not be refundable under any circumstances. Any amounts received after such
time on any date may, in the discretion of the Administrative Agent, be deemed
to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices specified in Section 12.01, except payments
to be made directly to an Issuing Bank as expressly provided herein and except
that payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section
12.03 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in dollars.
(b) Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, unreimbursed LC Disbursements, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.
(c) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with
41
the express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or participant,
other than to the Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this Section 4.01(c) shall apply). The Borrower consents to
the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
Section 4.02 Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or any Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or such Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or such Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
Section 4.03 Certain Deductions by the Administrative Agent. If any Lender
shall fail to make any payment required to be made by it pursuant to Section
2.05(b), Section 2.08(d), Section 2.08(e) or Section 4.02 then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
Section 5.01 Increased Costs.
(a) Eurodollar Changes in Law. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such
Lender;
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and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or any Issuing Bank
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's or such Issuing
Bank's capital or on the capital of such Lender's or such Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by such Issuing Bank, to a level below that which such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding company could
have achieved but for such Change in Law (taking into consideration such
Lender's or such Issuing Bank's policies and the policies of such Lender's or
such Issuing Bank's holding company with respect to capital adequacy), then from
time to time the Borrower will pay to such Lender or such Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding company for
any such reduction suffered.
(c) Certificates. A certificate of a Lender or any Issuing Bank
setting forth in reasonable detail the basis of its request and the amount or
amounts necessary to compensate such Lender or such Issuing Bank or its holding
company, as the case may be, as specified in Section 5.01(a) or (b) shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender or such Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.
(d) Effect of Failure or Delay in Requesting Compensation. Failure
or delay on the part of any Lender or any Issuing Bank to demand compensation
pursuant to this Section 5.01 shall not constitute a waiver of such Lender's or
such Issuing Bank's right to demand such compensation, provided that no Lender
may make any such demand more than 180 days after the Termination Date, nor for
any amount which has accrued more than 365 days prior to such Lender or Issuing
Bank delivering the certificate required in Section 5.01(c).
Section 5.02 Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the
43
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market.
A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
Section 5.03 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower or any Guarantor under any Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower or any Guarantor shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 5.03(a)), the Administrative Agent, Lender or Issuing Bank (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower or such Guarantor shall make such
deductions and (iii) the Borrower or such Guarantor shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) Payment of Other Taxes by the Borrower. The Borrower shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
(c) Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent, each Lender and each Issuing Bank, within 10 days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by the Administrative Agent, such Lender or such Issuing Bank,
as the case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section
5.03) and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate of the Administrative Agent, a Lender or an Issuing Bank as to the
basis of such Indemnified Taxes and Other Taxes and the amount of such payment
or liability under this Section 5.03 shall be delivered to the Borrower and
shall be conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any payment
of Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
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(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
Section 5.04 Designation of Different Lending Office. If any Lender
requests compensation under Section 5.01, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 5.03, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (a) would eliminate or reduce amounts
payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the
future and (b) would not subject such Lender to any unreimbursed cost or expense
and would not otherwise be disadvantageous to such Lender. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
Section 5.05 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender's obligation to make such Eurodollar Loans shall be
suspended (the "Affected Loans") until such time as such Lender may again make
and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans on the date specified by such Lender in such notice)
and, to the extent that Affected Loans are so made as (or converted into) ABR
Loans, all payments of principal which would otherwise be applied to such
Lender's Affected Loans shall be applied instead to its ABR Loans.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Effective Date. The obligations of the Lenders to make Loans
and of any Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 12.02):
(a) The Arranger, the Administrative Agent and the Lenders shall
have received all fees and other amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.
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(b) The Administrative Agent shall have received a certificate of EV
Management setting forth (i) resolutions of the board of directors or other
managing body with respect to the authorization of the Parent, the Borrower and
each Guarantor to execute and deliver the Loan Documents to which each is a
party and to enter into the transactions contemplated in those documents, (ii)
the individuals (y) who are authorized to sign the Loan Documents to which the
Parent, the Borrower or such Guarantor is a party and (z) who will, until
replaced by another individual duly authorized for that purpose, act as each
such entity's representative for the purposes of signing documents and giving
notices and other communications in connection with this Agreement and the other
Loan Documents to which it is a party, (iii) specimen signatures of such
authorized individuals, and (iv) the articles or certificate of incorporation or
formation, as applicable, and bylaws, operating agreement or partnership
agreement, as applicable, of the Parent, the Borrower and each Guarantor, in
each case, certified as being true and complete. The Administrative Agent and
the Lenders may conclusively rely on such certificate until the Administrative
Agent receives notice in writing from the Borrower to the contrary.
(c) The Administrative Agent shall have received certificates of the
appropriate State agencies with respect to the existence, qualification and good
standing of the Parent, the Borrower and each Guarantor, if any.
(d) The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit B, duly and
properly executed by a Responsible Officer and dated as of the Effective Date.
(e) The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.
(f) The Administrative Agent shall have received duly executed Notes
payable to the order of each Lender in a principal amount equal to its Maximum
Credit Amount dated as of the date hereof.
(g) The Administrative Agent shall have received from each party
thereto duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Security Instruments, including the Guarantee
Agreement and the other Security Instruments described on Exhibit C-1. In
connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall:
(i) be reasonably satisfied that the Security Instruments
create first priority, perfected Liens (subject only to Excepted Liens
identified in clauses (a) to (d) and (f) of the definition thereof, but
subject to the provisos at the end of such definition) on at least 80% of
the total value of the Oil and Gas Properties evaluated in the Initial
Reserve Report; and
(ii) have received certificates, together with undated, blank
stock powers for each such certificate, representing all of the issued and
outstanding Equity Interests of each of the Guarantors.
46
(h) The Administrative Agent shall have received an opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, special counsel to the Borrower, (i) C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
special Louisiana counsel, (ii) Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, special
Ohio counsel, (iii) Waters, Warner & ▇▇▇▇▇▇, PLLC, special West Virginia counsel
and (iv) any other special counsel requested by the Administrative Agent, each
in form and substance satisfactory to the Administrative Agent, as to such
matters incident to the Transactions as the Administrative Agent may reasonably
request.
(i) The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with Section 7.12.
(j) The Administrative Agent shall have received such title
information as the Administrative Agent may reasonably require, all of which
shall be reasonably satisfactory to the Administrative Agent in form and
substance, on at least 70% of the total value of the Oil and Gas Properties
evaluated by the Initial Reserve Report.
(k) The Administrative Agent shall have received a certificate of a
Responsible Officer certifying that the Borrower has received all consents and
approvals required by Section 7.03.
(l) The Administrative Agent shall have received the financial
statements referred to in Section 7.04(a) and the Initial Reserve Report.
(m) The Administrative Agent shall be reasonably satisfied with the
environmental condition of the Oil and Gas Properties of the Borrower and its
Subsidiaries.
(n) The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens encumbering the Properties of the
Parent, the Borrower and any of their Subsidiaries for each of the following
jurisdictions: Delaware, Louisiana, West Virginia and Ohio and any other
jurisdiction requested by the Administrative Agent, other than those being
assigned or released on or prior to the Effective Date or Liens permitted by
Section 9.03.
(o) The Administrative Agent shall have received:
(i) evidence of either (1) payment in full of all amounts due
under the Existing Credit Agreement, the termination of all
commitments to lend thereunder and the release of all Liens securing
such obligations and any other obligations secured thereby, or (2)
the modification and amendment of the Existing Credit Agreement such
that none of the Parent, the Borrower or any of their Subsidiaries
will have any liability, obligation or indebtedness thereunder and
all Liens on any of their respective properties, assets or capital
stock, if any, securing any obligations or indebtedness arising
under the Existing Credit Agreement have been released,
47
(ii) a list of all Swap Agreements to which the Borrower or
any Subsidiary is a party as of the date of this Agreement, which
list shall be listed on Schedule 7.20 hereto, and
(iii) evidence of the assignment, novation or other transfer,
if needed, to one or more Lenders or Approved Counterparties of each
such Swap Agreements referred to in clause (ii) above, together with
a copy of each such Swap Agreement, certified by the Borrower as
being a true and complete copy.
(p) The Administrative Agent shall have received evidence that the
Parent has closed its Initial Public Offering.
(q) The Administrative Agent shall have received such other
documents as the Administrative Agent or special counsel to the Administrative
Agent may reasonably request.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of each Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 12.02)
at or prior to 1:00 p.m., Houston time, on September 29, 2006 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate
at such time).
Section 6.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding), and of
each Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:
(a) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Material Adverse Effect shall have occurred.
(c) The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, such representations and warranties shall
continue to be true and correct as of such specified earlier date.
(d) The making of such Loan or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, would not conflict with, or
cause any Lender
48
or any Issuing Bank to violate or exceed, any applicable Governmental
Requirement, and no Change in Law shall have occurred, and no litigation shall
be pending or threatened, which does or, with respect to any threatened
litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of
any Loan, the issuance, amendment, renewal, extension or repayment of any Letter
of Credit or any participations therein or the consummation of the transactions
contemplated by this Agreement or any other Loan Document.
(e) The receipt by the Administrative Agent of a Borrowing Request
in accordance with Section 2.03 or a request for a Letter of Credit in
accordance with Section 2.08(b), as applicable.
Each request for a Borrowing and each issuance, amendment, renewal or extension
of any Letter of Credit shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
Section 6.02(a) through (e).
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Each of the Parent and the Borrower represents and warrants to the Lenders
that:
Section 7.01 Organization; Powers. Each of the Parent, Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, and has all material governmental licenses, authorizations, consents
and approvals necessary, to own its assets and to carry on its business as now
conducted, and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where failure to have
such power, authority, licenses, authorizations, consents, approvals and
qualifications could not reasonably be expected to have a Material Adverse
Effect.
Section 7.02 Authority; Enforceability. The Transactions are within the
Parent's, Borrower's and each Guarantor's partnership powers and have been duly
authorized by all necessary partnership and, if required, member action
(including, without limitation, any action required to be taken by any class of
directors of the Borrower or any other Person, whether interested or
disinterested, in order to ensure the due authorization of the Transactions).
Each Loan Document to which the Parent, the Borrower and any Guarantor is a
party has been duly executed and delivered by the Parent, the Borrower and such
Guarantor and constitutes a legal, valid and binding obligation of the Parent,
the Borrower and such Guarantor, as applicable, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
Section 7.03 Approvals; No Conflicts. The Transactions (a) do not require
any consent or approval of, registration or filing with, or any other action by,
any Governmental Authority or any other third Person (including the members or
any class of directors of the Parent, the Borrower or any other Person, whether
interested or disinterested), nor is any such consent, approval, registration,
filing or other action necessary for the validity or enforceability of any Loan
Document or the consummation of the transactions contemplated thereby, except
such as
49
have been obtained or made and are in full force and effect, and except for the
filing and recording of Security Instruments to perfect the Liens created
hereby, (b) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of the Parent, the Borrower or any of
its Subsidiaries or any order of any Governmental Authority, (c) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon the Parent, the Borrower or any of their Subsidiaries or
their Properties, or give rise to a right thereunder to require any payment to
be made by the Parent, the Borrower or such Subsidiary and (d) will not result
in the creation or imposition of any Lien on any Property of the Parent, the
Borrower or any of its Subsidiaries (other than the Liens created by the Loan
Documents).
Section 7.04 Financial Position; No Material Adverse Change.
(a) The Parent has heretofore furnished to the Lenders its (1)
consolidated balance sheet and statements of income, stockholders equity and
cash flows as of and for the fiscal year ended December 31, 2005, unaudited and
pro forma after giving effect to the contemplated restructuring transactions
contemplated by the S-1, (2) and the Parent's balance sheet as of May 12, 2006,
audited by Deloitte & Touche, LLP and (3) consolidated balance sheet and
statements of income, stockholders equity and cash flows of the Parent as of and
for the fiscal quarter ended June 30, 2006, unaudited and pro forma after giving
effect to the contemplated restructuring transactions contemplated by the S-1.
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the unaudited quarterly financial statements.
(b) Since June 30, 2006, there has been no event, development or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect.
(c) Neither the Parent, the Borrower nor any of their Subsidiaries
has on the date hereof any material Debt (including Disqualified Capital Stock),
or any contingent liabilities, off-balance sheet liabilities or partnerships,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any materially unfavorable commitments, except as
referred to or reflected or provided for in the Financial Statements.
Section 7.05 Litigation. Except as set forth on Schedule 7.05, there are
no actions, suits, investigations or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Parent or the
Borrower, threatened against or affecting the Parent, the Borrower or any of
their Subsidiaries (a) as to which there is a reasonable possibility of an
adverse determination that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect or (b) that involve any Loan Document or the Transactions. Since the date
of this Agreement, there has been no change in the status of the matters
disclosed in Schedule 7.05 that, individually or in the aggregate, has resulted
in, or could reasonably be expected to result in, a Material Adverse Effect.
50
Section 7.06 Environmental Matters. Except for such matters as set forth
on Schedule 7.06 or that, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect on the Parent or the Borrower:
(a) the Borrower and its Subsidiaries and each of their respective
Properties and operations thereon are, and within all applicable statute of
limitation periods have been, in compliance with all applicable Environmental
Laws;
(b) the Borrower and its Subsidiaries have obtained all
Environmental Permits required for their respective operations and each of their
Properties, with all such Environmental Permits being currently in full force
and effect, and none of the Borrower or its Subsidiaries has received any
written notice or otherwise has knowledge that any such existing Environmental
Permit will be revoked or that any application for any new Environmental Permit
or renewal of any existing Environmental Permit will be protested or denied;
(c) there are no claims, demands, suits, orders, inquiries, or
proceedings concerning any violation of, or any liability (including as a
potentially responsible party) under, any applicable Environmental Laws that is
pending or threatened against the Borrower or its Subsidiaries or any of their
respective Properties or as a result of any operations at the Properties;
(d) none of the Properties contain or have contained any: (i)
underground storage tanks; (ii) asbestos-containing materials; or (iii)
landfills or dumps; (iv) hazardous waste management units as defined pursuant to
RCRA or any comparable state law; or (v) sites on or nominated for the National
Priority List promulgated pursuant to CERCLA or any state remedial priority list
promulgated or published pursuant to any comparable state law;
(e) there has been no Release or threatened Release, of Hazardous
Materials at, on, under or from any of the Borrower's or their Subsidiaries'
Properties, there are no investigations, remediations, abatements, removals, or
monitorings of Hazardous Materials required under applicable Environmental Laws
at such Properties and none of such Properties are adversely affected by any
Release or threatened Release of a Hazardous Material originating or emanating
from any other real property;
(f) neither the Borrower nor its Subsidiaries has received any
written notice asserting an alleged liability or obligation under any applicable
Environmental Laws with respect to the investigation, remediation, abatement,
removal, or monitoring of any Hazardous Materials at, under, or Released or
threatened to be Released from any real properties offsite the Parent's, the
Borrower's or their Subsidiaries' Properties and there are no conditions or
circumstances that would reasonably be expected to result in the receipt of such
written notice.
(g) there has been no exposure of any Person or property to any
Hazardous Materials as a result of or in connection with the operations and
businesses of any of the Borrower's or its Subsidiaries' Properties that would
reasonably be expected to form the basis for a claim for damages or compensation
and, to the Borrower's knowledge, there are no conditions or circumstances that
would reasonably be expected to result in the receipt of notice regarding such
exposure; and
51
(h) To the extent requested by the Administrative Agent, the
Borrower and its Subsidiaries have provided to the Administrative Agent complete
and correct copies of all environmental site assessment reports, investigations,
studies, analyses, and correspondence on environmental matters (including
matters relating to any alleged non-compliance with or liability under
Environmental Laws) that are in any of the Borrower's or its Subsidiaries'
possession or control and relating to their respective Properties or operations
thereon.
Section 7.07 Compliance with the Laws and Agreements; No Defaults.
(a) Each of the Parent, the Borrower and their Subsidiaries is in
compliance with all Governmental Requirements applicable to it or its Property
and all agreements and other instruments binding upon it or its Property, and
possesses all licenses, permits, franchises, exemptions, approvals and other
authorizations granted by Governmental Authorities necessary for the ownership
of its Property and the present conduct of its business, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
(b) None of the Parent, the Borrower or any of their Subsidiaries is
in default nor has any event or circumstance occurred which, but for the
expiration of any applicable grace period or the giving of notice, or both,
would constitute a default or would require the Parent, the Borrower or any of
their Subsidiaries to Redeem or make any offer to Redeem all or any portion of
any Debt outstanding under any indenture, note, credit agreement or instrument
pursuant to which any Material Indebtedness is outstanding or by which the
Borrower or any of its Subsidiaries or any of their Properties is bound.
(c) No Default has occurred and is continuing.
Section 7.08 Investment Company Act. None of the Parent, the Borrower or
any of their Subsidiaries is an "investment company" or a company "controlled"
by an "investment company," within the meaning of, or subject to regulation
under, the Investment Company Act of 1940, as amended.
Section 7.09 Taxes. Each of the Parent, the Borrower and their
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes required
to have been paid by it, except (a) Taxes that are being contested in good faith
by appropriate proceedings and for which the Parent, the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves in
accordance with GAAP or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect. The charges,
accruals and reserves on the books of the Parent, the Borrower and their
Subsidiaries in respect of Taxes and other governmental charges are, in the
reasonable opinion of the Parent and the Borrower, adequate. No Tax Lien has
been filed and, to the knowledge of the Parent or the Borrower, no claim is
being asserted with respect to any such Tax or other such governmental charge.
52
Section 7.10 ERISA.
(a) The Borrower, its Subsidiaries and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the Code
regarding each Plan, if any.
(b) Each Plan, if any, is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred that could result
in imposition on the Borrower, any of its Subsidiaries or any ERISA Affiliate
(whether directly or indirectly) of (i) either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant
to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty
liability damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September 2, 1974. No
liability to the PBGC (other than for the payment of current premiums which are
not past due) by the Borrower, any of its Subsidiaries or any ERISA Affiliate
has been or is expected by the Borrower, any of its Subsidiaries or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with respect
to any Plan has occurred.
(e) Full payment when due has been made of all amounts which the
Borrower, any of its Subsidiaries or any ERISA Affiliate is required under the
terms of each Plan, if any, or applicable law to have paid as contributions to
such Plan as of the date hereof, and no accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan.
(f) The actuarial present value of the benefit liabilities under
each Plan, if any, which is subject to Title IV of ERISA does not, as of the end
of the Borrower's most recently ended fiscal year, exceed the current value of
the assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA.
(g) Neither the Borrower, its Subsidiaries nor any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by the Borrower, any of its Subsidiaries or any ERISA
Affiliate in its sole discretion at any time without any material liability.
(h) Neither the Borrower, its Subsidiaries nor any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the six-year period
preceding the date hereof sponsored, maintained or contributed to, any
Multiemployer Plan.
(i) Neither the Borrower, its Subsidiaries nor any ERISA Affiliate
is required to provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the Plan.
53
Section 7.11 Disclosure; No Material Misstatements. As set forth on
Schedule 7.11, the Borrower has disclosed to the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. None of the reports, financial statements, certificates or other
information furnished by or on behalf of the Borrower or any of its Subsidiaries
to the Administrative Agent, any other Agent or any Lender or any of their
Affiliates in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or under any other Loan Document (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time. There
is no fact peculiar to the Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect or in the future is
reasonably likely to have a Material Adverse Effect and which has not been set
forth in this Agreement or the Loan Documents or the other documents,
certificates and statements furnished to the Administrative Agent, any other
Agent or the Lenders by or on behalf of the Borrower or any of its Subsidiaries
prior to, or on, the date hereof in connection with the transactions
contemplated hereby.
Section 7.12 Insurance. The Borrower has, and has caused all of its
Subsidiaries to have, (a) all insurance policies sufficient for the compliance
by each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in at least amounts and against such risk
(including, without limitation, public liability) that are usually insured
against by companies similarly situated and engaged in the same or a similar
business for the assets and operations of the Borrower and its Subsidiaries. The
Administrative Agent and the Lenders have been named as additional insureds in
respect of such liability insurance policies and the Administrative Agent has
been named as loss payee with respect to Property loss insurance.
Section 7.13 Restriction on Liens. None of the Parent, the Borrower or any
of their Subsidiaries is a party to any material agreement or arrangement, or
subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to the Administrative Agent and
the Lenders on or in respect of their Properties to secure the Indebtedness and
the Loan Documents, except for any such restrictions on Properties subject to a
Lien permitted under Section 9.03 set forth in the agreements or instruments
evidencing or governing such Lien, but in each case, only on the property
subject to such Lien.
Section 7.14 Subsidiaries. Except as set forth on Schedule 7.14 or as
disclosed in writing, from time to time, to the Administrative Agent (which
shall promptly furnish a copy to the Lenders), which shall be a supplement to
Schedule 7.14, the Borrower has no Subsidiaries. The Borrower has no Foreign
Subsidiaries.
Section 7.15 Location of Business and Offices. The Borrower's jurisdiction
of organization is Delaware; the name of the Borrower as listed in the public
records of its jurisdiction of organization is EV Properties, L.P., and the
organizational identification number of the Borrower in its jurisdiction of
organization is 4135542 (or, in each case, as set forth in a
54
notice delivered to the Administrative Agent pursuant to Section 8.01(m) in
accordance with Section 12.01). The Borrower's principal place of business and
chief executive offices are located at the address specified in Section 12.01
(or as set forth in a notice delivered pursuant to Section 8.01(m) and Section
12.01(c)). The Parent's jurisdiction of organization is Delaware; the name of
the Parent as listed in the public records of its jurisdiction of organization
is EV Energy Partners, L.P., and the organizational identification number of the
Parent in its jurisdiction of organization is 4134906 (or, in each case, as set
forth in a notice delivered to the Administrative Agent pursuant to Section
8.01(m) in accordance with Section 12.01). The Parent's principal place of
business and chief executive offices are located at the address specified in
Section 12.01 (or as set forth in a notice delivered pursuant to Section 8.01(m)
and Section 12.01(c)). Each Subsidiary's jurisdiction of organization, name as
listed in the public records of its jurisdiction of organization, organizational
identification number in its jurisdiction of organization, and the location of
its principal place of business and chief executive office is stated on Schedule
7.14 (or as set forth in a notice delivered pursuant to Section 8.01(m)).
Section 7.16 Properties; Titles, Etc.
(a) Each of the Borrower and its Subsidiaries has good and
defensible title to its Oil and Gas Properties evaluated in the most recently
delivered Reserve Report and good title to all its personal Properties, in each
case, free and clear of all Liens except Liens permitted by Section 9.03. After
giving full effect to the Excepted Liens, the Borrower or any of its
Subsidiaries specified as the owner owns the net interests in production
attributable to the Hydrocarbon Interests as reflected in the most recently
delivered Reserve Report, and the ownership of such Properties shall not in any
material respect obligate the Borrower or any of its Subsidiaries to bear the
costs and expenses relating to the maintenance, development and operations of
each such Property in an amount in excess of the working interest of each
Property set forth in the most recently delivered Reserve Report that is not
offset by a corresponding proportionate increase in the Borrower's or any of its
Subsidiaries' net revenue interest in such Property.
(b) All material leases and agreements necessary for the present
conduct of the business of the Borrower and its Subsidiaries are valid and
subsisting, in full force and effect, and there exists no default or event or
circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or leases, which could
reasonably be expected to have a Material Adverse Effect.
(c) The rights and Properties presently owned, leased or licensed by
the Borrower and its Subsidiaries including, without limitation, all easements
and rights of way, include all rights and Properties necessary to permit the
Borrower and its Subsidiaries to conduct their business in all material respects
as of the date hereof.
(d) All of the Properties of the Borrower and each of its
Subsidiaries that are reasonably necessary for the operation of their businesses
are in good working condition and are maintained in accordance with customary
industry standards.
(e) The Borrower and each of its Subsidiaries owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other intellectual
Property material to its
55
business, and the use thereof by the Borrower and such Subsidiary does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. The Borrower and its Subsidiaries either
own or have valid licenses or other rights to use all databases, geological
data, geophysical data, engineering data, seismic data, maps, interpretations
and other technical information used in their businesses as presently conducted,
subject to the limitations contained in the agreements governing the use of the
same, which limitations are customary for companies engaged in the business of
the exploration and production of Hydrocarbons, with such exceptions as could
not reasonably be expected to have a Material Adverse Effect.
Section 7.17 Maintenance of Properties. Except for such acts or failures
to act as could not be reasonably expected to have a Material Adverse Effect,
the Oil and Gas Properties (and Properties unitized therewith) have been
maintained, operated and developed in a good and workmanlike manner and in
conformity with all Governmental Requirements and in conformity with the
provisions of all leases, subleases or other contracts comprising a part of the
Hydrocarbon Interests and other contracts and agreements forming a part of the
Oil and Gas Properties. Specifically in connection with the foregoing, except as
could not reasonably be expected to have a Material Adverse Effect, (a) no Oil
and Gas Property is subject to having allowable production reduced below the
full and regular allowable (including the maximum permissible tolerance) because
of any overproduction (whether or not the same was permissible at the time) and
(b) none of the ▇▇▇▇▇ comprising a part of the Oil and Gas Properties (or
Properties unitized therewith) is deviated from the vertical more than the
maximum permitted by Governmental Requirements, and such ▇▇▇▇▇ are, in fact,
bottomed under and are producing from, and the well bores are wholly within, the
Oil and Gas Properties (or in the case of ▇▇▇▇▇ located on Properties unitized
therewith, such unitized Properties). All pipelines, ▇▇▇▇▇, gas processing
plants, platforms and other material improvements, fixtures and equipment owned
in whole or in part by the Borrower or any of its Subsidiaries that are
necessary to conduct normal operations are being maintained in a state adequate
to conduct normal operations, and with respect to such of the foregoing which
are operated by the Borrower or any of its Subsidiaries, in a manner consistent
with the Borrower's or its Subsidiaries' past practices (other than those the
failure of which to maintain in accordance with this Section 7.17 could not
reasonably be expect to have a Material Adverse Effect).
Section 7.18 Gas Imbalances, Prepayments. As of the date hereof, except as
set forth on Schedule 7.18 or on the most recent certificate delivered pursuant
to Section 8.12(c), on a net basis there are no gas imbalances, take or pay or
other prepayments which would require the Borrower or any of its Subsidiaries to
deliver, in the aggregate, two percent (2%) or more of the monthly production
from Hydrocarbons produced from the Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor.
Section 7.19 Marketing of Production. Except for contracts listed and in
effect on the date hereof on Schedule 7.19, and thereafter either disclosed in
writing to the Administrative Agent or included in the most recently delivered
Reserve Report (with respect to all of which contracts the Borrower represents
that it or its Subsidiaries are receiving a price for all production sold
thereunder which is computed substantially in accordance with the terms of the
56
relevant contract and are not having deliveries curtailed substantially below
the subject Property's delivery capacity), no material agreements exist (other
than Swap Agreements permitted under Section 9.18) which are not cancelable on
60 days notice or less without penalty or detriment for the sale of production
from the Borrower's or its Subsidiaries' Hydrocarbons (including, without
limitation, calls on or other rights to purchase, production, whether or not the
same are currently being exercised) that (a) pertain to the sale of production
at a fixed price and (b) have a maturity or expiry date of more than six (6)
months from the date hereof.
Section 7.20 Swap Agreements. Schedule 7.20, as of the date hereof, and
after the date hereof, each report required to be delivered by the Borrower
pursuant to Section 8.01(e), sets forth, a true and complete list of all Swap
Agreements of the Borrower and each of its Subsidiaries, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net marked-to-market value thereof, all credit support
agreements relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.
Section 7.21 Use of Loans and Letters of Credit.
(a) The proceeds of the Working Capital Revolving Loans shall be
used (i) for the exploration, development and/or acquisition of Oil and Gas
Properties, (ii) for working capital (including such purposes for which Working
Capital Borrowings, as defined in the Parent LP Agreement, are permitted under
the terms of the Parent LP Agreement), and (iii) for general corporate purposes
of the Parent, the Borrower and its Subsidiaries, including Restricted Payments,
provided that if the Borrowing Base Utilization Percentage is equal to or
exceeds 90% before or after giving effect to the requested Loan or Letter of
Credit, then no proceeds of any Working Capital Revolving Loan may be used to
fund Restricted Payments under Section 9.04.
(b) The proceeds of the General Revolving Loans and the Letters of
Credit shall be used (i) for the exploration, development and/or acquisition of
Oil and Gas Properties, (ii) for working capital and (iii) for general corporate
purposes of the Parent, the Borrower and its Subsidiaries, but will not be used
to make any Restricted Payment permitted by Section 9.04.
(c) The Borrower and its Subsidiaries are not engaged principally,
or as one of its or their important activities, in the business of extending
credit for the purpose, whether immediate, incidental or ultimate, of buying or
carrying margin stock (within the meaning of Regulation T, U or X of the Board).
No part of the proceeds of any Loan or Letter of Credit will be used for any
purpose which violates the provisions of Regulations T, U or X of the Board.
Section 7.22 Solvency. After giving effect to the transactions
contemplated hereby, (a) the aggregate assets (after giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement), at a fair valuation, of the Borrower and the
Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and
the Guarantors on a consolidated basis, as the Debt becomes absolute and
matures, (b) each of the Borrower and the Guarantors will not have incurred or
intended to incur, and will not believe
57
that it will incur, Debt beyond its ability to pay such Debt (after taking into
account the timing and amounts of cash to be received by each of the Borrower
and the Guarantors and the amounts to be payable on or in respect of its
liabilities, and giving effect to amounts that could reasonably be received by
reason of indemnity, offset, insurance or any similar arrangement) as such Debt
becomes absolute and matures and (c) each of the Borrower and the Guarantors
will not have (and will have no reason to believe that it will have thereafter)
unreasonably small capital for the conduct of its business.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have been
reimbursed, each of the Parent and the Borrower covenants and agrees with the
Lenders that:
Section 8.01 Financial Statements; Ratings Change; Other Information. The
Parent and/or the Borrower will furnish to the Administrative Agent and each
Lender:
(a) Annual Financial Statements. As soon as available, but in any
event not later than 90 days after the end of each fiscal year, Parent's audited
consolidated balance sheet and related statements of operations, partners'
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on by independent public accountants of recognized national standing and
reasonably acceptable to the Administrative Agent (without a "going concern" or
like qualification or exception and without any qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial position and
results of operations of the Parent and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied.
(b) Quarterly Financial Statements. As soon as available, but in any
event not later than 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Parent, its consolidated balance sheet and
related statements of operations, partners' equity and cash flows as of the end
of and for such quarter and the then elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the corresponding period
or periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by a Financial Officer as presenting fairly
in all material respects the financial position and results of operations of the
Parent and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes.
(c) Certificate of Financial Officer -- Compliance. Concurrently
with any delivery of financial statements under Section 8.01(a) or Section
8.01(b), a certificate of a Financial Officer in substantially the form of
Exhibit B hereto (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed
58
calculations demonstrating compliance with Section 9.01 and (iii) stating
whether any change in GAAP or in the application thereof has occurred since the
Effective Date and, if any such change has occurred, specifying the effect of
such change on the financial statements accompanying such certificate.
(d) Certificate of Accounting Firm -- Defaults. Concurrently with
any delivery of financial statements under Section 8.01(a), a certificate of the
accounting firm that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the extent
required by accounting rules or guidelines).
(e) Certificate of Financial Officer - Swap Agreements. Concurrently
with any delivery of financial statements under Section 8.01(a) and Section
8.01(b), a certificate of a Financial Officer, in form and substance
satisfactory to the Administrative Agent, setting forth as of the last Business
Day of such fiscal quarter or fiscal year, a true and complete list of all Swap
Agreements of the Borrower and each of its Subsidiaries, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net ▇▇▇▇-to-market value therefor, any new credit
support agreements relating thereto not listed on Schedule 7.20, any margin
required or supplied under any credit support document, and the counterparty to
each such agreement.
(f) Certificate of Insurer - Insurance Coverage. Concurrently with
any delivery of financial statements under Section 8.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required by
Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent, all copies of the applicable
policies.
(g) Other Accounting Reports. Promptly upon receipt thereof, a copy
of each other report or letter submitted to the Parent, the Borrower or any of
their Subsidiaries by independent accountants in connection with any annual,
interim or special audit made by them of the books of the Parent, the Borrower
or any such Subsidiary, and a copy of any response by the Parent, the Borrower
or any such Subsidiary to such letter or report.
(h) SEC and Other Filings; Reports to shareholders. Promptly after
the same become publicly available, copies of all periodic and other reports,
proxy statements and other materials filed by the Parent, the Borrower or any
Subsidiary with the SEC, or with any national securities exchange, or
distributed by the Parent or the Borrower to their shareholders generally, as
the case may be.
(i) Notices Under Material Instruments. Promptly after the
furnishing thereof, copies of any financial statement, report or notice
furnished to or by any Person pursuant to the terms of any preferred stock
designation, indenture, loan or credit or other similar agreement, other than
this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.
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(j) Lists of Purchasers. Concurrently with the delivery of any
Reserve Report to the Administrative Agent pursuant to Section 8.12, a list of
all Persons purchasing Hydrocarbons from the Borrower or any of its
Subsidiaries.
(k) Notice of Sales of Oil and Gas Properties. If during any period
between two successive Redetermination Dates, the Borrower or any Subsidiary
sells, transfers, assigns or otherwise disposes of Oil and Gas Properties or
Equity Interests in any Subsidiary in accordance with Section 9.12(d) with an
aggregate fair market value which exceeds $1,000,000, prior written notice
thereof, the price thereof and the anticipated date of closing and any other
details thereof requested by the Administrative Agent or any Lender.
(l) Notice of Casualty Events. Prompt written notice, and in any
event within three Business Days, of the occurrence of any Casualty Event or the
commencement of any action or proceeding that could reasonably be expected to
result in a Casualty Event.
(m) Information Regarding Borrower and Guarantors. Prompt written
notice (and in any event within thirty (30) days prior thereto) of any change
(i) in the Borrower or any Guarantor's corporate name or in any trade name used
to identify such Person in the conduct of its business or in the ownership of
its Properties, (ii) in the location of the Borrower or any Guarantor's chief
executive office or principal place of business, (iii) in the Borrower or any
Guarantor's identity or corporate structure or in the jurisdiction in which such
Person is incorporated or formed, (iv) in the Borrower or any Guarantor's
jurisdiction of organization or such Person's organizational identification
number in such jurisdiction of organization, and (v) in the Borrower or any
Guarantor's federal taxpayer identification number.
(n) Production Report and Lease Operating Statements. Within 45 days
after the end of each fiscal quarter, a report setting forth, for each calendar
month during the then-current fiscal year to date, the volume of production and
sales attributable to production (and the prices at which such sales were made
and the revenues derived from such sales) for each such calendar month from the
Oil and Gas Properties, and setting forth the related ad valorem, severance and
production taxes and lease operating expenses attributable thereto and incurred
for each such calendar month.
(o) Notices of Certain Changes. Promptly, but in any event within
thirty (30) days after the execution thereof, copies of any amendment,
modification or supplement to the certificate or articles of incorporation,
by-laws, any preferred stock designation or any other organic document of the
Parent, the Borrower or any of their Subsidiaries.
(p) Issuance of Subordinated Debt. In the event the Borrower intends
to issue Subordinated Debt as contemplated by Section 9.02(e), 10 days prior
written notice of such intended offering therefor, the amount thereof and the
anticipated date of closing and will furnish a copy of the preliminary offering
memorandum (if any) and the final offering memorandum (if any).
(q) Annual Budget. Promptly, but in any event within 90 days after
the end of each fiscal year, a budget for the then current fiscal year,
including a pro forma balance sheet and income and cash flow projections.
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(r) Other Requested Information. Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of the Parent, the Borrower or any of their Subsidiaries
(including, without limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA), or compliance with the
terms of this Agreement or any other Loan Document, as the Administrative Agent
may reasonably request.
Section 8.02 Notices of Material Events. The Parent and/or the Borrower
will furnish to the Administrative Agent and each Lender, promptly after the
Parent or the Borrower obtains knowledge thereof, written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of, or the threat in writing of, any
action, suit, investigation, arbitration or proceeding by or before any
arbitrator or Governmental Authority against or affecting the Parent, the
Borrower or any Subsidiary thereof, or any material adverse development in any
action, suit, proceeding, investigation or arbitration (whether or not
previously disclosed to the Lenders), that, in either case, if adversely
determined, could reasonably be expected to result in liability in excess of
$500,000;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Parent, the Borrower and their Subsidiaries in an
aggregate amount exceeding $500,000; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
Section 8.03 Existence; Conduct of Business. The Parent and the Borrower
will, and will cause each of their Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business and maintain, if necessary, its qualification to
do business in each other jurisdiction in which any of its Oil and Gas
Properties is located or the ownership of its Properties requires such
qualification, except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 9.11.
Section 8.04 Payment of Obligations. The Parent and the Borrower will, and
will cause each of their Subsidiaries to, pay its obligations, including Tax
liabilities of the Parent and the Borrower and all of their Subsidiaries before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Parent, the Borrower or such Subsidiary has set aside on its books adequate
reserves with respect thereto in accordance with GAAP and (c) the failure to
make payment
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pending such contest could not reasonably be expected to result in a Material
Adverse Effect or result in the seizure or levy of any Property of the Parent,
the Borrower or any of their Subsidiaries.
Section 8.05 Performance of Obligations under Loan Documents. The Borrower
will pay the Notes according to the reading, tenor and effect thereof, and the
Borrower will, and the Parent and the Borrower will cause each of their
Subsidiaries to do and perform every act and discharge all of the obligations to
be performed and discharged by them under the Loan Documents, including, without
limitation, this Agreement, at the time or times and in the manner specified.
Section 8.06 Operation and Maintenance of Properties. The Borrower, at its
own expense, will, and will cause each of its Subsidiaries to:
(a) operate its Oil and Gas Properties and other material Properties
or cause such Oil and Gas Properties and other material Properties to be
operated in a careful and efficient manner in accordance with the practices of
the industry and in compliance with all applicable contracts and agreements and
in compliance with all Governmental Requirements, including, without limitation,
applicable pro ration requirements and Environmental Laws, and all applicable
laws, rules and regulations of every other Governmental Authority from time to
time constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
(b) keep and maintain all Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its material Oil and Gas Properties and
other material Properties, including, without limitation, all equipment,
machinery and facilities in accordance with customary industry standards.
(c) promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Properties and will do all other
things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder except for leases or other
agreements which are no longer used or useful in its business.
(d) promptly perform or make reasonable and customary efforts to
cause to be performed, in accordance with customary industry standards, the
obligations required by each and all of the assignments, deeds, leases,
sub-leases, contracts and agreements affecting its interests in its material Oil
and Gas Properties and other material Properties.
(e) to the extent the Borrower or one of its Subsidiaries is not the
operator of any Property, the Borrower shall use commercially reasonable efforts
to cause the operator to comply with this Section 8.06.
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Section 8.07 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans shall
be endorsed in favor of and made payable to the Administrative Agent as its
interests may appear and such policies shall name the Administrative Agent and
the Lenders as "additional insureds" and provide that the insurer will give at
least 30 days prior notice of any cancellation to the Administrative Agent.
Section 8.08 Books and Records; Inspection Rights. The Parent and the
Borrower will, and will cause each of their Subsidiaries to, keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The Parent
and the Borrower will, and will cause each of their Subsidiaries to, permit any
representatives designated by the Administrative Agent, upon reasonable prior
notice, to visit and inspect its Properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested.
Section 8.09 Compliance with Laws. The Parent and the Borrower will, and
will cause each of their Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to them or their
Property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
Section 8.10 Environmental Matters.
(a) The Parent and the Borrower shall, and shall cause each of their
Subsidiaries to: (i) comply, and shall cause their Properties and operations and
each of their Subsidiaries and each Subsidiary's Properties and operations to
comply, with all applicable Environmental Laws, the breach of which could be
reasonably expected to have a Material Adverse Effect; (ii) not dispose of or
otherwise release, and shall cause each Subsidiary not to dispose of or
otherwise release, any oil, oil and gas waste, hazardous substance, or solid
waste on, under, about or from any of the Borrower's or its Subsidiaries'
Properties or any other Property to the extent caused by the Borrower's or any
of its Subsidiaries' operations except in compliance with applicable
Environmental Laws, the disposal or release of which could reasonably be
expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each of their Subsidiaries to timely obtain or file, all notices,
permits, licenses, exemptions, approvals, registrations or other authorizations,
if any, required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of the Borrower's or its Subsidiaries'
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; (iv) promptly commence and diligently prosecute to
completion, and shall cause each of their Subsidiaries to promptly commence and
diligently prosecute to completion, any assessment, evaluation, investigation,
monitoring, containment, cleanup, removal, repair, restoration, remediation or
other remedial obligations (collectively, the "Remedial Work") in the event any
Remedial Work is required or reasonably necessary under applicable Environmental
Laws because of or in connection with the actual or suspected
63
past, present or future disposal or other release of any oil, oil and gas waste,
hazardous substance or solid waste on, under, about or from any of the
Borrower's or its Subsidiaries' Properties, which failure to commence and
diligently prosecute to completion could reasonably be expected to have a
Material Adverse Effect; and (v) establish and implement, and shall cause each
of their Subsidiaries to establish and implement, such procedures as may be
reasonably necessary to continuously determine and assure that the Borrower's
and its Subsidiaries' obligations under this Section 8.10(a) are timely and
fully satisfied, which failure to establish and implement could reasonably be
expected to have a Material Adverse Effect.
(b) The Borrower will promptly, but in no event later than five
Business Days after the occurrence thereof, notify the Administrative Agent and
the Lenders in writing of any threatened action, investigation or inquiry by any
Governmental Authority or any threatened demand or lawsuit by any landowner or
other third party against the Borrower or its Subsidiaries or their Properties
of which the Borrower has knowledge in connection with any Environmental Laws
(excluding routine testing and corrective action) if the Borrower reasonably
anticipates that such action will result in liability (whether individually or
in the aggregate) in excess of $500,000, not fully covered by insurance, subject
to normal deductibles.
(c) The Borrower will, and will cause each of its Subsidiaries to,
provide environmental audits and tests in accordance with American Society of
Testing Materials standards upon the reasonable request by the Administrative
Agent and the Required Lenders (or as otherwise required to be obtained by the
Administrative Agent or the Required Lenders by any Governmental Authority), in
connection with any future acquisitions of Oil and Gas Properties or other
material Properties.
Section 8.11 Further Assurances.
(a) The Parent and the Borrower, at their sole expense will, and
will cause each of their Subsidiaries to, promptly execute and deliver to the
Administrative Agent all such other documents, agreements and instruments
reasonably requested by the Administrative Agent to comply with, cure any
defects or accomplish the conditions precedent, covenants and agreements of the
Parent, the Borrower or any of their Subsidiaries, as the case may be, in the
Loan Documents, including the Notes, or to further evidence and more fully
describe the collateral intended as security for the Indebtedness, or to correct
any omissions in this Agreement or the Security Instruments, or to state more
fully the obligations secured therein, or to perfect, protect or preserve any
Liens created pursuant to this Agreement or any of the Security Instruments or
the priority thereof, or to make any recordings, file any notices or obtain any
consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.
(b) The Parent and the Borrower hereby authorize the Administrative
Agent to file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Mortgaged Property without the
signature of the Borrower or any other Guarantor where permitted by law. A
carbon, photographic or other reproduction of the Security Instruments or any
financing statement covering the Mortgaged Property or any part thereof shall be
sufficient as a financing statement where permitted by law.
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Section 8.12 Reserve Reports.
(a) On or before March 1st and September 1st of each year,
commencing March 1st, 2007, the Borrower shall furnish to the Administrative
Agent and the Lenders a Reserve Report as of the immediately preceding January 1
or July 1, as applicable. The Reserve Report as of January 1 of each year shall
be prepared by one or more petroleum engineers reasonably acceptable to the
Administrative Agent and the July 1 Reserve Report of each year shall be
prepared by or under the supervision of the chief engineer of EV Management who
shall certify, on behalf of the Borrower, such Reserve Report to be based upon
reasonable assumptions and estimates in light of the facts and circumstances
known to the Borrower at the time such Reserve Report was prepared and to have
been prepared in accordance with the procedures used in the immediately
preceding January 1 Reserve Report.
(b) In the event of an Interim Redetermination, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report prepared by
or under the supervision of the chief engineer of EV Management who shall
certify, on behalf of the Borrower, such Reserve Report to be based upon
reasonable assumptions and estimates in light of the facts and circumstances
known to the Borrower at the time such Reserve Report was prepared and to have
been prepared in accordance with the procedures used in the immediately
preceding January 1 Reserve Report. For any Interim Redetermination requested by
the Administrative Agent or the Borrower pursuant to Section 2.07(b), the
Borrower shall provide such Reserve Report with an "as of" date as required by
the Administrative Agent as soon as possible, but in any event no later than
thirty (30) days following the receipt of such request.
(c) With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material respects: (i) the
information contained in the Reserve Report and any other information delivered
in connection therewith is based upon reasonable assumptions and estimates in
light of the facts and circumstances known to the Borrower at the time such
Reserve Report was prepared, (ii) the Borrower or its Subsidiaries owns good and
defensible title to the Oil and Gas Properties evaluated in such Reserve Report
and such Properties are free of all Liens except for Liens permitted by Section
9.03, (iii) except as set forth on an exhibit to the certificate, on a net basis
there are no gas imbalances, take or pay or other prepayments in excess of the
volume specified in Section 7.18 with respect to their Oil and Gas Properties
evaluated in such Reserve Report that would require the Borrower or any of its
Subsidiaries to deliver Hydrocarbons either generally or produced from such Oil
and Gas Properties at some future time without then or thereafter receiving full
payment therefor, (iv) none of their Oil and Gas Properties evaluated in the
previous Reserve Report have been sold since the date of the last Borrowing Base
determination except as set forth on an exhibit to the certificate, which
certificate shall list all of such Oil and Gas Properties sold and in such
detail as reasonably required by the Administrative Agent, (v) attached to the
certificate is a list of all marketing agreements entered into subsequent to the
later of the date hereof or the most recently delivered Reserve Report that the
Borrower could reasonably be expected to have been obligated to list on Schedule
7.19 had such agreement been in effect on the date hereof and (vi) attached
thereto is a schedule of the Oil and Gas Properties evaluated by such Reserve
Report that are
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Mortgaged Properties and demonstrating the percentage of the present value that
such Mortgaged Properties represent.
Section 8.13 Title Information.
(a) On or before the delivery to the Administrative Agent and the
Lenders of each Reserve Report required by Section 8.12(a), the Borrower will
deliver title information in form and substance acceptable to the Administrative
Agent covering enough of the Oil and Gas Properties evaluated by such Reserve
Report that were not included in the immediately preceding Reserve Report, so
that the Administrative Agent shall have received together with title
information previously delivered to the Administrative Agent, satisfactory title
information on at least 70% of the total value of the Oil and Gas Properties
evaluated by such Reserve Report.
(b) If the Borrower has provided title information for additional
Properties under Section 8.13(a), the Borrower shall, within 60 days of notice
from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute acceptable
Mortgaged Properties with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such
definition) having an equivalent value or (iii) deliver title information in
form and substance acceptable to the Administrative Agent so that the
Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, satisfactory title information
on at least 70% of the value of the Oil and Gas Properties evaluated by such
Reserve Report.
(c) If the Borrower is unable to cure any title defect requested by
the Administrative Agent or the Lenders to be cured within the 60-day period or
the Borrower does not comply with the requirements to provide acceptable title
information covering 70% of the value of the Oil and Gas Properties evaluated in
the most recent Reserve Report, such default shall not be a Default, but instead
the Administrative Agent and/or the Required Lenders shall have the right to
exercise the following remedy in their sole discretion from time to time, and
any failure to so exercise this remedy at any time shall not be a waiver as to
future exercise of the remedy by the Administrative Agent or the Lenders. To the
extent that the Administrative Agent or the Required Lenders are not satisfied
with title to any Mortgaged Property after the 60-day period has elapsed, such
unacceptable Mortgaged Property shall not count towards the 70% requirement, and
the Administrative Agent may send a notice to the Borrower and the Lenders that
the then outstanding Borrowing Base shall be reduced by an amount as determined
by the Required Lenders to cause the Borrower to be in compliance with the
requirement to provide acceptable title information on 70% of the value of the
Oil and Gas Properties. This new Borrowing Base shall become effective
immediately after receipt of such notice.
Section 8.14 Additional Collateral; Additional Guarantors.
(a) In connection with each redetermination of the Borrowing Base,
the Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(c)(vi)) to ascertain whether the
Mortgaged Properties represent at
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least 80% of the total value of the Oil and Gas Properties evaluated in the most
recently completed Reserve Report after giving effect to exploration and
production activities, acquisitions, dispositions and production. In the event
that the Mortgaged Properties do not represent at least 80% of such total value,
then the Borrower shall, and shall cause its Subsidiaries to, grant to the
Administrative Agent or its designee as security for the Indebtedness a
first-priority Lien interest (provided the Excepted Liens of the type described
in clauses (a) to (d) and (f) of the definition thereof may exist, but subject
to the provisos at the end of such definition) on additional Oil and Gas
Properties not already subject to a Lien of the Security Instruments such that
after giving effect thereto, the Mortgaged Properties will represent at least
80% of such total value. All such Liens will be created and perfected by and in
accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance
reasonably satisfactory to the Administrative Agent or its designee and in
sufficient executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes. In order to comply with the foregoing, if
any Subsidiary places a Lien on its Oil and Gas Properties and such Subsidiary
is not a Guarantor, then it shall become a Guarantor and comply with Section
8.14(b).
(b) In the event that (i) the Borrower determines that any
Subsidiary is a Material Domestic Subsidiary or (ii) any Wholly-Owned Subsidiary
incurs or guarantees any Debt, then the Borrower shall promptly cause such
Subsidiary to guarantee the Indebtedness pursuant to the Guarantee Agreement. In
connection with any such guaranty, the Borrower shall, or shall cause such
Subsidiary to, (A) execute and deliver a supplement to the Guarantee Agreement
executed by such Subsidiary, (B) pledge all of the Equity Interests of such
Subsidiary (including, without limitation, delivery of original stock
certificates evidencing the Equity Interests of such Subsidiary, together with
an appropriate undated stock powers for each certificate duly executed in blank
by the registered owner thereof) and (C) execute and deliver such other
additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent or its designee.
Section 8.15 ERISA Compliance. The Borrower will promptly furnish, and
will cause its Subsidiaries and any ERISA Affiliate to promptly furnish, to the
Administrative Agent (a) promptly after the filing thereof with the United
States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of
each annual and other report with respect to each Plan, if any, or any trust
created thereunder, (b) immediately upon becoming aware of the occurrence of any
ERISA Event or of any "prohibited transaction," as described in section 406 of
ERISA or in section 4975 of the Code, in connection with any Plan or any trust
created thereunder, a written notice signed by the President or the principal
Financial Officer of the Borrower, its Subsidiaries or the ERISA Affiliate, as
the case may be, specifying the nature thereof, what action the Borrower, its
Subsidiaries or the ERISA Affiliate is taking or proposes to take with respect
thereto, and, when known, any action taken or proposed by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto, and (c)
immediately upon receipt thereof, copies of any notice of the PBGC's intention
to terminate or to have a trustee appointed to administer any Plan. With respect
to each Plan, if any (other than a Multiemployer Plan), the Borrower will, and
the Borrower will cause each of its Subsidiaries and ERISA Affiliates to, (i)
satisfy in full and in a timely manner, without incurring any late payment or
underpayment charge or penalty and without giving rise to any lien, all of the
contribution and funding
67
requirements of section 412 of the Code (determined without regard to
subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
Section 8.16 Marketing Activities. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in marketing activities for any
Hydrocarbons or enter into any contracts related thereto other than (a)
contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be
produced from their proved Oil and Gas Properties during the period of such
contract, (b) contracts for the sale of Hydrocarbons scheduled or reasonably
estimated to be produced from proved Oil and Gas Properties of third parties
during the period of such contract associated with the Oil and Gas Properties of
the Borrower and its Subsidiaries that the Borrower or one of its Subsidiaries
has the right to market pursuant to joint operating agreements, unitization
agreements or other similar contracts that are usual and customary in the oil
and gas business and (c) other contracts for the purchase and/or sale of
Hydrocarbons of third parties (i) which have generally offsetting provisions
(i.e. corresponding pricing mechanics, delivery dates and points and volumes)
such that no "position" is taken, (ii) for which appropriate credit support has
been taken to alleviate the material credit risks of the counterparty thereto,
or (iii) which otherwise constitute Swap Agreements permitted under Section
9.18.
Section 8.17 Clean-Down. The Borrower will cause the aggregate outstanding
principal balance of the Working Capital Revolving Loans which constitute
"Working Capital Borrowings" under and as defined in the Parent LP Agreement, to
be zero for a period of at least 15 consecutive days (i) during each calendar
year commencing in 2007, and (ii) during each twelve (12) month period
commencing on the Effective Date.
ARTICLE IX
NEGATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, each of the Parent and the Borrower covenants and agrees with the
Lenders that:
Section 9.01 Financial Covenants.
(a) Ratio of Total Debt to EBITDAX. The Parent will not, as of any
date of determination, permit its ratio of Total Debt as of such date to EBITDAX
for the most recent period of four fiscal quarters for which financial
statements are available to be greater than 4.0 to 1.0.
(b) Current Ratio. The Parent will not permit, as of the last day of
any fiscal quarter, its ratio of (i) consolidated current assets (including the
unused amount of the total Commitments, but excluding non-cash assets under FAS
133) to (ii) consolidated current
68
liabilities (excluding non-cash obligations under FAS 133 and current maturities
under this Agreement) to be less than 1.0 to 1.0.
Section 9.02 Debt. None of the Parent, the Borrower or any of their
Subsidiaries will incur, create, assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan Documents
or any guaranty of or suretyship arrangement for the Notes or other Indebtedness
arising under the Loan Documents.
(b) accounts payable and other accrued expenses, liabilities or
other obligations to pay (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business which
are not greater than ninety (90) days past the date of invoice or delinquent or
which are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP.
(c) intercompany Debt among the Parent, the Borrower and any of the
Borrower's Subsidiaries or between Subsidiaries to the extent permitted by
Section 9.05(g); provided that such Debt is not held, assigned, transferred,
negotiated or pledged to any Person other than the Parent or one of its
Wholly-Owned Subsidiaries, and, provided further, that any such Debt owed by the
Borrower to either the Parent or a Guarantor shall be subordinated to the
Indebtedness owed by the Borrower or a Guarantor on terms set forth in the
Guarantee Agreement.
(d) endorsements of negotiable instruments for collection in the
ordinary course of business.
(e) Subordinated Debt, the principal amount of which does not exceed
$250,000,000 and any guarantees thereof; provided that (i) the Borrower shall
have complied with Section 8.01(p), (ii) at the time of incurring such
Subordinated Debt (1) no Default has occurred and is then continuing and (2) no
Default would result from the incurrence of such Subordinated Debt after giving
effect to the incurrence of such Subordinated Debt (and any concurrent repayment
of Debt with the proceeds of such incurrence), (iii) the incurrence of such
Subordinated Debt (and any concurrent repayment of Debt with the proceeds of
such incurrence) would not result in the total Revolving Credit Exposure
exceeding the Borrowing Base then in effect, (iv) such Subordinated Debt does
not have any scheduled amortization prior to the date which is one year after
the Maturity Date, (v) such Subordinated Debt does not mature sooner than the
date which is one year after the Maturity Date, (vi) such Subordinated Debt and
any guarantees thereof are subordinated on terms satisfactory to the
Administrative Agent and the Required Lenders and (vii) prior to the incurrence
of such Debt, the Borrowing Base is adjusted pursuant to Section 2.07(e).
(f) other Debt, including Capital Leases and purchase money Debt not
to exceed $1,000,000 in the aggregate, not to exceed the lesser of $5,000,000 or
5% of the then effective Borrowing Base in the aggregate at any one time
outstanding.
69
Section 9.03 Liens. None of the Parent, the Borrower or any of their
Subsidiaries will create, incur, assume or permit to exist any Lien on any of
its Properties (now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness.
(b) Excepted Liens.
(c) Liens securing purchase money Debt and Debt under Capital Leases
permitted under Section 9.02(f).
(d) Liens on posted collateral or margin to secure obligations under
Swap Agreements permitted by Section 9.18.
(e) Liens on Property not constituting collateral for the
Indebtedness and not otherwise permitted by the foregoing clauses of this
Section 9.03; provided that the aggregate principal or face amount of all Debt
secured under this Section 9.03(e) shall not exceed $100,000 at any time.
Section 9.04 Dividends, Distributions and Redemptions.
(a) Restricted Payments. The Parent and the Borrower will not, and
will not permit any of their Subsidiaries to, declare or make, or agree to pay
or make, directly or indirectly, any Restricted Payment, return any capital to
its stockholders or make any distribution of their Property to their respective
Equity Interest holders, except (i) the Parent or the Borrower may declare and
pay dividends or distributions with respect to its Equity Interests payable
solely in additional shares of its Equity Interests (other than Disqualified
Capital Stock), (ii) the Borrower and its Subsidiaries may declare and pay
dividends or distributions ratably with respect to their Equity Interests and
(iii) after consummation of the Initial Public Offering so long as no Borrowing
Base Deficiency, Default or Event of Default has occurred and is continuing or
would result therefrom, and subject to the proviso in Section 7.21(a)(iii), the
Parent may declare and pay quarterly cash dividends to its partners of Available
Cash in accordance with the Parent LP Agreement.
(b) Repayment of Subordinated Debt; Amendment of terms of
Subordinated Debt. The Borrower will not, and will not permit any Subsidiary to,
prior to the date that is one year after the Maturity Date: (i) call, make or
offer to make any optional or voluntary Redemption of or otherwise optionally or
voluntarily Redeem (whether in whole or in part) the Subordinated Debt, except
that the Borrower may prepay the Subordinated Debt with the net cash proceeds of
any sale of Equity Interests (other than Disqualified Capital Stock) of the
Borrower, (ii) amend, modify, waive or otherwise change, consent or agree to any
amendment, modification, waiver or other change to, any of the terms of the
Subordinated Debt if (1) the effect thereof would be to shorten its maturity or
average life or increase the amount of any payment of principal thereof or
increase the rate or shorten any period for payment of interest thereon or (2)
such action requires the payment of a consent fee (howsoever described),
provided that the foregoing shall not prohibit the execution of supplemental
documents associated with the incurrence of additional Subordinated Debt to the
extent permitted by
70
Section 9.02(e), the execution of supplemental indentures to add guarantors if
required by the terms of any Subordinated Debt documents provided such Person
complies with Section 8.14(b) or (iii) designate any Debt (other than
obligations of the Borrower and the Subsidiaries pursuant to the Loan Documents)
as "Specified Senior Indebtedness" or "Specified Guarantor Senior Indebtedness"
or give any such other Debt any other similar designation for the purposes of
any Subordinated Debt.
Section 9.05 Investments, Loans and Advances. None of the Parent, the
Borrower or their Subsidiaries will make or permit to remain outstanding any
Investments in or to any Person, except that the foregoing restriction shall not
apply to:
(a) Investments reflected in the Financial Statements.
(b) accounts receivable arising in the ordinary course of business.
(c) direct obligations of the United States or any agency thereof,
or obligations guaranteed by the United States or any agency thereof, in each
case maturing within one year from the date of creation thereof.
(d) commercial paper maturing within one year from the date of
creation thereof rated in the two highest grades by S&P or ▇▇▇▇▇'▇.
(e) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $250,000,000 (as of the date
of such bank or trust company's most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating is set forth from
time to time, by S&P or Moody's, respectively.
(f) deposits in money market funds investing exclusively in
Investments described in Section 9.05(c), Section 9.05(d) or Section 9.05(e).
(g) Investments (i) made by the Parent or the Borrower in or to
Guarantors, (ii) made by any Subsidiary or the Parent in or to the Borrower or
any Guarantor, and (iii) made by the Borrower or any Guarantor in Subsidiaries
that are not Guarantors, provided that the aggregate of all Investments made by
the Borrower and the Guarantors in or to all Subsidiaries that are not
Guarantors shall not exceed $2,000,000 at any time.
(h) subject to the limits in Section 9.06, Investments (including,
without limitation, capital contributions) in general or limited partnerships or
other types of entities (each a "Venture") entered into by the Parent, the
Borrower or any of their Subsidiaries with others in the ordinary course of
business; provided that (i) any such Venture is engaged exclusively in oil and
gas exploration, development, production, processing and related activities,
including transportation, (ii) the interest in such venture is acquired in the
ordinary course of business and on fair and reasonable terms and (iii) such
Venture interests acquired and capital contributions made (valued as of the date
such interest was acquired or the
71
contribution made) do not exceed, in the aggregate at any time outstanding an
amount equal to $2,000,000.
(i) subject to the limits in Section 9.06, Investments in Persons by
the Borrower or a Subsidiary; provided, that, contemporaneously with such
Investment, such Person becomes a Wholly-Owned Subsidiary and, as of the date
such Investment is made (and after giving effect to all related transactions)
(1) all of the representations and warranties contained in each Loan Document
are true and correct and (2) no Default or Event of Default has occurred and is
continuing or would result from such person being a Wholly-Owned Subsidiary.
(j) subject to the limits in Section 9.06, Investments in direct
ownership interests in additional Oil and Gas Properties and gas gathering
systems, production facilities or processing facilities related thereto or
related to farm-out, farm-in, joint operating, joint venture or area of mutual
interest agreements, gathering systems, pipelines, production facilities,
processing facilities or other similar arrangements which are usual and
customary in the oil and gas exploration and production business located within
the geographic boundaries of the United States of America.
(k) loans or advances to employees, officers or directors in the
ordinary course of business of the Parent, the Borrower or any of their
Subsidiaries, in each case only as permitted by applicable law, including
Section 402 of the Sarbanes Oxley Act of 2002, but in any event not to exceed
$250,000 in the aggregate at any time.
(l) Investments in stock, obligations or securities received in
settlement of debts arising from Investments permitted under this Section 9.05
owing to the Parent, the Borrower or any of its Subsidiaries as a result of a
bankruptcy or other insolvency proceeding of the obligor in respect of such
debts or upon the enforcement of any Lien in favor of the Parent, the Borrower
or any of their Subsidiaries; provided that the Borrower shall give the
Administrative Agent prompt written notice in the event that the aggregate
amount of all Investments held at any one time under this Section 9.05(j)
exceeds $250,000.
(m) other Investments not to exceed, in the aggregate, $250,000 at
any time outstanding.
Section 9.06 Nature of Business; International Operations. The Parent and
the Borrower will not, and will not permit any of their Subsidiaries to, allow
any material change to be made in the character of its business as independent
oil and gas exploration and production companies. From and after the date
hereof, the Parent, the Borrower and their Subsidiaries will not acquire or make
any other expenditure (whether such expenditure is capital, operating or
otherwise) in or related to, any Oil and Gas Properties not located within the
geographical boundaries of the United States.
Section 9.07 Limitation on Leases. Neither the Borrower nor any of its
Subsidiaries will create, incur, assume or suffer to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or personal
but excluding leases of Hydrocarbon Interests), under leases or lease agreements
which would cause the aggregate amount of all
72
payments made by the Borrower and its Subsidiaries pursuant to all such leases
or lease agreements, including, without limitation, any residual payments at the
end of any lease, to exceed $2,000,000 in any period of twelve consecutive
calendar months during the life of such leases.
Section 9.08 Proceeds of Notes. The Borrower will not permit the proceeds
of the Notes to be used for any purpose other than those permitted by Section
7.21. Neither the Borrower nor any Person acting on behalf of the Borrower has
taken or will take any action which might cause any of the Loan Documents to
violate Regulations T, U or X or any other regulation of the Board or to violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
effect. If requested by the Administrative Agent, the Borrower will furnish to
the Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 or such other form referred to
in Regulation U, Regulation T or Regulation X of the Board, as the case may be.
Section 9.09 ERISA Compliance. The Borrower and its Subsidiaries will not
at any time:
(a) engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Borrower any of its Subsidiaries or any
ERISA Affiliate could be subjected to either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by
Chapter 43 of Subtitle D of the Code.
(b) terminate, or permit any ERISA Affiliate to terminate, any Plan
in a manner, or take any other action with respect to any Plan, which could
result in any liability of the Borrower, any of its Subsidiaries or any ERISA
Affiliate to the PBGC.
(c) fail to make, or permit any ERISA Affiliate to fail to make,
full payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Borrower, any of its
Subsidiaries or any ERISA Affiliate is required to pay as contributions thereto.
(d) permit to exist, or allow any ERISA Affiliate to permit to
exist, any accumulated funding deficiency within the meaning of section 302 of
ERISA or section 412 of the Code, whether or not waived, with respect to any
Plan.
(e) permit, or allow any ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities under any Plan maintained by the
Borrower, any of its Subsidiaries or any ERISA Affiliate which is regulated
under Title IV of ERISA to exceed the current value of the assets (computed on a
plan termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities. The term "actuarial present value of the
benefit liabilities" shall have the meaning specified in section 4041 of ERISA.
(f) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan.
73
(g) acquire, or permit any ERISA Affiliate to acquire, an interest
in any Person that causes such Person to become an ERISA Affiliate with respect
to the Borrower or any of its Subsidiaries or with respect to any ERISA
Affiliate of the Borrower or any of its Subsidiaries if such Person sponsors,
maintains or contributes to, or at any time in the six-year period preceding
such acquisition has sponsored, maintained, or contributed to, (i) any
Multiemployer Plan, or (ii) any other Plan that is subject to Title IV of ERISA
under which the actuarial present value of the benefit liabilities under such
Plan exceeds the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities.
(h) incur, or permit any ERISA Affiliate to incur, a liability to or
on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA.
(i) contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability.
(j) amend, or permit any ERISA Affiliate to amend, a Plan resulting
in an increase in current liability such that the Borrower, any of its
Subsidiaries or any ERISA Affiliate is required to provide security to such Plan
under section 401(a)(29) of the Code.
Section 9.10 Sale or Discount of Receivables. Except for receivables
obtained by the Borrower or any of its Subsidiaries out of the ordinary course
of business or the settlement of joint interest billing accounts in the ordinary
course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of
business in connection with the compromise or collection thereof and not in
connection with any financing transaction, neither the Borrower nor any of its
Subsidiaries will discount or sell (with or without recourse) any of its notes
receivable or accounts receivable.
Section 9.11 Mergers, Etc. None of the Parent, the Borrower or any of
their Subsidiaries will merge into or with or consolidate with any other Person,
or sell, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its Property to any other
Person, except that any Wholly-Owned Subsidiary may merge with any other
Wholly-Owned Subsidiary and that the Borrower or the Parent may merge with any
Wholly-Owned Subsidiary so long as the Borrower is the survivor.
Section 9.12 Sale of Properties. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, assign, farm-out, convey or otherwise
transfer any Property except for: (a) the sale of Hydrocarbons in the ordinary
course of business; (b) farmouts of undeveloped acreage and assignments in
connection with such farmouts; (c) the sale or transfer of Property that is no
longer necessary for the business of the Borrower or such Subsidiary or is
replaced by equipment of at least comparable value and use; (d) sales or other
dispositions (including Casualty Events) of Oil and Gas Properties or any
interest therein or Subsidiaries owning Oil and Gas Properties; provided that
(i) 100% of the consideration received in respect of such sale or other
disposition shall be cash, (ii) the consideration received in respect of such
sale or other disposition shall be
74
equal to or greater than the fair market value of the Oil and Gas Property,
interest therein or Subsidiary subject of such sale or other disposition (as
reasonably determined by the board of directors of EV Management on behalf of
the Borrower and, if requested by the Administrative Agent, the Borrower shall
deliver a certificate of a Responsible Officer of the Borrower certifying to
that effect), (iii) if such sale or other disposition of Oil and Gas Property or
Subsidiary owning Oil and Gas Properties included in the most recently delivered
Reserve Report during any period between two successive Scheduled
Redetermination Dates has a fair market value (as determined by the
Administrative Agent), individually or in the aggregate, in excess of
$5,000,000, the Borrowing Base shall be reduced, effective immediately upon such
sale or disposition, by an amount equal to the value, if any, assigned such
Property as determined by the Required Lenders in the most recently delivered
Reserve Report and (iv) if any such sale or other disposition is of a Subsidiary
owning Oil and Gas Properties, such sale or other disposition shall include all
the Equity Interests of such Subsidiary; and (e) sales and other dispositions of
Properties not regulated by Section 9.12(a) to (d) having a fair market value
not to exceed $250,000 during any 12-month period.
Section 9.13 Environmental Matters. The Borrower will not, and will not
permit any Subsidiary to, violate or permit any of its Property to be in
violation of, or do anything or permit anything to be done which will subject
any such Property to any Remedial Work under any Environmental Laws, assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such
violations or remedial obligations could reasonably be expected to have a
Material Adverse Effect.
Section 9.14 Transactions with Affiliates. The Parent and the Borrower
will not, and will not permit any Subsidiary to, enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of Property
or the rendering of any service, with any Affiliate (other than the Guarantors
and Wholly-Owned Subsidiaries of the Borrower) unless such transactions are
otherwise permitted under this Agreement and are upon fair and reasonable terms
no less favorable to it than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.
Section 9.15 Subsidiaries. The Parent and the Borrower shall not, and
shall not permit their Subsidiaries to, create or acquire any additional
Subsidiary unless the Borrower gives written notice to the Administrative Agent
of such creation or acquisition and complies with Section 8.14(b). The Parent
and the Borrower shall not, and shall not permit any of their Subsidiaries to,
sell, assign or otherwise dispose of any Equity Interests in any of its
Subsidiaries except as permitted under Section 9.12. Neither the Parent nor the
Borrower shall have any Foreign Subsidiaries.
Section 9.16 Negative Pledge Agreements; Dividend Restrictions. Neither
the Borrower nor any of its Subsidiaries will create, incur, assume or suffer to
exist any contract, agreement or understanding (other than this Agreement,
Security Instruments, Capital Leases, purchase money security interests creating
Liens permitted by Section 9.03(c) or collateral or margin agreements permitted
by Section 9.03(d) securing Swap Agreements) that in any way prohibits or
restricts the granting, conveying, creation or imposition of any Lien on any of
its Property in favor of the Administrative Agent and the Lenders or restricts
any Subsidiary from
75
paying dividends or making distributions to the Borrower or any Guarantor, or
which requires the consent of or notice to other Persons in connection
therewith.
Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments. The
Borrower will not, and will not permit any of its Subsidiaries to, allow gas
imbalances, take-or-pay or other prepayments with respect to the Oil and Gas
Properties of the Borrower or any of its Subsidiaries that would require the
Borrower or such Subsidiary to deliver, in the aggregate, two percent (2%) or
more of the aggregate monthly production of Hydrocarbons of the Borrower and its
Subsidiaries at some future time without then or thereafter receiving full
payment therefor.
Section 9.18 Swap Agreements. Neither the Borrower nor any of its
Subsidiaries will enter into any Swap Agreements with any Person other than Swap
Agreements (a) in respect of commodities (i) with an Approved Counterparty and
(ii) the notional volumes for which (when aggregated with other commodity Swap
Agreements then in effect other than basis differential swaps on volumes already
hedged pursuant to other Swap Agreements) do not exceed, as of the date such
Swap Agreement is executed, 90% of the reasonably anticipated projected
production from Proved Developed Producing Properties for each month during the
period during which such Swap Agreement is in effect for each of crude oil and
natural gas, calculated separately, for a rolling 5-year period based on
projections from the most recent Reserve Report plus any re-characterization of
reserves to Proved Developed Producing Properties since the date of the most
recent Reserve Report and (b) in respect of interest rates with an Approved
Counterparty, as follows: (i) Swap Agreements effectively converting interest
rates from fixed to floating, the notional principal amounts of which (when
aggregated with all other Swap Agreements of the Borrower and its Subsidiaries
then in effect effectively converting interest rates from fixed to floating) do
not exceed 50% of the then outstanding principal amount of the Borrower's Debt
for borrowed money which bears interest at a fixed rate and (ii) Swap Agreements
effectively converting interest rates from floating to fixed, the notional
principal amounts of which (when aggregated with all other Swap Agreements of
the Borrower and its Subsidiaries then in effect effectively converting interest
rates from floating to fixed) do not exceed 75% of the then outstanding
principal amount of the Borrower's Debt for borrowed money which bears interest
at a floating rate. In no event shall any Swap Agreement contain any
requirement, agreement or covenant for the Borrower or any of its Subsidiaries
to post collateral or margin (other than cash or cash equivalents not to exceed
an aggregate amount of $500,000, and any letters of credit providing credit
support for such Swap Agreement) to secure their obligations under such Swap
Agreement or to cover market exposures, except for contingent obligations, if
any, to post collateral or margin in connection with Swap Agreements with any
Lender or an Affiliate of a Lender, in the event that the Borrower's or such
Subsidiary's obligations under such Swap Agreement is no longer secured by the
collateral provided under the Loan Documents.
Section 9.19 Tax Status as Partnership. The Parent and the Borrower shall
not alter their status as partnerships for purposes of United States Federal
Income taxes. The Parent and the Borrower shall not, and shall not permit any
Subsidiary to, amend or modify any provision of their articles, bylaws, or
partnership or limited liability company organization or operating documents or
agreements, or any agreements with Affiliates of the type referred to in Section
9.14, if such amendment or modification could reasonably be expected to have a
Material Adverse Effect.
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Section 9.20 Covenants of Parent. Parent covenants and agrees with the
Administrative Agent and the Lenders that:
(a) Parent shall not conduct or otherwise engage in any business or
operations other than (i) transactions contemplated by the Loan Documents or the
provision of administrative, legal, accounting and management services to or on
behalf of Borrower or any of its Subsidiaries, (ii) the ownership of the equity
interests of Borrower and any general partner of the Borrower (or any successor
thereto), and the exercise of rights and performance of obligations (including
entering into guarantees and pledge agreements) in connection therewith, (iii)
the entry into, and exercise of rights and performance of obligations in respect
of, (1) this Agreement and the other Loan Documents to which Parent is a party,
and any other agreement to which Parent is a party on the date hereof, in each
case as amended, supplemented, waived or otherwise modified from time to time,
and any refinancings, refundings, renewals or extensions thereof, (2) contracts
and agreements with officers, directors and employees of Parent or Borrower
relating to their employment or directorships, (3) insurance policies and
related contracts and agreements, and (4) equity subscription agreements,
registration rights agreements, voting and other stockholder agreements,
engagement letters, underwriting agreements and other agreements in respect of
its equity securities or any offering, issuance or sale thereof, (iv) the
offering, issuance and sale of its equity securities, (v) the filing of
registration statements, and compliance with applicable reporting and other
obligations, under federal, state or other securities laws, (vi) the listing of
its equity securities and compliance with applicable reporting and other
obligations in connection therewith, (vii) the retention of transfer agents,
private placement agents, underwriters, counsel, accountants and other advisors
and consultants, (viii) the performance of obligations under and compliance with
the Parent LP Agreement, or any applicable law, ordinance, regulation, rule,
order, judgment, decree or permit, including, without limitation, as a result of
or in connection with the activities of Borrower and its Subsidiaries, (ix) the
incurrence and payment of its operating and business expenses and any taxes for
which it may be liable, and (x) other activities incidental or related to the
foregoing.
(b) Parent shall not own, lease, manage or otherwise operate any
properties or assets (other than in connection with the activities described in
Section 9.20(a)), or incur, create, assume or suffer to exist any Indebtedness
of Parent (other than such as may be incurred, created or assumed or exist in
connection with the activities described in Section 9.20(a)).
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 Events of Default. One or more of the following events shall
constitute an "Event of Default":
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise.
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(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of five
Business Days.
(c) any representation or warranty made or deemed made by or on
behalf of the Parent, the Borrower or any of their Subsidiaries in or in
connection with any Loan Document or any amendment or modification of any Loan
Document or waiver under such Loan Document, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with any Loan Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect in any material respect when made
or deemed made.
(d) the Parent, the Borrower or any of their Subsidiaries shall fail
to observe or perform any covenant, condition or agreement contained in, Section
8.01(m), Section 8.02, Section 8.03 or in ARTICLE IX.
(e) the Parent, the Borrower or any of their Subsidiaries shall fail
to observe or perform any covenant, condition or agreement contained in this
Agreement (other than those specified in Section 10.01(a), Section 10.01(b) or
Section 10.01(d)) or any other Loan Document, and such failure shall continue
unremedied for a period of 30 days after the earlier to occur of (i) notice
thereof from the Administrative Agent to the Parent or the Borrower (which
notice will be given at the request of any Lender) or (ii) a Responsible Officer
of the Parent or the Borrower or any of their Subsidiaries otherwise becoming
aware of such default.
(f) the Parent, the Borrower or any of their Subsidiaries shall fail
to make any payment (whether of principal or interest and regardless of amount)
in respect of any Material Indebtedness, when and as the same shall become due
and payable (after giving effect to any applicable notice and cure period).
(g) any event or condition occurs (after giving effect to any notice
or cure period) that results in any Material Indebtedness becoming due prior to
its scheduled maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the Redemption thereof or any
offer to Redeem to be made in respect thereof, prior to its scheduled maturity
or require the Parent, the Borrower or any of their Subsidiaries to make an
offer in respect thereof.
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Parent, the Borrower or any of their Subsidiaries or its
debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent, the Borrower or any of their
Subsidiaries or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered.
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(i) the Parent, the Borrower or any of their Subsidiaries shall (i)
voluntarily commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in Section 10.01(h), (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent, the Borrower or any of their
Subsidiaries or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing; or any
partner of the Parent or the Borrower shall make any request or take any action
for the purpose of calling a meeting of the partners of the Parent or the
Borrower to consider a resolution to dissolve and wind-up the Parent's or the
Borrower's affairs.
(j) the Parent, the Borrower or any of their Subsidiaries shall
become unable, admit in writing its inability or fail generally to pay its debts
as they become due.
(k) (i) one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000 (to the extent not covered by
independent third party insurance provided by insurers of the highest claims
paying rating or financial strength as to which the insurer does not dispute
coverage and is not subject to an insolvency proceeding) or (ii) any one or more
non monetary judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, shall be rendered
against the Parent, the Borrower, any of their Subsidiaries or any combination
thereof and the same shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to attach or levy upon any assets of the
Parent, the Borrower or any of their Subsidiaries to enforce any such judgment.
(l) the Loan Documents after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms
against the Borrower or a Guarantor party thereto or shall be repudiated by
them, or cease to create a valid and perfected Lien of the priority required
thereby on any of the collateral purported to be covered thereby, except to the
extent permitted by the terms of this Agreement, or the Borrower or any of its
Subsidiaries shall so state in writing.
(m) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Parent, the
Borrower and their Subsidiaries in an aggregate amount exceeding $1,000,000 in
any year.
(n) a Change in Control shall occur.
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Section 10.02 Remedies.
(a) In the case of an Event of Default other than one described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may,
and at the request of the Required Lenders, shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Notes and the Loans then outstanding to be due
and payable in whole (or in part, in which case any principal not so declared to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower
and the Guarantors accrued hereunder and under the Notes and the other Loan
Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in Section 2.08(j)), shall become due and
payable immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor; and in case of an Event of
Default described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), the
Commitments shall automatically terminate and the Notes and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
the other obligations of the Borrower and the Guarantors accrued hereunder and
under the Notes and the other Loan Documents (including, without limitation, the
payment of cash collateral to secure the LC Exposure as provided in Section
2.08(j)), shall automatically become due and payable, without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or other
notice of any kind, all of which are hereby waived by the Borrower and each
Guarantor.
(b) In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.
(c) All proceeds realized from the liquidation or other disposition
of collateral or otherwise received after maturity of the Notes, whether by
acceleration or otherwise, shall be applied: first, to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second, to accrued interest on the Notes; third, to fees; fourth, pro rata to
principal outstanding on the Notes and Indebtedness referred to in Clause (b) of
the definition of Indebtedness owing to a Lender or an Affiliate of a Lender;
fifth, to any other Indebtedness; sixth, to serve as cash collateral to be held
by the Administrative Agent to secure the LC Exposure; and any excess shall be
paid to the Borrower or as otherwise required by any Governmental Requirement.
Section 10.03 Disposition of Proceeds. The Security Instruments contain an
assignment by the Borrower and/or the Guarantors unto and in favor of the
Administrative Agent for the benefit of the Lenders of all of the Borrower's or
each Guarantor's interest in and to production and all proceeds attributable
thereto which may be produced from or allocated to the Mortgaged Property. The
Security Instruments further provide in general for the application of such
proceeds to the satisfaction of the Indebtedness and other obligations described
therein and secured thereby. Notwithstanding the assignment contained in such
Security Instruments, except after the occurrence and during the continuance of
an Event of Default, (a) the Administrative Agent and the Lenders agree that
they will neither notify the purchaser or purchasers of such
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production nor take any other action to cause such proceeds to be remitted to
the Administrative Agent or the Lenders, but the Lenders will instead permit
such proceeds to be paid to the Borrower and its Subsidiaries and (b) the
Lenders hereby authorize the Administrative Agent to take such actions as may be
necessary to cause such proceeds to be paid to the Borrower and/or its
Subsidiaries.
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.01 Appointment; Powers. Each of the Lenders and each Issuing
Bank hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof and the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto.
Section 11.02 Duties and Obligations of Administrative Agent. The
Administrative Agent shall have no duties or obligations except those expressly
set forth in the Loan Documents. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing (the use of the term "agent" herein and in the other Loan Documents
with reference to the Administrative Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law; rather, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties), (b) the Administrative
Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (c) except as
expressly set forth herein, the Administrative Agent shall have no duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity. The Administrative Agent shall be deemed not to have knowledge of
any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or under any other Loan Document or in connection herewith
or therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document, (v) the satisfaction of any condition set forth in ARTICLE VI or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent, (vi) the existence, value, perfection
or priority of any collateral security or the financial or other condition of
the Borrower and its Subsidiaries or any other obligor or guarantor, or (vii)
any failure by the Borrower or any other Person (other than itself) to perform
any of its obligations hereunder or under any other Loan Document or the
performance or observance of any covenants, agreements or other terms or
conditions set forth herein or therein. For purposes of determining compliance
with the conditions specified in ARTICLE VI,
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each Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the
Administrative Agent shall have received written notice from such Lender prior
to the proposed closing date specifying its objection thereto.
Section 11.03 Action by Agent. The Administrative Agent shall have no duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other
Loan Documents that the Administrative Agent is required to exercise in writing
as directed by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
12.02) and in all cases the Administrative Agent shall be fully justified in
failing or refusing to act hereunder or under any other Loan Documents unless it
shall (a) receive written instructions from the Required Lenders or the Lenders,
as applicable, (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 12.02) specifying the
action to be taken and (b) be indemnified to its satisfaction by the Lenders
against any and all liability and expenses which may be incurred by it by reason
of taking or continuing to take any such action. The instructions as aforesaid
and any action taken or failure to act pursuant thereto by the Administrative
Agent shall be binding on all of the Lenders. If a Default has occurred and is
continuing, then the Administrative Agent shall take such action with respect to
such Default as shall be directed by the requisite Lenders in the written
instructions (with indemnities) described in this Section 11.03, provided that,
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interests of the Lenders. In no event, however, shall
the Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement, the Loan Documents or applicable law. If a Default has occurred and
is continuing, neither the Co-Syndication Agents nor the Co-Documentation Agents
shall have any obligation to perform any act in respect thereof. No Agent shall
be liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders or the Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02), and otherwise the Administrative Agent shall not be
liable for any action taken or not taken by it hereunder or under any other Loan
Document or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith INCLUDING ITS OWN
ORDINARY NEGLIGENCE, except for its own gross negligence or willful misconduct.
Section 11.04 Reliance by Agent. Each Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. Each
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon and each of the Borrower, the Lenders and each
Issuing Bank hereby waives the right to dispute such Agent's record of such
statement, except in the case of gross negligence or willful misconduct by such
Agent. Each Agent may consult with legal counsel (who may be
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counsel for the Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts. The
Agents may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof permitted hereunder shall have been filed with the Administrative Agent.
Section 11.05 Subagents. The Administrative Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding Sections of this ARTICLE XI shall apply to any such sub-agent
and to the Related Parties of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Agent.
Section 11.06 Resignation or Removal of Agents. Subject to the appointment
and acceptance of a successor Agent as provided in this Section 11.06, any Agent
may resign at any time by notifying the Lenders, each Issuing Bank and the
Borrower, and any Agent may be removed at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right, with the approval of the Borrower, to appoint a successor.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation or removal of the retiring Agent, then the retiring
Agent may, on behalf of the Lenders and each Issuing Bank, appoint a successor
Agent. Upon the acceptance of its appointment as Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the Agent's resignation hereunder, the provisions of this ARTICLE XI and
Section 12.03 shall continue in effect for the benefit of such retiring Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Agent.
Section 11.07 Agents and Lenders. Each bank serving as an Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not an Agent hereunder.
Section 11.08 No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Loan Document to which it is a party. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document, any
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related agreement or any document furnished hereunder or thereunder. The Agents
shall not be required to keep themselves informed as to the performance or
observance by the Borrower or any of its Subsidiaries of this Agreement, the
Loan Documents or any other document referred to or provided for herein or to
inspect the Properties or books of the Borrower or its Subsidiaries. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, no Agent and no
Arranger shall have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of the Borrower (or any of its Affiliates) which may come into the
possession of such Agent or any of its Affiliates. In this regard, each Lender
acknowledges that ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. is acting in this transaction as
special counsel to the Administrative Agent only, except to the extent otherwise
expressly stated in any legal opinion or any Loan Document. Each other party
hereto will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.
Section 11.09 Administrative Agent May File Proofs of Claim. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans and all other Indebtedness
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 12.03) allowed in such judicial proceeding;
and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.
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Section 11.10 Authority of Administrative Agent to Release Collateral and
Liens. Each Lender and each Issuing Bank hereby authorizes the Administrative
Agent to release any collateral that is permitted to be sold or released
pursuant to the terms of the Loan Documents. Each Lender and each Issuing Bank
hereby authorizes the Administrative Agent to execute and deliver to the
Borrower, at the Borrower's sole cost and expense, any and all releases of
Liens, termination statements, assignments or other documents reasonably
requested by the Borrower in connection with any sale or other disposition of
Property to the extent such sale or other disposition is permitted by the terms
of Section 9.12 or is otherwise authorized by the terms of the Loan Documents.
Section 11.11 The Arranger, the Co-Syndication Agents and the
Co-Documentation Agents. The Arranger, the Co-Syndication Agents and the
Co-Documentation Agents shall have no duties, responsibilities or liabilities
under this Agreement and the other Loan Documents other than their duties,
responsibilities and liabilities in their capacity as Lenders hereunder.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower or the Parent, to it at ▇▇▇▇ ▇▇▇▇▇▇
▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(ii) if to the Administrative Agent, to it at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of Loan and
Agency Services, Attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (Telecopy No. (312)
385-7096), with a copy to ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention of ▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), and for all other
correspondence other than borrowings, continuation, conversion and Letter
of Credit requests ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention
of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(iii) if to any other Lender, in its capacity as such, or any
other Lender in its capacity as an Issuing Bank, to it at its address (or
telecopy number) set forth in its Administrative Questionnaire.
(b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V
unless otherwise agreed by the Administrative Agent and the applicable Lender.
The Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by
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electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.
(c) Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 12.02 Waivers; Amendments
(a) No failure on the part of the Administrative Agent, any other
Agent, any Issuing Bank or any Lender to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege, or any
abandonment or discontinuance of steps to enforce such right, power or
privilege, under any of the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any of the Loan Documents preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies of the
Administrative Agent, any other Agent, each Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by Section 12.02(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any other Agent, any
Lender or any Issuing Bank may have had notice or knowledge of such Default at
the time.
(b) Neither this Agreement nor any provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Required Lenders or by the Borrower and the Administrative Agent with
the consent of the Required Lenders; provided that no such agreement shall (i)
increase the Maximum Credit Amount of any Lender without the written consent of
such Lender, (ii) increase the Borrowing Base without the written consent of
each Lender, decrease or maintain the Borrowing Base without the consent of the
Required Lenders, or modify in any manner Section 2.07 without the consent of
each Lender, (iii) reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder, or
reduce any other Indebtedness hereunder or under any other Loan Document,
without the written consent of each Lender affected thereby, (iv) postpone the
scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any fees payable hereunder, or any
other Indebtedness hereunder or under any other Loan Document, or reduce the
amount of, waive or excuse any such payment, or postpone or extend the
Termination Date or the Maturity Date without the written consent of each Lender
affected thereby, (v) change Section 4.01(b) or Section 4.01(c) in a manner that
would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, (vi) waive or amend Section 6.01, Section
10.02(c) or Section 8.14 or change the definition of the terms "Material
Domestic Subsidiary" or "Subsidiary", without the written consent of each
Lender, (vii) release any Guarantor (except as
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set forth in the Guarantee Agreement), release all or substantially all of the
collateral (other than as provided in Section 11.09), or reduce the percentage
set forth in Section 8.14(a) to less than 75%, without the written consent of
each Lender, or (viii) change any of the provisions of this Section 12.02(b) or
the definition of "Required Lenders" or any other provision hereof specifying
the number or percentage of Lenders required to waive, amend or modify any
rights hereunder or under any other Loan Documents or make any determination or
grant any consent hereunder or any other Loan Documents, without the written
consent of each Lender; provided further that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent, any
other Agent, or any Issuing Bank hereunder or under any other Loan Document
without the prior written consent of the Administrative Agent, such other Agent
or such Issuing Bank, as the case may be. Notwithstanding the foregoing, any
supplement to Schedule 7.14 (Subsidiaries) shall be effective simply by
delivering to the Administrative Agent a supplemental schedule clearly marked as
such and, upon receipt, the Administrative Agent will promptly deliver a copy
thereof to the Lenders.
Section 12.03 Expenses, Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including, without
limitation, the reasonable fees, charges and disbursements of counsel and other
outside consultants for the Administrative Agent, the reasonable travel,
photocopy, mailing, courier, telephone and other similar expenses and, in
connection with the syndication of the credit facilities provided for herein,
the preparation, negotiation, execution, delivery and administration (both
before and after the execution hereof and including advice of counsel to the
Administrative Agent as to the rights and duties of the Administrative Agent and
the Lenders with respect thereto) of this Agreement and the other Loan Documents
and any amendments, modifications or waivers of or consents related to the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all out-of-pocket costs, expenses,
Taxes, assessments and other charges incurred by any Agent in connection with
any filing, registration, recording or perfection of any security interest
contemplated by this Agreement or any Security Instrument or any other document
referred to therein, (iii) all reasonable out-of-pocket expenses incurred by
each Issuing Bank in connection with the issuance, amendment, renewal or
extension of any Letter of Credit issued by such Issuing Bank or any demand for
payment thereunder, (iv) all out-of-pocket expenses incurred by any Agent, any
Issuing Bank or any Lender, including the fees, charges and disbursements of any
counsel for any Agent, any Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement or any
other Loan Document, including its rights under this Section 12.03, or in
connection with the Loans made or Letters of Credit issued hereunder, including,
without limitation, all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) THE BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGERS, EACH
ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING
PERSONS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND
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RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL
FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT
OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY
OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN
DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY OF ITS SUBSIDIARIES TO COMPLY
WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY
GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY
BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN
ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS
DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE
OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY ANY
ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT ISSUED BY
SUCH ISSUING BANK IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO
NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT
OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE,
NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN
CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE
OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER
AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO
RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ITS SUBSIDIARIES OR ANY OF THEIR
PROPERTIES, INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE,
RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL
OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON
ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR
ANY OF ITS SUBSIDIARIES WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR
ANY OF ITS SUBSIDIARIES, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY OF ITS
SUBSIDIARIES OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR
PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT
IN PRESENT LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT,
DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT
OR ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR
HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE
BORROWER OR ANY OF ITS SUBSIDIARIES OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE
OF
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HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR
ANY OF ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO
THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL,
HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY
ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO
ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY
SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE,
WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL
TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL
NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to such Agent or any Issuing Bank under Section 12.03(a) or
(b), each Lender severally agrees to pay to such Agent or such Issuing Bank, as
the case may be, such Lender's Applicable Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against such Agent or such Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the Transactions, any Loan or Letter
of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section 12.03 shall be payable within
ten (10) Business Days of written demand therefor.
Section 12.04 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of any Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by
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the Borrower without such consent shall be null and void) and (ii) no Lender may
assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section 12.04. Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of any Issuing Bank that issues any Letter of Credit), Participants
(to the extent provided in Section 12.04(c)) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
each Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in Section 12.04(b)
(ii), any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the
Borrower shall be required for an assignment to a Lender or an
Affiliate of a Lender or, if an Event of Default has occurred and is
continuing, to any other assignee; and
(B) the Administrative Agent, provided that no consent
of the Administrative Agent shall be required for an assignment to
an assignee that is a Lender or any Affiliate of a Lender,
immediately prior to giving effect to such assignment.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Commitment, the amount of the
Commitment of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent)
shall not be less than $5,000,000 unless each of the Borrower and
the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has
occurred and is continuing;
(B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement;
(C) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500;
(D) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire;
and
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(E) any assignment of a given percentage of a Lender's
Commitment shall cover the same percentage of such Lender's Working
Capital Revolving Commitment, and vice versa.
(iii) Subject to Section 12.04(b)(iv) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Section
5.01, Section 5.02, Section 5.03 and Section 12.03). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this Section 12.04 shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 12.04(c).
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Maximum Credit Amount of, and
principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent,
each Issuing Bank and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrower, any Issuing Bank and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice. In connection with any changes to the Register, if necessary, the
Administrative Agent will reflect the revisions on Annex I and forward a copy of
such revised Annex I to the Borrower, each Issuing Bank and each Lender.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
12.04(b) and any written consent to such assignment required by Section
12.04(b), the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this Section 12.04(b).
(c) (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or any Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (1) such Lender's
obligations under this Agreement shall remain unchanged, (2) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (3) the Borrower, the Administrative Agent, each Issuing
Bank and the other
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Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the proviso to Section 12.02 that
affects such Participant. In addition such agreement must provide that the
Participant be bound by the provisions of Section 12.03. Subject to Section
12.04(c)(ii), the Borrower agrees that each Participant shall be entitled to the
benefits of Section 5.01, Section 5.02 and Section 5.03 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to Section
12.04(b). To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 12.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 4.01(c) as though it were a
Lender.
(ii) A Participant shall not be entitled to receive any
greater payment under Section 5.01 or Section 5.03 than the applicable Lender
would have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant is
made with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 5.03 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 5.03(e) as though it were a Lender.
(d) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section 12.04(d) shall not apply to any such
pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
Section 12.05 Survival; Revival; Reinstatement.
(a) All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, any other Agent, any Issuing Bank or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 and ARTICLE XI shall survive and remain in full
force and effect regardless of
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the consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement, any other Loan Document or any
provision hereof or thereof.
(b) To the extent that any payments on the Indebtedness or proceeds
of any collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.
Section 12.06 Counterparts; Integration; Effectiveness.
(a) This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.
(b) This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. This Agreement
and the other Loan Documents represent the final agreement among the parties
hereto and thereto and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
(c) Except as provided in Section 6.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
Section 12.07 Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
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Section 12.08 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitations obligations under Swap Agreements) at any
time owing by such Lender or Affiliate to or for the credit or the account of
the Borrower or any of its Subsidiaries against any of and all the obligations
of the Borrower or any of its Subsidiaries owed to such Lender now or hereafter
existing under this Agreement or any other Loan Document, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations may be unmatured. The
rights of each Lender under this Section 12.08 are in addition to other rights
and remedies (including other rights of setoff) which such Lender or its
Affiliates may have.
Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT
UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE,
RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH
LENDER IS LOCATED. CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL
NOT APPLY TO THIS AGREEMENT OR THE NOTES.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN
DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF
AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE
AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN
ANY COURT OTHERWISE HAVING JURISDICTION.
(c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE
ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED
PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO
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BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.
(d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.
Section 12.10 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 12.11 Confidentiality. Each of the Agents, each Issuing Bank and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement or any other Loan Document, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or thereunder, (f)
subject to an agreement containing provisions substantially the same as those of
this Section 12.11, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors) to
any Swap Agreement relating to the Borrower and their obligations, (g) with the
consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section 12.11 or
(ii) becomes available to the Administrative Agent, any Issuing Bank or any
Lender on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section 12.11, "Information" means all information received
from the Borrower
95
or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries
and their businesses, other than any such information that is available to the
Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Borrower or any of its Subsidiaries; provided that,
in the case of information received from the Borrower, or any of its
Subsidiaries after the date hereof, such information is clearly identified at
the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Section 12.12 Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows: (a) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (b) in the event that the maturity of the Notes is accelerated by
reason of an election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to any Lender may never include more than the maximum amount allowed
by such applicable law, and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically by such Lender as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been
96
payable to such Lender if the total amount of interest had been computed without
giving effect to this Section 12.12. To the extent that Chapter 303 of the Texas
Finance Code is relevant for the purpose of determining the Highest Lawful Rate
applicable to a Lender, such Lender elects to determine the applicable rate
ceiling under such Chapter by the weekly ceiling from time to time in effect.
Chapter 346 of the Texas Finance Code does not apply to the Borrower's
obligations hereunder.
Section 12.13 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."
Section 12.14 Collateral Matters; Swap Agreements. The benefit of the
Security Instruments and of the provisions of this Agreement relating to any
collateral securing the Indebtedness shall also extend to and be available to
those Lenders or their Affiliates which are counterparties to any Swap Agreement
with the Borrower or any of its Subsidiaries on a pro rata basis in respect of
any obligations of the Borrower or any of its Subsidiaries which arise under any
such Swap Agreement while such Person or its Affiliate is a Lender, but only
while such Person or its Affiliate is a Lender, including any Swap Agreements
between such Persons in existence prior to the date hereof. No Lender or any
Affiliate of a Lender shall have any voting rights under any Loan Document as a
result of the existence of obligations owed to it under any such Swap
Agreements.
Section 12.15 No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or
materialman) shall have any rights, claims, remedies or privileges hereunder or
under any other Loan Document against the Administrative Agent, any
97
other Agent, the Issuing Bank or any Lender for any reason whatsoever. There are
no third party beneficiaries.
Section 12.16 USA Patriot Act Notice. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the Act.
Section 12.17 General Partner Liability. The Lenders agree for themselves
and their respective successors and assigns, including any subsequent holder of
any Note, no claim arising against the Borrower or the Parent under any Loan
Document shall be asserted against the General Partner or EV Management (or any
member, manager, officer, director, partner, employee, or agent of the General
Partner or EV Management) and no judgment, order or execution entered in any
suit, action or proceeding, whether legal or equitable, on this Agreement, such
Note or any of the other Loan Documents shall be obtained or enforced against
the General Partner or EV Management or their respective assets for the purpose
of obtaining satisfaction and payment of such Note, the Indebtedness evidenced
thereby or any claims arising thereunder or under this Agreement or any other
Loan Document, any right to proceed against the General Partner or EV Management
(or any member, manager, officer, director, partner, employee, or agent of the
General Partner or EV Management) individually or its respective assets being
hereby expressly waived, renounced and remitted by the Lenders for themselves
and their respective successors and assigns. Nothing in this Section 12.17,
however, shall be construed so as to prevent the Administrative Agent, any
Lender or any other holder of any Note from commencing any action, suit or
proceeding with respect to or causing legal papers to be served upon the General
Partner or EV Management for the purpose of (i) obtaining jurisdiction over the
Borrower or the Parent or (ii) obtaining judgment, order or execution against
the General Partner or EV Management arising out of any fraud or intentional
misrepresentation by the General Partner or EV Management in connection with the
Loan Documents or of recovery of moneys received by the General Partner or EV
Management in violation of the terms of this Agreement.
[SIGNATURES BEGIN NEXT PAGE]
98
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: EV PROPERTIES, L.P.
By: EV Properties GP, LLC, its general partner
By: EV Energy Partners, L.P., its sole member
By: EV Energy GP, L.P., its general partner
By: EV Management, L.L.C., its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
PARENT: EV ENERGY PARTNERS, L.P.
By: EV Energy GP, L.P., its general partner
By: EV Management, L.L.C., its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
SIGNATURE PAGE
CREDIT AGREEMENT
1
ADMINISTRATIVE AGENT: JPMORGAN CHASE BANK, N.A., as
Administrative Agent
By: _______________________________________
Name:
Title:
SIGNATURE PAGE
CREDIT AGREEMENT
2
CO-SYNDICATION AGENT: BNP PARIBAS, as Co-Syndication Agent
By: _______________________________________
Name:
Title:
By: _______________________________________
Name:
Title:
SIGNATURE PAGE
CREDIT AGREEMENT
3
CO-SYNDICATION AGENT: WACHOVIA BANK, NATIONAL
ASSOCIATION, as Co-Syndication Agent
By: _______________________________________
Name:
Title:
SIGNATURE PAGE
CREDIT AGREEMENT
4
CO-DOCUMENTATION AGENT: COMPASS BANK, as Co-Documentation Agent
By: _______________________________________
Name:
Title:
SIGNATURE PAGE
CREDIT AGREEMENT
5
CO-DOCUMENTATION AGENT: UNION BANK OF CALIFORNIA, N.A., as
Co-Documentation Agent
By: _______________________________________
Name:
Title:
SIGNATURE PAGE
CREDIT AGREEMENT
6
LENDERS: JPMORGAN CHASE BANK, N.A., as a Lender
By: _______________________________________
Name:
Title:
BNP PARIBAS, as a Lender
By: _______________________________________
Name:
Title:
By: _______________________________________
Name:
Title:
WACHOVIA BANK, NATIONAL
ASSOCIATION, as a Lender
By: _______________________________________
Name:
Title:
COMPASS BANK, as a Lender
By: _______________________________________
Name:
Title:
SIGNATURE PAGE
CREDIT AGREEMENT
7
UNION BANK OF CALIFORNIA, N.A., as a Lender
By: _______________________________________
Name:
Title:
SIGNATURE PAGE
CREDIT AGREEMENT
8
ANNEX I
LIST OF MAXIMUM CREDIT AMOUNTS
AGGREGATE MAXIMUM CREDIT AMOUNTS
NAME OF LENDER APPLICABLE PERCENTAGE MAXIMUM CREDIT AMOUNT
------------------------------------ --------------------- ---------------------
JPMorgan Chase Bank, N.A. 20% $ 30,000,000.00
BNP Paribas 20% $ 30,000,000.00
Wachovia Bank, National Association 20% $ 30,000,000.00
Compass Bank 20% $ 30,000,000.00
Union Bank of California, N.A. 20% $ 30,000,000.00
TOTAL 100% $ 150,000,000.00
ANNEX 1-1
CREDIT AGREEMENT
EXHIBIT A
[FORM OF] NOTE
$[ ] [ ],200[ ]
FOR VALUE RECEIVED, EV Properties, L.P., a Delaware limited partnership
(the "Borrower"), hereby promises to pay to the order of [ ] (the "Lender"), at
the principal office of JPMorgan Chase Bank, N.A., as administrative agent (the
"Administrative Agent"), the principal sum of [ ] Dollars ($[ ]) (or such lesser
amount as shall equal the aggregate unpaid principal amount of the Loans made by
the Lender to the Borrower under the Credit Agreement, as hereinafter defined),
in lawful money of the United States of America and in immediately available
funds, on the dates and in the principal amounts provided in the Credit
Agreement, and to pay interest on the unpaid principal amount of each such Loan,
at such office, in like money and funds, for the period commencing on the date
of such Loan until such Loan shall be paid in full, at the rates per annum and
on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of
each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books and,
prior to any transfer of this Note, may be endorsed by the Lender on the
schedules attached hereto or any continuation thereof or on any separate record
maintained by the Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender's or the Borrower's rights or obligations
in respect of such Loans or affect the validity of such transfer by any Lender
of this Note.
This Note is one of the Notes referred to in the Credit Agreement dated as
of September 29, 2006 among the Borrower, the Administrative Agent, and the
other agents and lenders signatory thereto (including the Lender), and evidences
Loans made by the Lender thereunder (such Credit Agreement as the same may be
amended, supplemented or restated from time to time, the "Credit Agreement").
Capitalized terms used in this Note have the respective meanings assigned to
them in the Credit Agreement.
This Note is issued pursuant to, and is subject to the terms and
conditions set forth in, the Credit Agreement and is entitled to the benefits
provided for in the Credit Agreement and the other Loan Documents. The Credit
Agreement provides for the acceleration of the maturity of this Note upon the
occurrence of certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.
EXHIBIT A
CREDIT AGREEMENT
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS.
BORROWER: EV PROPERTIES, L.P.
By: EV Properties GP, LLC, its general partner
By: EV Energy Partners, L.P., its sole member
By: EV Energy GP, L.P., its general partner
By: EV Management, L.L.C., its general partner
By:_______________________________________
Name:
Title:
EXHIBIT A
CREDIT AGREEMENT
EXHIBIT B
[FORM OF]
COMPLIANCE CERTIFICATE
Each of the undersigned hereby certifies that he/she is the [ ] of EV
Energy Partners, L.P., a Delaware limited liability company (the "Parent"),
general partner of EV Properties, L.P., a Delaware limited partnership (the
"Borrower"), and that as such he/she is authorized to execute this certificate
on behalf of the Borrower and the Parent. With reference to the Credit Agreement
dated as of September 29, 2006 (together with all amendments, supplements or
restatements thereto being the "Agreement") among the Borrower, Parent, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the other agents and lenders (the
"Lenders") which are or become a party thereto, and such Lenders, each of the
undersigned represents and warrants as follows (each capitalized term used
herein having the same meaning given to it in the Agreement unless otherwise
specified):
(a) The representations and warranties of the Parent and the Borrower
contained in Article VII of the Agreement and in the Loan Documents and
otherwise made in writing by or on behalf of the Parent, the Borrower or any
other Guarantor pursuant to the Agreement and the Loan Documents were true and
correct when made, and are repeated at and as of the time of delivery hereof and
are true and correct in all material respects at and as of the time of delivery
hereof, except to the extent such representations and warranties are expressly
limited to an earlier date or the Required Lenders have expressly consented in
writing to the contrary.
(b) The Parent and the Borrower have performed and complied with all
agreements and conditions contained in the Agreement and in the Loan Documents
required to be performed or complied with by them prior to or at the time of
delivery hereof [or specify default and describe].
(c) Since June 30, 2006, no change has occurred, either in any case or in
the aggregate, in the condition, financial or otherwise, of the Parent, the
Borrower or any of their Subsidiaries that could reasonably be expected to have
a Material Adverse Effect [or specify event].
(d) There exists no Default or Event of Default [or specify Default and
describe].
(e) Attached hereto are the detailed computations necessary to determine
whether the Parent is in compliance with Section 9.01 and Section 8.14 as of the
end of the fiscal quarter ending [ ].
EXHIBIT B
CREDIT AGREEMENT
EXECUTED AND DELIVERED this [ ] day of [ ].
BORROWER: EV PROPERTIES, L.P.
By: EV Properties GP, LLC, its general partner
By: EV Energy Partners, L.P., its sole member
By: EV Energy GP, L.P., its general partner
By: EV Management, L.L.C., its general partner
By:_______________________________________
Name:
Title:
PARENT: EV ENERGY PARTNERS, L.P.
By: EV Energy GP, L.P., its general partner
By: EV Management, L.L.C., its general partner
By:_______________________________________
Name:
Title:
EXHIBIT B
CREDIT AGREEMENT
EXHIBIT C-1
SECURITY INSTRUMENTS
1) Guarantee and Collateral Agreement among the Parent, the other Obligors
and JPMorgan Chase Bank, N.A..
2) Guarantee Agreement Financing Statements
(a) Borrower
(b) Parent
(c) EV Properties GP, LLC
(d) Enervest Production Partners, Ltd.
(e) CGas Properties, L.P.
(f) Enervest-Cargas, Ltd.
(g) Lower Cargas Operating Company LLC
3) Mortgage, Assignment of As-Extracted Collateral, Security Agreement, and
Fixture Filing (Louisiana), by Enervest Production Partners, Ltd. in favor
of JPMorgan Chase Bank, N.A., as Mortgagee and Administrative Agent
4) Mortgage UCC-1, to be filed with the Texas Secretary of State
5) Mortgage, Deed of Trust, Credit Line Deed of Trust, Assignment of
As-Extracted Collateral, Security Agreement, Fixture Filing and Financing
Statement (West Virginia), by CGas Properties, L.P. in favor of JPMorgan
Chase Bank, N.A., as Mortgagee and Administrative Agent
6) Mortgage UCC-1, to be filed with the Delaware Secretary of State
7) Open End Mortgage, Assignment of As-Extracted Collateral, Security
Agreement and Financing Statement (Ohio), by CGas Properties, L.P. in
favor of JPMorgan Chase Bank, N.A., as Mortgagee and Administrative Agent.
8) Mortgage UCC-1, to be filed with the Delaware Secretary of State.
9) Fee Letter with Administrative Agent referred to in Section 3.05(c).
EXHIBIT C-1
CREDIT AGREEMENT
EXHIBIT C-2
FORM OF GUARANTEE AND COLLATERAL AGREEMENT
EXHIBIT C-2
CREDIT AGREEMENT
EXHIBIT D
[FORM OF] ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the "Assignment and Assumption") is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
"Credit Agreement"), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.
The Assignor named on the reverse hereof hereby sells and assigns, without
recourse, to the Assignee named on the reverse hereof, and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of the
Assignment Date set forth on the reverse hereof, the interests set forth on the
reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and Loans owing to the Assignor which are outstanding on the
Assignment Date, together with the participations in Letters of Credit and LC
Disbursements held by the Assignor on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.
This Assignment and Assumption is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 5.03(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The [Assignee/Assignor] shall pay the fee payable to the
Administrative Agent pursuant to Section 12.04(b) of the Credit Agreement.
This Assignment and Assumption shall be governed by and construed in
accordance with the laws of the State of Texas.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
EXHIBIT D
CREDIT AGREEMENT
Effective Date of Assignment
("Assignment Date"):
Facility Principal Amount Assigned Percentage Assigned of
Facility/Commitment (set forth, to at
least 8 decimals, as a percentage of the
Facility and the aggregate Commitments
of all Lenders thereunder)
Commitment Assigned: $ %
Loans:
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor], as Assignor
By:______________________________
Name:
Title:
[Name of Assignee], as Assignee
By: ______________________________
Name:
Title:
EXHIBIT D
CREDIT AGREEMENT
The undersigned hereby consent to the within assignment:1
BORROWER: EV PROPERTIES, L.P.
By: EV Properties GP, LLC, its general partner
By: EV Energy Partners, L.P., its sole member
By: EV Energy GP, L.P., its general partner
By: EV Management, L.L.C., its general partner
By:_______________________________________
Name:
Title:
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT
By:_______________________________________
Name:
Title:
----------------
(1) Consents to be included to the extend required by Section 12.04(b) of the
Credit Agreement.
EXHIBIT D
CREDIT AGREEMENT
EV PROPERTIES, L.P. CREDIT AGREEMENT
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement as a Lender thereunder and, to the extent
of the Assigned Interest, shall have the obligations of a Lender thereunder,
(iv) it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 8.01 thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender, attached to the Assignment and Assumption is any documentation required
to be delivered by it pursuant to the terms of the Credit Agreement, duly
completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the
EXHIBIT D
CREDIT AGREEMENT
Effective Date and to the Assignee for amounts which have accrued from and after
the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of Texas.
EXHIBIT D
CREDIT AGREEMENT
EXHIBIT E-1
FORM OF MAXIMUM CREDIT AMOUNT INCREASE CERTIFICATE
[ ], 200[ ]
To: JPMorgan Chase Bank, N.A.,
as Administrative Agent
The Borrower, the Administrative Agent and the other Agents and certain
Lenders have heretofore entered into a Credit Agreement, dated as of September
29, 2006, as amended from time to time (the "Credit Agreement"). Capitalized
terms not otherwise defined herein shall have the meaning given to such terms in
the Credit Agreement.
This Maximum Credit Amount Increase Certificate is being delivered
pursuant to Section 2.06(c) of the Credit Agreement.
Please be advised that the undersigned has agreed to increase its Maximum
Credit Amount under the Credit Agreement effective [ ], 200[ ] from $[ ] to $[ ]
and (b) that it shall continue to be a party in all respect to the Credit
Agreement and the other Loan Documents.
The [Borrower/Lender] shall pay the fee payable to the Administrative
Agent pursuant to Section 2.06(c)(ii) of the Credit Agreement.
Very truly yours,
[ ]
By:______________________________________
Name:____________________________________
Title:___________________________________
EXHIBIT E-1
CREDIT AGREEMENT
Accepted and Agreed:
JPMorgan Chase Bank, N.A.
as Administrative Agent
By:___________________________________
Name:_________________________________
Title:________________________________
Accepted and Agreed:
EV PROPERTIES, L.P.
By: EV Properties GP, LLC, its general partner
By: EV Energy Partners, L.P., its sole member
By: EV Energy GP, L.P., its general partner
By: EV Management, L.L.C., its general partner
By:_______________________________________
Name:
Title:
EXHIBIT E-1
CREDIT AGREEMENT
EXHIBIT E-2
FORM OF ADDITIONAL LENDER CERTIFICATE
[ ], 200[ ]
To: JPMorgan Chase Bank, N.A.
as Administrative Agent
The Borrower, the Administrative Agent and the other Agents and certain
Lenders have heretofore entered into a Credit Agreement, dated as of September
29, 2006, as amended from time to time (the "Credit Agreement"). Capitalized
terms not otherwise defined herein shall have the meaning given to such terms in
the Credit Agreement.
This Additional Lender Certificate is being delivered pursuant to Section
2.06(c) of the Credit Agreement.
Please be advised that the undersigned has agreed (a) to become a Lender
under the Credit Agreement effective September 29, 2006 with a Maximum Credit
Amount of $[ ] and (b) that it shall be a party in all respect to the Credit
Agreement and the other Loan Documents.
This Additional Lender Certificate is being delivered to the
Administrative Agent together with (i) if the Additional Lender is a Foreign
Lender, any documentation required to be delivered by such Additional Lender
pursuant to Section 5.03(e) of the Credit Agreement, duly completed and executed
by the Additional Lender, and (ii) an Administrative Questionnaire in the form
supplied by the Administrative Agent, duly completed by the Additional Lender.
The [Borrower/Additional Lender] shall pay the fee payable to the Administrative
Agent pursuant to Section 2.06(c)(ii) of the Credit Agreement.
Very truly yours,
[ ]
By:_____________________________________
Name:___________________________________
Title:__________________________________
EXHIBIT E-2
CREDIT AGREEMENT
Accepted and Agreed:
JPMorgan Chase Bank, N.A.,
as Administrative Agent
By:___________________________________
Name:_________________________________
Title:________________________________
Accepted and Agreed:
BORROWER: EV PROPERTIES, L.P.
By: EV Properties GP, LLC, its general partner
By: EV Energy Partners, L.P., its sole member
By: EV Energy GP, L.P., its general partner
By: EV Management, L.L.C., its general partner
By:_______________________________________
Name:
Title:
EXHIBIT E-2
CREDIT AGREEMENT
SCHEDULE 1.02
APPROVED COUNTERPARTIES
1) BP North America, Inc.
SCHEDULE 1.02
CREDIT AGREEMENT
SCHEDULE 7.05
LITIGATION
None
SCHEDULE 7.05
CREDIT AGREEMENT
SCHEDULE 7.11
MATERIAL AGREEMENTS
None
SCHEDULE 7.11
CREDIT AGREEMENT
SCHEDULE 7.14
SUBSIDIARIES
Legal name: Enervest Production Partners, Ltd.
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All names and trade names that Enervest Production Partners, Ltd. has used in
the last five years: None
Jurisdiction of organization over the last five years: Texas
Current jurisdiction of organization: Texas
Organizational number: 12922610
Legal name: CGas Properties, L.P.
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All names and trade names that CGas Properties, L.P. has used in the last five
years: ▇▇ ▇▇▇▇▇▇▇ Properties, L.P.
Jurisdiction of organization over the last five years: Delaware
Current jurisdiction of organization: Delaware
Organizational number: 4177898
Legal name: Enervest-Cargas, Ltd.
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All names and trade names that CGas Properties, L.P. has used in the last five
years: None
Jurisdiction of organization over the last five years: Texas
Current jurisdiction of organization: Texas
Organizational number: 800456443
Legal name: Lower Cargas Operating Company LLC
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All names and trade names that Lower Cargas Operating Company LLC has used in
the last five years: None
Jurisdiction of organization over the last five years: Louisiana
Current jurisdiction of organization: Louisiana
Organizational number: 35398719K
Legal name: EVPP GP, LLC
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All names and trade names EVPP GP, LLC has used in the last five years: None
Jurisdiction of organization over the last five years: Delaware
Current jurisdiction of organization: Delaware
Organizational number: 4140163
Legal name: EVCG GP, LLC
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All names and trade names that EVCG GP, LLC has used in the last five years:
None
Jurisdiction of organization over the last five years: Delaware
Current jurisdiction of organization: Delaware
Organizational number: 4178864
SCHEDULE 7.14
CREDIT AGREEMENT
SCHEDULE 7.18
GAS IMBALANCES
None
SCHEDULE 7.18
CREDIT AGREEMENT
SCHEDULE 7.19
MARKETING CONTRACTS
None
SCHEDULE 7.19
CREDIT AGREEMENT
SCHEDULE 7.20
SWAP AGREEMENTS
See Attached
SCHEDULE 7.20
CREDIT AGREEMENT