This LC PROCUREMENT AGREEMENT, dated as of January 24, 2014 (as amended, modified, restated and/or supplemented from time to time, this “Agreement”), is by and among Endeavour International Corporation, a Nevada corporation (“Holdings”), Endeavour Energy UK Limited, a private limited company registered in England and Wales (the “Payer”), LC Finco S.à.r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, with its registered office at 40, avenue Monterey, L-2163 Luxembourg, in the process of being registered with the Luxembourg Register of Commerce and Companies and having a share capital of $20,000 (the “Payee”), and Credit Suisse AG, acting through one or more of its branches or affiliates, as collateral agent (in such capacity, including any successor thereto, the “Collateral Agent”).
W I T N E S S E T H:
WHEREAS, subject to and upon the terms and conditions set forth herein and the other LC Procurement Documents, the Payee shall, on the date hereof, enter into an agreement with Credit Suisse AG, London Branch (the “LC Bank”) pursuant to which the Payee (in its capacity as the “Company” thereunder, the “LC Party”) will instruct the LC Bank to issue Letters of Credit from time to time in an amount up to the Maximum LC Amount. The Letters of Credit are to be issued to support the decommissioning liabilities of the Payer and to secure payment bonds or other surety arrangements issued by third parties in support of such decommissioning liabilities, including, without limitation, to replace those letters of credit previously issued in connection with the Existing LC Procurement Agreements, and shall be fully released on or prior to the LC Release Date.
WHEREAS, in consideration of the Payee instructing the LC Bank to issue Letters of Credit, the Payer and Holdings agree to reimburse the Payee for certain payments made in connection with the LC Issuance Documents. If a Letter of Credit is drawn, the Payer shall provide cash cover to reimburse the Payee in an amount equal to such drawing.
WHEREAS, the Payer, Holdings and the Payee desire to enter into this Agreement to document, among other things, the terms governing such reimbursement arrangement, the fees payable by the Payer to the Payee for procuring the issuance of the Letters of Credit and the obligation to procure the release of all Letters of Credit on or prior to the LC Release Date. The Collateral Agent is entering into this Agreement in its capacity as Collateral Agent in respect of the Collateral securing the Obligations.
NOW, THEREFORE, IT IS AGREED:
Article I.
Definitions and Accounting Terms.
SECTION 1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:
“5.5% Convertible Notes” shall mean the 5.5% Convertible Senior Notes due 2016 issued by Holdings, including any related notes, guarantees, instruments and agreements executed in connection therewith.
“11.5% Convertible Bonds” shall mean the 11.5% Guaranteed Convertible Bonds due 2014 (extended to 2016) issued by Endeavour Energy Luxembourg S.à.r.l. and guaranteed by Holdings, including any related notes, guarantees, instruments and agreements executed in connection therewith.
“ABR Tranche” shall have the meaning provided in Section 2.03(a).
“Additional Assets” shall mean:
(1) any properties or assets used or useful in the Oil and Gas Business, other than Indebtedness or Capital Stock;
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by Holdings or any of its Restricted Subsidiaries; or
(3) Capital Stock constituting a Minority Interest in any Person that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clause (2) or (3) is primarily engaged in the Oil and Gas Business.
“Additional Guarantor Requirement” shall have the meaning provided in Section 7.11(c).
“Additional Security Documents” shall have the meaning provided in Section 7.11(a).
“Adjusted Consolidated Net Tangible Assets” of a specified Person shall mean (without duplication), as of the date of determination, the remainder of:
(1) the sum of:
(a) discounted future net revenue from proved crude oil and natural gas reserves of such Person and its Restricted Subsidiaries calculated in accordance with SEC guidelines before any state or federal or other income taxes, as estimated by such Person in a reserve report prepared as of the end of the fiscal year of such Person and audited by such Person’s independent petroleum engineers, as increased by, as of the date of determination, the estimated discounted future net revenue from:
(i) estimated proved crude oil and natural gas reserves of such Person and its Restricted Subsidiaries attributable to acquisitions consummated since the date of such reserve report, which reserves were not reflected in such reserve report, and
(ii) estimated proved crude oil and natural gas reserves of such Person and its Restricted Subsidiaries attributable to extensions, discoveries and other additions and upward revisions of estimates of proved crude oil and natural gas reserves (including previously estimated development costs incurred during the period and the accretion of discount since the prior period end) due to exploration, development or exploitation, production or other activities which would, in accordance with standard industry practice, cause such revisions,
and decreased by, as of the date of determination, the estimated discounted future net revenue attributable to:
(iii) estimated proved crude oil and natural gas reserves of such Person and its Restricted Subsidiaries reflected in such reserve report produced or disposed of since the date of such reserve report, and
(iv) reductions in the estimated proved crude oil and natural gas reserves of such Person and its Restricted Subsidiaries reflected in such reserve report since the date of such reserve report due to changes in geological conditions or other factors which would, in accordance with standard industry practice, cause such revisions;
in the case of clauses (i) through (iv) calculated on a pre-tax basis in accordance with SEC guidelines (utilizing the prices estimated by such Person in a reserve report prepared as of the end of the fiscal year of such Person); provided, however, that, in the case of each of the determinations made pursuant to clauses (i), (ii), (iii) and (iv) above, such increases and decreases shall be estimated by Holdings’ petroleum engineers or any independent petroleum engineers engaged by Holdings for that purpose;
(b) the capitalized costs that are attributable to crude oil and natural gas properties of such Person and its Restricted Subsidiaries to which no proved crude oil and natural gas reserves are attributable, based on such Person’s books and records as of a date no earlier than the date of such Person’s latest available annual or quarterly financial statements;
(c) the Net Working Capital of such Person as of a date no earlier than the date of such Person’s latest available annual or quarterly financial statements; and
(d) the greater of:
(i) the net book value of other tangible assets of such Person and its Restricted Subsidiaries as of a date no earlier than the date of such Person’s latest available annual or quarterly financial statements, and
(ii) the appraised value, as estimated by independent appraisers, of other tangible assets of such Person and its Restricted Subsidiaries as of a date no earlier than the date of such Person’s latest available annual or quarterly financial statements (provided that if no such appraisal has been performed, such Person shall not be required to obtain such an appraisal of such assets solely for the purpose of determining this value and only clause (1)(d)(i) of this definition shall apply);
minus:
(2) the sum of:
(a) Minority Interests;
(b) to the extent not otherwise taken into account in determining Adjusted Consolidated Net Tangible Assets, any net natural gas balancing liabilities of such Person and its Restricted Subsidiaries reflected in such Person’s latest audited financial statements;
(c) to the extent included in clause (1)(a) above, the discounted future net revenue, calculated in accordance with SEC guidelines (utilizing the prices utilized in such Person’s year end reserve report), attributable to reserves subject to participation interests, overriding royalty interests or other interests of third parties, pursuant to participation, partnership, vendor financing or other agreements then in effect, or which otherwise are required to be delivered to third parties;
(d) to the extent included in clause (1)(a) above, the discounted future net revenue calculated in accordance with SEC guidelines (utilizing the prices utilized in such Person’s year end reserve report), attributable to reserves that are required to be delivered to third parties to fully satisfy the obligations of such Person and its Restricted Subsidiaries with respect to Volumetric Production Payments on the schedules specified with respect thereto; and
(e) the discounted future net revenue, calculated in accordance with SEC guidelines, attributable to reserves subject to Dollar-Denominated Production Payments that, based on the estimates of production and price assumptions included in determining the discounted future net revenue specified in clause (1)(a) above (utilizing the prices utilized in such Person’s year end reserve report), would be necessary to satisfy fully the obligations of such Person and its Restricted Subsidiaries with respect to Dollar-Denominated Production Payments on the schedules specified with respect thereto.
If Holdings changes its method of accounting from the full cost method to the successful efforts method or a similar method of accounting, “Adjusted Consolidated Net Tangible Assets” of Holdings will continue to be calculated as if Holdings were still using the full cost method of accounting.
“Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Tranche for any Fee Period, a rate per annum equal to the greater of (a) 1.25% per annum and (b) the product of (i) the LIBO Rate in effect for such Fee Period and (ii) Statutory Reserves (as defined in the Term B Credit Agreement).
“Affiliate” of any specified Person shall mean any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that none of the Payee or any of its Affiliates shall be considered
an Affiliate of Holdings or any Subsidiary. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.
“Affiliate Transaction” shall have the meaning provided in Section 8.05.
“Agreement” shall have the meaning provided in the preamble to this Agreement.
“Agreement Currency” shall have the meaning provided in Section 11.19.
“Alternate Base Rate��� shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (c) the one-month Adjusted LIBO Rate plus 1.0%; provided that for the purpose of clause (c), the Adjusted LIBO Rate for any day shall be based on the rate determined on such day at approximately 11 a.m. (London time) by reference to the British Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized vendor for the purpose of displaying such rates). If the Collateral Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Collateral Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate or Adjusted LIBO Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate or Adjusted LIBO Rate, as the case may be.
“Allocation” shall mean the allocation of any portion of the Payee Deposit into a Eurodollar Tranche or an ABR Tranche.
“Allocation Request” shall mean a request by the Payee for an Allocation in accordance with the terms of Section 2.03(a).
“Applicable Law” except as the context may otherwise require, shall mean all applicable laws, rules, regulations, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any Governmental Authority and rules, regulations, orders, licenses and permits of any Governmental Authority.
“Applicable Percentage” shall mean, with respect to any fiscal year, 50%; provided that (a) if the Consolidated Leverage Ratio as of the end of such fiscal year is less than 2.50:1.0, 25% and (b) if the Consolidated Leverage Ratio as of the end of such fiscal year is less than 1.75:1.0, 0%.
“Applicable Premium” shall mean, with respect to any reduction of the Maximum LC Amount, in whole or in part, under Section 3.01, or mandatory posting of Payer Deposit under Section 3.02(b), (a) if made prior to the first anniversary of the date hereof, a cash amount with respect to the portion of the Payee Deposit released in connection with such reduction of the Maximum LC Amount or increase of Payer Deposit pursuant to Section 3.04 equal to the present value at the date of the release of all LC Fees which would accrue on the released portion of the
Payee Deposit (assuming that the Adjusted LIBO Rate prevailing at the time of the notice of release applies throughout such period) from the date of release to but excluding the first anniversary of the date hereof, computed using a discount rate equal to the Treasury Rate as of such date of release plus 50 basis points discounted to the redemption date on a quarterly basis (assuming a 360 day year consisting of twelve 30 day months); and (b) if made on or after the first anniversary of the date hereof, $0. Notwithstanding the foregoing, payment of the Applicable Premium will not be required in connection with any reduction of the Maximum LC Amount, in whole or in part, under Section 3.01 or mandatory posting of Payer Deposit under Section 3.02(b) (i) to the extent the Term A Borrowers elect to borrow additional Term A Loans in the amount of any resulting prepayment of Term B Loans, as provided in Section 2.01(b) of the Tern Loan A Credit Agreement or (ii) such reduction is effected on or prior to the 180th day following the Closing Date, and (A) such reduction is the result of the reduction of the Payer’s obligation to provide security for its decommissioning liabilities by the applicable Governmental Authority and/or agreement with the Payer’s joint interest owners and (B) after giving effect thereto, the Dollar equivalent of the Maximum LC Amount calculated at the Fixed Exchange Rate is not less than $32,000,000.
“Applicable Rate” shall mean, for any day (a) with respect to any Eurodollar Tranche, 7.0% per annum and (b) with respect to any ABR Tranche, 6.0% per annum.
“Approved Hedge Counterparty” shall have the meaning provided in the Term A Credit Agreement.
“Asset Sale” shall mean:
(a) the sale, lease, conveyance or other disposition of any properties or assets (including by way of a Production Payment, Sale Leaseback Transaction, conveyance of any royalty interest, overriding royalty interest, net profits interest, or mergers, consolidations or otherwise); provided, however, that the disposition of all or substantially all of the properties or assets of Holdings and its Restricted Subsidiaries taken as a whole will not be an “Asset Sale,” but will be governed by the provisions of Section 8.09 and not by the provisions of Section 8.04; and
(b) the issuance of Equity Interests in any of Holdings’ Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries (other than directors’ qualifying shares or shares required by Applicable Law to be held by a Person other than Holdings or a Restricted Subsidiary of Holdings).
Notwithstanding the preceding clauses (a) and (b), the following items will not be deemed to be Asset Sales:
(1) any single transaction or series of related transactions that involves properties or assets having a Fair Market Value of less than the greater of (i) $5,000,000 and (ii) 0.5% of Holdings’ Adjusted Consolidated Net Tangible Assets determined as of the date of such transaction;
(2) subject to compliance with the Additional Guarantor Requirement as of the date of such disposition, a disposition of assets between or among any of Holdings and its Restricted Subsidiaries;
(3) an issuance or sale of Equity Interests by a Restricted Subsidiary to Holdings or to another Restricted Subsidiary;
(4) any disposition, abandonment, relinquishment or expiration of equipment, inventory, products, accounts receivable or other similar properties or similar assets in the ordinary course of business (excluding, for the avoidance of doubt, Production Payments);
(5) the disposition of cash or Cash Equivalents, Hedging Agreements or other financial instruments in the ordinary course of business;
(6) a Restricted Payment that is permitted by Section 8.01 or a Permitted Investment (or a disposition that would constitute a Restricted Payment but for the exclusion from the definition thereof);
(7) the farm-out, lease or sublease of developed or undeveloped crude oil or natural gas properties owned or held by Holdings or any of its Restricted Subsidiaries in the ordinary course of business or in exchange for crude oil and natural gas properties or interests owned or held by another Person;
(8) (i) any trade or exchange by Holdings or any of its Restricted Subsidiaries of Hydrocarbon properties or other properties or assets for Hydrocarbon properties or other properties or assets owned or held by one or more other Persons, and (ii) any transfer or sale of assets, or lease, assignment or sublease of any real or personal property, (A) in exchange for services (including in connection with any outsourcing arrangements) related to the exploration, development, completion or production (and related activities) of properties of Holdings or any Restricted Subsidiary, (B) in exchange for such transferee, lessee or assignee (or an Affiliate thereof) agreeing to pay all or a portion of the costs and expenses related to the exploration, development, completion or production (and related activities) of properties of Holdings or any Restricted Subsidiary or (C) in exchange for properties or assets satisfying the requirements of clause (i) of this clause (8) ((A) and (B) being referred to herein as a “carry”); provided that the Fair Market Value of the properties or assets traded, exchanged, transferred, sold, leased, assigned or subleased by Holdings or such Restricted Subsidiary is equal to or less than the Fair Market Value of the properties, assets or carry (together with any cash and Cash Equivalents) agreed by such other Persons to be transferred, provided or paid to or on behalf of Holdings or such Restricted Subsidiary, and provided further that any cash or Cash Equivalents received must be applied in accordance with the provisions of Section 3.02(a);
(9) the creation or perfection of a Lien (but not (i) except to the extent contemplated in clause (10) below, the sale or other disposition of the properties or assets subject to such Lien or (ii) Production Payments);
(10) the creation or perfection of a Permitted Lien and the exercise by any Person in whose favor a Permitted Lien is granted of any of its rights in respect of that Permitted Lien (but in each case excluding Production Payments);
(11) a surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind;
(12) the licensing or sublicensing of intellectual property or other general intangibles in the ordinary course of business to the extent that such license does not prohibit the licensor from using the intellectual property and licenses, leases or subleases of other property;
(13) any sale or other disposition of Equity Interests in an Unrestricted Subsidiary;
(14) the sale or other disposition (whether or not in the ordinary course of business) of Oil and Gas Properties, provided that at the time of such sale or other disposition such properties do not have associated with them any proved reserves, and provided further that the sale or other disposition is not for less than the Fair Market Value of such Oil and Gas Properties;
(15) any Refinancing Production Payment; and
(16) the grant or transfer by Holdings or a Restricted Subsidiary of Holdings of a royalty, overriding royalty or net profits interest, in each case pursuant to any incentive compensation programs on terms that are reasonably customary in the Oil and Gas Business for geologists, geophysicists and other providers of technical services to Holdings or a Restricted Subsidiary of Holdings.
“Attributable Debt” in respect of a Sale Leaseback Transaction shall mean, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such Sale Leaseback Transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP. As used in the preceding sentence, the “net rental payments” under any lease for any period shall mean the sum of rental and other payments required to be paid with respect to such period by the lessee thereunder, excluding any amounts required to be paid by such lessee on account of maintenance and repairs, insurance, taxes, assessments, water rates or similar charges. In the case of any lease that is terminable by the lessee upon payment of penalty, such net rental payment shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated.
“Authorization” shall mean an authorization, consent, permit, approval, resolution, license, exemption, filing, notarization or registration.
“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and “Beneficially Owned” have correlative meanings.
“Board” shall mean the Board of Governors of the Federal Reserve System of the United States.
“Board of Directors” shall mean:
(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; and
(2) with respect to any other Person, the board or committee of such Person serving a similar function.
“Board Resolution” shall mean a copy of a resolution certified by the Secretary or an Assistant Secretary of the applicable Person and with respect to EIH, its Responsible Officer as having been duly adopted by the Board of Directors of such Person and being in full force and effect on the date of such certification, and delivered to the Payee.
“Breakage Event” shall have the meaning provided for in Section 2.03(b)(iii).
“Business” shall mean any corporation, limited liability company, partnership or other business entity (or the adjectival form thereof, where appropriate) or the equivalent of the foregoing in any jurisdiction outside of the United States or any State thereof.
“Business Day” shall mean for all purposes, any day except Saturday, Sunday and any day which shall be in New York, New York or London, England, a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close.
“Calculation Date” shall mean each date on which any financial ratio calculation is calculated.
“Capital Expenditures” shall mean, with respect to any Person, all expenditures by such Person and its Restricted Subsidiaries which should be capitalized in accordance with GAAP and, without duplication, the amount of all Capital Lease Obligations incurred by such Person and its Restricted Subsidiaries.
“Capital Lease Obligation” shall mean, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.
“Capital Stock” shall mean:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and
(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person;
(5) but excluding from all of the foregoing any debt securities convertible into Capital Stock, regardless of whether such debt securities include any right of participation with Capital Stock.
“Cash Equivalents” shall mean:
(1) securities issued or directly and fully guaranteed or insured by the government of the United States or any agency or instrumentality of the government of the United States (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition;
(2) marketable general obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition thereof, having a credit rating of “A” or better from either S&P or Moody’s;
(3) certificates of deposit, demand deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500,000,000 and a credit rating of “A” or better from either S&P or Moody’s;
(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;
(5) commercial paper having one of the two highest ratings obtainable from Moody’s or S&P and, in each case, maturing within one year after the date of acquisition;
(6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition; and
(7) instruments equivalent to those referred to in clauses (1) through (6) above denominated in Sterling comparable in credit quality and tenor to those referred to above and customarily used by companies for cash management purposes in the United Kingdom to the extent reasonably required in connection with any business conducted by any Subsidiary organized in such jurisdiction.
“Cash Interest Expense” shall mean, with respect to any Person, for any period, the Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period, less the sum of (a) any pay-in-kind interest expense or other noncash interest expense (including as a result of the effects of purchase accounting) of such Person and its Restricted Subsidiaries, (b) to
the extent included in Consolidated Interest Expense, the amortization of any financing fees paid by, or on behalf of, such Person and its Restricted Subsidiaries, (c) the amortization of debt discounts, if any, or fees in respect of Hedging Agreements and (d) cash interest income of such Person and its Restricted Subsidiaries for such period.
“Change in Law” shall mean (a) the adoption of any law, rule, regulation or treaty after the date hereof, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority after the date hereof or (c) compliance by the Payee with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date hereof; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Change of Control” shall mean the occurrence of any of the following:
(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets (including Capital Stock of the Restricted Subsidiaries) of Holdings and its Restricted Subsidiaries taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act);
(2) the adoption by the stockholders of Holdings of a plan relating to the liquidation or dissolution of Holdings;
(3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of Holdings, measured by voting power rather than number of shares, units or the like;
(4) the first day on which a majority of the members of the Board of Directors of Holdings are not Continuing Directors; or
(5) Holdings shall at any time cease to own (beneficially and of record), directly or indirectly, 100% of the Equity Interests of the Payer.
“Charges” shall have the meaning provided in Section 11.09.
“Class C Convertible Preferred Stock” shall mean Holdings’ Series C Preferred Stock with the terms set forth in the Certificate of Designation of Series C Preferred Stock originally filed with the Nevada Secretary of State on October 30, 2006 and amended on December 21, 2006, November 17, 2009 and March 10, 2010.
“Closing Date” shall mean the date on which the conditions specified in Section 5 are satisfied (or waived in accordance with Section 11.08).
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor statute and any regulations promulgated thereunder.
“Collateral” shall mean all property (whether real or personal, tangible or intangible) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Security Document, including, without limitation, all Collateral under and as defined in each Security Document; provided that “Collateral” shall not include any Excluded Assets.
“Collateral Agent” shall have the meaning provided in the preamble to this Agreement, and shall include any successor to the Collateral Agent appointed pursuant to Section 10.05.
“Collateral Assignment” shall mean the Collateral Assignment of LC Procurement Agreement dated on or about the date of this Agreement between the Payee and the Collateral Agent in substantially the form attached hereto as Exhibit I.
“Commitment” shall mean the commitment of the Payee to enter into the LC Issuance Documents as of the Closing Date and from time to time thereafter during the Commitment Period at the request of the Payer and to instruct the LC Bank to issue Letters of Credit pursuant to the LC Issuance Documents.
“Commitment Period” shall mean the period from the date of this Agreement until the date which is thirty (30) days prior to the LC Release Date.
“Commodity Hedging Agreement” shall mean a commodity price risk management agreement or similar arrangement (including commodity price swap agreements, forward agreements or contracts of sale which provide for prepayment for deferred shipment or delivery of oil, gas or other commodities).
“Communications” shall have the meaning provided in Section 11.01.
“Consolidated EBITDA” shall mean, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication:
(1) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus
(2) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus
(3) depreciation, depletion, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period), impairment and other non-cash expenses (excluding any such non-cash expense to the extent that it
represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, depletion, amortization, impairment and other non-cash expenses were deducted in computing such Consolidated Net Income; plus
(4) all fees, costs and expenses (other than depreciation, depletion or amortization expense) incurred in connection with the Transactions, the execution and delivery of the Term A Credit Agreement and the Term B Credit Agreement and each other agreement or document executed and delivered in connection therewith, and the borrowings and other transactions contemplated under the Term A Credit Agreement and/or the Term B Credit Agreement, including, without limitation, the Transactions (as defined in each of the Term A Credit Agreement and the Term B Credit Agreement) and any amendment or other modification of any such agreements, in each case, deducted (and not added back) in computing Consolidated Net Income; plus
(5) unrealized non-cash losses resulting from foreign currency balance sheet adjustments required by GAAP to the extent such losses were deducted in computing such Consolidated Net Income; minus
(6) non-cash items increasing such Consolidated Net Income for such period, other than items that were accrued in the ordinary course of business; and minus
(7) to the extent increasing such Consolidated Net Income for such period, the sum of (a) the amount of deferred revenues that are amortized during such period and are attributable to reserves that are subject to Volumetric Production Payments and (b) amounts recorded in accordance with GAAP as repayments of principal and interest pursuant to Dollar-Denominated Production Payments;
in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the preceding sentence, clauses (1) through (5) relating to amounts of a Restricted Subsidiary of the referent Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person.
“Consolidated Interest Expense” shall mean, with respect to any Person, for any period, the sum of (a) the interest expense (including imputed interest expense in respect of Capital Lease Obligations and Synthetic Lease Obligations) attributable to Indebtedness of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (but excluding interest expense with regard to any Production Payment), plus (b) any interest accrued during such period in respect of Indebtedness of such Person and its Restricted Subsidiaries that is required to be capitalized rather than included in consolidated interest expense for such period in accordance with GAAP, plus (c) the LC Fee payable by the Payer for such period. For purposes of the foregoing, interest expense shall be determined after giving effect to any net payments made or received by such Person and its Restricted Subsidiaries with respect to Interest Rate Hedging Agreements.
“Consolidated Leverage Ratio” shall mean, on any Calculation Date, the ratio of (a) the sum of (i) Total Funded Debt of Holdings and its Restricted Subsidiaries on such Calculation Date plus (ii) the Maximum LC Procurement Obligation minus (iii) the aggregate amount of unrestricted cash on the consolidated balance sheet of Holdings and its Restricted Subsidiaries as of such date (provided that the maximum amount of such unrestricted cash shall not exceed $25,000,000) to (b) Consolidated EBITDA of Holdings for the period of four consecutive fiscal quarters most recently ended on or prior to such Calculation Date, in each case after giving effect to any applicable Pro Forma Adjustments.
“Consolidated Net Income” shall mean, with respect to any specified Person for any period, the aggregate of the net income (loss) of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP and before any reduction in respect of non-cash preferred stock dividends of such Person, provided that:
(1) the net income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included, but only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person;
(2) the net income (but not loss) of any Restricted Subsidiary of Holdings will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that net income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, partners or members;
(3) the cumulative effect of a change in accounting principles will be excluded;
(4) any gain (loss) realized upon the sale or other disposition of any property, plant or equipment of such Person or its consolidated Restricted Subsidiaries (including pursuant to any Sale Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business and any gain (loss) realized upon the sale or other disposition of any Capital Stock of any Person will be excluded;
(5) any asset impairment writedowns on Oil and Gas Properties under GAAP or SEC guidelines will be excluded;
(6) unrealized non-cash losses and gains under Hedging Agreements included in the determination of Consolidated Net Income, including, without limitation, those resulting from the application of FASB ASC Topic 815, “Derivatives and Hedging,” will be excluded;
(7) any non-cash charges relating to any premium or penalty paid, write off of deferred financing costs or other financial recapitalization charges in connection with redeeming or retiring any Indebtedness prior to its Stated Maturity will be excluded;
(8) items classified as extraordinary or nonrecurring gains and losses (less all fees and expenses related thereto) and the related tax effects, in each case according to GAAP, will be excluded; and
(9) income resulting from transfers of assets (other than cash) between such Person or any of its Restricted Subsidiaries, on the one hand, and an Unrestricted Subsidiary of such Person, on the other hand, will be excluded.
“Contingent Obligation” shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (d) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the lower of (i) the maximum amount of such Contingent Obligation pursuant to the agreement or instrument under which such Contingent Obligation is created and (ii) the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
“Continuing Directors” shall mean the directors of Holdings on the date hereof and each other director if such director’s nomination for election to the Board of Directors is recommended by a majority of the then Continuing Directors.
“Credit Facility” shall mean any debt facility, commercial paper facility or Debt Issuance, in each case with banks or other institutional lenders or institutional investors providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), letters of credit or other borrowings or Debt Issuances, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.
“De Minimis Guaranteed Amount” shall mean a principal amount of Indebtedness not to exceed $5,000,000.
“Debt Issuance” shall mean one or more issuances after the date of this Agreement of Indebtedness evidenced by notes, debentures, bonds or other similar securities or instruments.
“Debt Service” shall mean, for any fiscal year, Cash Interest Expense of Holdings for such period plus (a) scheduled principal amortization of Total Funded Debt of Holdings and its Restricted Subsidiaries for such period and (b) cash payments made on any Existing Production Payments or any Refinancing Production Payment.
“Debtor Relief Laws” shall mean, collectively, the Netherlands Bankruptcy Code (Faillissementswet), Title 11 of the United States Bankruptcy Code and any other bankruptcy, insolvency, liquidation, restructuring, reorganization, compromise, arrangement, readjustment of debt, conservatorship, receivership, winding-up, dissolution, or similar laws of the United States and any other applicable jurisdictions from time to time in effect.
“Default” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
“Deposit Account Control Agreement” shall mean a deposit account control agreement to be executed and delivered among any Payer Party, the Collateral Agent and each bank at which such Payer Party maintains any deposit account other than an Excluded Account, in each case, in accordance with such bank’s standard form of control agreement or otherwise as may be reasonably acceptable to the Collateral Agent, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Disqualified Stock” shall mean any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the LC Release Date; provided, however, that only the portion of Capital Stock that so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require Holdings to repurchase or redeem such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that Holdings may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 8.01. The amount (or principal amount) of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement will be the maximum amount that Holdings and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.
“Dollar-Denominated Production Payments” shall mean production payment obligations recorded as liabilities in accordance with GAAP, together with all undertakings and obligations in connection therewith.
“Dollars” and “$” shall each mean lawful money of the United States.
“Domestic Subsidiary” shall mean any Restricted Subsidiary of Holdings that was incorporated or organized under the laws of the United States, any State thereof or the District of Columbia.
“Dutch Civil Code” means the Burgerlijk Wetboek.
“Dutch Insolvency Event” means any bankruptcy (faillissement), suspension of payments (voorlopige surseance van betaling), administration (onderbewindstelling), dissolution (ontbinding) or EIH having filed a notice under Section 36 of the Tax Collection Act of the Netherlands (Invorderingswet 1990).
“Dutch Sector” shall mean the jurisdiction of The Netherlands commonly referred to as the Dutch Sector – North Sea.
“EIH” shall mean Endeavour International Holding B.V., a private limited company organized under the laws of the Netherlands.
“Employee Benefit Plan” shall mean any Plan, any other “employee benefit plan” as defined in Section 3(3) of ERISA, and any other material agreements, plans or arrangements, with or for the benefit of current or former employees of Holdings, any of its Subsidiaries or any ERISA Affiliate.
“English Charge Over Shares” shall have the meaning provided in Section 5.01(j).
“English Debenture” shall have the meaning provided in Section 5.01(i).
“English Security Documents” shall mean and include (a) the English Charge Over Shares and (b) the English Debenture.
“Environmental Law” shall mean any applicable U.S. federal, state, local, UK or other non-U.S. law (including common law), rule, regulation, ordinance, code, directive, judgment or order now or hereafter in effect and in each case as amended, and any binding judicial or administrative interpretation thereof, relating to the protection of the environment or of human health and safety (to the extent such health and safety relate to exposure to Hazardous Materials), or to the presence, Release or threatened Release, or the manufacture, use, transportation, treatment, storage, disposal or recycling of Hazardous Materials, or the arrangement for any such activities.
“Environmental Liability” shall mean all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines, penalties, and reasonable fees, expenses or costs (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement made by Holdings or any of its Subsidiaries pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“EOC” shall mean Endeavour Operating Corporation, a Delaware corporation.
“Equity Interests” shall mean Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute.
“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA) which together with Holdings and/or any of its Subsidiaries would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.
“ERISA Event” shall mean (a) a Reportable Event; (b) the failure of any Plan to satisfy the minimum funding standards, if any, applicable to that Plan for a Plan year under Section 412 of the Code or Section 302 of ERISA or a Plan’s application for a waiver of such minimum funding standards pursuant to Section 412(c) of the Code or Section 302(c) of ERISA; (c) the arising of a lien or encumbrance under Section 4068 of ERISA with respect to property of Holdings, any of its Subsidiaries or an ERISA Affiliate; (d) a determination that any Plan is, or is expected to be, in at-risk status under Section 430(i) of the Code or Section 303(i) of ERISA; (e) the incurrence by Holdings, any of its Subsidiaries, or an ERISA Affiliate of material liability (including any indirect, contingent, or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 4062, 4063, 4064, or 4069 of ERISA or Section 4971 or 4975 of the Code; (f) the institution of proceedings, or the occurrence of an event or condition which would reasonably be expected to constitute grounds for the institution of proceedings by the PBGC to terminate or appoint a trustee to administer any Plan pursuant to Title IV of ERISA; (g) the filing of a notice of intent to terminate any Plan, if such termination would require material additional contributions in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, the filing under Section 4041(a)(2) of ERISA of a notice of intent to terminate any Plan or the termination of any Plan under Section 4041(c) of ERISA; (h) the complete or partial withdrawal of Holdings, any Subsidiary or any ERISA Affiliate from a Multiemployer Plan that gives rise to, or is expected to give rise to a liability under Section 4201 of ERISA, the reorganization or insolvency under Title IV of ERISA of any Multiemployer Plan, or the receipt by Holdings, any Subsidiary or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Holdings, any Subsidiary or any ERISA Affiliate of any notice, that a Multiemployer Plan is in endangered or critical status under Section 432 of the Code or Section 305 of ERISA; or (i) the knowledge of Holdings of a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the Code by any fiduciary (as defined in Section 3(21) of ERISA) or disqualified person (as defined in Section 4975(e)(2) of the Code) with respect to any Plan for which Holdings or any of its Subsidiaries is reasonably expected to incur a material liability.
“Estimated Administrative Costs” shall have the meaning provided in Section 2.04(b).
“Eurodollar Tranche” shall have the meaning provided in Section 2.03(a).
“Events of Default” shall have the meaning provided in Article IX.
“Excess Cash Flow” shall mean, with respect to Holdings for any fiscal year of Holdings, the Consolidated EBITDA of Holdings for such fiscal year, minus, without duplication:
(1) Debt Service for such fiscal year;
(2) any optional prepayment of Term A Loans and the amount of any release of the Payer Deposit pursuant to Section 3.04 resulting from an optional reduction in the Maximum LC Amount under Section 3.01 in each case, that results in a prepayment of Term B Loans during such fiscal year or prior to the date 100 days following such fiscal year, so long as the amount of such prepayment or release of the Payer Deposit is not already reflected in Debt Service or otherwise deducted from Excess Cash Flow;
(3) the aggregate Capital Expenditures made by Holdings during such fiscal year that are paid in cash;
(4) Taxes paid in cash by Holdings and its Restricted Subsidiaries on a consolidated basis during such fiscal year or that will be paid within six months after the close of such fiscal year (provided that any amount so deducted that will be paid after the close of such fiscal year shall not be deducted again in a subsequent fiscal year) and for which reserves have been established, including income tax expense;
(5) an amount equal to any increase in Net Working Capital for such fiscal year;
(6) amounts paid in cash during such fiscal year on account of (i) items that were accounted for as noncash reductions of net income in determining the Consolidated Net Income of Holdings or as noncash reductions in Consolidated Net Income in determining Consolidated EBITDA of Holdings in a prior fiscal year and (ii) reserves or accruals established in purchase accounting;
(7) the amount related to items that were added to or not deducted from net income in calculating Consolidated Net Income of Holdings or were added to or not deducted from Consolidated Net Income of Holdings in calculating Consolidated EBITDA of Holdings to the extent such items represented a cash payment (which had not reduced Excess Cash Flow upon the accrual thereof in a prior fiscal year), or an accrual for a cash payment, by Holdings and its Restricted Subsidiaries or did not represent cash received by Holdings and its Restricted Subsidiaries, in each case on a consolidated basis during such fiscal year;
(8) amounts paid in cash with respect to an acquisition of assets (including through mergers, consolidations or otherwise);
(9) amounts paid in cash with respect to Hedging Agreements; and
(10) to the extent added to net income in determining Consolidated Net Income of Holdings or to Consolidated Net Income in determining Consolidated EBITDA of Holdings, the aggregate amount of all fees, costs and expenses (other than depreciation, depletion or amortization expense) incurred by Holdings or any Restricted Subsidiary in connection with the Transactions, the execution and delivery of the Term A Credit Agreement and the Term B Credit
Agreement and each other agreement or document executed and delivered in connection therewith, and the borrowings and other transactions contemplated under the Term A Credit Agreement and/or the Term B Credit Agreement, including, without limitation, the Transactions (as defined in the Term A Credit Agreement and the Term B Credit Agreement); and any amendment or other modification of any such agreements;
plus, without duplication,
(1) an amount equal to any decrease in Net Working Capital for such fiscal year;
(2) all proceeds received during such fiscal year of Capital Lease Obligations, purchase money Indebtedness, Sale Leaseback Transactions and any other Indebtedness, in each case to the extent used to finance any Capital Expenditure;
(3) all amounts referred to in clause (3) above to the extent funded with the proceeds of the issuance of Equity Interests of, or capital contributions to, Holdings after the Closing Date (to the extent not previously used to prepay Indebtedness, make any investment or Capital Expenditure or otherwise for any purpose resulting in a deduction to Excess Cash Flow in any prior fiscal year);
(4) cash payments received in respect of Hedging Agreements during such fiscal year to the extent not included in the computation of the Consolidated EBITDA of Holdings;
(5) to the extent deducted in computation of Consolidated EBITDA of Holdings, cash interest income; and
(6) the amount related to items that were deducted from or not added to net income in connection with calculating Consolidated Net Income of Holdings or were deducted from or not added to Consolidated Net Income of Holdings in calculating Consolidated EBITDA of Holdings to the extent either (i) such items represented cash received by Holdings or any Restricted Subsidiary or (ii) does not represent cash paid by Holdings or any Restricted Subsidiary, in the case of each of the foregoing clauses, determined on a consolidated basis during such fiscal year.
“Exchange Act” shall mean the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder.
“Exchange Rate” shall mean, on any day, with respect to any currency other than Dollars, the noon buying rate in New York City for such currency on such date for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York.
“Excluded Account” shall mean (a) a deposit account of Holdings or any other Payer Party with a principal balance that does not exceed at any time, or has not at any time exceeded within the past 12 months, $250,000, and (b) that certain deposit account maintained with JPMorgan Chase Bank in Houston, Texas (reference Endeavour Operating CO 010 General – Enertia) so long as the principal balance of such account does not exceed $250,000, until the principal balance of such account on any day exceeds $250,000.
“Excluded Asset” shall mean, collectively, (a) any Indenture Collateral, (b) Oil and Gas Properties owned by Holdings or any of its Restricted Subsidiaries located in North America to the extent that no Proved Reserves are attributable thereto, (c) all Oil and Gas Properties owned by Holdings or any of its Restricted Subsidiaries located in North America to which Proved Reserves are attributed to the extent that the aggregate PV-10 Value of all Proved Reserves attributable thereto is less than $20,000,000, and (d) any individual Oil and Gas Property owned by Holdings or any of its Restricted Subsidiaries located in North America to the extent that the PV-10 Value of all Proved Reserves attributable thereto is less than $1,500,000.
“Existing Credit Agreement” shall mean that certain Credit Agreement (as amended, supplemented or otherwise modified), dated as of April 12, 2012, by and among Holdings, the Payer, as the borrower, MC Admin Co LLC, as administrative agent, and the lenders party thereto.
“Existing Indebtedness” shall mean the aggregate principal amount of Indebtedness of Holdings and its Restricted Subsidiaries in existence on the date hereof and specified on Schedule 6.19 (other than the Indebtedness referenced in Section 5.01(k)), including the 5.5% Convertible Notes, the Indenture Notes, the 11.5% Convertible Bonds and Indebtedness under the Existing Credit Agreement, until such amounts are repaid.
“Existing LC Procurement Agreements” shall mean, collectively, (a) that certain Reimbursement Agreement (as amended, supplemented or otherwise modified), dated May 31, 2012 by and among, Holdings, the Payer, New Pearl S.à.r.l. and Cyan Partners, LP, and (b) that certain LC Procurement Agreement, dated January 9, 2013 among, inter alia, the Payer and Max Participations II S.à.r.l.
“Existing Production Payments” shall mean (a) the Production Payment over interests in United Kingdom Production Licence P.213 (Block 16/26a A-ALBA) (the Alba Field) and Seaward Production Licence P.255 (Blocks 22/6c A and 22/6s A) (the Bacchus Field) granted to Cidoval S.à.r.l. pursuant to that certain Deed of Grant of a Production Payment in respect of United Kingdom Continental Shelf Seaward Production Licence P.213 (Block 16/26a A-ALBA) and Seaward Production Licence P.255 (Blocks 22/6c A and 22/6s A); and (b) the Production Payment over interests in United Kingdom Seaward Production Licence P.226 for Block 15/27 Area E and United Kingdom Seaward Production Licence P.1615 for Block 15/26c (including any other licence issued in substitution or partial substitution thereof) granted pursuant to that certain Deed of Grant of a Production Payment in respect of United Kingdom Seaward Production Licence P.226 for Block 15/27 Area E and United Kingdom Seaward Production Licence P.1615 for Block 15/26c (including any other licence issued in substitution or partial substitution thereof).
“FATCA” shall mean:
(a) sections 1471 to 1474 of the Code or any associated regulations or other official guidance;
(b) any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the United States and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or
(c) any agreement pursuant to the implementation of paragraphs (a) or (b) above with the United States Internal Revenue Service, the United States government or any governmental or taxation authority in any other jurisdiction.
“Fair Market Value” shall mean, with respect to any asset or property, the sale value that would be obtained in an arm’s-length free market transaction between an informed and willing seller under no compulsion to sell and an unaffiliated informed and willing buyer under no compulsion to buy, determined on the date of contractually agreeing to such sale, or in circumstances in which Holdings or a Restricted Subsidiary grants a third party the right to purchase an asset, the date of such grant. Fair Market Value will be determined in good faith by the Board of Directors of Holdings in the case of amounts of $20,000,000 or more and otherwise by the principal financial or accounting officer of Holdings acting in good faith.
“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Collateral Agent from three Federal funds brokers of recognized standing selected by it.
“Fee Payment Date” shall mean (a) with respect to any ABR Tranche, the second to last Business Day of each March, June, September and December, and (b) with respect to any Eurodollar Tranche, the second to last day of the Fee Period applicable to the Tranche of which such Payee Deposit is a part and, in the case of a Eurodollar Tranche with a Fee Period of more than three months’ duration, each day that would have been a Fee Payment Date had successive Fee Periods of three months’ duration been applicable to such Tranche.
“Fee Period” shall mean, (i) with respect to any ABR Tranche, one fiscal quarter and (ii) with respect to any Eurodollar Tranche, the period commencing on the date of such Eurodollar Tranche and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the Payer may elect; provided, however, that (a) if a Fee Period would end on a day other than a Business Day, such Fee 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 Fee Period shall end on the next preceding Business Day, (b) any Fee Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Fee Period) shall end on the last Business Day of the calendar month at the end of such Fee Period and (c) no Fee Period for any Tranche shall extend beyond the LC Release Date. LC Fees shall accrue from and including the first day of a Fee Period to but excluding the last day of such Fee Period. For purposes hereof, the date of a Tranche initially shall be the date on which such Tranche is allocated and thereafter shall be the effective date of the most recent conversion or continuation of such Tranche.
“Fees” shall mean the LC Fee, the Fronting Fee, the Estimated Administrative Costs and any interest payable pursuant to Section 2.04(c), as applicable.
“Financial Officer” of any Person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such Person.
“First Priority Notes” shall mean the 12% First Priority Notes due 2018 issued pursuant to the First Priority Notes Indenture, including any such 12% First Priority Notes issued in the exchange offer as contemplated in the First Priority Notes Indenture.
“First Priority Notes Indenture” shall mean that certain indenture, dated as of February 23, 2012, among Holdings, the guarantors party thereto, and Wells Fargo Bank, National Association, as collateral agent and trustee.
“First-Tier Foreign Subsidiary” shall mean any Foreign Subsidiary the Equity Interests in which are owned directly by (a) Holdings or (b) a Domestic Subsidiary that is not a direct or indirect Subsidiary of a Foreign Subsidiary.
“Fixed Charge Coverage Ratio” shall mean with respect to any specified Person for any four-quarter reference period, the ratio of the Consolidated EBITDA of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the applicable four-quarter reference period and on or prior to the Calculation Date, then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, calculation of the Fixed Charge Coverage Ratio shall give effect to all Pro Forma Adjustments.
“Fixed Charges” shall mean, with respect to any specified Person for any period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (excluding (i) any interest attributable to Dollar-Denominated Production Payments, (ii) write-off of deferred financing costs and (iii) accretion of interest charges on future plugging and abandonment obligations, future retirement benefits and other obligations that do not constitute Indebtedness; but including, without limitation, (a) amortization of debt issuance costs and accretion and amortization of original issue discount (except with respect to any 11.5% Convertible Bonds outstanding on the date hereof), (b) non-cash interest payments, (c) the interest component of any deferred payment obligations (other than that attributable to any Commodity Hedging Agreement), (d) the interest component of all payments associated with Capital Lease Obligations, (e) imputed interest with respect to Attributable Debt, and (f) commissions, discounts and other fees and charges incurred in respect
of letters of credit or bankers’ acceptance financings), and net of the effect of all payments made or received pursuant to Interest Rate Hedging Agreements; plus
(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon; plus
all dividends on any Disqualified Stock of such Person or any Disqualified Stock or series of preferred securities of any of its Restricted Subsidiaries, whether paid or accrued and whether or not in cash, other than dividends on Equity Interests payable solely in Equity Interests of Holdings (other than Disqualified Stock) or to Holdings or a Restricted Subsidiary of Holdings,
(4) in each case, on a consolidated basis and in accordance with GAAP.
“Fixed Exchange Rate” shall mean (a) prior to any increase in the Maximum LC Amount pursuant to Section 3.03, the rate at which the Payee exchanges Dollars for Sterling on the Closing Date for purposes of establishing any portion of the Payee Deposit established by the Payee on the Closing Date, and (b) from and after each increase in the Maximum LC Amount pursuant to Section 3.03, the weighted average of (i) the Fixed Exchange Rate immediately prior to such increase and (ii) the rate at which the Payee exchanges Dollars for Sterling in connection with any increase in the Payee Deposit resulting from such increase in the Maximum LC Amount calculated in accordance with the formula set forth below. The Payee shall provide notice to the Payer of the Fixed Exchange Rate on the Closing Date and any adjustment to the Fixed Exchange Rate in connection with any increase in the Maximum LC Amount.
(A x X) + (B x Y)
PD
For this purpose:
A = the Sterling amount of the Payee Deposit immediately prior to such increase in the Maximum LC Amount.
B = the Sterling amount of the increase in the Payee Deposit in connection with such increase in the Maximum LC Amount.
X = the Fixed Exchange Rate immediately prior to such increase in the Maximum LC Amount.
Y = the rate at which the Payee exchanges Dollars for Sterling in connection with any increase in the Payee Deposit resulting from such increase in the Maximum LC Amount.
PD = the aggregate Sterling amount of the Payee Deposit after giving effect to such increase in the Maximum LC Amount.
“Foreign Subsidiary” shall mean any Restricted Subsidiary of Holdings that was not formed under the laws of the United States or any State thereof or the District of Columbia.
“FX True Up” shall have the meaning provided in Section 3.05.
“GAAP” shall mean generally accepted accounting principles in the United States, which are in effect on the date of this Agreement.
“Governmental Authority” shall mean the government of the United Kingdom, the United States, the Netherlands, the European Union and any other nation or any political subdivision thereof, whether state, provincial 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.
“Grantor” shall have the meaning provided in Section 7.11(c).
“Guarantor” shall mean Holdings and the Subsidiary Guarantors.
“Hazardous Materials” shall mean any waste or other substance that is listed, defined, designated or classified as, or otherwise regulated as, hazardous or toxic or a pollutant or contaminant under or pursuant to any Environmental Law, including any petroleum, Hydrocarbons and all derivatives thereof or synthetic substitutes therefor and asbestos or asbestos-containing materials.
“Hedging Agreement” shall mean any Commodity Hedging Agreement, Interest Rate Hedging Agreement or foreign currency exchange agreement or other currency exchange rate hedging agreement.
“HMRC” means Her Majesty’s Revenue and Customs.
“Holdings” shall have the meaning provided in the preamble to this Agreement.
“Hydrocarbons” shall mean oil, gas, casinghead gas, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons, all products directly or indirectly refined, separated, settled and dehydrated therefrom, including kerosene, liquefied petroleum gas, refined lubricating oils, diesel fuel, drip gasoline, natural gasoline, helium, sulfur and all other minerals.
“Hydrocarbon Interests” shall mean all rights, titles, interests and estates now owned or hereafter acquired in and to oil, gas and mineral leases, leasehold interests, production licences in the North Sea and other licenses, or other liquid or gaseous hydrocarbon licenses, leases, fee mineral interests, term mineral interests, subleases, farm-outs, royalties, overriding royalty and royalty interests, non-consent interests arising out of or pursuant to Oil and Gas Contracts, net profit interests, net revenue interests, oil payments, production payments, production payment interests and similar interests and estates, including all reserved or residual interest of whatever nature and all reversionary or carried interests relating to any of the foregoing.
“Immaterial Subsidiary” shall mean any Restricted Subsidiary that did not, as of the last day of the most recently ended four full fiscal quarters of Holdings for which internal financial statements are available, have assets (for this purpose, determined exclusive of intercompany receivables) with a book value in excess of 2.5% of the consolidated total assets of Holdings and its Restricted Subsidiaries; provided, that if at any time the aggregate amount of consolidated total assets attributable to Immaterial Subsidiaries would otherwise exceed 10% of the consolidated total assets of Holdings and its Restricted Subsidiaries, then Restricted Subsidiaries that would otherwise constitute Immaterial Subsidiaries pursuant to this definition (without giving effect to this proviso) shall be deemed not to constitute Immaterial Subsidiaries to the extent necessary so that the percentage limitation in this proviso is not exceeded. For purposes of calculations of the book value of assets of a Restricted Subsidiary pursuant to this definition (i) the value of the loan evidenced by that certain revolving loan facility agreement dated January 23, 2008 (as amended, supplemented or modified from time to time) between EIH and Endeavour Energy Luxembourg S.à r.l., and (ii) the value of other loans and receivables in an aggregate amount not in excess of $5,000,000 owed to such Restricted Subsidiary by Holdings or any other Subsidiary of Holdings, in each case shall be disregarded. Notwithstanding anything to the contrary above in this definition, in no event shall an Indenture Guarantor be considered an Immaterial Subsidiary for the purposes of this Agreement.
“incur” shall have the meaning provided in Section 8.03.
“Indebtedness” shall mean, with respect to any specified Person:
(1) any indebtedness of such Person, whether or not contingent, in respect of borrowed money;
(2) all obligations evidenced by bonds, notes, debentures or similar instruments;
(3) all obligations in respect of bankers’ acceptances or letters of credit (including reimbursement obligations in respect thereof, except to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such obligation (which shall be deemed to be the principal amount thereof) is satisfied within five Business Days of payment on such letter of credit); provided that any such exempted obligations shall be unsecured or secured only by Liens which would be permitted under clause (8) of the definition of “Permitted Liens” if such obligations were to constitute Indebtedness;
(4) all Capital Lease Obligations or Attributable Debt in respect of Sale Leaseback Transactions;
(5) all obligations representing the balance deferred and unpaid of the purchase price of any property (other than (i) property purchased, and expense accruals and deferred compensation items arising, in the ordinary course of business, (ii) obligations payable solely in Capital Stock that is not Disqualified Stock and (iii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller);
(6) all obligations under Hedging Agreements;
(7) with respect to Production Payments, any warranties or guarantees of production or payment by such Person with respect to such Production Payment, but excluding other contractual obligations of such Person with respect to such Production Payment,
if and to the extent any of the preceding items (other than letters of credit and obligations under Hedging Agreements) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of other Persons secured by a Lien on any asset of the specified Person, whether or not such Indebtedness is assumed by the specified Person (provided that the amount of such Indebtedness will be the lesser of (a) the Fair Market Value of such asset at such date of determination and (b) the amount of such Indebtedness of such other Person), and, to the extent not otherwise included, the guarantee by the specified Person of any Indebtedness of any other Person.
Notwithstanding the foregoing, the following shall not constitute or be deemed “Indebtedness”:
(i) any indebtedness which has been defeased in accordance with GAAP or defeased pursuant to the deposit of cash or Cash Equivalents (in an amount sufficient to satisfy all such indebtedness obligations at maturity or redemption, as applicable, and all payments of interest and premium, if any) in a trust or account created or pledged for the sole benefit of the holders of such indebtedness, and subject to no other Liens, and the other applicable terms of the instrument governing such indebtedness;
(ii) any obligation of a Person in respect of the balance deferred and unpaid of the purchase price of any property in respect of a farm-in agreement or similar arrangement whereby such Person agrees to pay all or a share of the drilling, development, completion or other expenses of an exploratory or development well or program (which agreement may be subject to a maximum payment obligation, after which expenses are shared in accordance with the working or participation interest therein or in accordance with the agreement of the parties) or perform the drilling, completion or other operation on such well or program in exchange for an ownership interest in an oil or gas property;
(iii) any obligations arising from agreements of a Person providing for indemnification, guarantees, adjustment of purchase price, holdbacks, contingent payment obligations based on a final financial statement or performance of acquired or disposed of assets or similar obligations (other than guarantees of Indebtedness), in each case, incurred or assumed by such Person in connection with the acquisition or disposition of assets (including through mergers, consolidations or otherwise);
(iv) subject to clause (7) above, any Dollar-Denominated Production Payments or Volumetric Production Payments;
(v) any liability arising under a declaration of joint and several liability (hoofdelijke aansprakelijkheid) as referred to in Article 2:403 of the Dutch Civil Code; and
(vi) any liability arising by operation of law as a result of the existence of a fiscal unity (fiscale eenheid) of which a Dutch Obligor is a member.
The amount (or principal amount) of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) in the case of obligations under any Hedging Agreements, the termination value of the agreement or arrangement giving rise to such obligations that would be payable by such Person at such date; and
(3) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness.
The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date.
“Indemnitee” shall have the meaning provided in Section 11.05(b).
“Indenture Collateral” shall mean (i) any Capital Stock and other Equity Interests in any First-Tier Foreign Subsidiary and the certificates, if any, representing such Equity Interests, and all dividends, distributions, return of capital, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Equity Interests and all subscription warrants, rights or options issued thereon or with respect thereto, (ii) any promissory notes or other Indebtedness owed by any Foreign Subsidiary to Holdings or any Domestic Subsidiary of Holdings and any other instruments or agreements evidencing such Indebtedness, and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Indebtedness, (iii) all proceeds of, income and other payments (including, without limitation, dividends and distributions received) now or hereafter due and payable with respect to, and supporting obligations relating to, any of the assets described in preceding clauses (i) and (ii) and (iv) any other assets not described above in this definition to the extent, but only to the extent, a Lien is granted in such assets by Holdings or an Indenture Guarantor for the benefit of the holders of the Indenture Notes pursuant to the Indenture Security Documents as in effect on the date hereof.
“Indenture Documents” shall mean and include each of the documents, instruments (including the Indenture Notes) and other agreements (including, without limitation, the Indentures) relating to the issuance by Holdings of the Indenture Notes, including, without limitation, the Indenture Security Documents.
“Indenture Guarantors” shall mean each of (a) the Restricted Subsidiaries of Holdings executing the Indentures as initial Indenture Guarantors, (b) any other Restricted Subsidiary of Holdings that executes a supplement to the Indentures in accordance with the terms thereof and (c) the respective successors and assigns of such Restricted Subsidiaries in each case until such time as any such Restricted Subsidiary shall be released and relieved of its obligations pursuant to the terms thereof.
“Indenture Notes” shall mean, collectively, the First Priority Notes and the Second Priority Notes.
“Indenture Obligations” shall mean all advances to, and debts, liabilities, obligations, covenants and duties of, Holdings or any Indenture Guarantor arising under the Indentures, the Indenture Notes and the other Indenture Documents (including all principal, premium, interest, penalties, fees, charges, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees, and other liabilities or amounts payable or arising thereunder), whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against Holdings or any Indenture Guarantor of any proceeding in bankruptcy or insolvency law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.
“Indenture Security Documents” shall mean all (i) Security Documents (as defined in the First Priority Notes Indenture) and (ii) Security Documents (as defined in the Second Priority Notes Indenture).
“Indentures” shall mean, collectively, the First Priority Notes Indenture and the Second Priority Notes Indenture.
“Independent Engineering Firm” shall mean Netherland, Sewell & Associates, Inc. and/or one or more independent petroleum engineering firms selected by the Payer and reasonably acceptable to the Payee and the Collateral Agent.
“Information” shall have the meaning provided in Section 11.16.
“Initial Loan” shall have the meaning provided in the Term A Credit Agreement.
“Initial Reserve Report” shall mean the Reserve Report prepared by Netherland, Sewell & Associations, Inc., as of December 31, 2012 with respect to the Oil and Gas Properties of Holdings and its Restricted Subsidiaries.
“Intercreditor Agreement” shall mean that certain Second Amended and Restated Intercreditor Agreement, dated as of December 12, 2013, by and among Holdings, EEUK, MC Admin Co LLC, Cidoval S.à r.l. and Sand Waves, S.A. and the joinder agreement referred to in Section 5.01(o).
“Interest Coverage Ratio” shall mean, on any Calculation Date, the ratio of (a) Consolidated EBITDA of Holdings for the period of four consecutive fiscal quarters most recently ended on or prior to such Calculation Date to (b) Cash Interest Expense of Holdings for such period, in each case after giving effect to any applicable Pro Forma Adjustments. For purposes of calculating the Interest Coverage Ratio, in the event that Holdings or a Restricted Subsidiary incurs, assumes, incurs a Contingent Obligation for, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) subsequent to the commencement of the period for which the Interest Coverage Ratio is being calculated and on or prior to the applicable Calculation Date, then the Interest Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption,
Contingent Obligation, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period.
“Interest Rate Hedging Agreement” shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement or other interest rate protection agreement, interest rate hedging arrangement or other similar arrangement or arrangement.
“Investments” shall mean, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans, advances or extensions of credit (including guarantees or similar arrangements, but excluding (1) commission, travel and similar advances to officers, directors, employees and consultants made in the ordinary course of business and (2) advances to customers or suppliers in the ordinary course of business that are recorded in accordance with GAAP as accounts receivable on the balance sheet of the lender), or capital contributions, purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities (excluding any interest in a crude oil or natural gas leasehold to the extent constituting a security under Applicable Law), together with all items that are or would be classified as investments on a balance sheet of such Person prepared in accordance with GAAP. If Holdings or any Restricted Subsidiary of Holdings sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of Holdings such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of Holdings, Holdings will be deemed to have made an Investment on the date of any such sale or disposition in an amount equal to the Fair Market Value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 8.01. The acquisition by Holdings or any Subsidiary of Holdings of a Person that holds an Investment in a third Person will be deemed to be an Investment made by Holdings or such Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investment held by the acquired Person in such third Person on the date of any such acquisition in an amount determined as provided in the final paragraph of Section 8.01. Except as otherwise provided in this Agreement, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value or write-ups, write-downs or write-offs with respect to such Investment.
“Joint Venture” shall mean any Person that is not a direct or indirect Subsidiary of Holdings in which Holdings or any of its Restricted Subsidiaries makes any Investment.
“Judgment Currency” shall have the meaning provided in Section 11.19.
“LC Bank” shall have the meaning provided in the recitals.
“LC Finco US” shall mean LC Finco US LLC, a Delaware limited liability company.
“LC Issuance Agreement” shall mean that certain LC Issuance Agreement, dated as of the date hereof, between the LC Bank and the LC Party in respect of the issuance of letters of credit and substantially in the form of Exhibit C, as the same may be amended from time to time as permitted hereunder.
“LC Issuance Date” shall mean each date on which the Payee requests the issuance of a Letter of Credit by notice to the LC Bank.
“LC Issuance Documents” means each of the LC Issuance Agreement, the Collateral Assignment and the Letters of Credit.
“LC Party” shall have the meaning provided in the recitals.
“LC Procurement Documents” shall mean this Agreement, the Subordination Agreement and each Security Document.
“LC Procurement Obligations” shall mean those obligations of the Payer and Holdings to reimburse the Payee pursuant to Section 2.02, or to make any payment to the Payee pursuant to Sections 2.03 and 2.04.
“LC Release Date” shall mean the date which is the earlier of (a) November 30, 2017 and (b) 91 days prior to the maturity of those certain 5.5% Convertible Notes and 11.5% Convertible Bonds, if such notes or bonds have not been converted, cancelled or extinguished in full prior to such date or extended or refinanced in full prior to such date with a resulting maturity date not earlier than March 1, 2018.
“Leaseholds” of any Person shall mean all the right, title and interest of such Person as lessee, sublessee or licensee in, to and under leases, subleases or licenses of land, improvements and/or fixtures.
“Lenders” shall mean the entities party to the Term B Credit Agreement as “Lenders” as defined therein.
“Letter of Credit” shall mean each letter of credit issued by the LC Bank pursuant to the LC Issuance Agreement.
“LIBO Rate” shall mean, with respect to any Eurodollar Tranche for any Fee Period, the rate per annum determined by the Collateral Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the commencement of such Fee Period by reference to the British Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set forth by any service selected by the Collateral Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates) (or the successor thereto if the British Bankers’ Association is no longer making a LIBO Rate available) for a period equal to such Fee Period; provided that, to the extent that a rate is not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO Rate” shall be the rate per annum determined by the Collateral Agent to be the average of the rates per annum at which deposits in Dollars are offered for such relevant Fee Period to major banks in the London interbank market in London, England by the Collateral Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Fee Period.
“Lien” shall mean, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under Applicable Law, including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the UCC (or equivalent statutes) of any jurisdiction other than a precautionary financing statement respecting a lease not intended as a security agreement.
“Luxembourg” shall mean the Grand Duchy of Luxembourg.
“Material Adverse Effect” shall mean a material adverse effect on (a) the business, property or financial condition of Holdings and its Restricted Subsidiaries taken as a whole, (b) the rights or remedies of the Payee or the Collateral Agent hereunder or under any other the LC Procurement Document, (c) the ability of the Payer Parties, collectively, to perform their obligations to the Payee or the Collateral Agent hereunder or under any other LC Procurement Document or (d) a material portion of the Collateral.
“Maximum LC Amount” shall mean an amount equal to 98.04% of the Sterling (a) purchased by the Payee with the proceeds of the Term B Loans (at the Fixed Exchange Rate) deposited and on hand with the LC Bank as Payee Deposit, and (b) deposited by Payer and on hand with LC Bank as Payer Deposit, as such amount may be reduced and increased from time to time pursuant to Section 3.01, 3.02 or 3.03.
“Maximum LC Procurement Obligation” shall mean, as of any date, the amount which would be payable to the Payee in Dollars on such date pursuant to Sections 3.04 and 3.05 if the Maximum LC Amount was reduced to zero on such date.
“Maximum Rate” shall have the meaning provided in Section 11.09.
“Minority Interest” shall mean the percentage interest represented by any Capital Stock of a Restricted Subsidiary of Holdings that is not owned by Holdings or a Restricted Subsidiary of Holdings.
“MNPI” shall have the meaning provided in the final paragraph of Section 7.01.
“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.
“Mortgages” shall mean the mortgages, leasehold mortgages, deeds of trust, leasehold deeds of trust, deeds to secure debt, leasehold deeds to secure debt, debentures, assignments of leases and rents and similar security instruments delivered to the Collateral Agent, each in form and substance satisfactory to the Payee and Collateral Agent, as the same may be amended, modified or supplemented from time to time.
“Multiemployer Plan” shall mean any multiemployer plan as defined in Section 4001(a)(3) of ERISA, which is contributed to by (or to which there is an obligation to contribute of) Holdings, any of its Subsidiaries and/or any ERISA Affiliate, and each such plan for the five-year period immediately following the latest date on which Holdings, any of its Subsidiaries and/or an ERISA Affiliate contributed to or had an obligation to contribute to such plan.
“Net Proceeds” shall mean the aggregate cash proceeds received by Holdings or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of:
(a) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, title and recording tax expenses and sales commissions, and any relocation and severance expenses and charges of personnel incurred as a result of the Asset Sale, including, without limitation, the Agreement Value (as defined in the Term A Credit Agreement) payable under any Hedging Agreement as a result of such Asset Sale,
(b) taxes paid or payable or required to be accrued as a liability under GAAP as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements,
(c) amounts required to be applied to the repayment of Indebtedness (other than the Obligations) secured by a Lien on the assets that were the subject of such Asset Sale, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale or by Applicable Law, be repaid out of the proceeds from such Asset Sale,
(d) all distributions and other payments required to be made to Minority Interest holders in Restricted Subsidiaries or Joint Ventures as a result of such Asset Sale, and
(e) any appropriate amounts to be set aside in any reserve established in accordance with GAAP or any amount placed in escrow, in either case for adjustment in respect of the sale price of such assets or for liabilities associated with such Asset Sale and retained by Holdings or any of its Restricted Subsidiaries until such time as such reserve is reversed or such escrow arrangement is terminated, in which case Net Proceeds shall include only the amount of the reserve so reversed or the amount returned to Holdings or its Restricted Subsidiaries from such escrow arrangement, as the case may be.
“Net Working Capital” shall mean (a) all current assets of Holdings and its Restricted Subsidiaries except current assets from commodity price risk management activities arising in the ordinary course of business, less (b) all current liabilities of Holdings and its Restricted Subsidiaries, except (i) current liabilities included in Indebtedness, (ii) current liabilities associated with asset retirement obligations relating to Oil and Gas Properties and (iii) any current liabilities from commodity price risk management activities arising in the ordinary course of business, in each case as set forth in the consolidated financial statements of Holdings prepared in accordance with GAAP (excluding any adjustments made pursuant to FASB ASC Topic 815, “Derivatives and Hedging”); provided that, for purposes of calculating Excess Cash Flow, increases or decreases in Net Working Capital shall be calculated without regard to any changes in current assets or current liabilities as a result of (A) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (B) the effects of purchase accounting.
“Non-Guarantor Subsidiary” shall mean each Subsidiary of Holdings (other than the Payer) that is not a Subsidiary Guarantor.
“Non-Recourse Debt” shall mean Indebtedness:
(1) as to which neither Holdings nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) is the lender; and
(2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Obligations) of Holdings or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and
(3) the explicit terms of which provide there is no recourse against any of the property or assets of Holdings or its Restricted Subsidiaries.
For purposes of determining compliance with Section 8.03, in the event that any Non-Recourse Debt of any of Holdings’ Unrestricted Subsidiaries ceases to be Non-Recourse Debt of such Unrestricted Subsidiary, such event will be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of Holdings.
“Non-U.S. Pension Plan” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States by Holdings or any one or more of its Subsidiaries primarily for the benefit of employees of Holdings or such Subsidiaries residing outside the United States, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.
“North Sea” shall mean, collectively, the Dutch Sector, the UK Sector and surrounding areas of the North Sea, including, without limitation, any such areas in Scottish or Norwegian waters.
“Obligations” shall mean all amounts owing to the Payee pursuant to the terms of this Agreement or any other LC Procurement Document, including, without limitation, the LC Procurement Obligations, all amounts in respect of any of the Fees or interest thereon (including any fees or interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in this Agreement or the respective other LC Procurement Document, whether or not such interest is an allowed claim under any such proceeding or under applicable state, federal or foreign law), all amounts owing pursuant to Section 3.01(a), penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts.
“Oil and Gas Business” shall mean:
(1) the acquisition, exploration, development, production, operation and disposition of interests in crude oil, natural gas and other Hydrocarbon properties;
(2) the gathering, marketing, treating, processing, refining, storage, distribution, selling and transporting of any production from such interests or properties;
(3) any business relating to exploration for or development, production, treatment, processing, refining, storage, transportation or marketing of crude oil, natural gas and other Hydrocarbons and products produced in association therewith; and
(4) any activity that is ancillary, complementary or incidental to or necessary or appropriate for the activities described in clauses (1) through (3) of this definition.
“Oil and Gas Contracts” shall mean all contracts, agreements, operating agreements, farm-out or farm-in agreements, sharing agreements, mineral purchase agreements, contracts for the purchase, exchange, transportation, processing or sale of Hydrocarbons, rights-of-way, easements, surface leases, subleases, equipment leases, permits, franchises, licenses, pooling or unitization agreements, and unit or pooling designations and orders now or hereafter affecting any of the Oil and Gas Properties (or related oil and gas gathering assets) or Hydrocarbon Interests of Holdings and each of its Subsidiaries, or which are useful or appropriate in drilling for, producing, treating, handling, storing, transporting, or marketing oil, gas or other minerals produced from any of the Oil and Gas Properties of Holdings and each of its Subsidiaries, as any such contracts and agreements as may be amended, restated, modified, substituted or supplemented from time to time.
“Oil and Gas Properties” shall mean (a) Hydrocarbon Interests; (b) the properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all currently existing or future rights arising under (i) unitization agreements, orders or other arrangements, (ii) pooling orders, agreements or other arrangements and (iii) declarations of pooled units and the units created thereby (including all units created under orders, regulations and rules of any Governmental Authority having jurisdiction) which may affect all or any portion of the Hydrocarbon Interests; (d) all pipelines, gathering lines, compression facilities, tanks and processing plants; (e) all interests held in royalty trusts whether currently existing or hereafter created; (f) all Hydrocarbons in and under and which may be produced, saved, processed or attributable to the Hydrocarbon Interests, the lands covered thereby and all Hydrocarbons in pipelines, gathering lines, tanks and processing plants and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; (g) all tenements, hereditaments, appurtenances, interests and properties in any way appertaining, belonging, affixed or incidental to the Hydrocarbon Interests, and all rights, titles, interests and estates described or referred to above (including (i) any and all Real Property, now owned or hereafter acquired, leased or subleased or otherwise used or held for use in connection with the operating, working or development of any such Hydrocarbon Interests or property and (ii) any and all surface leases, subleases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing); (h) all production units, drilling and spacing units (and the properties covered thereby) which may affect all or any portion of the other Oil and Gas Properties and any units created by agreement or designation or under orders, regulations, rules or other official acts of any Governmental Authority having jurisdiction; and (i) 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.
“Original Dollar Amount” shall have the meaning provided in Section 3.05.
“Payee” shall have the meaning provided in the preamble to this Agreement.
“Payee Deposit” shall mean, collectively, (a) any amounts in Sterling deposited by the Payee with the LC Bank to secure the obligations of the Payee under the LC Issuance Documents and (b) the amounts deposited by the Payer with the LC Bank pursuant to Section 5.01(s).
“Payer” shall have the meaning provided in the preamble to this Agreement.
“Payer Deposit” shall mean any amounts deposited by the Payer with the LC Bank pursuant to the LC Issuance Agreement (excluding, for the avoidance of doubt, any amounts which constitute the Payee Deposit).
“Payer Party” shall mean Holdings, the Payer and each Subsidiary Guarantor.
“Payer Party Guaranty” shall have the meaning provided in Section 5.01(g).
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
“Permitted Acquisition Indebtedness” shall mean Indebtedness or Disqualified Stock of Holdings or any of its Restricted Subsidiaries to the extent such Indebtedness or Disqualified Stock was Indebtedness or Disqualified Stock of any other Person existing at the time (a) such Person became a Restricted Subsidiary of Holdings, (b) such Person was merged or consolidated with or into Holdings or any of its Restricted Subsidiaries or (c) properties or assets of such Person were acquired by Holdings or any of its Restricted Subsidiaries and such Indebtedness was assumed in connection therewith (excluding any such Indebtedness that is repaid contemporaneously with such event), provided that on the date such Person became a Restricted Subsidiary of Holdings or the date such Person was merged or consolidated with or into Holdings or any of its Restricted Subsidiaries, or on the date of such property or asset acquisition, as applicable, either
(1) immediately after giving effect to such transaction on a pro forma basis as if the same had occurred at the beginning of the applicable four-quarter period, Holdings or such Restricted Subsidiary, as applicable, would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 8.03, or
(2) immediately after giving effect to such transaction on a pro forma basis as if the same had occurred at the beginning of the applicable four-quarter period, the Fixed Charge Coverage Ratio of Holdings would be equal to or greater than the Fixed Charge Coverage Ratio of Holdings immediately prior to such transaction.
“Permitted Business Investments” shall mean Investments made in the ordinary course of, and of a nature that is or shall have become customary in, the Oil and Gas Business, including investments or expenditures for actively exploring for, acquiring, developing, producing, processing, gathering, marketing or transporting Hydrocarbons through agreements, transactions, interests or arrangements that permit one to share risk or costs, comply with regulatory requirements regarding local ownership or satisfy other objectives customarily achieved through the conduct of the Oil and Gas Business jointly with third parties, including without limitation:
(1) direct or indirect ownership of crude oil, natural gas, other related Hydrocarbon properties or any interest therein, gathering, transportation, processing, storage or related systems, or ancillary real property interests and interests therein; and
(2) the entry into operating agreements, joint ventures, processing agreements, working interests, royalty interests, mineral leases, farm-in agreements, farm-out agreements, development agreements, production sharing agreements, area of mutual interest agreements, contracts for the sale, transportation or exchange of crude oil and natural gas and related Hydrocarbons and minerals, unitization agreements, pooling arrangements, joint bidding agreements, service contracts, partnership agreements (whether general or limited), or other similar or customary agreements, transactions, properties, interests or arrangements, and Investments and expenditures in connection therewith or pursuant thereto, in each case made or entered into in the ordinary course of the Oil and Gas Business, excluding, however, Investments in corporations and publicly-traded limited partnerships.
“Permitted Debt” shall have the meaning provided in Section 8.03.
“Permitted Intercompany Debt” shall have the meaning provided in Section 8.03(6).
“Permitted Investments” shall mean:
(1) any Investment in Holdings or, subject to compliance with the Additional Guarantor Requirement as of the date of such Investment, in a Restricted Subsidiary of Holdings;
(2) any Investment in cash and Cash Equivalents;
(3) subject to compliance with the Additional Guarantor Requirement as of the date of such Investment, any Investment by Holdings or any Restricted Subsidiary of Holdings in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of Holdings; or
(b) such Person is merged or consolidated with or into, or transfers or conveys substantially all of its properties or assets to, or is liquidated into, Holdings or a Restricted Subsidiary of Holdings;
(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 8.04;
(5) any Investment in any Person solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of Holdings;
(6) any Investments received in compromise or resolution of, or upon satisfaction of judgments with respect to, (a) obligations of trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or (b) litigation, arbitration or other disputes (including pursuant to any bankruptcy or insolvency proceedings) with Persons who are not Affiliates;
(7) Hedging Agreements permitted under this Agreement;
(8) guarantees by Holdings or any of its Restricted Subsidiaries of operating leases (other than Capital Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into by Holdings or any Restricted Subsidiary of Holdings in the ordinary course of business or otherwise customary in the Oil and Gas Business;
(9) Permitted Business Investments (including any Permitted Business Investment made as the result of the receipt of non-cash consideration pursuant to clause (8) of the items deemed not to be Asset Sales under the definition of “Asset Sale”);
(10) Investments that are in existence on the date of this Agreement;
(11) bid, performance, surety and similar bonds (other than with respect to Indebtedness) and lease, utility, tax and workers’ compensation, performance and other similar deposits and prepaid expenses made in the ordinary course of business by Holdings or any of its Restricted Subsidiaries and necessary or appropriate in connection with their operations;
(12) loans or advances to officers, directors, employees or consultants made in the ordinary course of business or otherwise customary in the Oil and Gas Business and otherwise in compliance with Section 8.05 of this Agreement;
(13) Investments of a Restricted Subsidiary acquired after the date hereof or of any entity merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with Section 8.09 of this Agreement, to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;
(14) Investments received as a result of a foreclosure by, or other transfer of title to, Holdings or any of its Restricted Subsidiaries with respect to any secured Investment in default; and
(15) subject to compliance with the Additional Guarantor Requirement as of the date of such Investment, other Investments (but excluding repurchases of or other Investments in the Indenture Notes or Unsecured Notes) having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (15) that are at the time outstanding, not to exceed the greater of $35,000,000 and 3.0% of Holdings’ Adjusted
Consolidated Net Tangible Assets determined at the time of such Investment (after giving effect to any dividends, interest payments, return of capital and subsequent reduction in the amount of any Investment made pursuant to this clause (15) as a result of the repayment or other disposition thereof, in an amount not to exceed the amount of such Investments previously made pursuant to this clause (15)); provided, however, that (a) if any Investment pursuant to this clause (15) is made in any Person that is not a Restricted Subsidiary of Holdings at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of Holdings after such date, such Investment shall, subject to compliance with the Additional Guarantor Requirement, thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (15) for so long as such Person continues to be a Restricted Subsidiary and (b) with respect to any Investment, Holdings may, in its sole discretion, allocate all or any portion of any Investment and later re-allocate all or any portion of any Investment to one or more of the above clauses (1) through (15) so that the entire Investment would be a Permitted Investment.
“Permitted Liens” shall mean:
(1) Liens created in favor of the Secured Parties by or pursuant to this Agreement, the Security Documents, the Term A Credit Agreement and the Security Documents (as defined in the Term A Credit Agreement);
(2) Liens in favor of any Payer Party (other than Liens securing intercompany Indebtedness);
(3) Liens on any asset or property of a Person existing at the time such Person is merged with or into or consolidated with Holdings or any Restricted Subsidiary of Holdings, provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any properties or assets other than those of the Person merged into or consolidated with Holdings or the Restricted Subsidiary;
(4) Liens on any asset or property existing at the time of acquisition of the asset or property by Holdings or any Restricted Subsidiary of Holdings, provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to other assets or properties of Holdings or any Restricted Subsidiary (other than any asset or property affixed or appurtenant thereto);
(5) any interest or title of a lessor to the property subject to a Capital Lease Obligation;
(6) Liens on any asset or property acquired, constructed or improved by Holdings or any of its Restricted Subsidiaries in the ordinary course of business; provided that (a) such Liens are in favor of the seller of such asset or property, in favor of the Person or Persons developing, constructing, repairing or improving such asset or property, or in favor of the Person or Persons that provided the funding for the acquisition, development, construction, repair or improvement cost, as the case may be, of such asset or property, (b) such Liens are created within 180 days after the acquisition, development, construction, repair or improvement, (c) the aggregate principal amount of the Indebtedness secured by such Liens is otherwise permitted to be incurred under this Agreement and does not exceed the greater of (i) the cost of the asset or property so
acquired, constructed or improved plus related financing costs and (ii) the Fair Market Value of the asset or property so acquired, constructed or improved, measured at the date of such acquisition, or the date of completion of such construction or improvement, and (d) such Liens are limited to the asset or property so acquired, constructed or improved (including the proceeds thereof, accessions thereto, upgrades thereof and improvements thereto);
(7) Liens existing on the date of this Agreement, other than Liens securing any Credit Facility or any guarantees thereof;
(8) Liens securing the performance of tenders, bids, statutory obligations, appeal bonds, government contracts, bid, performance, surety or similar bonds or other obligations of a like nature incurred in the ordinary course of business of Holdings and its Restricted Subsidiaries and necessary or appropriate in connection with their operations (or letters of credit supporting such obligations);
(9) Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture owned by Holdings or any Restricted Subsidiary of Holdings to the extent securing Non-Recourse Debt of such Unrestricted Subsidiary or Joint Venture;
(10) Liens in respect of the Existing Production Payments and any Refinancing Production Payment;
(11) Liens arising under oil and gas leases, operating agreements, joint venture agreements, partnership agreements, oil and gas leases, farm-out agreements, farm-in agreements, division orders, contracts for the sale, transportation or exchange of crude oil and natural gas and related Hydrocarbons and minerals, unitization and pooling declarations and agreements, area of mutual interest agreements, land purchase option arrangements, participation and development agreements, joint operating agreements, and other agreements (including, without limitation, options, put and call arrangements, rights of first offer, rights of first refusal, preferential rights, restrictions on dispositions and the like and those of the type described in the definition of “Permitted Business Investments” but excluding any Production Payments) arising in the ordinary course of business of Holdings and its Restricted Subsidiaries or that are customary in the Oil and Gas Business;
(12) Liens upon specific items of inventory, receivables or other goods or proceeds of Holdings or any of its Restricted Subsidiaries securing such Person’s obligations in respect of bankers’ acceptances or receivables securitizations issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory, receivables or other goods or proceeds and permitted by Section 8.03;
(13) Liens on the Indenture Collateral securing the Indenture Obligations;
(14) Liens in favor of Approved Hedge Counterparties to secure payment and performance of Secured Hedging Agreements of Holdings or any of its Restricted Subsidiaries provided, if such Approved Hedge Counterparty is a Person defined under clause (f) of the definition thereof, such Approved Hedge Counterparty enters into an intercreditor agreement with the Administrative Agent, for the benefit of the Secured Parties, in form and substance and with terms and subject to conditions acceptable to the Collateral Agent;
(15) any attachment or judgment Lien that does not constitute an Event of Default;
(16) survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of Holdings or any of its Restricted Subsidiaries;
(17) Liens arising solely by virtue of clause 24 or clause 25 of the general terms and conditions (algemene bankvoorwaarden) of any member of the Dutch Bankers’ Association (Nederlandse Vereniging van Banken) or any similar term applied by a financial institution in the Netherlands pursuant to its general terms and conditions, any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained or deposited with a depositary institution; provided that (a) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by Holdings in excess of those set forth by regulations promulgated by the Federal Reserve Board and (b) such deposit account is not intended by Holdings or any of its Restricted Subsidiaries to provide collateral to the depositary institution;
(18) Liens arising from UCC financing statement filings regarding operating leases entered into by Holdings and its Restricted Subsidiaries in the ordinary course of business;
(19) leases or subleases granted to others that do not materially interfere with the ordinary course of business of Holdings and its Restricted Subsidiaries, taken as a whole;
(20) Liens arising from the deposit of funds or securities in trust for the purpose of decreasing or defeasing Indebtedness so long as such deposit of funds or securities and such decreasing or defeasing of Indebtedness are permitted under Section 8.01 of this Agreement;
(21) Liens arising from royalties, revenue interests, net revenue interests, reversionary interests, preferential rights of purchase, working interests and other similar interests in Hydrocarbons, all as ordinarily exist with respect to properties and assets of Holdings and its Restricted Subsidiaries or otherwise as are customary in the Oil and Gas Business other than any Production Payment;
(22) Liens securing Indebtedness under the Existing Credit Agreement, the Existing LC Procurement Agreements and guarantees thereof by Holdings and the Subsidiary Guarantors; provided that such Liens shall not be permitted under this clause (22) at any time after the Closing Date;
(23) Liens securing Indebtedness not exceeding the greater of (a) $25,000,000 and (b) 2.0% of Holdings' Adjusted Consolidated Net Tangible Assets; provided such Liens are subordinated and junior to the Liens securing the Obligations pursuant to an intercreditor agreement in form and substance satisfactory to the Payee;
(24) Liens securing the payment of Taxes that are not delinquent or are being diligently contested in good faith by appropriate proceedings and as to which adequate reserves have been established in accordance with GAAP;
(25) Liens securing any Permitted Refinancing Indebtedness permitted to be incurred under this Agreement and incurred to refinance Indebtedness that was previously so secured other than Indebtedness referred to in clause (1) above, provided that any such Lien is limited to all or part of the same assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of assets that is the security for a Permitted Lien hereunder;
(26) Liens securing any Permitted Intercompany Debt between or among Payer Parties; provided that (a) such Liens are expressly subordinated in all respects to the prior payment in full in cash of all Obligations and Liens securing the Obligations pursuant to a written subordination agreement satisfactory in form and substance to the Administrative Agent and (b) such intercompany Indebtedness is pledged to the Collateral Agent, for the benefit of the Secured Parties and the Payee, and to no other Person; and
(27) Liens in favor of the LC Bank on any Payer Deposit.
“Permitted Refinancing Indebtedness” shall mean any Indebtedness of Holdings or any of its Restricted Subsidiaries or any Disqualified Stock of Holdings incurred or issued in exchange for, or the net proceeds of which shall be used to extend, refinance, renew, replace, defease, discharge, refund or otherwise retire for value, in whole or in part, any other Indebtedness of Holdings or any of its Restricted Subsidiaries (other than intercompany Indebtedness) or any Disqualified Stock of Holdings (the “Refinanced Indebtedness”); provided that:
(1) the principal amount, or in the case of Disqualified Stock, the amount thereof as determined in accordance with the definition of Disqualified Stock, of such Permitted Refinancing Indebtedness does not exceed the principal amount of the Refinanced Indebtedness (plus all accrued (including, for the purposes of defeasance, future accrued) and unpaid interest on, or accrued and unpaid dividends on, the Refinanced Indebtedness, as the case may be, and the amount of all fees, expenses and premiums incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date or redemption date, as applicable, later than or equal to the shorter of (a) 91 days following the LC Release Date or (b) the final maturity date or redemption date, as applicable, of the Refinanced Indebtedness;
(3) such Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity at the time such Permitted Refinancing Indebtedness is incurred equal to or greater than the shorter of (a) the Weighted Average Life to Maturity of the Refinanced Indebtedness and (b) the Weighted Average Life to Maturity that would result if all payments of principal on the Refinanced Indebtedness that were due on or after the date that is 91 days following the LC Release Date were instead due on the LC Release Date;
(4) if the Refinanced Indebtedness is contractually subordinated or otherwise junior in right of payment to the Obligations, such Permitted Refinancing Indebtedness is contractually subordinated or otherwise junior in right of payment to the Obligations on terms at least as favorable to the Payee as those contained in the documentation governing the Refinanced Indebtedness;
(5) such Permitted Refinancing Indebtedness is not incurred or guaranteed by any Person that is not the issuer or otherwise an obligor with respect to the Refinanced Indebtedness unless such Person is a Payer Party; and
except as otherwise provided in clause (3) of the second paragraph of Section 8.01, the proceeds of the Permitted Refinancing Indebtedness shall be used substantially concurrently with the incurrence thereof to extend, refinance, renew, replace, defease, discharge, refund or otherwise retire the Refinanced Indebtedness, unless the Refinanced Indebtedness is not then due and is not redeemable or prepayable, defeasable or dischargeable, as the case may be, at the option of the obligor thereof or is redeemable or prepayable or may be defeased or discharged only with notice, in which case, such proceeds shall be held in a segregated account of the obligor of the Refinanced Indebtedness until the Refinanced Indebtedness becomes due or redeemable, prepayable or subject to defeasance or discharge, as the case may be, or such notice period lapses and then shall be used to extend, refinance, renew, replace, defease, discharge, refund or otherwise retire the Refinanced Indebtedness; provided that in any event the Refinanced Indebtedness shall be extended, refinanced, renewed, replaced, defeased, discharged, refunded or otherwise retired within 60 days of the incurrence of the Refinancing Indebtedness.
“Person” shall mean any natural person, corporation, business trust, joint venture, association, company, joint stock company, unincorporated organization, limited liability company, partnership, Governmental Authority or other entity.
“Plan” shall mean any pension plan as defined in Section 3(2) of ERISA, other than a Multiemployer Plan, which is maintained or contributed to by (or to which there is an obligation to contribute of) Holdings, any of its Subsidiaries or an ERISA Affiliate, and each such plan for the five-year period immediately following the latest date on which Holdings, any of its Subsidiaries or any ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.
“Prime Rate” shall mean the rate of interest per annum determined from time to time by Collateral Agent as its prime rate in effect at its principal office in New York City and notified to the Payer and the Payee. The prime rate is a rate set by Collateral Agent based upon various factors including Collateral Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such rate.
“Pro Forma Adjustments” shall mean, for purposes of calculating compliance with any financial covenant or financial term:
(1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers, consolidations or otherwise (including acquisitions of
assets used or useful in the Oil and Gas Business), or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including in each case any related financing transactions and increases in ownership of Restricted Subsidiaries, during the applicable four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date, will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period, and the Consolidated EBITDA for such reference period will be calculated giving pro forma effect to any expense and cost reductions or operating improvements that have occurred or are reasonably expected to occur, in the reasonable judgment of a Financial Officer of Holdings and in accordance with Regulation S-X promulgated under the Securities Act or any other regulation or policy of the SEC related thereto;
(2) the Consolidated EBITDA attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded;
(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;
(4) any Person that is a Restricted Subsidiary of the specified Person on the Calculation Date will be deemed to have been a Restricted Subsidiary of the specified Person at all times during such four-quarter period;
(5) any Person that is not a Restricted Subsidiary of the specified Person on the Calculation Date will be deemed not to have been a Restricted Subsidiary of the specified Person at any time during such four-quarter period; and
(6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any obligations arising under any Hedging Agreement applicable to such Indebtedness if such Hedging Agreement has a remaining term as at the Calculation Date in excess of 12 months), but if the remaining term of such Hedging Agreement is less than 12 months, then it shall only be taken into account for that portion of the period equal to the remaining term thereof.
“Probable Reserves” shall mean the estimated quantities of crude oil, condensate, natural gas and natural gas liquids that geological and engineering data suggests are more likely than not to be recoverable with presently available technology at an economically viable cost (as determined in accordance with the guidelines of the Society of Petroleum Engineers).
“Process Agent” shall have the meaning provided in Section 11.18(a).
“Production Payments” shall mean, collectively, Dollar-Denominated Production Payments and Volumetric Production Payments.
“Projections” shall have the meaning provided in Section 6.07.
“Protected Party” shall mean the Payee to the extent it is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a this Agreement.
“Proved Reserves” shall mean those Oil and Gas Properties designated as “proved” (in accordance with SEC definitions and regulations) in the Reserve Report most recently delivered to the Payee pursuant to this Agreement.
“Proved Reserves Coverage Ratio” shall mean, as of any date of calculation, the ratio of the PV-10 Value as reflected in the most recently prepared Reserve Report which has been delivered to the Administrative Agent (together with any supplements, revisions or updates thereto after such date and to the date of such calculation) to Total Funded Secured Debt as shown in Holdings’ financial statements as of the end of the immediately preceding fiscal quarter.
“Purchased Dollar Amount” shall have the meaning provided in Section 3.05.
“PV-10 Value” shall mean, as of any date of determination, the present value of future cash flows from Proved Reserves on Holdings’ and each of its Restricted Subsidiaries’ Oil and Gas Properties as set forth in the most recent Reserve Report delivered pursuant to Section 7.01(c), utilizing (a) in the case of any Oil and Gas Properties located in the United States, the Three-Year Strip Price for crude oil (WTI Cushing) and natural gas (Henry Hub), quoted on the New York Mercantile Exchange (or its successor), (b) in the case of any Oil and Gas Properties located in the North Sea, the Three-Year Strip Price for crude oil (North Sea Brent) and natural gas (UK National Balancing Point), in each case quoted on the International Petroleum Exchange (or its successor) and (c) in the case of any Oil and Gas Properties located in any other jurisdiction, the Three-Year Strip Price for crude oil and natural gas, in each case quoted on any commodities exchange or other price quotation source generally recognized in the oil and gas industry in such jurisdiction and reasonably acceptable to the Payee and the Collateral Agent, in the case of each of clauses (a), (b) and (c), as of the date as of which the information set forth in such Reserve Report is provided (as adjusted for basis differentials) and utilizing a 10% discount rate. For purposes of calculating PV-10 Value, (i) any future cash flow calculations set forth in any Reserve Report and made in any currency other than Dollars shall be converted into Dollars based on the Exchange Rate on the date as of which the information set forth in such Reserve Report is provided, (ii) PV-10 Value shall be calculated net of the present value of future cash flows attributable to reserves that are required to be delivered to third parties to fully satisfy the obligations of such Person and its Restricted Subsidiaries with respect to Production Payments on the schedules specified with respect thereto, participation interests, overriding royalty interests, net profits interests or other interests of third parties, pursuant to participation, partnership, vendor financing or other agreements then in effect, or which otherwise are required to be delivered to third parties and (iii) PV-10 Value shall be calculated net of all associated plugging, abandoning and/or decommissioning expense or liabilities, contingent or otherwise, of Holdings and its Restricted Subsidiaries.
“Real Property” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.
“Recipient” shall have the meaning provided in Section 4.02(e)(ii).
“Refinancing Production Payment” shall mean a Production Payment granted, sold, assigned or otherwise conveyed by any Payer Party for purposes of refinancing an Existing Production Payment; provided such Refinancing Production Payment does not have a notional principal amount greater than the notional principal amount of the Existing Production Payment refinanced.
“Related Party” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective partners, directors, trustees, officers, employees, agents, administrators, managers, advisors and representatives of such Person and such Person’s Affiliates.
“Release” shall mean actively or passively disposing, discharging, injecting, spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring, seeping or migrating into or upon any land or water or air, or otherwise entering into the environment.
“Reportable Event” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under PBGC Regulations promulgated under Section 4043 of ERISA.
“Reporting Default” shall mean a Default arising from a failure to comply with Section 7.01, subject to the applicable grace period set forth in Section 9.03.
“Required Lenders” shall mean, collectively, the “Required Lenders” under, and defined under, each of the Term A Credit Agreement and the Term B Credit Agreement.
“Reserve Report” shall mean (a) the Initial Reserve Report, (b) each annual reserve report prepared by Holdings and audited by an Independent Engineering Firm with respect to Oil and Gas Properties of Holdings and each of its Restricted Subsidiaries as of December 31 of the year immediately preceding the year in which such report is delivered pursuant to Section 5.01(c), in form and detail consistent with the Initial Reserve Report or otherwise reasonably acceptable to the Payee and the Collateral Agent and (c) each interim reserve report prepared by Holdings, in form and detail reasonably acceptable to the Payee and the Collateral Agent (it being understood and agreed that (i) each Reserve Report will set forth Holdings’ and its Restricted Subsidiaries’ royalty interests, working interest, net revenue interest, Proved Reserves (including proved developed producing, proved developed non-producing and proved undeveloped), Probable Reserves, a projection of the rate of production and future net income, production and ad valorem taxes, operating expenses and capital expenditures with respect thereto as of such date, in each case, with respect to 100% of their Oil and Gas Properties, all in accordance with the guidelines published by the SEC (but utilizing the pricing parameters set forth in the definition of the term PV‑10 Value and, in the case of an annual Reserve Report, in addition to such pricing parameters those specified in such SEC guidelines) and utilizing such operating cost and other assumptions as proposed by Holdings, (ii) Holdings will prepare each interim reserve report based on the most recent annual Reserve Report, as adjusted for actual
production, operating costs, capital costs and net additions of Proved Reserves during the calendar months of the respective year specified therein and (iii) each Reserve Report prepared by Holdings shall be certified by the chief engineering officer of Holdings as being accurate in all material respects.
“Responsible Officer” of any Person shall mean any executive officer or Financial Officer of such Person and any other officer or similar official thereof responsible for the administration of the obligations of such Person and with respect to EIH, its Board of Directors (or any other Person authorized to represent EIH pursuant to a power of attorney), in respect of this Agreement.
“Restricted Investment” shall mean any Investment other than a Permitted Investment.
“Restricted Payment” shall have the meaning provided in Section 8.01(e).
“Restricted Subsidiary” shall have the meaning assigned such term in the Term A Credit Agreement (as in effect on the Closing Date).
“Returns” shall have the meaning provided in Section 6.08.
“S&P” shall mean Standard & Poor’s Ratings Services, or any successor thereto.
“Sale Leaseback Transaction” shall mean an arrangement relating to property now owned or hereafter acquired whereby Holdings or a Restricted Subsidiary transfers such property to a Person and Holdings or a Restricted Subsidiary leases it from such Person.
“SEC” shall mean the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“Second Priority Notes” shall mean the 12% Second Priority Notes due 2018 issued pursuant to the Second Priority Notes Indenture, including any such 12% Second Priority Notes issued in the exchange offer contemplated in the Second Priority Notes Indenture.
“Second Priority Notes Indenture” shall mean that certain indenture, dated as of February 23, 2012, among Holdings, the guarantors party thereto, Wilmington Trust, National Association, as trustee, and Wells Fargo Bank, National Association, as collateral agent.
“Secured Hedging Agreement” shall mean any Hedging Agreement by or among Holdings or any of its Restricted Subsidiaries and any Approved Hedge Counterparty.
“Secured Parties” shall have the meaning provided in the Term A Credit Agreement.
“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Security Documents” shall mean the Mortgages, the Payer Party Guaranty, the U.S. Security Agreement, the English Security Documents, the Deposit Account Control Agreement, after the execution and delivery thereof, the Additional Security Documents, and the other
security agreements, mortgages and other instruments and documents, including each that is executed and delivered pursuant to any of the foregoing or pursuant to Section 7.11 or any other Section of this Agreement.
“Series B Preferred Stock” shall mean Holdings’ Series B Preferred Stock with the terms set forth in the Amended and Restated Certificate of Designation of Series B Preferred Stock originally filed with the Nevada Secretary of State on February 26, 2004.
“Stated Maturity” shall mean, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
“Sterling” means the lawful currency of the United Kingdom.
“Subject Party” shall have the meaning provided in Section 4.02(e)(ii).
“Subordination Agreement” shall have the meaning provided in Section 5.01(k).
“Subsidiary” shall mean, with respect to any specified Person:
(1) any corporation, association or other business entity (other than a partnership or limited liability company) of which more than 50% of the total voting power of Voting Stock is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (whether general or limited) or limited liability company (a) the sole general partner or member of which is such Person or a Subsidiary of such Person, or (b) if there is more than a single general partner or member, either (x) the only managing general partners or managing members of which are such Person or one or more Subsidiaries of such Person (or any combination thereof) or (y) such Person owns or controls, directly or indirectly, a majority of the outstanding general partner interests, member interests or other Voting Stock of such partnership or limited liability company, respectively.
“Subsidiary Guarantor” shall mean each Subsidiary of Holdings whether existing on the date hereof or established, created or acquired after the date hereof, that has executed and delivered the Payer Party Guaranty or has otherwise become a party thereto by means of the execution and delivery of a joinder, accession or similar agreement (in form and substance satisfactory to the Payee) by such Subsidiary unless and until such time as the respective Subsidiary is released from all of its obligations under the Payer Party Guaranty in accordance with the terms and provisions thereof. The Subsidiary Guarantors on the Closing Date are listed on Schedule 1.01(b).
“Successor Company” shall have the meaning provided in Section 8.09(a).
“Supplier” shall have the meaning provided in Section 4.02(e)(ii).
“Synthetic Lease” shall mean, as to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for income tax purposes, other than any such lease under which such Person is the lessor.
“Synthetic Lease Obligations” shall mean, as to any Person, an amount equal to the capitalized amount of the remaining lease payments under any Synthetic Lease that would appear on a balance sheet of such person in accordance with GAAP if such obligations were accounted for as Capital Lease Obligations.
“Tax Credit” shall mean a credit against, relief or remission for, or repayment of any Tax.
“Tax Deduction” shall mean a deduction or withholding for or on account of Tax from a payment under this Agreement.
“Tax Payment” shall mean a payment under Section 2.04(b)(ii) or Section 11.05(iii), the increase in a payment made by a Payer Party to a Lender or Agent under Section 4.02(a) or a payment under Section 4.02(b).
“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term A Credit Agreement” shall mean that certain Credit Agreement, dated as of the date hereof, among Holdings, EIH and End Finco LLC, a Delaware limited liability company, as co-borrowers, the lenders party thereto and Credit Suisse AG, as administrative agent and as collateral agent.
“Term A Borrowers” shall mean EIH and End Finco LLC, a Delaware limited liability company.
“Term A Loans” shall have the meaning provided to the term “Loans” in the Term A Credit Agreement.
“Term B Commitment” shall have the meaning provided to the term “Commitments” in the Term B Credit Agreement.
“Term B Credit Agreement” shall mean that certain Credit Agreement, dated as of the date hereof, among the Payee and LC Finco US, as co-borrowers, the lenders party thereto and Credit Suisse AG, as administrative agent and as collateral agent.
“Term B Loans” shall have the meaning provided to the term “Loans” in the Term B Credit Agreement.
“Three-Year Strip Price” shall mean, as of any date of determination, (a) for the 36-month period commencing with the month immediately following the month in which the date of
determination occurs, the monthly futures contract prices for crude oil and natural gas for the 36 succeeding months as quoted on the applicable commodities exchange or other price quotation source as contemplated in the definition of “PV-10 Value” and (b) for periods after such 36-month period, the average of such quoted prices for the period from and including the 25th month in such 36-month period through the 36th month in such period.
“Total Funded Debt” shall mean, at any time, all Indebtedness of the type described in clauses (1), (2), (3), (4) and (5) of the definition of “Indebtedness”.
“Total Funded Secured Debt” shall mean, at any time, the Total Funded Debt of Holdings and its Restricted Subsidiaries to the extent such Total Funded Debt is secured by a Lien on the assets of Holdings and its Restricted Subsidiaries (excluding any Indebtedness under the Indenture Notes to the extent secured only by the Indenture Collateral as in effect on the date hereof).
“Tranche” and “Tranches” shall each have the meaning provided in Section 2.03(a).
“Transaction” shall mean, collectively, (a) the execution, delivery and performance by the Payee of the LC Issuance Agreement and the issuance of the Letters of Credit thereunder on the Closing Date, (b) the execution, delivery and performance by each Payer Party of the LC Procurement Documents, (c) the execution, delivery and performance by the Payee and the Collateral Agent of the Collateral Assignment, (d) the crediting of the Payee Deposit to accounts for the benefit of the LC Bank in an amount up to the Maximum LC Amount in connection with the repayment of amounts paid by the LC Bank under the Letters of Credit, and (e) the payment of all fees and expenses in connection with the foregoing.
“UCC” shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.
“UK Process Agent” shall have the meaning provided in Section 11.18(b).
“UK Sector” shall mean the jurisdiction of the United Kingdom commonly referred to as the UK Sector – North Sea.
“Unfunded Current Liability” of any Plan subject to Title IV of ERISA shall mean the amount, if any, by which the value of the accumulated plan benefits under such Plan determined on a plan termination basis in accordance with actuarial assumptions at such time consistent with those prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds the Fair Market Value of all plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), but only to the extent such excess could reasonably be expected to result in material liability to Holdings or a Subsidiary.
“United Kingdom” and “UK” shall mean each of England, Wales, Northern Ireland and Scotland, as the case may be, and shall include the U.K. Sector – North Sea.
“United States” and “U.S.” shall each mean the United States of America and any of its territories (including U.S. federal waters in the Gulf of Mexico).
“Unrestricted Subsidiary” shall have the meaning assigned such term in the Term A Credit Agreement (as in effect on the Closing Date).
“Unsecured Notes” shall mean any senior unsecured Indebtedness of Holdings or any other Payer Party evidenced by notes, debentures, bonds or other similar securities or instruments, including, without limitation, under the 5.5% Convertible Notes and the 11.5% Convertible Bonds.
“USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107 56 (signed into law October 26, 2001)).
“U.S. Security Agreement” shall have the meaning provided in Section 5.01(h).
“VAT” shall mean (a) any tax imposed in compliance with the council directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112), and (b) any other tax of similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to such tax referred to in clause (a), or elsewhere.
“Volumetric Production Payments” shall mean production payment obligations recorded as deferred revenue in accordance with GAAP, together with all related undertakings and obligations.
“Voting Stock” of any Person as of any date shall mean the Capital Stock of such Person that is at the time entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors of such Person.
“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness or Disqualified Stock at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity or redemption, in respect of the Indebtedness or Disqualified Stock, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by
(2) the then outstanding aggregate principal amount of such Indebtedness or Disqualified Stock.
SECTION 1.02 Terms Generally. The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation” except in cases where such words are already expressed. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (iii) 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, (iv) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (v) the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect on the date hereof and consistent with financial statements delivered pursuant to Section 6.05(a).
Article II.
LC Issuance Procurement; Reimbursement by the Payer.
SECTION 2.01 LC Issuance Documents, Procurement and Cancellation of Letters of Credit.
(a) The Payer hereby requests that the Payee (i) enter into the LC Issuance Documents as of the Closing Date and (ii) at the request of the Payer from time to time during the Commitment Period, instruct the LC Bank to issue Letters of Credit pursuant to the LC Issuance Documents. Subject to the terms and conditions hereof, the Payee hereby agrees to enter into the LC Issuance Documents as of the Closing Date and from time to time thereafter during the Commitment Period at the request of the Payer instruct the LC Bank to issue Letters of Credit pursuant to the LC Issuance Documents.
(b) The Payee shall not be obliged to enter into the LC Issuance Documents on the Closing Date or instruct the LC Bank to issue any Letter of Credit unless the conditions precedent set forth in Article V have been satisfied or waived. The Payee shall notify Holdings promptly upon satisfaction of all the conditions precedent set forth in Section 5.01. In order to request that the Payee instruct the LC Bank to issue Letters of Credit pursuant to Section 2.01(a), Payer shall notify the Payee of such request by telephone not later than 12:00 Noon (London) time three Business Days before the proposed issuance of a Letter of Credit. Each such telephonic notice shall be irrevocable, and shall be confirmed promptly by hand delivery or fax to the Payee of a written notice and shall specify the following information: (i) the requested date of the issuance of the Letter of Credit, (ii) the amount of the requested Letter of Credit and (iii) the beneficiary of the Letter of Credit.
(c) At no time shall the aggregate outstanding face amount of the Letters of Credit issued pursuant to the LC Issuance Documents, plus the amount, if any, demanded by the Payee pursuant to Section 2.02(a) and not reimbursed by the Payer exceed the Maximum LC Amount.
(d) Except as otherwise contemplated herein or in the LC Issuance Documents, the Payee shall not enter into, or agree to enter into, any amendment or modification to, or waiver in
respect of, any LC Issuance Document without the prior written consent of Holdings and the Payee.
SECTION 2.02 Reimbursement by the Payer.
(a) If the Payee receives a notice of demand for payment under a Letter of Credit or for payment or indemnification from the LC Bank pursuant to the terms of an LC Issuance Agreement, the Payee shall immediately notify the Payer of the amount demanded and the date on which it is payable. The Payer shall within three Business Days after receipt of demand from the Payee to the Payer pay to the Payee an amount equal to the amount of such demand.
(b) The Payer, in respect of each Letter of Credit issued or deemed issued under an LC Issuance Agreement, unconditionally and irrevocably agrees that its obligations under this Agreement shall not be affected by any act, omission, matter or thing which but for this provision might operate to release, prejudice or otherwise exonerate the Payer from its obligations under this Agreement, in whole or in part, including without limitation and whether or not known to the Payer:
(i) any time or waiver granted to or composition with the Payee, the LC Bank, the beneficiary of any such Letter of Credit or any other Person;
(ii) any taking, variation, compromise, exchange, renewal or release of, refusal or neglect to perfect, take-up or enforce, any rights, remedies or securities available to the Payee or any other Person or arising under any such Letter of Credit or any other LC Issuance Document;
(iii) any variation or extension of or increase in liabilities under any such Letter of Credit and any other LC Issuance Documents made with the prior written consent of the Payee, so that references in this Agreement to the same shall include each such variation, extension and variation;
(iv) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of any beneficiary under a Letter of Credit or any other person; or
(v) any insolvency or similar proceedings.
(c) The obligations of the Payer under this Section 2.02 shall be continuing, shall extend to the ultimate balance of the obligations and liabilities of the Payer under this Section 2.02 and shall continue in force notwithstanding any intermediate payment in part of such obligations or liabilities.
SECTION 2.03 LC Fees.
(a) In consideration for the Payee procuring the issuances of the Letters of Credit, the Payer shall pay the Payee a fee (the “LC Fee”) on the Payee Deposit. The LC Fee shall be payable in Dollars on the applicable Fee Payment Date and shall accrue on the Payee Deposit from and including the date of this Agreement to, but excluding, the LC Release Date. On the
Closing Date, the Payer shall designate whether the LC Fee shall accrue at the Adjusted LIBO Rate plus the Applicable Rate or the Alternate Base Rate plus the Applicable Rate; provided that, for purposes of calculating the LC Fee, the Payer may, at its option, elect to allocate the Payee Deposit to one or more tranches and elect to have the LC Fee computed for each tranche by reference to the Adjusted LIBO Rate (each such tranche calculated by reference to the Adjusted LIBO Rate, a “Eurodollar Tranche”) or the Alternate Base Rate (each such Trance calculated by reference to the Alternate Base Rate, an “ABR Tranche” and together with the Eurodollar Tranche, the “Tranches” and each, a “Tranche”). The LC Fee on each Eurodollar Tranche shall be a Dollar amount equal to a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days), for the applicable Fee Period in respect of such Eurodollar Tranche, equal to the Adjusted LIBO Rate plus the Applicable Rate on the Dollar equivalent of the average Payee Deposits comprising such Eurodollar Tranche (calculated by reference to the Fixed Exchange Rate). The LC Fee on each ABR Tranche shall be a Dollar amount equal to a rate per annum (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be), for the applicable Fee Period in respect of such ABR Tranche, equal to the Alternate Base Rate plus the Applicable Rate on the Dollar equivalent of the average Payee Deposit comprising such ABR Tranche (calculated by reference to the Fixed Exchange Rate). In order to allocate the Payee Deposit to one or more Tranches on the Closing Date for purposes of calculating the LC Fee, the Payer shall notify the Payee of such Allocation Request on or prior to the Closing Date by telephone. Such telephonic Allocation Request shall be irrevocable, and shall be confirmed promptly by hand delivery or fax to the Payee of a written Allocation Request and shall specify the following information: (i) whether such Allocation is to be a Eurodollar Tranche or an ABR Tranche (provided that, until the Payee shall have notified the Payer that the primary syndication of the Term B Commitments has been completed (which notice shall be given as promptly as practicable and, in any event, within 30 days after the Closing Date), the Payer shall not be permitted to request a Eurodollar Tranche with a Fee Period in excess of one month); (ii) the amount of the Payee Deposit that shall be Allocated to the applicable Tranche; and (iii) if such Allocation is to be a Eurodollar Tranche, the Fee Period with respect thereto.
(b) The Payer shall have the right at any time upon prior irrevocable notice to the Payee (a) not later than 12:00 (noon), New York City time, one Business Day prior to conversion, to convert any Eurodollar Tranche into an ABR Tranche, (b) not later than 12:00 (noon), New York City time, three Business Days prior to conversion or continuation, to convert any ABR Tranche into a Eurodollar Tranche or to continue any Eurodollar Tranche as a Eurodollar Tranche for an additional Fee Period, and (c) not later than 12:00 (noon), New York City time, three Business Days prior to conversion, to convert the Fee Period with respect to any Eurodollar Tranche to another permissible Fee Period, subject in each case to the following:
(i) unless the administrative agent under the Term B Credit Agreement shall have notified the Payee that the primary syndication of the Term B Commitments and/or the Term B Loans has been completed (which notice shall be given as promptly as practicable), no ABR Tranche may be converted into a Eurodollar Tranche with a Fee Period in excess of one month prior to the date that is 30 days after the Closing Date;
(ii) if less than all the amount of the Payee Deposit in a Tranche shall be converted or continued, then the amount of any Payee Deposit comprising each resulting Tranche shall be in an integral multiple of $1,000,000 and not less than $5,000,000;
(iii) if any Eurodollar Tranche is converted at a time other than the end of the Fee Period applicable thereto, the Payer shall pay, upon demand, any amounts due to the Payee to indemnify the Payee against any loss or expense that the Payee actually sustains or incurs as a consequence of (a) any event, other than a default by the Payee in the performance of its obligations hereunder, which results in (i) the Payee receiving or being deemed to receive any amount on account of the conversion of any Eurodollar Tranche occurring prior to the end of the Fee Period in effect therefor or (ii) the conversion of any Eurodollar Tranche to an ABR Tranche, or the conversion of the Fee Period with respect to any Eurodollar Tranche, in each case other than on the last day of the Fee Period in effect therefor (any of the events referred to in this clause (a) being called a “Breakage Event”) or (b) any default in the making of any payment required to be made hereunder. In the case of any Breakage Event, such loss shall include an amount equal to the excess of (i) its cost of obtaining funds for the portion of the Payee Deposit that constitutes the Eurodollar Tranche that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Fee Period in effect (or that would have been in effect) for such Eurodollar Tranche over (ii) the amount of interest realized by the Payee in redeploying the funds released or not utilized by reason of such Breakage Event for such period. A certificate of any Lender setting forth any amount or amounts which the Payee is entitled to receive pursuant to this Section 2.03 shall be delivered to the Payer and shall be conclusive absent manifest error;
(iv) no Tranche may be converted into, or continued as, a Eurodollar Tranche within one month of the LC Release Date; and
(v) upon notice to the Payer from the Payee and/or the Collateral Agent, after the occurrence and during the continuance of an Event of Default, no Tranche may be converted into, or continued as, a Eurodollar Tranche.
Each notice pursuant to this Section 2.03(b) shall be irrevocable and shall refer to this Agreement and specify (i) the identity and amount of the Tranche that the Payer requests be converted or continued, (ii) whether such Tranche is to be converted to or continued as a Eurodollar Tranche or an ABR Tranche, (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day) and (iv) if such Tranche is to be converted to or continued as a Eurodollar Tranche, the Fee Period with respect thereto. If no Fee Period is specified in any such notice with respect to any conversion to or continuation as a Eurodollar Tranche, the Payee shall be deemed to have selected a Fee Period of one month’s duration. If the Payee shall not have given notice in accordance with this Section 2.03(b) to continue any Tranche into a subsequent Fee Period (and shall not otherwise have given notice in accordance with this Section 2.03(b) to convert such Tranche), such Tranche shall, at the end of the Fee Period applicable thereto automatically be converted to an ABR Tranche.
(c) In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Fee Period for any calculation of the LC Fee on a Eurodollar Tranche, the
Collateral Agent shall have determined that reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Collateral Agent shall, as soon as practicable thereafter, give written or fax notice of such determination to the Payer and the Payee. In the event of any such determination, until the Collateral Agent shall have advised Payer and the Payee that the circumstances giving rise to such notice no longer exist, any request by the Payee for a LC Fee based on reference to the Adjusted LIBO Rate pursuant to this Section 2.03 shall be deemed to be a request for an election that the LC Fee be calculated based on reference to the Alternate Base Rate. Each determination by the Collateral Agent under this Section 2.03 shall be conclusive absent manifest error.
(d) Any reduction in the Payee Deposit will be deemed to first reduce all ABR Tranches before reducing a LIBOR Tranches.
SECTION 2.04 Other Fees.
(a) Fronting Fee. In respect of the issuances of the Letters of Credit, the Payer shall pay the Payee a fronting fee (the “Fronting Fee”) equal to 0.25% per annum on the aggregate daily average face amount of all Letters of Credit outstanding. The Fronting Fee shall be payable on the second to last Business Day of each fiscal quarter.
(b) Estimated Administrative Costs. On or prior to the Closing Date, the Payee shall provide the Payer with a written estimate of the costs for the maintenance of the Payee’s corporate existence and the expenses expected to be incurred by the Payee in connection with the LC Issuance Documents to which it is a party for the first fiscal quarter following the Closing Date (the “Estimated Administrative Costs”). The Payer shall pay to the Payee the Estimated Administrative Costs on the LC Issuance Date. On last day of each fiscal quarter thereafter and on the LC Release Date (or, if the LC Release Date is not a Business Day, the preceding Business Day), the Payer shall (i) reimburse the Payee for the administrative costs and expenses for the prior fiscal quarter that are incurred by the Payee and still outstanding, (ii) promptly reimburse the Payee an amount equal to any Luxembourg Taxes payable by the Payee and any additional amount or indemnity payable by the Payee with respect to any Taxes under the terms of the Term B Credit Agreement and (iii) promptly reimburse the Payee an amount equal to any other amounts payable by the Payee under Section 2.14 under the Term B Credit Agreement, in each case in the currency in which such costs, expenses and Taxes have been incurred.
(c) Default Rate. If the Payer (or Holdings, as applicable) fails to pay any amount due and payable by it in connection with or under this Agreement on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at the rate of the applicable Fee plus two percent (2.0%). Any interest accruing under this Section 2.04(c) shall be immediately payable by the Payer on demand by the Payee.
Article III
Maximum LC Amount; Release of Payee Deposit
SECTION 3.01 Voluntary Reduction of Maximum LC Amount
(a) Subject to the concurrent payment of the Applicable Premium, the Payer may at any time and from time to time prior to the LC Release Date reduce the Maximum LC Amount (including to zero).
(b) The Payer shall notify the Payee of any election to reduce the Maximum LC Amount under Section 3.01(a) at least three Business Days prior to the effective date of such reduction, specifying such election and the effective date thereof.
(c) Notwithstanding the foregoing, in no event shall the Maximum LC Amount be reduced to an amount that is less than the aggregate face amount of the outstanding Letters of Credit issued pursuant to the LC Issuance Documents, plus the amount, if any, demanded by the Payee pursuant to Section 2.02(a) and not reimbursed by the Payer.
SECTION 3.02 Mandatory Posting of Payer Deposit.
(a) Asset Sales. Not later than the third Business Day following the receipt of Net Proceeds from Asset Sales in excess of $10,000,000 in the aggregate by for Holdings and its Restricted Subsidiaries, the Payer shall apply 100% of the Net Proceeds received with respect thereto (i) first, in accordance with Section 2.13(a) of the Term A Credit Agreement and (ii) second, the balance, if any to increase the amount of the Payer Deposit; provided that no such increase of the Payer Deposit shall be required under this Section 3.02(a) if (A) the Payer shall deliver a certificate of a Financial Officer to the Payee at the time of receipt thereof setting forth the intent of Holdings or the applicable Restricted Subsidiary to use such Net Proceeds to (1) subject to compliance with the Additional Guarantor Requirement as of the date of such investment, invest in or acquire Additional Assets or (2) make Capital Expenditures in respect of Holdings’ or its Restricted Subsidiaries’ Oil and Gas Business, in each case, within 365 days after receipt of such proceeds and (ii) no Default or Event of Default shall have occurred and shall be continuing or would result therefrom at the time of such certificate; provided further that if such Net Proceeds are not applied as pursuant to clause (1) or (2) above within such 365-day period, such Net Proceeds shall, subject to clause (a)(i) above, be applied to increase the Payer Deposit pursuant to this Section 3.02. The requirement of clause (1) or (2) above shall be deemed to be satisfied if a bona fide binding contract committing to make the investment, acquisition or expenditure referred to therein is entered into by Holdings or any of its Restricted Subsidiaries with a Person other than an Affiliate of Holdings within the time period specified above in this paragraph and such Net Proceeds are subsequently applied in accordance with such contract within six months following the date such agreement is entered into.
(b) Incurrence of Indebtedness. In the event that Holdings or any Restricted Subsidiary of Holdings shall receive Net Proceeds from the issuance or incurrence of Indebtedness for money borrowed by any Payer Party or any Subsidiary of a Payer Party (other than any cash proceeds from the issuance of Indebtedness permitted pursuant to Section 8.03), the Payer shall substantially simultaneously with (and in any event not later than the third Business Day following) the receipt of such Net Proceeds by Holdings or such Restricted Subsidiary, apply an amount equal to 100% of such Net Proceeds (a) first, in accordance with Section 3.02(b) of the Term A Credit Agreement and (b) second, the balance, if any to increase the amount of the Payer Deposit. All increases in the Payer Deposit pursuant to this Section 3.02(b) shall be accompanied by the concurrent payment of the Applicable Premium.
(c) Excess Cash Flow. Not later than 100 days after the end of each fiscal year of Holdings beginning with the fiscal year ending December 31, 2014, the Payer shall calculate Excess Cash Flow for such fiscal year and apply an aggregate amount equal to the Applicable Percentage of such Excess Cash Flow (a) first, in accordance with Section 2.13(c) of the Term A Credit Agreement and (b) second, the balance, if any, to increase the amount of the Payer Deposit. Not later than the date on which the Payer is required to deliver financial statements with respect to the end of each fiscal year under Section 7.01(a), the Payer will deliver to the Payee a certificate signed by a Financial Officer of Holdings setting forth the amount, if any, of Excess Cash Flow for such fiscal year and the calculation thereof in reasonable detail.
(d) Amortization Payment. On the second to last Business Day of each fiscal quarter, beginning with the fiscal quarter in which the Term A Loans are paid in full, Payer shall increase the amount of the Payer Deposit by an amount equal to the amount of the Amortization Payment (as defined in the Term A Credit Agreement and after giving effect to all adjustments to the amount of such Amortization Payment through the repayment of the Term A Loans). The amount of each remaining quarterly increase in the Payer Deposit required pursuant to this clause shall be ratably reduced by the amount of the Payee Deposit released to the Payee pursuant to Section 3.04 as a result of (x) any voluntary reduction of the Maximum LC Amount pursuant to Section 3.01 or (y) any increase in Payer Deposit as a result of any mandatory posting of Payer Deposit pursuant to Sections 3.02(a), 3.02(b) and 3.02(c), in each case that results in a prepayment of Term B Loans.
(e) LC Release Date. On the LC Release Date, subject to the procurement of the release of all Letters of Credit on the LC Release Date, the Maximum LC Amount shall be reduced to zero.
SECTION 3.03 Increase of Maximum LC Amount.
(a) The Payer may, by written notice to the Payee from time to time, request an increase of the Maximum LC Amount. Such notice shall set forth (i) the amount of the increase of the Maximum LC Amount being requested (which shall be in minimum increments of $1,000,000 and a minimum amount of $5,000,000) and (ii) the date on which such increase is requested to become effective (which shall not be less than 10 Business Days nor more than 60 days after the date of such notice).
(b) The Payee shall be entitled to agree or decline to increase the Maximum LC Amount in its sole discretion. Holdings and the Payer shall execute and deliver to the Payee such documentation as the Payee shall reasonably specify to evidence the increase in the Maximum LC Amount.
(c) Notwithstanding the foregoing, no increase in the Maximum LC Amount shall become effective under this Section 3.03 unless (i) on the date of such effectiveness, the conditions set forth in paragraphs (b) and (c) of Section 5.02 shall be satisfied and the Payee shall have received a certificate to that effect dated such date and executed by a Financial Officer of the Payee, (ii) except as otherwise specified by the Payee, the Payee shall have received Board Resolutions and other closing certificates reasonably requested by the Payee and consistent with
those delivered on the Closing Date under Section 5, and (iii) all fees and expenses owed to the Payee under the LC Procurement Documents shall have been paid.
SECTION 3.04 Release of Payee Deposit. In the event at any time the Payee Deposit, taken together with the Payer Deposit, exceeds 102% of the Maximum LC Amount, including as a result of the reduction in the Maximum LC Amount or any posting of the Payer Deposit, the Payee will, upon the request of the Payer, cause the amount of such excess Payee Deposit to be promptly released by the LC Bank, and the Payee will use such released amounts to purchase Dollars which, subject to any upward or downward adjustment with respect to such release pursuant to the FX True Up, will be required to prepay the Term B Loans, until repaid in full.
SECTION 3.05 FX True Up. Within one Business Day following any reimbursement by the Payer of payments made by the Payee under a Letter of Credit from the LC Bank pursuant to Section 2.02(a) or any release of the Payee Deposit pursuant to Section 3.04, the Payee shall use the full amount of such reimbursed or released amount to purchase Dollars (the “Purchased Dollar Amount”) and not later than one Business Day immediately thereafter (a) the Payee shall pay to the Payer a cash amount in Dollars equal to the amount, if any, by which the Purchased Dollar Amount exceeds the amount of Dollars the Payee used to purchase the Sterling constituting the reimbursed or released amount at the Fixed Exchange Rate (“Original Dollar Amount”) and (b) the Payer shall pay to the Payee a cash amount in Dollars equal to the amount, if any, by which the Original Dollar Amount exceeds the Purchased Dollar Amount (the foregoing referred to as the “FX True Up”).
Article IV.
Payments
SECTION 4.01 Method and Place of Payment. All payments under this Agreement shall be made to the Payee not later than 12:00 Noon (London time) on the date when due and shall be made in the currency requested for such payments and in immediately available funds at the address for notices of the Payee as specified in Section 11.01(c). Except as otherwise expressly provided herein, whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension.
SECTION 4.02 Tax Gross-Up and Indemnities.
(a) Tax gross-up.
(i) Each Payer Party shall make all payments to be made by it or on its behalf without any Tax Deduction, unless a Tax Deduction is required by law.
(ii) The Payer shall promptly upon becoming aware that a Payer Party must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Payee accordingly. Similarly, the Payee shall notify the Payer Party on becoming so aware in respect of a payment payable to the Payee.
(iii) If a Tax Deduction is required by law to be made by a Payer Party, the amount of the payment due from such Payer Party shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
(iv) If a Payer Party is required to make a Tax Deduction (including any deduction or withholding under FATCA), such Payer Party shall make such Tax Deduction and any payment required in connection with such Tax Deduction within the time allowed and in the minimum amount required by law.
(v) Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Payer Party making such Tax Deduction shall deliver to the Payee for the Lender entitled to the payment a statement under section 975 of the U.K.’s Income Tax Act 2007 or other evidence reasonably satisfactory to such Lender that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
(vi) The Payee (to the extent it is legally entitled to), and each Payer Party which makes a payment to which the Payee is entitled, shall cooperate in completing any procedural formalities necessary for such Payer Party to obtain authorization to make that payment without a Tax Deduction (including, without limitation, submitting a claim under the applicable double tax treaty) and shall take such action as the Payer requests (including authorizing the Payer to take conduct of such dispute) to dispute any refusal of an application to obtain such authorization, provided that all costs of such dispute be borne by the Payer.
(vii) The Payee, if requested by the Payer, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Payer as will enable the Payer to determine whether or not the Payee is subject to United States backup withholding or information reporting requirements.
(b) Tax indemnity.
(i) The Payer shall (within 10 Business Days of demand by the Payee) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been suffered for or on account of Tax (including any withholding or deduction imposed under FATCA) by that Protected Party in respect of a LC Procurement Document.
(ii) Paragraph (i) above shall not apply to the extent the loss, liability or cost is compensated for by an increased payment under Section 4.02(a), Section 2.04(b) or Section 11.05(iii).
(iii) A Protected Party making, or intending to make a claim under paragraph (i) above shall promptly notify the Payee of the event which will give, or has given, rise to the claim, following which the Payee shall notify the Payer.
(iv) A Protected Party shall, on receiving a payment from a Payer Party under this Section 4.02(b), notify the Payee.
(c) Tax Credit. If a Payer Party makes a Tax Payment and the Payee determine that:
(i) a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment; and
(ii) the Payee has obtained, utilized and retained that Tax Credit,
the Payee shall pay an amount to the applicable Payer Party which the Payee reasonably determines will leave the Payee (after such payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by such Payer Party.
(d) Stamp Taxes. The Payer shall pay and, within 3 Business Days of demand, indemnify the Payee against any cost, loss or liability that the Payee incur in relation to all stamp duty, registration and other similar Taxes payable in respect of this Agreement except for any tax imposed as a result of a voluntary registration by the Payee of this Agreement.
(e) VAT.
(i) All amounts set out, or expressed in a LC Procurement Document to be payable by any Payer Party to the Payee which (in whole or in part) constitute the consideration for a supply or supplies for VAT purposes shall be deemed to be exclusive of any VAT which is chargeable on such supply or supplies, and accordingly, subject to paragraph (ii) below, if VAT is or becomes chargeable on any supply made by the Payee to any Payer Party under a LC Procurement Document and the Payee is required to account for the VAT, that Payer Party shall pay to the Payee (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of such VAT (and the Payee shall promptly provide an appropriate VAT invoice to such Payer Party).
(ii) If VAT is or becomes chargeable on any supply made by the Payee (the “Supplier”) to any Lender or the Agent (the “Recipient”) under a LC Procurement Document., and any Payer Party other than the Recipient (the “Subject Party”) is required by the terms of any LC Procurement Document to pay an amount equal to the consideration for such supply to the Supplier (rather than being required to reimburse the Recipient in respect of that consideration), such Payer Party shall also pay to the Supplier (if that Supplier is required to account for the VAT) or the Recipient (if the Recipient is required to account for the VAT) (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT. The Recipient will promptly pay to the Subject Party an amount equal to any credit or repayment obtained by the Recipient from the relevant tax authority which the Recipient reasonably determines in respect of such VAT.
(iii) Where a LC Procurement Document requires any Payer Party to reimburse or indemnify the Payee for any cost or expense, the Payer Party shall reimburse or indemnify (as the case may be) the Payee for the full amount of such cost or expense,
including such part thereof as represents VAT, save to the extent that the Payee reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
(iv) Any reference in this Section 4.02(e) to any Payer Party shall, at any time when such Payer Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term “representative member” to have the same meaning as in the Value Added Tax Act 1994).
For the purposes of this Section 4.02, any reference to a U.K. statutory provision includes a reference to that provision as modified or replaced from time to time after the Closing Date.
(f) FATCA Information. Each party shall, within ten Business Days of a reasonable request by another party supply to that other party such forms, documentation and other information relating to its status under FATCA (including its applicable “passthru payment percentage” or other information required under the United States Treasury Regulations or other official guidance including intergovernmental agreements) as that other party reasonably requests for the purposes of that other party's compliance with FATCA. Notwithstanding the foregoing, a Payee shall not be obligated to do anything which would or might in its reasonable opinion constitute a breach of: (i) any law or regulation, (ii) any fiduciary duty, or (iii) any duty of confidentiality.
Article V.
Conditions Precedent.
SECTION 5.01 Conditions Precedent to the Closing Date. The obligations of the Payee to enter into the Commitment are subject to the satisfaction of the following conditions on the Closing Date:
(a) Legal Opinions. The Payee shall have received, on behalf of itself, a favorable written opinion of (i) Vinson & Elkins L.L.P., special New York counsel to the Payer Parties, in substantially the form attached as Exhibit H-1 hereto, (ii) Vinson & Elkins R.L.L.P., special English counsel to the Credit Parties, in substantially the form attached as Exhibit H-2 hereto; (iii) Vinson & Elkins L.L.P., special New York counsel to the Payer Parties, in connection with the joinder agreement to the Intercreditor Agreement referenced in Section 5.01(o) and with respect to such matters, and in form, reasonably acceptable to the Collateral Agent; (iv) Woodburn and Wedge, special Nevada counsel to Holdings, in substantially the form attached as Exhibit H-3 hereto, in each case dated the Closing Date, and (v) Allen & Overy, a société en commandite simple, special Luxembourg counsel to the Payee, in substantially the form attached as Exhibit H-4 hereto, in each case, dated the Closing Date.
(b) Officer’s Certificates. The Payee shall have received (i) a copy of the certificate or articles of incorporation (or equivalent agreement or instrument governing the formation or operation of the applicable Payer Party), including all amendments thereto, of each Payer Party except EIH, to the extent applicable, certified, as of a recent date by the Secretary of State of the state of its formation (or equivalent Governmental Authority), and, to the extent applicable, a
certificate as to the good standing of each Payer Party other than EIH as of a recent date, from such Secretary of State (or equivalent Governmental Authority) and, with respect to EIH, an extract from the chamber of commerce (kamer van koophandel), a copy of the articles of association (statuten) and a copy of the deed of incorporation (akte van oprichting); (ii) a certificate of a Responsible Officer of each Payer Party dated the Closing Date certifying (A) that attached thereto is a true and complete copy of the governing documents of such Payer Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the members, board of directors or other appropriate governing body (if required) of such Payer Party authorizing the execution, delivery and performance of the LC Procurement Documents to which such Payer Party is a party and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation (or equivalent agreement or instrument governing the formation or operation of the applicable Person) of such Payer Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing and with respect to EIH, the date of the last amendment thereto shown on the extract from the chamber of commerce (kamer van koophandel), furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any LC Procurement Document or any other document delivered in connection herewith on behalf of such Payer Party; and (iii) a certificate of another officer as to the incumbency and specimen signature of the Responsible Officer executing the certificate pursuant to clause (ii) above.
(c) Certificate. The Payee shall have received a certificate, dated the Closing Date and signed by a Responsible Officer of the Payer, certifying compliance with the conditions precedent set forth in paragraphs (b) and (c) of Section 5.02.
(d) Fees. The Payee shall have received all Fees and other amounts due and payable on or prior to the Closing Date (or arrangements for the netting of such Fees and other amounts due and payable on the Closing Date shall have been made), including, to the extent invoiced at least two Business Days prior to the Closing Date, reimbursement or payment of all reasonable and documented legal fees and all out-of-pocket expenses required to be reimbursed or paid by Holdings or the Payer hereunder or under any other LC Procurement Document.
(e) LC Procurement Documents. The Payee and the Collateral Agent shall have received each of (i) this Agreement and (ii) the Security Documents, in each case, duly executed by each applicable Payer Party and each other party that is to be a party hereto or thereto and each such document shall be in full force and effect on the Closing Date. The Collateral Agent on behalf of the Payee shall have a security interest in the Collateral of the type and priority described in each Security Document.
(f) Reserve Report. The Payee shall have received the Initial Reserve Report.
(g) Payer Party Guaranty. Each Guarantor shall have duly authorized, executed and delivered to the Collateral Agent the Payer Party Guaranty in the form of Exhibit D (as amended, modified, restated and/or supplemented from time to time, the “Payer Party Guaranty”).
(h) U.S. Security Agreement. Each Payer Party party thereto shall have duly authorized, executed and delivered to the Collateral Agent the U.S. Security Agreement in the form of Exhibit E (as amended, modified, restated and/or supplemented from time to time, the “U.S. Security Agreement”) and, in connection therewith, the Payer Parties shall have delivered to the Collateral Agent:
(i) proper financing statements (Form UCC-1 or the equivalent) fully executed or authorized for filing under the UCC or other appropriate filing offices of each jurisdiction as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the U.S. Security Agreement;
(ii) copies of requests for information or copies (Form UCC-11), or equivalent reports as of a recent date, listing all effective financing statements that name any Payer Party as debtor and that are filed where each Payer Party is organized and, to the extent reasonably requested by the Collateral Agent, in such other jurisdictions in which Collateral is located on the Closing Date, together with copies of such other financing statements that name Holdings or any of its Subsidiaries as debtor (none of which shall cover any of the Collateral except (x) to the extent evidencing Permitted Liens or (y) those in respect of which the Collateral Agent shall have received termination statements (Form UCC-3) or such other termination statements as shall be required by local law fully executed or authorized for filing);
(iii) evidence of the completion (or arrangements therefor satisfactory to the Collateral Agent) of all other recordings and filings of, or with respect to, and all action necessary in connection with, the U.S. Security Agreement as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests intended to be created by the U.S. Security Agreement; and
(iv) evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the U.S. Security Agreement have been taken (or arrangements therefor satisfactory to the Collateral Agent).
(i) English Debenture. Each Payer Party party thereto shall have duly authorized, executed and delivered to the Collateral Agent an English Debenture in the form of Exhibit F (as amended, modified, restated and/or supplemented from time to time the “English Debenture”) and, in connection therewith, the Payer Parties shall have delivered to the Collateral Agent copies of lien searches with respect to each such Payer Party.
(j) English Charge Over Shares. Each Payer Party party thereto shall have duly authorized, executed and delivered to the Collateral Agent an English Charge Over Shares in the form of Exhibit G (as amended, modified, restated and/or supplemented from time to time, the “English Charge Over Shares”).
(k) Subordination Agreement. The Collateral Agent shall have received a subordination agreement, duly executed by each of EOC, EEUK, EIH and Endeavour Energy
Luxembourg S.à r.l., (as amended, modified, restated and/or supplemented from time to time, the “Subordination Agreement”), with respect to (i) that certain Inter-Company Loan Agreement, dated as of May 31, 2012, and between EOC and EEUK and (ii) that certain revolving loan facility agreement dated January 23, 2008 between EIH and Endeavour Energy Luxembourg S.à.r.l., which agreement shall be in substantially the form of Exhibit J and otherwise acceptable to the Collateral Agent.
(l) Solvency Certificate. The Payee shall have received a solvency certificate from a Financial Officer of Holdings in the form of Exhibit A.
(m) Insurance Certificates. The Collateral Agent shall have received certificates of insurance complying with the requirements of Section 7.03 for the business and properties of Holdings and its Restricted Subsidiaries, in form and substance reasonably satisfactory to the Payee and naming the Collateral Agent as an additional insured and/or as loss payee, as applicable.
(n) Joinder to Intercreditor Agreement. The Collateral Agent shall have become a party to the Intercreditor Agreement, pursuant to a joinder agreement in form and substance acceptable to the Collateral Agent, and shall have acceded to all of the rights and privileges of MC Admin Co LLC thereunder.
(o) Term A Credit Agreement. The Payee and the Collateral Agent shall have received evidence satisfactory to it that the Term A Credit Agreement and the other Credit Documents (as defined thereunder) shall have been duly authorized, executed and delivered by each of the parties thereto and in full force and effect and that all conditions to the effectiveness of the parties obligations thereunder (other than the effectiveness of this Agreement) shall have been satisfied.
(p) Term B Credit Agreement. The Payee and the Collateral Agent shall have received evidence satisfactory to it that the Term B Credit Agreement and the other Credit Documents (as defined thereunder), including, without limitation, the Collateral Assignment shall have been duly authorized, executed and delivered by each of the parties thereto and in full force and effect and that all conditions to the effectiveness of the parties obligations thereunder (other than the effectiveness of this Agreement) shall have been satisfied.
(q) LC Issuance Agreement. Each of the Payee and the Collateral Agent shall have received evidence satisfactory to it that the LC Issuance Agreement shall have been duly authorized, executed and delivered by each of the parties thereto and shall be in full force and effect, and the Payee shall have received a notice to instruct the LC Bank to issue Letters of Credit pursuant to Section 2.01(b).
(r) Service of Process. On or prior to the Closing Date, the Payee shall have received evidence satisfactory to them that (i) each Payer Party has appointed CT Corporation as agent for service of process as contemplated in Section 11.18 and (ii) CT Corporation has accepted its appointment.
(s) Payee Deposit. The Payer shall have paid the Payee an amount in Sterling equal to the Dollar equivalent of one and a half percent (1.5%) of 102% of the Maximum LC Amount in
effect on the Closing Date (calculated by reference to the Fixed Exchange Rate), which amount shall be deposited by the Payee with the LC Bank on the Closing Date and shall constitute a portion of the Payee Deposit.
(t) PATRIOT Act. At least five Business Days prior to the Closing Date, the Payee shall have received, to the extent previously requested, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.
(u) Termination of Existing LC Procurement Agreements. Each Existing LC Procurement Agreement shall have been terminated, all letters of credit issued pursuant thereto shall have been terminated and the Payee and the Collateral shall have received satisfactory payoff letters, lien release documentation or similar agreements which evidence the foregoing.
(v) Termination of Existing Credit Agreement. All Indebtedness arising under the Existing Credit Agreement shall have been repaid in full, and the Payee and the Collateral Agent shall have received satisfactory payoff letters, lien release documentation or similar agreements which evidence the foregoing.
SECTION 5.02 Additional Conditions. The obligation of the Payee to instruct the LC Bank to issue any Letter of Credit under the LC Issuance Documents pursuant to Section 2.01(a) is subject to the satisfaction of the following conditions:
(a) The Payee shall have received a request to enter into a LC Issuance Document as required by Section 2.01(b).
(b) The representations and warranties set forth in Article VI shall be true and correct in all material respects (other than representations and warranties qualified as to materiality, which will be true and correct in all respects) on and as of the date of the applicable LC Issuance Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date in which case they will be true and correct as of such earlier date.
(c) At the time of and immediately after the entry into the LC Issuance Documents, no Default or Event of Default shall have occurred and be continuing.
Each request to enter into a LC Issuance Document shall be deemed to constitute a representation and warranty by the Payer and Holdings on the date thereof as to the matters specified in paragraphs (b) and (c) of this Section 5.02.
Article VI.
Representations and Warranties.
The Payer and the Collateral Agent represents and warrants to the Payee that:
SECTION 6.01 Company Status. Each of Holdings and each of its Subsidiaries (a) is a duly organized and validly existing Business in good standing (or, in the case of any Foreign Subsidiary of Holdings, the applicable equivalent of “good standing” to the extent that such
concept exists in such Foreign Subsidiary’s jurisdiction of organization) under the laws of the jurisdiction of its organization, (b) has the Business power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (c) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the ownership, leasing or operation of its property or the conduct of its business requires such qualifications except for failures to be so qualified or authorized which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No certifications by any Governmental Authority are required for operation of the business of Holdings and its Subsidiaries that are not in place, except for such certifications or agreements, the absence of which could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
SECTION 6.02 Power and Authority. Each Payer Party has the Business power and authority to execute, deliver and perform the terms and provisions of each of the LC Procurement Documents to which it is a party and has taken all necessary Business action to authorize the execution, delivery and performance by it of each of such LC Procurement Documents. Each Payer Party has duly executed and delivered each of the LC Procurement Documents to which it is a party, and each of such LC Procurement Documents constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
SECTION 6.03 No Violation. Neither the execution, delivery or performance by any Payer Party of the LC Procurement Documents to which it is a party, nor compliance by it with the terms and provisions thereof, (a) will contravene any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or Governmental Authority, (b) will conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents) upon any of the property or assets of any Payer Party or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, in each case to which any Payer Party or any of its Subsidiaries is a party or by which it or any its property or assets is bound or to which it may be subject or (c) will violate any provision of the certificate or articles of incorporation, certificate of formation, limited liability company agreement or by-laws (or equivalent constitutional, organizational and/or formation documents), as applicable, of any Payer Party or any of its Subsidiaries.
SECTION 6.04 Approvals. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except (a) for those that have otherwise been obtained or made on or prior to the date hereof and remain in full force and effect on the date hereof and (b) filings which are necessary to perfect the security interests created or intended to be created under the Security Documents, which filings will be made within 10 days following the Closing Date), or exemption by, any Governmental Authority or other Person is required to be obtained or made by, or on behalf of, any Payer Party to authorize, or is required
to be obtained or made by, or on behalf of, any Payer Party in connection with, (i) the execution, delivery and performance of any LC Procurement Document or (ii) the legality, validity, binding effect or enforceability of any such LC Procurement Document.
SECTION 6.05 Financial Statements; Financial Condition; Undisclosed Liabilities.
(a) The audited consolidated balance sheets of Holdings and its subsidiaries at December 31, 2010, December 31, 2011 and December 31, 2012 and the related consolidated statements of operations, stockholders’ equity and cash flows for the fiscal years of Holdings ended on such dates, in each case furnished to the Lenders prior to the date hereof, present fairly in all material respects the consolidated financial position of Holdings and subsidiaries at the dates of said financial statements and the results of their operations and their cash flows for the respective periods covered thereby. All such financial statements have been prepared in accordance with GAAP consistently applied except to the extent provided in the notes to said financial statements.
(b) On and as of the Closing Date, and after giving effect to those of the Transactions to be consummated on the Closing Date and to all Indebtedness being incurred or assumed and Obligations incurred by the Payer Parties in connection therewith on such date, (i) the sum of the fair value of the assets, at a fair valuation, of the Payer Parties and their Subsidiaries (taken as a whole) will exceed their debts (taken as a whole), (ii) the sum of the present fair salable value of the assets of the Payer Parties and their Subsidiaries (taken as a whole) will exceed their debts (taken as a whole), (iii) the Payer Parties and their Subsidiaries (taken as a whole) have not incurred and do not intend to incur, and do not believe that they will incur, debts beyond their ability to pay such debts as such debts mature and (iv) the Payer Parties and their Subsidiaries (taken as a whole) will have sufficient capital with which to conduct their businesses. For purposes of this Section 6.05(b), “debt” means any liability on a claim, and “claim” means (A) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (B) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
(c) Except as disclosed in the financial statements delivered pursuant to Section 6.05(a), and except for the obligations under this Agreement, there are as of the date hereof and the Closing Date no liabilities or obligations with respect to Holdings or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. As of the date hereof and the Closing Date, neither Holdings nor the Payer knows of any basis for the assertion against Holdings or any of its Subsidiaries of any liability or obligation of any nature whatsoever that is not disclosed in such financial statements delivered pursuant to Section 6.05(a) or referred to in the immediately preceding sentence which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(d) After giving effect to the Transactions, since December 31, 2012, nothing has occurred that has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
SECTION 6.06 Litigation. There are no actions, suits or proceedings pending or, to the knowledge of Holdings or the Payer, threatened (a) with respect to the Transactions or any LC Procurement Document or (b) that has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
SECTION 6.07 True and Complete Disclosure. All written factual information (taken as a whole) furnished by or on behalf of Holdings or the Payer to the Payee (including, without limitation, all information contained in the LC Procurement Documents) for purposes of or in connection with this Agreement, the other LC Procurement Documents or any transaction contemplated herein or therein is, and all other such written factual information (taken as a whole) hereafter furnished by or on behalf of Holdings or the Payer in writing to the Payee will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided. Any projections or forward-looking statements (the “Projections”) furnished by or on behalf of Holdings or the Payer to the Payee will be based on assumptions and estimates developed by management of Holdings in good faith that management believes to be reasonable as of the date thereof. It is understood that all such information, including, without limitation, any Projections furnished by or on behalf of Holdings or the Payer to the Payee is supplemented in its entirety by Holdings’ filings with the SEC. Whether or not such Projections are in fact achieved will depend upon future events some of which are not within the control of Holdings and the Payer. Accordingly, actual results may vary from the Projections and such variations may be material. Such Projections should not be regarded as a representation by Holdings or the Payer or its or their management that the projected results will be achieved.
SECTION 6.08 Tax Returns and Payments; Tax Residency. Each of Holdings and each of its Subsidiaries has timely filed or caused to be timely filed with the appropriate taxing authority all federal and all material foreign, state and local returns, statements, forms and reports for Taxes (the “Returns”) required to be filed by, or with respect to the income, properties or operations of, Holdings and/or any of its Subsidiaries, and has paid all Taxes and assessments payable by it which have become due, other than (a) Taxes that are being contested in good faith and adequately disclosed and for which adequate reserves have been established in accordance with GAAP or (b) where the failure to pay any such Taxes would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Each Payer Party is resident for Tax purposes only in its jurisdiction of organization. LC Finco US is a “disregarded entity” for U.S. federal income tax purposes and does not carry out any business activities in the United States.
SECTION 6.09 Compliance with ERISA. (a) Schedule 6.09 hereto sets forth each Plan as of the date of this Agreement. Each Plan (and each related trust, insurance contract or fund) is in compliance with its terms and with all applicable laws, including without limitation ERISA and the Code, except to the extent that any non-compliance could not reasonably be
expected to result in a material liability to Holdings or any of its Subsidiaries; each Plan (and each related trust, if any) which is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service (or has submitted, or is within the remedial amendment period for submitting, an application for a determination letter with the Internal Revenue Service, and is awaiting receipt of a response) to the effect that it meets the requirements of Sections 401(a) and 501(a) of the Code or is comprised of a master or prototype plan that has received a favorable opinion letter from the Internal Revenue Service; or a volume submitter plan that has received a favorable advisory letter from the Internal Revenue Service as of the date of this Agreement; no Employee Benefit Plan is a Multiemployer Plan; no Plan has an Unfunded Current Liability that could reasonably be expected to result in a material liability; no ERISA Event has occurred, or is reasonably expected to occur, with respect to any Plan that could reasonably be expected to result in a material liability to Holdings or any of its Subsidiaries; all contributions required to be made with respect to a Plan have been timely made or have been reflected on the most recent consolidated balance sheet filed prior to the date hereof or accrued in the accounting records of Holdings and its Subsidiaries; no action, suit, proceeding, hearing, or audit or investigation by a Governmental Authority with respect to the administration, operation or the investment of assets of any Plan (other than routine claims and appeals for benefits) is pending, expected or threatened that is reasonably expected to result in a material liability to Holdings or any of its Subsidiaries; no Multiemployer Plan that is subject to Section 412 of the Code or Section 302 of ERISA has applied for or received an extension of any amortization period, within the meaning of Section 431(d) of the Code or Section 304(d) of ERISA; Holdings, any of its Subsidiaries and any ERISA Affiliate have not withdrawn as a substantial employer so as to become subject to the provisions of Section 4063 of ERISA or ceased making contributions to any Plan subject to Section 4064(a) of ERISA that has terminated and to which it made contributions at any time within the five Plan years preceding the date of termination; none of Holdings, any of its Subsidiaries or any ERISA Affiliate have incurred or reasonably expect to incur any liability to the PBGC except for any liability for premiums due in the ordinary course or other liability which could not reasonably be expected to result in material liability, and no lien imposed under the Code or ERISA on the assets of Holdings or any of its Subsidiaries or any ERISA Affiliate exists or is expected to arise on account of any Plan; none of Holdings, any of its Subsidiaries or any ERISA Affiliate has incurred, or is expected to incur, any liability under Section 4069 or 4212(c) of ERISA; each Employee Benefit Plan that is a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) has at all times been operated in compliance with the provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code, except to the extent that any non-compliance with any such provisions could not reasonably be expected to result in a material liability to Holdings or any of its Subsidiaries; each Employee Benefit Plain that is group health plan (as defined in 45 Code of Federal Regulations Section 160.103) has at all times been operated in compliance with the provisions of the Health Insurance Portability and Accountability Act of 1996 and the regulations promulgated thereunder, except to the extent that any non-compliance with such provisions and regulations could not reasonably be expected to result in a material liability to Holdings or any of its Subsidiaries; and Holdings and its Subsidiaries may amend any Plan sponsored by any of them (other than a defined benefit plan) to cease contributions thereunder and may terminate any Plan sponsored by any of them without, in each case, incurring any material liability (other than ordinary administrative termination costs that are immaterial in nature).
(a) Except as could not reasonably be expected to result in a material liability to Holdings or any of its Subsidiaries, each Non-U.S. Pension Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. All contributions required to be made with respect to a Non-U.S. Pension Plan have been timely made. Neither Holdings nor any of its Subsidiaries has incurred any obligation in connection with the termination of, or withdrawal from, any Non-U.S. Pension Plan (other than a defined contribution plan). The present value of the accrued benefit liabilities (whether or not vested) under each Non-U.S. Pension Plan (other than a Non-U.S. Pension Plan that (i) is not required to be funded under applicable law or (ii) is a defined contribution plan), determined as of the end of Holdings’ most recently ended fiscal year on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the assets of such Non-U.S. Pension Plan allocable to such benefit liabilities by an amount that could reasonably be expected to have a Material Adverse Effect.
(b) Without limiting the effect of preceding clauses (a) and (b), neither Holdings nor any of its Subsidiaries is or has at any time been, within the United Kingdom, an employer (for the purposes of sections 38 to 51 of the United Kingdom’s Pensions Act 2004) of an occupational pension scheme which is not a money purchase scheme (both terms as defined in the United Kingdom’s Pension Schemes Act 1993) or has at any time been “connected” with or an “associate” of (as those terms are used in sections 38 and 43 of the United Kingdom’s Pensions Act 2004) such an employer.
SECTION 6.10 Security Documents. When executed and delivered pursuant to Article V, the provisions of each Security Document, will be effective to create in favor of the Collateral Agent for the benefit of the Payee a legal, valid and enforceable security interest of the type that it purports to create in all right, title and interest of the Payer Parties in the Collateral described therein, and the Collateral Agent, for the benefit of the Payee, upon such execution and delivery, will have (or upon filing of UCC financing statements and other required filings registrations or notices or taking of possession or control (which shall occur within 10 days following the Closing Date) will have) a fully perfected security interest in all right, title and interest in all of the Collateral described therein, subject to no other Liens other than Permitted Liens, and such security interest shall be a first priority security interest, subject to Permitted Liens; provided that (i) the Payer shall not be deemed to represent pursuant to the foregoing that the U.S. Security Agreement creates a legal, valid and enforceable security interest in any Collateral (as defined in the U.S. Security Agreement) granted by any Grantor (as defined in the U.S. Security Agreement) that is not organized under the laws of the United States or any state thereof (other than Equity Interests held by any such Grantor in any Person that is organized under the laws of the United States or any state thereof), and (ii) no steps have been taken in order to perfect any such security interest in the Collateral referred to in clause (i) (other than Equity Interests held by any such Grantor in any Person that is organized under the laws of the United States or any state thereof), in each case granted pursuant to the U.S. Security Agreement. The recordation of (i) the grant of security interest in Patents (as defined in the U.S. Security Agreement) and (ii) the grant of security interest in Trademarks (as defined in the U.S. Security Agreement) in the respective form attached to the U.S. Security Agreement, in each case in the United States Patent and Trademark Office, together with filings on Form UCC-1 made pursuant
to the U.S. Security Agreement, will create, to the extent as may be perfected by such filings and recordation, a perfected security interest in the United States trademarks and patents covered by the U.S. Security Agreement, and the recordation of the grant of security interest in Copyrights (as defined in the U.S. Security Agreement) in the form attached to the U.S. Security Agreement with the United States Copyright Office, together with filings on Form UCC-1 made pursuant to the U.S. Security Agreement, will create, to the extent as may be perfected by such filings and recordation, a perfected security interest in the United States copyrights covered by the U.S. Security Agreement.
SECTION 6.11 Properties
(a) All Real Property (other than Oil and Gas Properties) leased by Holdings or any of its Subsidiaries as of the date hereof and the Closing Date, and the nature of the interest therein, is set forth in Schedule 6.11(a) hereto. Each of Holdings and each of its Subsidiaries has a valid and indefeasible leasehold interest in the material properties set forth in Schedule 6.11(a) free and clear of all Liens other than Permitted Liens. As of the date hereof and the Closing Date, none of Holdings or any of its Subsidiaries owns any Real Property other than Oil and Gas Properties.
(b) All Oil and Gas Properties owned or leased by Holdings or any of its Subsidiaries as of the date hereof and the Closing Date (other than Oil and Gas Properties (i) which are not developed, (ii) which have no reserves or (iii) in which none of Holdings or any of its Subsidiaries have any material working interests) are reflected in the Reserve Report as of December 31, 2012 or are otherwise set forth in Schedule 6.11(b).
(c) Each of Holdings and each of its Subsidiaries, as applicable, has good and defensible (from the perspective of a reasonably prudent investor in the Oil and Gas Business) title to all of the Oil and Gas Properties included in the most recent Reserve Report delivered pursuant to Section 5.01(f) or 7.01(c), as the case may be, free from all Liens, claims and title imperfections, except for (i) such imperfections of title as do not in the aggregate detract from the value thereof to, or the use thereof in, the business of Holdings and its Subsidiaries in any material respect, (ii) Oil and Gas Properties disposed of since the date of the most recent Reserve Report as permitted by Section 8.04 or Section 8.04 of the Existing Credit Agreement and (iii) Liens expressly permitted by Section 8.06. Except as set forth on Schedule 6.11(c) or to the extent otherwise permitted under this Agreement, the quantum and nature of the interest of Holdings and each of its Subsidiaries in and to the Oil and Gas Properties as set forth in each Reserve Report includes or will include the entire interest of Holdings and each of its Subsidiaries in such Oil and Gas Properties as of the date of such Reserve Report and are or will be complete and accurate in all material respects as of the date of such Reserve Report; and there are no “back-in” or “reversionary” interests held by third parties which could reduce the interest (working, net revenue or otherwise) of Holdings and its Subsidiaries in such Oil and Gas Properties in any material respect, except as expressly set forth or given effect to in such Reserve Report or on Schedule 6.11(c). Except for obligations to contribute a proportionate share of the costs of defaulting or non-consenting co-owners or as otherwise expressly set forth in the most recent Reserve Report, neither Holdings nor any Subsidiary is obligated to bear any percentage share of the costs and expenses relating to the drilling, development and production of the Oil and Gas Properties in excess of its working interests.
(d) Holdings and each of its Subsidiaries has complied with all obligations under all licenses, leases, subleases and term mineral interests in their respective Oil and Gas Properties and all such licenses, leases, subleases and term mineral interests are valid, subsisting and in full force and effect, and neither Holdings nor any of its Subsidiaries has knowledge that a default exists under any of the terms or provisions, express or implied, of any of such licenses, leases, subleases or interests or under any agreement to which the same are subject, except to the extent any inaccuracy in the foregoing could not reasonably be expected to result in a Material Adverse Effect. All of the Oil and Gas Contracts and obligations of Holdings and each of its Subsidiaries that relate to the Oil and Gas Properties are in full force and effect and constitute legal, valid and binding obligations of Holdings and its Subsidiaries party thereto, except to the extent any inaccuracy in the foregoing could not reasonably be expected to result in a Material Adverse Effect. None of Holdings or any of its Subsidiaries or, to the knowledge of Holdings or its Subsidiaries, any other party to any licenses, leases, subleases or term mineral interests in the Oil and Gas Properties or any Oil and Gas Contract (i) is in breach of or default, or with the lapse of time or the giving of notice, or both, would be in breach or default, with respect to any obligations thereunder, whether express or implied, except such that could not reasonably be expected to result in a Material Adverse Effect or (ii) has given or threatened to give notice of any default under or inquiry into any possible default under, or action to alter, terminate, rescind or procure a judicial reformation of, any licenses or lease in the Oil and Gas Properties or any Oil and Gas Contract. Holdings and each of its Subsidiaries enjoys peaceful and undisturbed possession under all such licenses, leases, subleases and term mineral interests.
(e) Holdings and each of its Subsidiaries has complied with all obligations under all Authorizations, and to the best knowledge of Holdings and the Payer, no steps have been taken for the revocation, variation or refusal of any Authorization, except to the extent any non-compliance with such obligations or any such revocation, variation or refusal could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
SECTION 6.12 Reserved.
SECTION 6.13 Subsidiaries. On and as of the date hereof, Holdings has no Subsidiaries other than those Subsidiaries listed on Schedule 6.13 hereto. Schedule 6.13 sets forth, as of the date hereof and the Closing Date, the percentage ownership (direct and indirect) of Holdings in each class of Capital Stock of each of its Subsidiaries and also identifies the direct owner thereof. All outstanding Capital Stock of each Subsidiary of Holdings has been duly and validly issued, is fully paid and non-assessable and has been issued free of preemptive rights. Other than as set forth on Schedule 6.13, no Subsidiary of Holdings has outstanding any securities convertible into or exchangeable for its Capital Stock or outstanding any right to subscribe for or to purchase, or any options or warrants for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of or any calls, commitments or claims of any character relating to, its Capital Stock or any appreciation or similar rights. On the date hereof and the Closing Date, 100% of the Equity Interests of each Payer Party is owned directly or indirectly by Holdings.
SECTION 6.14 Compliance with Statutes, etc.
(a) Each of Holdings and each of its Subsidiaries is qualified under and is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, and has obtained all required Authorizations from, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including statutes, regulations, orders and restrictions applicable to the Oil and Gas Business and applicable statutes, regulations, orders and restrictions relating to environmental standards and controls, except such statutes, regulations, orders and restrictions that are expressly addressed in Section 6.16), except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Each of Holdings and each of its Subsidiaries is in compliance with all bonding requirements for the ownership and operation of its Oil and Gas Properties.
SECTION 6.15 Investment Company Act. Neither Holdings nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.
SECTION 6.16 Environmental Matters. Except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) each of Holdings and each of its Subsidiaries is in compliance with all applicable Environmental Laws and, with respect to its current operations, has obtained and is in compliance with all permits required of it under Environmental Law, and there are no proceedings pending or, to the knowledge of Holdings or the Payer, threatened to revoke or rescind any such permit; (b) there are no claims, proceedings, investigations or notices of violation pending or, to the knowledge of Holdings or the Payer, threatened against Holdings or any of its Subsidiaries under any Environmental Law; (c) no Lien, other than a Permitted Lien, has been recorded or, to the knowledge of Holdings or the Payer, threatened under any Environmental Law with respect to any Real Property currently owned by Holdings or any of its Subsidiaries; (d) neither Holdings nor any of its Subsidiaries has contracted to assume or accept responsibility for any liability of any non-affiliated Person under any Environmental Law; and (e) there are no facts, circumstances, conditions or occurrences with respect to the past or present business or operations of Holdings, any of its Subsidiaries or any of their respective predecessors, or any Real Property or facility at any time owned, leased or operated by Holdings, any of its Subsidiaries or any of their respective predecessors, that could be reasonably expected to give rise to any claim, proceeding, investigation, action or liability of or against Holdings or any of its Subsidiaries under any Environmental Law.
SECTION 6.17 Employment and Labor Relations. (a) Neither Holdings nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings or the Payer, threatened against any of them, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings or the Payer, threatened (in writing) against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings or the Payer, threatened (in writing) against Holdings or any of its Subsidiaries, (iii) no union representation question exists with respect to the employees of
Holdings or any of its Subsidiaries, (iv) no legal actions, lawsuits, arbitrations, administrative or other proceedings, charges, complaints, investigations, inspections, audits or notices of violations or possible violations are pending or, to the knowledge of Holdings or the Payer, threatened against Holdings or any of its Subsidiaries by or on behalf of, or otherwise involving, any current or former employee, any person alleging to be a current or former employee, any applicant for employment, or any class of the foregoing, or any Governmental Authority, that involve the labor or employment relations and practices of Holdings or any of its Subsidiaries, including but not limited to claims of employment discrimination and (v) no violation of the Fair Labor Standards Act or any other applicable federal, state or foreign wage and hour laws, except (with respect to any matter specified in clauses (i) – (v) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect.
(a) Neither Holdings nor any of its Subsidiaries is, within the United Kingdom, engaged in any unfair or unlawful employment practice that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect. There is within the United Kingdom (i) no unfair or discriminatory employment practice complaint or investigation pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings or the Payer, threatened against any of them, before the United Kingdom’s Equality and Human Rights Commission or Health and Safety Executive or any other bodies with similar functions in relation to any person engaged as a worker or afforded the status of a worker (under any laws applicable within the United Kingdom), and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against Holdings or the Payer or any of either of their Subsidiaries or, to the knowledge or Holdings or the Payer, threatened (in writing) against any of them, (ii) no strike or other employee relations dispute pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings or the Payer, threatened (in writing) against any of them, (iii) no disagreement pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings or the Payer, threatened (in writing) against any of them in respect of the relations of any of them with any trade union, works council, special negotiating body, staff association or any other body representing individuals afforded the status of workers (under any laws applicable within the United Kingdom), (iv) no legal actions, lawsuits, arbitrations, administrative or other proceedings, charges, complaints, investigations, inspections, audits or notices of violations or possible violations are pending or, to the knowledge of Holdings or the Payer, threatened against Holdings or any of its Subsidiaries by or on behalf of, or otherwise involving, any current or former employee, any person alleging to be a current or former employee, any applicant for employment or any other individual claiming the status of, or protection afforded to, a worker (under any laws applicable within the United Kingdom), or any Governmental Authority, that involve the employment relations and practices of Holdings or any of its Subsidiaries, including but not limited to claims of employment discrimination, victimization or harassment on any irrational, perverse or prohibited bases, accidents or injuries, breach of contract or unfair dismissal or any claims under the United Kingdom’s Working Time Regulations 1998, National Minimum Wage Act 1998, Data Protection Act 1998, Equal Pay Act 1970, Sex Discrimination Act 1975, Race Relations Act 1976, Disability Discrimination Act 1995, Employment Equality (Sexual Orientation) Regulations 2003, Employment Equality (Age) Regulations 2006 or Employment Equality (Religion and Belief) Regulations 2003 and (v) no complaint of non-compliance by Holdings or any of its Subsidiaries with any provisions of the Treaty of Rome, European Union directives or
other directly applicable European Union laws, statutes, regulations, codes of conduct, collective agreements, terms and conditions of employment, orders, declarations and awards relevant to any individual afforded the status of a worker, except (with respect to any matter specified in clauses (i) – (v) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect.
SECTION 6.18 Intellectual Property, etc. Each of Holdings and each of its Subsidiaries owns or has the right to use all the patents, trademarks, permits, domain names, service marks, trade names, copyrights, licenses, franchises, inventions, trade secrets, proprietary information and know-how of any type, whether or not written (including, but not limited to, rights in computer programs and databases) and formulas and has obtained assignments of all leases, licenses and other rights of whatever nature, necessary for the present conduct of its business, without any known conflict with the rights of others which, or the failure to own or have which, as the case may be, could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
SECTION 6.19 Indebtedness. Schedule 6.19 hereto sets forth a list of all Indebtedness (including Contingent Obligations) and preferred stock of Holdings and its Subsidiaries as of the date hereof and the Closing Date and which is to remain outstanding after giving effect to those of the Transactions to be consummated on the Closing Date (excluding the Obligations) in each case showing the aggregate principal amount or stated amount thereof and the name of the respective borrower or issuer and any Person that directly or indirectly guarantees such debt or preferred stock.
SECTION 6.20 Insurance. Schedule 6.20 hereto sets forth a listing of all insurance maintained by Holdings and its Subsidiaries as of the date hereof and the Closing Date, with the amounts insured (and any deductibles) set forth therein.
SECTION 6.21 Holding Company. Holdings is a holding company and does not (a) have any material liabilities (other than (i) liabilities arising under the Credit Documents (as defined in the Term A Credit Agreement), any Class C Convertible Preferred Stock and Series B Preferred Stock outstanding on the date hereof and any Existing Indebtedness to which it is a party, (ii) other liabilities which are permitted by this Agreement and are incurred in connection with the financing and operation of Holdings’ and its Subsidiaries’ businesses, (iii) taxes and other liabilities arising under applicable law and (iv) obligations arising under this Agreement or the Security Documents) or (b) own any material assets or engage in any operations or business (other than (i) its direct or indirect ownership of its Subsidiaries and (ii) Investments permitted under Section 8.05).
SECTION 6.22 Immaterial Subsidiaries. On the date hereof and the Closing Date, each of Endeavour Colorado Corporation, Endeavour Energy Luxembourg S.à r.l., Endeavour Energy Netherlands B.V., Endeavour Energy New Ventures Inc., END Management Company and Endeavour North Sea Limited is an Immaterial Subsidiary.
SECTION 6.23 Liens. Schedule 6.23 hereto sets forth a list of all Liens (other than Liens arising under the Security Documents and the Security Documents (as defined in the Term A Credit Agreement) or securing Indebtedness under the Existing Credit Agreement or
guarantees thereof) on the assets of Holdings and its Restricted Subsidiaries as of the date hereof and the Closing Date that secure Indebtedness for borrowed money or Capital Lease Obligations and which are to remain outstanding after giving effect to those of the Transactions to be consummated on the Closing Date, in each case showing the aggregate principal amount of Indebtedness or other obligations secured thereby and the name of the respective grantor.
Article VII.
Affirmative Covenants.
Each of Holdings and the Payer hereby covenants and agrees with the Payee that until the Maximum LC Amount has been reduced to zero and all Fees and all other Obligations (other than indemnities described in Section 11.05 which are not then due and payable and for which no claim has been made) shall have been paid in full, unless waived in accordance with Section 11.08:
SECTION 7.01 Information Covenants. The Payer will furnish to the Payee and the Collateral Agent:
(a) Annual Financial Statements. Within 90 days after the close of each fiscal year of Holdings, (i) the consolidated balance sheet of Holdings as at the end of such fiscal year and the related consolidated statements of operations, stockholders’ equity and cash flows for such fiscal year, setting forth comparative figures for the preceding fiscal year, and certified by Ernst & Young or another independent certified public accountants of recognized national standing reasonably acceptable to the Payee, accompanied by an opinion of such accounting firm (which opinion shall be without a “going concern” or like qualification or exception and without any qualification or exception as to scope of audit) and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year.
(b) Quarterly Financial Statements. Within 45 days after the close of each of the first three quarterly accounting periods in each fiscal year of Holdings, (i) the consolidated balance sheet of Holdings as at the end of such quarterly accounting period and the related consolidated statements of income and retained earnings and statement of cash flows for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly accounting period, in each case setting forth comparative figures for all such financial information for the corresponding quarterly accounting period in the prior fiscal year, and (ii) management’s discussion and analysis of the important operational and financial developments during such quarterly accounting period. All of the foregoing financial statements shall be certified by a Financial Officer of Holdings that they fairly present in all material respects in accordance with GAAP the consolidated financial condition of Holdings as of the dates indicated and the consolidated results of operations for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes.
(c) Reserve Report. Prior to or concurrently with any delivery of financial statements under clause (a) of this Section 7.01 and, solely as to each quarter ending on June 30, under clause (b) of this Section 7.01 (or more frequently at Holdings’ option) (1) a Reserve Report (which shall be (i) an annual Reserve Report (as described in the definition of such term) in the case of a Reserve Report delivered in connection with annual financial statements or (ii) a semi-annual Reserve Report (as so described) in the case of a Reserve Report delivered in connection
with quarterly financial statements for any fiscal quarter ending June 30) and (2) a certificate of a Responsible Officer showing any additions to or deletions from the Oil and Gas Properties made by Holdings and each of its Restricted Subsidiaries and in Proved Reserves and Probable Reserves attributable to such Oil and Gas Properties since the date of the most recently delivered previous Reserve Report.
(d) Management Letters. Promptly after Holdings’ or any of its Subsidiaries’ receipt thereof, a copy of any “management letter” received from its certified public accountants and management’s response thereto.
(e) Compliance Certificate. At the time of the delivery of the financial statements provided for in Sections 7.01(a) and (b), a compliance certificate from a Financial Officer of Holdings in the form of Exhibit B certifying on behalf of Holdings that, to such officer’s knowledge after due inquiry, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof, which certificate shall (i) set forth in reasonable detail the calculations required to establish whether Holdings and its Subsidiaries were in compliance with the provisions of Sections 8.10, 8.11 and 8.12 at the end of such fiscal quarter or year, as the case may be, (ii) for the compliance certificate delivered at the time of delivery of the financial statements provided for in Section 7.01(a) only, set forth the Payee’s calculation of Excess Cash Flow for the applicable fiscal year, and (iii) certify that there have been no changes to Schedule VI of the U.S. Security Agreement, in each case since the Closing Date or, if later, since the date of the most recent certificate delivered pursuant to this Section 7.01(e), or if there have been any such changes, a list in reasonable detail of such changes (but, in each case with respect to this clause (ii), only to the extent that such changes are required to be reported to the Collateral Agent pursuant to the terms of the U.S. Security Agreement) and whether Holdings and the other Payer Parties have otherwise taken all actions required to be taken by them pursuant to the U.S. Security Agreement in connection with any such changes.
(f) Notice of Default, Litigation and Material Adverse Effect. Promptly, and in any event within three Business Days after any Responsible Officer of Holdings or any of its Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or an Event of Default, (ii) any litigation or governmental investigation or proceeding pending against Holdings or any of its Subsidiaries (A) which, either individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect or (B) with respect to any LC Procurement Document or (iii) any other event, change or circumstance that has had, or could reasonably be expected to have, a Material Adverse Effect.
(g) Other Reports and Filings. Promptly after the filing or delivery thereof, copies of all financial information, proxy materials and reports, if any, which Holdings or any of its Subsidiaries shall publicly file with the SEC.
(h) Environmental Matters. Promptly after any officer of Holdings or any of its Subsidiaries obtains knowledge thereof, notice of one or more of the following environmental matters, but only to the extent that such environmental matters, either individually or when aggregated with all other such environmental matters, could reasonably be expected to have a Material Adverse Effect:
(i) any pending or threatened claim, proceeding, investigation or notice of violation issued under or pursuant to any Environmental Law against Holdings or any of its Subsidiaries or any Real Property, facility or Oil and Gas Property owned, leased or operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real Property, facility or Oil and Gas Property owned, leased or operated by Holdings or any of its Subsidiaries that could reasonably be expected to form the basis of a claim, proceeding, investigation, action or notice of violation against Holdings or any of its Subsidiaries or any such Real Property or facility under any Environmental Law;
(iii) issuance under any Environmental Law of any liens or restrictions on the ownership, lease, occupancy, use or transferability by Holdings or any of its Subsidiaries of any Real Property, facility or Oil and Gas Property owned, operated or leased by Holdings or any of its Subsidiaries; and
(iv) the taking of any removal or remedial action as required by any Environmental Law or any Governmental Authority in response to the actual or alleged presence, Release or threatened Release of any Hazardous Material on any Real Property, facility or Oil and Gas Property owned, leased, used or operated by Holdings or any of its Subsidiaries.
All such notices shall describe in reasonable detail the nature of the claim, proceeding, investigation, notice, condition, occurrence, incurrence or removal or remedial action and Holdings’ or such Subsidiary’s response thereto.
(i) Production and Hedging Reports. Concurrently with any delivery of financial statements under clause (a) or (b) of this Section 7.01, (i) production and operating reports (the same to include information as to volumes produced and sold and the amount received by the Payer) in respect of the Oil and Gas Properties of the Payer Parties, and (ii) a certificate of a Financial Officer of Holdings in form and substance reasonably satisfactory to the Payee setting forth as of a recent date, a true and complete list of all Hedging Agreements of Holdings and each Restricted Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), any new credit support agreements relating thereto (other than Credit Documents (as defined in the Term A Credit Agreement)), any margin required or supplied under any credit support document, and the counterparty to each such agreement; provided, that unless and until Holdings makes such reports and information provided under this Section 7.01(i) publicly available, such information and reports shall be considered MNPI and, absent the consent of such Lender, shall not be delivered to any Public Lender (as defined in the Term A Credit Agreement).
(j) Other Information. From time to time, such other information or documents (financial or otherwise) with respect to Holdings or any of its Subsidiaries as the Payee and the Collateral Agent may reasonably request.
Notwithstanding the foregoing, the obligations in clauses (a), (b) and (g) of this Section 7.01 may be satisfied with respect to financial information (or, in the case of such
clause (i), other information) of Holdings and the Subsidiaries by filing Holdings’ Form l0-K or 10-Q, as applicable (or, in the case of such clause (i), such other applicable filing), with the SEC or by making such information available on Holdings’ website, in each case to the extent Holdings has notified the Payee of such filing or that such information is available on such website.
Each of Holdings and the Payer hereby acknowledges that the Payee and the Collateral Agent may have personnel who do not wish to receive material non-public information with respect to the Payer, Holdings or their respective Subsidiaries, or the respective securities of any of the foregoing (“MNPI”), and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. Prior to the delivery of any information to the Collateral Agent or the Payee pursuant to this Agreement, a Responsible Officer of Holdings will certify on behalf of Holdings and the Payer as to whether such information contains any MNPI. In the case any such information contains MNPI, the Collateral Agent or the Payee may decline to receive such information in which case neither Holdings nor the Payer shall deliver such information to the Collateral Agent or the Payee, as applicable.
SECTION 7.02 Books, Records and Inspections; Annual Meetings.
(a) Holdings will, and will cause each of its Subsidiaries to, keep proper books of record and accounts in which full, true and correct entries in conformity with GAAP and all requirements of law shall be made of all dealings and transactions in relation to its business and activities. Holdings will, and will cause each of its Subsidiaries to, permit officers and designated representatives of the Payee (i) to visit and inspect, under guidance of officers of the Payer or such Subsidiary, any of the properties of the Payer or such Subsidiary and (ii) to examine the books of account of the Payer or such Subsidiary and discuss the affairs, finances and accounts of the Payer or such Subsidiary with, and be advised as to the same by, its and their officers and independent accountants, all upon reasonable prior notice and at such reasonable times and intervals and to such reasonable extent as the Payee may reasonably request.
(b) At the request of the Payee, Holdings will within 120 days after the close of each fiscal year of Holdings, hold a meeting (which may be by conference call or teleconference), at a time and place selected by Holdings and reasonably acceptable to the Payee, with the Payee, to review the financial results of the previous fiscal year and the financial condition of Holdings and its Subsidiaries and the budgets presented for the current fiscal year of Holdings and its Subsidiaries.
SECTION 7.03 Maintenance of Property; Insurance. (a) Holdings will, and will cause each of its Subsidiaries to, (i) keep all property necessary to the business of Holdings and its Subsidiaries in good working order and condition, ordinary wear and tear excepted and subject to the occurrence of casualty events, (ii) maintain with financially sound and reputable insurance companies insurance on all such property and against all such risks as is consistent and in accordance with industry practice for companies similarly situated owning similar properties and engaged in similar businesses as Holdings and its Subsidiaries and (iii) furnish to the Payee, upon its request therefor, full information as to the insurance carried. Such insurance shall include physical damage insurance on all real and personal property, including, without limitation, on Oil and Gas Properties (whether now owned or hereafter acquired) on an all risk
basis. The provisions of this Section 7.03 shall be deemed supplemental to, but not duplicative of, the provisions of any Security Documents that require the maintenance of insurance.
(a) Holdings will, and will cause each of its Subsidiaries to, at all times keep its property insured in favor of the Collateral Agent, and all policies or certificates (or certified copies thereof) with respect to such insurance (and any other insurance maintained by Holdings and/or such Subsidiaries) (i) shall be endorsed to the Collateral Agent’s satisfaction for the benefit of the Collateral Agent (including, without limitation, by naming the Collateral Agent as loss payee and/or additional insured), (ii) shall state that such insurance policies shall not be canceled without at least 30 days’ prior written notice thereof by the respective insurer to the Collateral Agent, (iii) shall provide that the respective insurers irrevocably waive any and all rights of subrogation with respect to the Collateral Agent and the Payee and (iv) shall be deposited with the Collateral Agent.
(b) If Holdings or any of its Subsidiaries shall fail to maintain insurance in accordance with this Section 7.03, or if Holdings or any of its Subsidiaries shall fail to so endorse and deposit all policies or certificates with respect thereto, the Payee shall have the right (but shall be under no obligation) to procure such insurance, and Holdings and the Payer jointly and severally agree to reimburse the Payee for all costs and expenses of procuring such insurance.
SECTION 7.04 Existence; Franchises; Oil and Gas Properties. (a) Holdings will, and will cause each of its Subsidiaries to, do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and its material rights, franchises, licenses, permits, copyrights, trademarks and patents and pay all royalties when due; provided, that nothing in this Section 7.04 shall prevent (i) sales of assets and other transactions by Holdings or any of its Subsidiaries in accordance with Section 8.04, (ii) the termination of the existence of an Immaterial Subsidiary, (iii) other than in connection with the foregoing clause (ii), the withdrawal by Holdings or any of its Subsidiaries of its qualification as a Business in any jurisdiction other than the United States or any State thereof or the United Kingdom if such withdrawal could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(a) Holdings will, and will cause each of its Subsidiaries to, (i) comply in all material respects with the terms and provisions of all oil and gas leases and licenses relating to the Oil and Gas Properties of Holdings and each of its Subsidiaries and all contracts and agreements relating thereto or to the production and sale of Hydrocarbons therefrom; provided that Holdings and its Subsidiaries shall have the right to abandon Oil and Gas Properties in the exercise of Holdings’ or such Subsidiaries’ reasonable judgment, in each case in compliance with the relevant Oil and Gas Contracts governing such Oil and Gas Properties, and (ii) with respect to any such Oil and Gas Properties or oil and gas gathering assets that are operated by operators other than Holdings or any of its Subsidiary, use all commercially reasonable efforts to enforce in a manner consistent with industry practice the operator’s contractual obligations to maintain, develop, and operate such Oil and Gas Properties and oil and gas gathering assets in accordance with the applicable operating agreements.
SECTION 7.05 Compliance with Statutes, etc. (a) Holdings will, and will cause each of its Subsidiaries to, comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls other than such statutes, regulations, orders and restrictions that are expressly addressed in Section 7.06), except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(a) Holdings shall, and shall cause each of its Subsidiaries to, maintain and comply with the terms and conditions of any material Authorization required under any law or regulation (including Environmental Law) (i) to enable it to perform its obligations and/or exercise its rights under, or the validity or enforceability of, each LC Procurement Document and Oil and Gas Contract and (ii) to enable it to conduct the Oil and Gas Business in which it has an interest except, in the case of preceding clause (ii) only, such failure to maintain or non-compliance as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 7.06 Compliance with Environmental Laws. (a) Holdings will comply, and will cause each of its Subsidiaries to comply, with all Environmental Laws and permits applicable to, or required by, the ownership, lease or operation of Real Property, facilities and Oil and Gas Property now or hereafter owned, leased or operated by Holdings or any of its Subsidiaries, except such noncompliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and will promptly pay or cause to be paid all costs and expenses for which Holdings or its Subsidiaries are legally obligated that are incurred in connection with such compliance, and will keep or cause to be kept all such Real Property, facilities and Oil and Gas Properties free and clear of any Liens imposed pursuant to such Environmental Laws. Holdings and its Subsidiaries will generate, use, treat, store, Release and dispose of, and will cause the generation, use, treatment, storage, Release and disposal of Hazardous Materials on any Real Property, facilities or Oil and Gas Properties now or hereafter owned, leased or operated by Holdings or any of its Subsidiaries, and transport or cause the transportation of Hazardous Materials to or from any such Real Property, facilities or Oil and Gas Properties in compliance with all applicable Environmental Laws, except for such Hazardous Materials generated, used, treated, stored, Released and disposed of at any such Real Properties, facilities or Oil and Gas Properties in connection with or arising out of the business or operations of Holdings or any of its Subsidiaries as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(a) Upon (i) the receipt by the Payee of any notice from Holdings or the Payer of the type described in Section 7.01(h), (ii) a reasonable determination that Holdings or any of its Subsidiaries are not in compliance with Section 7.06 or (iii) the exercise by the Payee of any of the remedies pursuant to Article IX, each of Holdings and the Payer will (in each case) collectively, or if either Holdings or the Payer so desire, individually, provide, upon the request of the Payee at the sole expense of Holdings and the Payer, as applicable, an environmental site assessment report concerning any Real Property or facilities owned, leased or operated by Holdings or any of its Subsidiaries, prepared by an environmental consulting firm reasonably acceptable to by the Payee, indicating, as the circumstances may dictate, the presence or absence of Hazardous Materials and the potential cost of any removal or remedial action in connection with such Hazardous Materials on such Real Property or facilities. If either Holdings or the
Payer fails to provide the same within 30 days after such request was made, the Payee may order the same, the cost of which shall be borne by the non-responsive Payer Party; and each of Holdings and the Payer shall grant and hereby grants to the Payee and their respective agents access to such Real Property or facilities and specifically grant the Payee an irrevocable non-exclusive license, subject to the rights of tenants, to undertake such an assessment at any reasonable time upon reasonable notice to Holdings and the Payer, all at the sole expense of each of Holdings and the Payer.
SECTION 7.07 ERISA. (a) As soon as reasonably practicable and, in any event, within ten (10) days after Holdings, any of its Subsidiaries or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, Holdings will deliver to the Payee a certificate of any Responsible Officer of Holdings setting forth the full details as to such occurrence and the action, if any, that Holdings, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given or filed by Holdings, such Subsidiary, the Plan administrator or such ERISA Affiliate to or with the PBGC or any other Governmental Authority, or a Plan participant with respect thereto, and any notices received by Holdings, such Subsidiary or ERISA Affiliate from the PBGC or any other Governmental Authority, or a Plan participant with respect thereto: an ERISA Event (except to the extent that Holdings has previously delivered to the Payee a certificate and notices (if any) concerning such event pursuant to the next clause of this Section 7.07); a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA becoming subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur with respect to such Plan within the following 30 days (except to the extent that a waiver to the advance reporting requirement of PBGC Regulation Section 4043.61 applies with respect to such event); a failure of Holdings, any of its Subsidiaries, or an ERISA Affiliate to timely make any material contribution required to be made with respect to a Plan or Non-U.S. Pension Plan; the existence of potential withdrawal liability under Section 4201 of ERISA if Holdings, any of its Subsidiaries and any ERISA Affiliate were to withdraw completely from any and all Multiemployer Plans if such withdrawal is reasonably expected to occur and such liability to Holdings or any of its Subsidiaries could reasonably be expected to result in a material liability to Holdings or any of its Subsidiaries; the adoption of, or the commencement of contributions to, any Plan subject to Section 412 of the Code by Holdings, any of its Subsidiaries or any ERISA Affiliate; the adoption of any amendment to a Plan subject to Section 412 of the Code that results in a material increase in the contribution obligations of Holdings, any of its Subsidiaries or any ERISA Affiliate; a Plan has an Unfunded Current Liability that could reasonably be expected to result in a material liability; with respect to group health plans (as defined in Section 607(1) of ERISA, or Section 4980B(g)(2) of the Code), a violation of the provisions of Part 6 of subtitle B of Title 1 of ERISA and Section 4980B of the Code that is reasonably expected to result in a material liability to Holdings or any of its Subsidiaries; with respect to group health plans (as defined in 45 Code of Federal Regulations Section 160.103), a violation of the Health Insurance Portability and Accountability Act of 1996 and the regulations promulgated thereunder that could reasonably be expected to result in a material liability to Holdings or any of its Subsidiaries; or the incurrence of any material liability by Holdings or any of its Subsidiaries pursuant to any portion of an employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA). Holdings will deliver to the Payee (i) a copy of each funding waiver request filed with the Internal Revenue Service or any other Governmental Authority with respect to any Plan pursuant to Section 412(d) of the Code or Section 302(c) of ERISA and all communications received by Holdings, any of its Subsidiaries or any ERISA Affiliate from the Internal Revenue Service or any other Governmental Authority regarding such funding waiver request, (ii) copies of any records, documents or other information that must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA and (iii) a complete copy of the annual report (on Internal Revenue Service Form 5500-series) of each Plan (including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information) required to be filed with the U.S. Department of Labor. In addition to any certificates or notices delivered to the Payee pursuant to the first sentence of this Section 7.07, copies of annual reports and any records, documents or other information required to be furnished to the PBGC or any other Governmental Authority, and any material notices received by Holdings or any of its Subsidiaries or any ERISA Affiliate, with respect to any Plan or Non-U.S. Pension Plan, shall be delivered to the Payee no later than ten (10) days after the date such annual reports have been filed or such records, documents and/or information have been furnished to the PBGC or other Governmental Authority or such notice has been received by Holdings, any of its Subsidiaries, or any ERISA Affiliate, as applicable.
(a) If, at any time after the date of this Agreement, Holdings or any of its Subsidiaries or any ERISA Affiliate maintains, or contributes to (or incurs an obligation to contribute to), a pension plan as defined in Section 3(2) of ERISA that is subject to Section 412 of the Code or Section 302 or Title IV of ERISA (including, without limitation, a Multiemployer Plan) which is not set forth in Schedule 6.09 hereto as may be updated from time to time, then Holdings shall deliver to the Agent an updated Schedule 6.09 as soon as reasonably practicable and, in any event, within ten (10) days after Holdings, such Subsidiary or such ERISA Affiliate first maintains, or contributes to (or incurs an obligation to contribute to), such pension plan. Such updated Schedule 6.09 shall supersede and replace the existing Schedule 6.09.
(b) Holdings and each of its applicable Subsidiaries shall ensure that all Non-U.S. Pension Plans administered by it or to which it contributes obtains or retains (as applicable) registered status under and as required by applicable law and is administered in a timely manner in all respects in compliance with all applicable laws, except where the failure to do any of the foregoing, either individually or in the aggregate, would not be reasonably likely to result in a Material Adverse Effect.
(c) Holdings and its Subsidiaries shall ensure that none of Holdings or any of its Subsidiaries is or has at any time been, within the United Kingdom, an employer (for the purposes of sections 38 through 51 of the United Kingdom’s Pensions Act 2004) of an occupational pension scheme which is not a money purchase scheme (both terms as defined in the United Kingdom’s Pension Schemes Act 1993) or “connected” with or an “associate” of (as those terms are used in sections 38 or 43 of the United Kingdom’s Pensions Act 2004) such an employer.
SECTION 7.08 End of Fiscal Years; Fiscal Quarters. Holdings will cause (a) its and each of its Restricted Subsidiaries’ fiscal years to end on December 31 of each calendar year and
(b) its and each of its Restricted Subsidiaries’ fiscal quarters to end on March 31, June 30, September 30 and December 31; provided that nothing in this Section 7.08 shall prohibit any Restricted Subsidiary of Holdings from maintaining a tax year that does not end on December 31.
SECTION 7.09 Performance of Obligations. Holdings will, and will cause each of its Subsidiaries to, perform all of its obligations under the terms of each mortgage, indenture, security agreement, loan agreement or credit agreement and each other agreement, contract or instrument by which it is bound, except such non-performances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 7.10 Payment of Taxes, etc. Holdings will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, would become a Lien or charge upon any properties of Holdings or any of its Subsidiaries not otherwise permitted under Section 8.06; provided that neither Holdings nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP. The Payer will not change its tax residency. LC Finco US LLC will continue to be a “disregarded entity” for U.S. federal income tax purposes and will not carry out any business activities in the United States.
SECTION 7.11 Additional Security; Further Assurances; etc.
(a) Holdings will, and will cause each other Payer Party to, grant to the Collateral Agent for the benefit of the Payee security interests in such Oil and Gas Assets and other assets of Holdings and such other Payer Party (including, without limitation properties of Holdings and such other Payer Party acquired subsequent to the Closing Date) as are not covered by the original Security Documents (including, without limitation, with respect to any such property, pursuant to grants pursuant to the laws of Scotland) and as may be reasonably requested from time to time by the Payee or the Collateral Agent (collectively, the “Additional Security Documents”); provided that no Payer Party shall be required to take any action to grant or perfect a security interest on any Excluded Asset for so long as, and to the extent that, such Oil and Gas Properties constitute Excluded Assets; provided, further, that within 60 days following the date of the first Reserve Report reflecting that any Payer Party owns Oil and Gas Properties in North America that are not Excluded Assets, the applicable Payer Party shall cause such Oil and Gas Properties to become Collateral subject to the Liens of the Security Documents. In addition, at such time as any deposit account of Holdings or any Payer Party ceases to be an Excluded Account, Holdings or the applicable Payer Party, shall, within 60 days thereafter, cause such deposit account to become Collateral subject to the Liens of the Security Documents. All such security interests shall be granted pursuant to documentation satisfactory in form and substance to the Collateral Agent and shall constitute valid and enforceable perfected security interests, hypothecations and mortgages superior to and prior to the rights of all third Persons and enforceable against third parties and subject to no other Liens except for Permitted Liens. The Additional Security Documents or instruments related thereto shall have been duly recorded or
filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Additional Security Documents and all taxes, fees and other charges payable in connection therewith shall have been paid in full.
(b) Holdings will, and will cause each of the other Payer Parties to, at the expense of Holdings and the Payer, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, real property surveys, reports, landlord lien waivers, collateral access agreements, bailee agreements, control agreements and other assurances or instruments and take such further steps relating to the Collateral covered by any of the Security Documents as the Collateral Agent may reasonably require. Furthermore, Holdings will, and will cause the other Payer Parties to, deliver to the Collateral Agent such opinions of counsel, title insurance and other related documents as may be reasonably requested by the Collateral Agent to assure itself that this Section 7.11 has been complied with.
(c) Holdings will cause (i) each Subsidiary (other than any Immaterial Subsidiary or Unrestricted Subsidiary) that is established, created or acquired after the Closing Date and (ii) each Non-Guarantor Subsidiary (other than an Unrestricted Subsidiary) that ceases to be an Immaterial Subsidiary, in each case, to become a Guarantor and a party (in such capacity, a “Grantor”) to the U.S. Security Agreement, the English Security Documents and/or such other Security Documents as may be required by the Collateral Agent such that the Collateral Agent, for the benefit of the Payee, has a first priority security interest in all assets (other than Excluded Assets) of such Subsidiary or Non-Guarantor Subsidiary (as applicable). In addition, if, after the date hereof, any Restricted Subsidiary of Holdings that is not already a Guarantor and a Grantor (including any Immaterial Subsidiary) guarantees any other Indebtedness of Holdings or any Guarantor in excess of the De Minimis Guaranteed Amount, then that Subsidiary shall become a Guarantor and a Grantor. Any such Subsidiary shall become a Guarantor and a Grantor pursuant to this clause (c) by executing joinders to the Payer Party Guaranty and the applicable Security Documents in form and substance satisfactory to the Collateral Agent whereby such Subsidiary shall guarantee the Obligations and grant a security interest to the Collateral Agent, for the benefit of the Payee, in the assets (other than Excluded Assets) of such Subsidiary and, in each case, delivering such documents to the Collateral Agent within 60 days after the date on which it was established, created or acquired or ceased to be an Immaterial Subsidiary, as applicable (or such later date as may be agreed by the Collateral Agent in its sole discretion), or within 15 days of the date on which it guaranteed such other Indebtedness (or such later date as may be agreed by the Collateral Agent in its sole discretion), as the case may be, together with any officer’s certificate and opinion which may be reasonably requested by the Collateral Agent. In connection with the execution of such Security Documents, such Subsidiary shall take or cause to be taken such other actions (including delivering properly completed Uniform Commercial Code financing statements) as may be necessary or advisable in the opinion of the Collateral Agent to vest in the Collateral Agent, for the benefit of the Payee, a first-priority perfected security interest in such assets and to have such assets added to the Collateral and thereupon all provisions of this Agreement and the Security Documents relating to the Collateral shall be deemed to relate to such assets to the same extent and with the same force and effect. The
requirements set forth above in this clause (c) are collectively referred to herein as the “Additional Guarantor Requirement”.
(d) Each of Holdings and the Payer agrees that each action required by clauses (a) through (c) of this Section 7.11 shall be completed as soon as possible, but in no event later than 60 days after such action is requested to be taken by the Payee or Collateral Agent or such later date as may be otherwise provided in such clauses.
SECTION 7.12 Maintenance of Company Separateness. Holdings will, and will cause each of its Subsidiaries to, satisfy customary Business formalities, including the holding of regular Board of Directors’ and members’ meetings or action by managers or members without a meeting and the maintenance of Business records. Neither Holdings nor any other Payer Party shall make any payment to a creditor of any Non-Guarantor Subsidiary in respect of any liability of any Non-Guarantor Subsidiary (other than (a) pursuant to Holdings’ guarantee of Endeavour Energy Luxembourg S.à. r.l.’s obligations under the 11.5% Convertible Bonds and (b) any guarantee by Holdings or such other Payer Party of intercompany Indebtedness of any such Non-Guarantor Subsidiary owing to Holdings or any of its Subsidiaries), and no bank account of any Non-Guarantor Subsidiary shall be commingled with any bank account of Holdings or any other Payer Party. Any financial statements distributed to any creditors of any Non-Guarantor Subsidiary shall clearly establish or indicate the corporate separateness of such Non-Guarantor Subsidiary from Holdings and its other Subsidiaries. Finally, neither Holdings nor any of its Subsidiaries shall take any action, or conduct its affairs in a manner, which is likely to result in the Business existence of Holdings, any other Payer Party or any Non-Guarantor Subsidiaries being ignored, or in the assets and liabilities of Holdings or any other Payer Party being substantively consolidated with those of any other such Person or any Non-Guarantor Subsidiary in a bankruptcy, reorganization or other insolvency proceeding.
SECTION 7.13 Oil and Gas Properties. Each Payer Party shall (a) exercise such votes and other rights as it may have under each Oil and Gas Contract to which it is a party with a view to ensuring (so far as able) that each Oil and Gas Property in which Holding or any of its Subsidiaries has an interest is at all times exploited and operated in a reasonable and prudent manner and in accordance with good industry practice, all applicable laws and regulations and the provisions of each such Oil and Gas Contract, (b) not concur in, and shall vote against, any proposal or decision to abandon all or any material part of any of Oil and Gas Properties in which Holdings or any of its Subsidiaries has an interest unless the Payee have granted their prior written consent, (c) not exercise its rights on any operating or similar committee in a manner that would be materially prejudicial to the interests of any Payer Party or the Payee and (d) maintain full and proper technical and financial records in relation to each Oil and Gas Property in which Holdings or any of its Subsidiaries has an interest and ensure (so far as it is able) that the Payee (and/or any Person nominated by it) are afforded reasonable access to each Oil and Gas Property in which it has an interest and all such records during normal business hours on reasonable notice.
SECTION 7.14 Post-Closing Obligations. Holdings shall (or shall procure that the relevant Payer Party shall), except as otherwise stated below, as soon as reasonably practicable but not later than 10 Business Days (or such later date as may be permitted by the Collateral Agent in its sole discretion) after the Closing Date, deliver to the Collateral Agent:
(a) evidence of making of all recordings and filings and all action necessary or desirable in connection with the registration of the security interests intended to be created by the English Debenture in accordance with the Companies Act 2006 in form and substance satisfactory to the Collateral Agent not later than 21 days after the date of the English Debenture;
(b) evidence that the Secretary of State has been notified of the creation of the security interests intended to be created by the English Debenture in respect of each Project Licence (as such term is defined in the English Debenture) in form and substance satisfactory to the Collateral Agent not later than 10 days after the date of the English Debenture;
(c) evidence of the making of all recordings and filings (or arrangements therefor satisfactory to the Collateral Agent) and all action necessary or, in the reasonable opinion of the Collateral Agent, desirable, in connection with, the English Debenture as may be necessary to perfect and protect the security interests intended to be created by the English Debenture;
(d) evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect and protect the security interests purported to be created by the English Debenture have been taken (or arrangements therefor satisfactory to the Collateral Agent);
(e) all of the Collateral consisting of certificated securities referred to in the English Charge Over Shares and then owned by the relevant Payer Party, together with executed and undated endorsements for transfer; and all other Collateral consisting of certificated securities and promissory notes, if any, owned by each Credit Party, (i) endorsed in blank in the case of any such promissory notes and (ii) together with executed and undated endorsements for transfer in the case of any such certificated securities;
(f) evidence of the completion (or arrangements therefor satisfactory to the Collateral Agent) of all other recordings and filings of, or with respect to, and all action necessary or, in the reasonable opinion of the Collateral Agent, desirable, in connection with, the English Charge Over Shares as may be necessary to perfect and protect the security interests intended to be created by the English Charge Over Shares;
(g) evidence that all other actions necessary to perfect and protect the security interests purported to be created by the English Charge Over Shares have been taken (or arrangements therefor satisfactory to the Collateral Agent); and
(h) a share pledge agreement, in form and substance satisfactory to the Collateral Agent, duly authorized, executed and delivered by EIH, as pledgor, in favor of the Collateral Agent, pledging the share capital of Endeavour Energy Luxembourg S.à.r.l.
Article VIII.
Negative Covenants.
Each of Holdings and the Payer hereby covenants and agrees with the Payee that until the Maximum LC Amount has been reduced to zero and all Fees and all other Obligations (other than indemnities described in Section 11.05 which are not then due and payable and for which no
claim has been made) shall have been paid in full, unless waived in accordance with Section 11.08:
SECTION 8.01 Restricted Payments. Holdings will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend or make any other payment or distribution on account of Holdings’ or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving Holdings or any of its Restricted Subsidiaries) or to the direct or indirect holders of Holdings’ or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of Holdings or payable to Holdings or, subject to compliance with the Additional Guarantor Requirement at the time of such dividend, payment or distribution, a Restricted Subsidiary of Holdings);
(b) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving Holdings) any Equity Interests of Holdings or any direct or indirect parent of Holdings;
(c) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness that is subordinated in right of payment to the Obligations (excluding (i) the purchase, redemption, defeasance or other acquisition or retirement for value of any other Indebtedness (other than intercompany Indebtedness) that is subordinated in right of payment to the Obligations in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, redemption, defeasance or other acquisition or retirement for value, (ii) any payment of principal or interest at the Stated Maturity thereof and (iii) any payment, purchase, redemption, defeasance or other acquisition or retirement for value made with the prior written consent of the Payee; provided that the aggregate amount of any payments, purchases, redemptions, defeasances or other acquisitions or retirements made in reliance on the exclusions from the restrictions contained in this clause (c)(iii), when aggregated with the aggregate amount of all payments, purchases, redemptions, defeasances or other acquisitions or retirements for value made in reliance on clause (e)(iii) below, shall not exceed $35,000,000); or
(d) make any Restricted Investment; or
(e) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indenture Notes (other than (i) at the Stated Maturity thereof, (ii) pursuant to any covenant contained in either Indenture (in each case as in effect as of the date hereof) requiring Holdings to make an offer to holders of Indenture Notes to purchase Indenture Notes in connection with a Change of Control or an Asset Sale in respect of Indenture Collateral or (iii) with the prior written consent of the Payee) or Unsecured Notes (other than at the Stated Maturity thereof; provided that the aggregate amount of any payments, purchases, redemptions, defeasances or other acquisitions or retirements for value made in reliance on this clause (iii), when aggregated with the aggregate amount of all payments, purchases, redemptions, defeasances or other acquisitions or retirements for value made in reliance on the exclusions from the restrictions contained in clause (c)(iii) above, shall not exceed $35,000,000) (all such
payments and other actions set forth in these clauses (a) through (e) being collectively referred to as “Restricted Payments”);
unless, at the time of and after giving effect to such Restricted Payment, no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment and:
(A) Holdings would, at the time of such Restricted Payment immediately after giving pro forma effect thereto as if the same had occurred at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 8.03; and
(B) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by Holdings and its Restricted Subsidiaries (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (8), (9), (11) and (12) of the next succeeding paragraph) since the date of this Agreement, is less than the sum, without duplication, of:
(i) 50% of the Consolidated Net Income of Holdings for the period (taken as one accounting period) from January 1, 2014 to the last day of Holdings’ last fiscal quarter ending prior to the date of the Restricted Payment for which internal financial statements are in existence at the time of such Restricted Payment (or, if such Consolidated Net Income for such period shall be a loss, minus 100% of such loss); plus
(ii) 100% of the aggregate net cash proceeds and the Fair Market Value of any Capital Stock of Persons (other than Holdings or an Affiliate of Holdings) engaged primarily in the Oil and Gas Business or any other assets that are used or useful in the Oil and Gas Business, in each case received by Holdings after the date of this Agreement as a contribution to its common equity capital or from the issue or sale after the date of this Agreement of Equity Interests of Holdings (other than Disqualified Stock) or from the issue or sale after the date of this Agreement of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of Holdings that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of Holdings) or received upon the exercise of any options, warrants or rights to purchase Equity Interests (other than Disqualified Stock) of Holdings, plus
(ii) the amount equal to the net reduction in Restricted Investments made by Holdings or any of its Restricted Subsidiaries in any Person since the date of this Agreement resulting from:
(C) repurchases or redemptions of such Restricted Investments by such Person, proceeds realized upon the sale of such Restricted Investment to a
purchaser other than Holdings or a Subsidiary of Holdings, repayments of loans or advances or other transfers of assets (including by way of interest payments, dividend or distribution) by such Person to Holdings or any Restricted Subsidiary of Holdings; plus
(D) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries or the merger or consolidation of an Unrestricted Subsidiary with and into Holdings or any Restricted Subsidiary (valued in each case as provided in the definition of “Investment”) not to exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by Holdings or any Restricted Subsidiary of Holdings in such Unrestricted Subsidiary; plus
(E) an amount equal to any amount included as a Restricted Payment pursuant to clause (II) above on account of any guarantee entered into by Holdings or any Restricted Subsidiary; to the extent that such guarantee has not been called upon and the obligation arising under such guarantee no longer exists or has been reduced; plus
(F) in the event Holdings or any Restricted Subsidiary makes any Investment in a Person that, as a result of or in connection with such Investment, becomes a Restricted Subsidiary or is merged or consolidated with Holdings or a Restricted Subsidiary, an amount equal to the amount included as a Restricted Payment pursuant to clause (II) above on account of Holdings’ or any Restricted Subsidiary’s Investment in such Person prior to the time it became a Restricted Subsidiary or the time of such merger or consolidation; plus
(i) the amount by which Indebtedness of Holdings or its Restricted Subsidiaries is reduced on Holdings’ balance sheet upon the conversion or exchange (other than by a Subsidiary of Holdings) subsequent to the date of this Agreement of any Indebtedness of Holdings or its Restricted Subsidiaries convertible into or exchangeable for Equity Interests of Holdings (other than Disqualified Stock) (less the amount of cash, or the Fair Market Value of any other property, distributed by Holdings upon such conversion or exchange),
in the case of clauses (b) through (d) above, to the extent such amounts have not been included in Consolidated Net Income for the applicable period.
The preceding provisions will not prohibit:
(1) the payment of any dividend or distribution within 60 days after the date of its declaration, if at the date of declaration the payment would have complied with the provisions of this Agreement;
(2) the purchase, redemption, defeasance or other acquisition or retirement for value of any subordinated Indebtedness, Indenture Notes or Unsecured Notes of Holdings or any other Payer Party or of any Equity Interests of Holdings in exchange for, or out of the net cash proceeds of the substantially concurrent (A) contribution (other than from a Restricted
Subsidiary of Holdings) to the equity capital of Holdings or (B) sale (other than to a Restricted Subsidiary of Holdings) of, Equity Interests of Holdings (other than Disqualified Stock), with a sale being deemed substantially concurrent if such purchase, redemption, defeasance or other acquisition or retirement for value occurs not more than 120 days after such sale; provided, that the amount of any such net cash proceeds that are utilized for any such purchase, redemption, defeasance or other acquisition or retirement for value will be excluded or deducted from clause (II) above;
(3) the purchase, redemption, defeasance or other acquisition or retirement for value of subordinated Indebtedness, Indenture Notes or Unsecured Notes or Disqualified Stock of Holdings or any other Payer Party with the net cash proceeds from a substantially concurrent incurrence of, or in exchange for, Permitted Refinancing Indebtedness, with an incurrence of Permitted Refinancing Indebtedness being deemed substantially concurrent if such purchase, redemption, defeasance or other acquisition or retirement for value occurs not more than 120 days after such incurrence;
(4) the payment of any dividend or distribution by a Restricted Subsidiary of Holdings to the holders of such Restricted Subsidiary’s Equity Interests (other than Disqualified Stock) on a pro rata basis or on a basis more favorable to Holdings or a Restricted Subsidiary; provided, that distributions or dividends by EIH shall be promptly applied to fund any Capital Expenditure, the payment of any expense, any Investment or other use, in each case, permitted under this Agreement, and not permitted to accumulate other than on a temporary basis in the deposit or other account of the payee of such Indebtedness or any Affiliate thereof;
(5) so long as no Default (other than a Reporting Default) or Event of Default shall have occurred and be continuing or would be caused thereby, the purchase, redemption or other acquisition or retirement for value (other than for any Equity Interest) of any Equity Interests of Holdings or any Restricted Subsidiary of Holdings pursuant to any director, employee or consultant equity subscription agreement or equity option agreement or other employee benefit plan or to satisfy obligations under any Equity Interests option plan or similar arrangement; provided that the aggregate price paid for all such purchased, redeemed, acquired or retired Equity Interests may not exceed $5,000,000 in the 2014 calendar year and $2,500,000 in any calendar year thereafter (with any portion of such amount that is unused in any calendar year to be carried forward to successive calendar years and added to such amount) plus, to the extent not previously applied or included,
(i) the cash proceeds received by Holdings or any of its Restricted Subsidiaries from sales of Equity Interests of Holdings to employees, consultants or directors of Holdings or its Affiliates that occur after the date of this Agreement (to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (II)(b) of the first paragraph of this Section 8.01); and
(ii) the cash proceeds of key man life insurance policies received by Holdings or any of its Restricted Subsidiaries after the date of this Agreement.
(6) any purchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness (other than any intercompany Indebtedness) that is subordinated in right of payment to the Obligations pursuant to the provisions of such Indebtedness in the event of a Change of Control or an Asset Sale, in each case plus accrued and unpaid interest thereon, but only if:
(i) in the case of a Change of Control, the purchase price therefor is not greater than 101% of the principal amount of such Indebtedness and accrued and unpaid interest thereon; or
(ii) in the case of an Asset Sale, the purchase price therefor is not greater than 100% of the principal amount of such Indebtedness and accrued and unpaid interest thereon, and Holdings has complied with and fully satisfied its obligations in accordance with Section 3.02(a);
(7) the purchase, redemption or other acquisition or retirement for value of Equity Interests of Holdings or any Restricted Subsidiary of Holdings representing fractional shares of such Equity Interests in connection with a merger or consolidation involving Holdings or such Restricted Subsidiary or any other transaction permitted by this Agreement;
(8) the purchase, redemption or other acquisition or retirement for value of Equity Interests deemed to occur upon the exercise or conversion of stock options, warrants or other convertible securities if such Equity Interests represent a portion of the exercise or conversion price thereof;
(9) the purchase, redemption or other acquisition or retirement for value of any Equity Interests of Holdings or any Restricted Subsidiary of Holdings held by any current or former officers, directors or employees of Holdings or any of its Restricted Subsidiaries in connection with the exercise or vesting of any equity compensation (including, without limitation, stock options, restricted stock and phantom stock) in order to satisfy any tax withholding obligation with respect to such exercise or vesting;
(10) payments to dissenting stockholders pursuant to Applicable Law in connection with a consolidation, merger or transfer of assets in connection with a transaction that is not prohibited by this Agreement not to exceed $5,000,000 in the aggregate since the date of this Agreement;
(11) any payment with respect to, purchase, redemption, defeasance or other acquisition or retirement for value of any Permitted Intercompany Debt, including, without limitation, that certain Inter-Company Loan Agreement, dated as of May 31, 2012, between EOC and the Payer (the “Intercompany Loan Agreement”); provided (a) no Default or Event of Default shall have occurred and be continuing or would result therefrom, (b) such payment, purchase, redemption, defeasance or other acquisition or retirement for value does not obligate Holdings or any Restricted Subsidiary of Holdings to make or offer to make any payment on, or purchase or redeem any other Indebtedness and (c) solely with respect to any payment with respect to, purchase, redemption, defeasance or other acquisition or retirement for value in respect of any Indebtedness under the Intercompany Loan Agreement, the proceeds of such purchase,
redemption or other acquisition or retirement for value are promptly applied to fund any Capital Expenditure, the payment of any expense, any Investment or other use, in each case, permitted under this Agreement, and not permitted to accumulate other than on a temporary basis in the deposit or other account of the payee of such Indebtedness or any Affiliate thereof;
(12) the declaration and payment of dividends payable pursuant to the terms (as of the date of this Agreement) of Holdings’ Class C Convertible Preferred Stock outstanding on the date of this Agreement; and
(13) so long as no Default (other than a Reporting Default) or Event of Default shall have occurred and be continuing or would be caused thereby, other Restricted Payments in an aggregate amount not to exceed $25,000,000 at any time outstanding since the date of this Agreement (after giving effect to any dividends, interest payments, return of capital and subsequent reduction in the amount of any Investments made pursuant to this clause as a result of the repayment or other disposition thereof, in an amount not to exceed the amount of such Investments previously made pursuant to in this clause); provided, that if any Investment pursuant to this clause (13) is made in any Person that is not a Restricted Subsidiary of Holdings at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of Holdings after such date, such Investment shall, subject to compliance with such clause (1), thereafter be deemed to have been made pursuant to clause (1) of the definition of “Permitted Investments” and shall cease to have been made pursuant to this clause (13) for so long as such Person continues to be a Restricted Subsidiary.
The amount of all Restricted Payments (other than cash) will be the Fair Market Value, on the date of the Restricted Payment, of the Restricted Investment proposed to be made or asset(s) or securities proposed to be paid, transferred or issued by Holdings or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment, except that the amount of any non-cash Restricted Payment referred to in the preceding clause (1) will be the Fair Market Value on the date of declaration. The Fair Market Value of any assets or securities that are required to be valued by this covenant will be determined by the method prescribed in the definition of such term, except that the Fair Market Value of any non-cash consideration received from an Affiliate as a capital contribution for Equity Interests of Holdings shall be determined in good faith by the Board of Directors of Holdings in the case of amounts of $10,000,000 or more, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing. For purposes of determining compliance with this Section 8.01, in the event that a Restricted Payment meets the criteria of more than one of the categories of Restricted Payments described in the preceding clauses (1) through (13) or as a Permitted Investment, Holdings will be permitted to divide or classify (or later divide, classify or reclassify in whole or in part in its sole discretion) such Restricted Payment in any manner that complies with this Section 8.01.
SECTION 8.02 Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries. Holdings will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary of Holdings to:
(a) pay dividends or make any other distributions on its Capital Stock to Holdings or any of its Restricted Subsidiaries, or pay any Indebtedness or other obligations owed to Holdings or any of its Restricted Subsidiaries;
(b) make loans or advances to Holdings or any of its Restricted Subsidiaries; or
(c) sell, lease or transfer any of its properties or assets to Holdings or any of its Restricted Subsidiaries;
provided, that the preceding restrictions of this Section 8.02 will not apply to encumbrances or restrictions existing under or by reason of:
(1) agreements (including those governing Existing Indebtedness) as in effect on the date of this Agreement and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend, distribution and other payment restrictions than those contained in those agreements on the date of this Agreement, as determined by the Board of Directors of Holdings in its reasonable and good faith judgment;
(2) this Agreement, the Existing LC Procurement Agreements, the Term A Credit Agreement, the Existing Credit Agreement, the other Security Documents, the other Credit Documents (as defined in the Term A Credit Agreement) and the Indenture Documents;
(3) Applicable Law or similar restriction;
(4) any agreement or instrument with respect to a Restricted Subsidiary that is not a Restricted Subsidiary of Holdings on the date of this Agreement, in existence at the time such Person becomes a Restricted Subsidiary of Holdings and not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary; provided that such encumbrances and restrictions are not applicable to Holdings or any Restricted Subsidiary or the properties or assets of Holdings or any Restricted Subsidiary other than such Subsidiary which is becoming a Restricted Subsidiary;
(5) any agreement or instrument governing any Permitted Acquisition Indebtedness, so long as such agreement or instrument (a) was not entered into in contemplation of the acquisition, merger or consolidation transaction related thereto, and (b) is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the properties or assets or Subsidiaries of the Person, subject to such acquisition, merger or consolidation, so long as the agreement containing such restriction does not violate any other provision of this Agreement;
(6) instruments or agreements governing Indebtedness of Holdings or any of the Restricted Subsidiaries permitted to be incurred pursuant to an instrument or agreement entered into subsequent to the date of this Agreement in accordance with Section 8.03; provided that either (a) the encumbrance or restriction contained in the instrument or agreement governing such Indebtedness applies only in the event of a payment default or a default with respect to a financial covenant in such Indebtedness or agreement or (b) the Board of Directors of Holdings
determines in good faith that any such encumbrance or restriction will not materially affect Holdings’ ability to make principal or interest payments on the Obligations;
(7) (a) customary non-assignment provisions in Hydrocarbon purchase and sale or exchange agreements, joint operating agreements, or similar operational agreements or in licenses or leases entered into in the ordinary course of business, or (b) in the case of clause (c) of the preceding paragraph, other encumbrances or restrictions in agreements or instruments (including joint venture agreements, asset sale agreements, stock sale agreements and agreements of the type described in the definition of “Permitted Business Investments”) relating to specific assets or property (and not to Indebtedness) that restrict generally the transfers of such assets or property; provided that such other encumbrances or restrictions do not materially impair the ability of Holdings to make scheduled payments on the Obligations when due and in each case entered into in the ordinary course of business or customary in the Oil and Gas Business;
(8) Capital Lease Obligations, mortgage financings or purchase money obligations, in each case for property acquired in the ordinary course of business or which is customary in the Oil and Gas Business that impose restrictions on that property purchased or leased of the nature described in clause (c) of the preceding paragraph;
(9) any agreement for the sale or other disposition of a Restricted Subsidiary of Holdings that restricts distributions by that Restricted Subsidiary pending its sale or other disposition;
(10) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced, as determined by the Board of Directors of Holdings in its reasonable and good faith judgment;
(11) Liens securing Indebtedness otherwise permitted to be incurred under the provisions of Section 8.06 that limit the right of the debtor to dispose of the assets subject to such Liens;
(12) restrictions on cash, Cash Equivalents or other deposits or net worth imposed by customers or lessors under contracts or leases entered into in the ordinary course of business or which are customary in the Oil and Gas Business;
(13) Hedging Agreements permitted from time to time under this Agreement;
(14) any subordination of intercompany Indebtedness or other intercompany obligations (including any intercompany revolving credit) to the claims or Liens (otherwise permitted by this Agreement) of any other creditor of the obligor or obligors of such intercompany Indebtedness or other obligations, including to the claims or Liens (otherwise permitted by this Agreement) of any lender or other party to any Credit Facility (as a lender, letter of credit issuer or in any other capacity); and
(15) the issuance of preferred securities by any Restricted Subsidiary of Holdings or the payment of dividends thereon in accordance with the terms thereof; provided that issuance of
such preferred securities is permitted pursuant to Section 8.03 and the terms of such preferred securities do not expressly restrict the ability of a Restricted Subsidiary of Holdings to pay dividends or make any other distributions on its Equity Interests (other than requirements to pay dividends or liquidation preferences on such preferred securities prior to paying any dividends or making any other distributions on such other Equity Interests).
SECTION 8.03 Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock. Holdings will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness, Holdings will not issue any Disqualified Stock, and Holdings will not permit any of its Restricted Subsidiaries to issue any Disqualified Stock or preferred securities; provided, that Holdings and any other Payer Party may incur Indebtedness, Holdings may issue Disqualified Stock and any other Payer Party may issue Disqualified Stock or preferred securities, if the Fixed Charge Coverage Ratio for Holdings’ most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such preferred securities or Disqualified Stock is issued, as the case may be, would have been at least 2.25 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or such preferred securities or Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period.
The first paragraph of this Section 8.03 will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of any Disqualified Stock or any preferred securities described below (collectively, “Permitted Debt”):
(1) Indebtedness incurred pursuant to the Term A Credit Agreement, the Existing Credit Agreement and the other Credit Documents (as defined in the Term A Credit Agreement) and the unsecured intercompany loan made by EIH to the Payer with the proceeds of the Initial Loans;
(2) the incurrence by Holdings or any of the Restricted Subsidiaries of additional unsecured Indebtedness under one or more Credit Facilities, provided that, after giving effect to any such incurrence, the aggregate principal amount of all Indebtedness outstanding under Holdings and its Restricted Subsidiaries’ Credit Facilities incurred under this clause (2) does not exceed:
(a) if Holdings’ Adjusted Consolidated Net Tangible Assets determined as of the date of such incurrence are $2,000,000,000 or less, the greater of (i) $100,000,000 and (ii) 7.5% of Holdings’ Adjusted Consolidated Net Tangible Assets determined as of such date;
(b) if Holdings’ Adjusted Consolidated Net Tangible Assets determined as of the date of such incurrence are $3,000,000,000 or less, but exceed $2,000,000,000, the greater of (i) $100,000,000 and (ii) 10% of Holdings’ Adjusted Consolidated Net Tangible Assets determined as of such date; and
(c) if Holdings’ Adjusted Consolidated Net Tangible Assets determined as of the date of such incurrence exceed $3,000,000,000, the greater of (i) $100,000,000 and (ii) 15% of Holdings’ Adjusted Consolidated Net Tangible Assets determined as of such date;
(3) the incurrence by Holdings or its Restricted Subsidiaries of the Existing Indebtedness not otherwise referred to in this definition of “Permitted Debt”;
(4) the incurrence by Holdings or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of design, installation, repair, replacement, construction or improvement of property, plant or equipment used in the business of Holdings or such Restricted Subsidiary (whether through the direct purchase of such assets or the Capital Stock of any Person owning such assets (but no other material assets)) and related financing costs, and Attributable Debt in respect of Sale Leaseback Transactions, including all Permitted Refinancing Indebtedness incurred to extend, refinance, renew, replace, defease, discharge, refund or otherwise retire for value any Indebtedness incurred pursuant to this clause (4), provided that after giving effect to any such incurrence, the aggregate principal amount of all Indebtedness incurred pursuant to this clause (4) and then outstanding does not exceed the greater of (A) $25,000,000 and (B) 2.0% of Holdings’ Adjusted Consolidated Net Tangible Assets determined as of the date of such incurrence;
(5) the incurrence by Holdings or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which shall be used to extend, refinance, renew, replace, defease, discharge, refund or otherwise retire for value, in whole or in part, Indebtedness of Holdings or any of its Restricted Subsidiaries (other than intercompany Indebtedness) or Disqualified Stock of Holdings, in each case that was permitted by this Agreement to be incurred pursuant to the first paragraph of this Section 8.03 or clauses (3) (other than in respect of Indebtedness under the Existing Credit Agreement) and (12) of this paragraph or this clause (5);
(6) the incurrence by Holdings or any of its Restricted Subsidiaries of intercompany Indebtedness between or among any of Holdings and any of its Restricted Subsidiaries (“Permitted Intercompany Debt”); provided that:
(a) such Indebtedness must be expressly subordinated in all respects to the prior payment in full in cash of all Obligations pursuant to a written subordination agreement satisfactory in form and substance to the Administrative Agent; and
(b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Holdings or a Restricted Subsidiary of Holdings and (ii) any sale or other transfer of any such Indebtedness to a Person that is neither Holdings nor a Restricted Subsidiary of Holdings shall be deemed, in each case, to constitute an incurrence (as of the date of such issuance, sale or transfer) of such Indebtedness by Holdings or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) the incurrence by Holdings or any of its Restricted Subsidiaries of obligations under Hedging Agreements entered into not for speculative purposes;
(8) (A) the guarantee by Holdings or any other Payer Party of Indebtedness of Holdings or any other Payer Party that was permitted to be incurred by the first paragraph of this Section 8.03; provided that if the Indebtedness being guaranteed is subordinated to the Obligations, then the guarantee of Holdings or such other Payer Party (or, (i) in the case of a guarantee made by a Term A Borrower, such Term A Borrower’s Obligations (as defined in the Term A Credit Agreement) and (ii) in the case of a guarantee made by the Payer, the Payer’s Obligations) made pursuant to the Credit Party Guaranty (as defined in the Term A Credit Agreement) shall be senior to its guarantee of such subordinated Indebtedness; and (B) the guarantee by Holdings or any of its Restricted Subsidiaries of Indebtedness of Holdings or any of its Restricted Subsidiaries that was permitted to be incurred by another provision of this Section 8.03 other than the first paragraph hereof; provided that if the Indebtedness being guaranteed is subordinated to the Obligations, then the guarantee of Holdings or such other Payer Party (or, in the case of a guarantee made by a Term A Borrower, such Term A Borrower’s Obligations (as defined in the Term A Credit Agreement)), if it is a Guarantor, made pursuant to the Credit Party Guaranty (as defined in the Term A Credit Agreement), shall be senior to its guarantee of such subordinated Indebtedness;
(9) the incurrence by Holdings or any of its Restricted Subsidiaries of Indebtedness relating to net gas balancing positions arising in the ordinary course of business and consistent with past practice;
(10) the incurrence by Holdings or any of its Restricted Subsidiaries of Indebtedness in respect of bid, performance, surety, appeal and similar bonds issued for the account of Holdings and any of its Restricted Subsidiaries, or obligations in respect of letters of credit posted in lieu of, or to secure, any such bonds, in the ordinary course of business or which are customary in the Oil and Gas Business;
(11) the issuance by any of Holdings’ Restricted Subsidiaries to Holdings or to any of its Restricted Subsidiaries of any preferred securities; provided, that:
(a) any subsequent issuance or transfer of Equity Interests that results in any such preferred securities being held by a Person other than Holdings or a Restricted Subsidiary of Holdings; and
(b) any sale or other transfer of any such preferred securities to a Person that is not either Holdings or a Restricted Subsidiary of Holdings shall be deemed, in each case, to constitute an issuance (as of the date of such issuance, sale or transfer) of such preferred securities by such Restricted Subsidiary that was not permitted by this clause (11);
(12) Permitted Acquisition Indebtedness;
(13) the incurrence by Holdings or its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of business, so long as such Indebtedness is covered within five Business Days;
(14) the incurrence by Holdings or its Restricted Subsidiaries of Indebtedness consisting of the financing of insurance premiums in customary amounts consistent with the operations and business of Holdings and the Restricted Subsidiaries; and
(15) the incurrence by Holdings or any other Payer Party of additional Indebtedness or the issuance by Holdings of additional Disqualified Stock, provided that, after giving effect to any such incurrence or issuance, the aggregate principal amount of all Indebtedness and Disqualified Stock incurred or issued under this clause (15) and then outstanding does not exceed the greater of (a) $75,000,000 and (b) 5.0% of Holdings’ Adjusted Consolidated Net Tangible Assets determined as of the date of such incurrence or issuance.
Notwithstanding any of the foregoing, Holdings shall not, and shall not permit any of its Restricted Subsidiaries to (and the provisions of this Section 8.03 shall not permit Holdings or any of its Restricted Subsidiaries to), incur any Indebtedness for borrowed money having a maturity date occurring on or prior to the LC Release Date.
For purposes of determining compliance with this Section 8.03, in the event that an item of Indebtedness or Disqualified Stock or preferred securities meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (15) above, or is entitled to be incurred or issued pursuant to the first paragraph of this Section 8.03, Holdings will be permitted to divide and classify (or later classify, reclassify or re-divide in whole or in part in its sole discretion) such item of Indebtedness or Disqualified Stock or preferred securities in any manner that complies with this Section 8.03; provided that Indebtedness under the Term A Credit Agreement and the other Credit Documents (as defined in the Term A Credit Agreement) shall be considered to have been incurred under clause (1) above. For purposes of determining any particular amount of Indebtedness under this covenant, guarantees of Indebtedness otherwise included in the determination of such amount shall not also be included except to the extent that such Indebtedness exceeds such guarantee.
The accrual of interest, accrual of dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness and the payment of dividends on Disqualified Stock or preferred securities in the form of additional shares of Disqualified Stock or preferred securities will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred securities for purposes of this Section 8.03.
For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency will be calculated based on the relevant currency exchange rate in effect on the date the Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and the refinancing would cause the applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of the refinancing, such U.S. dollar-
dominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced (plus all accrued and unpaid interest on such Indebtedness, and the amount of all fees, expenses and premiums incurred in connection therewith). Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that Holdings or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Permitted Refinancing Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, will be calculated based on the currency exchange rate applicable to the currencies in which the Permitted Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.
SECTION 8.04 Limitation on Asset Sales. Holdings will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:
(a) Holdings (or the Restricted Subsidiary, as the case may be) receives consideration at least equal to the Fair Market Value of the assets or Equity Interest issued or sold or otherwise disposed of;
(b) in the case of any Asset Sale constituting the grant, sale, assignment or other conveyance of any Production Payment, such Production Payment constitutes a Refinancing Production Payment; and
(c) at least 75% of the aggregate consideration to be received by Holdings and its Restricted Subsidiaries in such Asset Sale (determined on the date of contractually agreeing to such Asset Sale) and any other Asset Sale since the date of this Agreement, on a cumulative basis, is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash:
(i) any liabilities, as shown on Holdings’ or any Restricted Subsidiary’s most recent balance sheet, of Holdings or such Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated in right of payment to the Obligations) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases Holdings or such Restricted Subsidiary from further liability; and
(ii) any securities, notes or other obligations received by Holdings or any Restricted Subsidiary from such transferee that are, within 90 days after the Asset Sale, converted by Holdings or such Restricted Subsidiary into cash or Cash Equivalents, to the extent of the cash received in that conversion;
provided that in the case of any Asset Sale pursuant to a condemnation, appropriation or similar governmental taking, including by deed in lieu of condemnation, such Asset Sale shall not be required to satisfy the requirements of clauses (a) and (b) above. Notwithstanding the preceding, the 75% limitation referred to above shall be deemed satisfied with respect to any Asset Sale to which such limitation applies in which the cash or Cash Equivalents portion of the consideration received therefrom, determined in accordance with the preceding provision on an after-tax basis,
is equal to or greater than what the after-tax proceeds would have been had such Asset Sale complied with the aforementioned 75% limitation.
SECTION 8.05 Limitation on Transactions with Affiliates. Holdings will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any properties or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of Holdings (each, an “Affiliate Transaction”), unless:
(a) the Affiliate Transaction is on terms that are not less favorable to Holdings or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by Holdings or such Restricted Subsidiary with an unrelated Person or, if in the good faith judgment of Holdings’ Board of Directors, no comparable transaction is available with which to compare such Affiliate Transaction, such Affiliate Transaction is otherwise fair to Holdings or the relevant Restricted Subsidiary from a financial point of view; and
(b) Holdings delivers to the Payee:
(i) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration to or from an Affiliate in excess of $10,000,000, a resolution of the Board of Directors of Holdings set forth in a certificate of a Financial Officer of Holdings certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this Section 8.05 and that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors of Holdings; and
(ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration to or from an Affiliate in excess of $20,000,000, an opinion as to the fairness to Holdings or such Restricted Subsidiary of such Affiliate Transaction or series of related Affiliate Transactions from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.
The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph of this Section 8.05:
(1) any employment agreement or arrangement, equity award, equity option or cash or equity settled equity appreciation agreement or plan, employee benefit plan, officer or director indemnification agreement, severance agreement, consulting agreement or other compensation plan or arrangement entered into by Holdings or any of its Restricted Subsidiaries in the ordinary course of business or which is customary in the Oil and Gas Business, and payments, awards, grants or issuances of securities pursuant thereto;
(2) transactions between or among any of Holdings and its Restricted Subsidiaries;
(3) transactions with a Person (other than an Unrestricted Subsidiary of Holdings) that is an Affiliate of Holdings solely because Holdings owns, directly or indirectly, an Equity
Interest in, or otherwise controls, such Person or has nominated or appointed a person to the Board of Directors of that Person;
(4) customary compensation, indemnification and other benefits made available to officers, directors, employees or consultants of Holdings or a Restricted Subsidiary of Holdings, including reimbursement or advancement of out-of-pocket expenses and provisions of officers’ and directors’ liability insurance;
(5) issuances of Equity Interests (other than Disqualified Stock) of Holdings to, or receipt of capital contributions from, Affiliates of Holdings and any dividend or distribution payable in Equity Interests (other than Disqualified Stock) of Holdings;
(6) any Permitted Investments or Restricted Payments that are permitted by Section 8.01;
(7) transactions between Holdings or any of its Restricted Subsidiaries and any Person that would not otherwise constitute an Affiliate Transaction except for the fact that one director of such other Person is also a director of Holdings or such Restricted Subsidiary, as applicable; provided that such director abstains from voting as a director of Holdings or such Restricted Subsidiary, as applicable, on any matter involving such other Person;
(8) the existence of, and the performance of obligations of Holdings or any of its Restricted Subsidiaries under the terms of, any written agreement to which Holdings or any of its Restricted Subsidiaries is a party on the date of this Agreement, as such agreements may be amended, modified, supplemented or replaced from time to time; provided, however, that any amendment, modification, supplement or replacement entered into after the date of this Agreement will be permitted to the extent that its terms are not materially more disadvantageous, taken as a whole, to the Payee than the terms of the agreements in effect on the date of this Agreement (as conclusively evidenced by a Board Resolution of Holdings or such Subsidiary);
(9) any transaction in which Holdings or any of its Restricted Subsidiaries, as the case may be, delivers to the Payee an opinion from an accounting, appraisal or investment banking firm of national standing stating that such transaction is fair to Holdings or such Restricted Subsidiary from a financial point of view or that such transaction meets the requirements of clause (1) of the preceding paragraph of this Section 8.05;
(10) (a) guarantees by Holdings or any of its Restricted Subsidiaries of performance of obligations of Holdings’ Unrestricted Subsidiaries in the ordinary course of business or which are customary in the Oil and Gas Business and (b) pledges by Holdings or any Restricted Subsidiary of Holdings of Equity Interests in Unrestricted Subsidiaries for the benefit of lenders or other creditors of Holdings’ Unrestricted Subsidiaries;
(11) any Affiliate Transaction with a Person in its capacity as a holder of Indebtedness or Capital Stock of Holdings or any Restricted Subsidiary of Holdings if such Person is treated no more favorably than the other holders of Indebtedness or Capital Stock of Holdings or such Restricted Subsidiary;
(12) transactions with joint venture partners, customers, clients, suppliers or purchasers or sellers of goods or services, or lessors or lessees of property, in each case in the ordinary course of business or which are customary in the Oil and Gas Business and otherwise in compliance with the terms of this Agreement similar to those contained in similar contracts entered into by Holdings or any Restricted Subsidiary and unrelated third parties, or if neither Holdings nor any Restricted Subsidiary has entered into a similar contract with an unrelated third party, which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), not materially less favorable to Holdings and its Restricted Subsidiaries than those that would have been obtained in a comparable transaction by Holdings or such Restricted Subsidiary with an unrelated third party, in the good faith determination of Holdings’ Board of Directors or any executive officer of Holdings involved in or otherwise familiar with such transaction; and
(13) dividends and distributions to Holdings and its Restricted Subsidiaries by any Unrestricted Subsidiary.
SECTION 8.06 Limitation on Liens. Holdings will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness upon any of their property or assets (whether now owned or hereafter acquired) other than Permitted Liens.
SECTION 8.07 Business Activities. Holdings will not, and will not permit any Restricted Subsidiary to, engage in any business other than the Oil and Gas Business, except to such extent as would not be material to Holdings and its Restricted Subsidiaries taken as a whole.
SECTION 8.08 Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of Holdings may designate any Restricted Subsidiary of Holdings (other than the Term A Borrowers) to be an Unrestricted Subsidiary if that designation would not cause a Default or Event of Default and the other requirements for such designation prescribed in the definition of “Unrestricted Subsidiary” are satisfied. If a Restricted Subsidiary of Holdings is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by Holdings and its Restricted Subsidiaries in the Subsidiary properly designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the first paragraph of Section 8.01 or represent Permitted Investments, as determined by Holdings. That designation shall only be permitted if the Investment would be permitted at that time and if the Subsidiary so designated otherwise meets the definition of an Unrestricted Subsidiary.
The Board of Directors of Holdings may at any time designate any Unrestricted Subsidiary of Holdings to be a Restricted Subsidiary of Holdings, provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of Holdings of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under Section 8.03, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (2) no Default (other than a Reporting Default) or Event of Default would be in existence following such designation.
SECTION 8.09 Merger, Consolidation, or Sale of Assets. Neither Holdings nor the Payer may: (x) consolidate or merge with or into another Person (whether or not Holdings or the Payer (as applicable) is the survivor), convert into another form of entity or continue in another jurisdiction; or (y) directly or indirectly, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions to another Person, unless:
(a) either (i) Holdings or the Payer (as applicable) is the survivor or (ii) the Person formed by or surviving any such consolidation or merger or resulting from such conversion (if other than Holdings or the Payer) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation, limited liability company or limited partnership organized or existing under the laws of the United States, any state of the United States or the District of Columbia or, in the case of any such merger or consolidation involving the Payer, or any sale, assignment, transfer, lease, conveyance or other disposition of assets of the Payer, organized or existing under the laws of England and Wales or the Netherlands (Holdings, the Payer or such other Person, as the case may be, being herein called the “Successor Company”);
(b) the Successor Company unconditionally assumes all the obligations of Holdings or the Payer (as applicable) under this Agreement, the Security Documents and any and all other LC Procurement Documents to which it is a party pursuant to a joinder agreement or other agreement in a form reasonably satisfactory to the Payee and the Collateral Agent;
(c) immediately after such transaction or transactions, no Default (other than a Reporting Default) or Event of Default exists;
(d) either:
(i) the Successor Company would, on the date of such transaction immediately after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 8.03 hereof; or
(ii) immediately after giving pro forma effect to such transaction and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, the Fixed Charge Coverage Ratio of the Successor Company, will be equal to or greater than the Fixed Charge Coverage Ratio of Holdings immediately prior to such transaction;
(e) the Successor Company causes such amendments, supplements or other instruments to be executed, delivered, filed and recorded, as applicable, in such jurisdictions as may be required by applicable law or desired by the Collateral Agent to preserve and protect the Lien of the Security Documents on any Collateral owned by or transferred to the Successor Company;
(f) any Collateral owned by or transferred to the Successor Company shall (i) continue to constitute Collateral, (ii) be subject to a first-priority Lien in favor of the Collateral Agent for the benefit of the Payee and (iii) not be subject to any Lien other than the Liens securing the Obligations and other Permitted Liens; and
(g) the property and assets of the Person which is merged or consolidated with or into the Successor Company, to the extent that they are property or assets of the types which would constitute Collateral, shall be treated as after-acquired property and the Successor Company shall take such action as may be reasonably necessary or desired by the Collateral Agent to cause such property and assets to be made subject to a first-priority Lien in favor of the Collateral Agent for the benefit of the Payee.
(h) Notwithstanding the restrictions described in the foregoing clause (f), (i) any Restricted Subsidiary of Holdings (other than the Payer) may consolidate with, merge into or dispose of all or part of its properties or assets to Holdings or another Restricted Subsidiary, in each case, subject to compliance with the Additional Guarantor Requirement as of the time of such merger or disposition and (ii) Holdings may merge with or into an Affiliate formed solely for the purpose of reincorporating Holdings in another jurisdiction.
(i) For purposes of the foregoing, the sale, assignment, transfer, lease, conveyance or other disposition (in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Subsidiaries of Holdings, which properties or assets, if held by Holdings instead of such Subsidiaries, would constitute all or substantially all of the properties or assets of Holdings on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties or assets of Holdings.
(j) Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the properties or assets of Holdings in accordance with this Section 8.09, in which Holdings is not the surviving entity, the Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, Holdings under this Agreement and any other Security Document to which it is a party with the same effect as if such Successor Company had been named as Holdings herein (so that from and after the date of such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the provisions of this Agreement referring to “Holdings” shall refer instead to such Successor Company and not to Holdings); and thereafter (except in the case of a lease of all or substantially all of Holdings’ properties or assets), Holdings shall be discharged and released from all obligations and covenants under this Agreement and the other Security Documents to which it is a party.
SECTION 8.10 Minimum Interest Coverage Ratio. Holdings will not permit the Interest Coverage Ratio as of the last day of each fiscal quarter for the period of four consecutive fiscal quarters ending on such date, beginning with the fiscal quarter ending June 30, 2014, to be less than 1.50:1.00.
SECTION 8.11 Maximum Leverage Ratio. Holdings will not permit the Consolidated Leverage Ratio, as of the last day of any period of four consecutive fiscal quarters, beginning with the fiscal quarter ending June 30, 2014, to be greater than 5.00:1.00.
SECTION 8.12 Minimum Asset Coverage Ratios. Holdings will not permit the Proved Reserves Coverage Ratio, as of the last day of each fiscal quarter beginning with the fiscal quarter ending June 30, 2014, to be less than 2.0 to 1.0.
SECTION 8.13 Elections. Without the prior written consent of the Required Lenders, Holdings will not, and will not permit any of its Subsidiaries to, make any election for U.S. federal income tax purposes that causes the Indebtedness of the Borrowers to be treated as the Indebtedness of a “U.S. person” (as such term is defined under Section 7701(a)(30) of the Code) for U.S. federal income tax purposes.
SECTION 8.14 Amendments to Certain Documents. Holdings will not, and will not permit any of its Restricted Subsidiaries to amend, modify, restate, supplement or otherwise change (pursuant to a waiver or otherwise), the Subordination Agreement, any LC Procurement Document or the LC Issuance Agreement other than (i) any such amendment, restatement, supplement, modification or other change which would not be adverse to any Payer Party or the Collateral Agent and which does not involve the payment of a consent fee or (ii) any such amendment as may be necessary, if any, with respect to the Applicable Rate and related provisions and definitions hereunder in order to provide for the payment of a LC Fee equal to the sum of the weighted average Applicable Margin (as defined in the Term B Credit Agreement), the Alternate Base Rate (as defined in the Term B Credit Agreement) (with respect to the ABR Tranches of ABR Borrowings under the Term B Credit Agreement), and the Adjusted LIBO Rate (as defined in the Term B Credit Agreement) (with respect to the Eurodollar Tranches of Eurodollar Borrowings under the Term B Credit Agreement) after giving effect to the incurrence of Other Term Loans (as defined in the Term B Credit Agreement) in accordance with Section 2.22 of the Term B Credit Agreement; provided that no such amendment, modification, change, waiver, discharge or termination shall, without the consent of the Collateral Agent, (a) extend the LC Release Date, or reduce the Fees or extend the time of payment of any LC Procurement Agreement Obligations (as defined in the Term B Credit Agreement) (except in connection with the waiver of applicability of any post-default increase in interest rates), or reduce (or forgive) the outstanding amount of Reimbursement Obligations (as defined in the Term B Credit Agreement), (b) release any Collateral, (c) amend, modify or waive any provision of Section 10.05, or (d) consent to the assignment or transfer by LuxCo of any of its rights thereunder.
Article IX.
Events of Default.
In case of the happening of any of the following events (“Events of Default”):
SECTION 9.01 Payments. The Payer shall (a) default in the payment when due of any LC Procurement Obligations or (b) default, and such default shall continue unremedied for three or more Business Days, in the payment when due of any Fees or any interest payable hereunder, or any other amounts owing hereunder or any other Credit Document.
SECTION 9.02 Representations, etc.. Any representation, warranty or statement made or deemed made by any Payer Party herein or in any other LC Procurement Document or
in any certificate delivered to the Payee pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made.
SECTION 9.03 Covenants. Holdings or any of its Restricted Subsidiaries shall (a) default in the due performance or observance by it of any term, covenant or agreement contained in Section 7.01(f)(i), 7.04 (with respect to the Payer only), 7.11(c) or 7.12 or Article VIII or (b) default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement (other than those set forth in Sections 9.01, 9.02 and 9.03(a)) and such default shall continue unremedied for a period of 30 days following the earlier of (i) Holdings’ or the Payer’s actual knowledge of such default and (ii) written notice from the Payee specifying such default.
SECTION 9.04 Default Under Other Agreements. (a) Holdings or any of its Restricted Subsidiaries shall (i) default in any payment of any Indebtedness (other than the Obligations under the Credit Documents) beyond the period of grace, if any, provided in an instrument or agreement under which such Indebtedness was created or (ii) default in the observance or performance of any agreement or condition relating to any Indebtedness (other than the Obligations under the Credit Documents) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause any such Indebtedness to become due prior to its stated maturity, or (b) any Indebtedness (other than the Obligations under the Credit Documents) of Holdings or any of its Restricted Subsidiaries shall be declared to be (or shall become) due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the Stated Maturity thereof; provided that, it shall not be a Default or an Event of Default under this Section 9.04 unless the principal amount of all Indebtedness as described in preceding clauses (a) and (b) is at least $25,000,000.
SECTION 9.05 Bankruptcy, etc. Holdings or any of the other Payer Parties, other than EIH, shall commence a voluntary case concerning itself under any Debtor Relief Law; or an involuntary case is commenced against Holdings or any of the other Payer Parties, other than EIH, and the petition is not controverted within 10 days, or is not dismissed within 60 days after the filing thereof; or a custodian (as defined in a Debtor Relief Law) is appointed for, or takes charge of, all or substantially all of the property of Holdings or any of the other Payer Parties, other than EIH, to operate all or any substantial portion of the business of Holdings or any of the other Payer Parties, other than EIH, or Holdings or any of the other Payer Parties, other than EIH, commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Holdings or any of the other Payer Parties, other than EIH, or there is commenced against Holdings or any of the other Payer Parties any such proceeding which remains undismissed for a period of 60 days after the filing thereof, or Holdings or any of the other Payer Parties, other than EIH, is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Holdings or any of the other Payer Parties, other than EIH, makes a general assignment for the benefit of creditors; or any Business action is taken by Holdings or any of the other Payer Parties, other than EIH, for the purpose of effecting any of the foregoing.
SECTION 9.06 Dutch Insolvency Event. A Dutch Insolvency Event shall have occurred with respect to EIH.
SECTION 9.07 ERISA. (a) An ERISA Event shall have occurred, a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA shall be subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof) and an event described in Subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur with respect to such Plan within the following 30 days (except to the extent that a waiver to the advance reporting requirement of PBGC Regulation 4043.61 applies with respect to such event); any Plan shall have an Unfunded Current Liability; there is or arises any potential withdrawal liability under Section 4201 of ERISA, if Holdings, any of its Subsidiaries, or any ERISA Affiliate were to withdraw completely from any and all Multiemployer Plans; a contribution required to be made by Holdings, any of its Subsidiaries or any ERISA Affiliate with respect to a Plan or Non-U.S. Plan has not been timely made, Holdings, any of its Subsidiaries or any ERISA Affiliate has incurred or is likely to incur any liability on account of a group health plan (as defined in Section 607(1) of ERISA, Section 4980B(g)(2) of the Code or 45 Code of Federal Regulations Section 160.103) under Section 4980B of the Code and/or the Health Insurance Portability and Accountability Act of 1996; or Holdings or any of its Subsidiaries has incurred or is likely to incur liabilities pursuant to any portion of any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA); any Change in Law occurs, or, as a result of a Change in Law, an event occurs following a Change in Law, with respect to or otherwise affecting any Plan; (b) there shall result from any of the events set forth in clause (a) above the imposition of a lien, the granting of a security interest, or a liability or a material risk of incurring a liability; and (c) such lien, security interest or liability described in clause (a) or (b) above, either individually or in the aggregate, in the opinion of the Payee has had, or could reasonably be expected to have, a Material Adverse Effect.
SECTION 9.08 Security Documents. Any of the Security Documents shall cease to be in full force and effect, or shall cease to give the Collateral Agent for the benefit of the Payee the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Collateral (other than any immaterial portion thereof), in favor of the Collateral Agent, subject to no other Liens (except Permitted Liens), or any Payer Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any such Security Document and such default shall continue beyond the period of grace, if any, specifically applicable thereto pursuant to the terms of such Security Document.
SECTION 9.09 Guaranties. The Payer Party Guaranty or any provision thereof shall cease to be in full force or effect as to any Guarantor (except as a result of a release of any Guarantor in accordance with the terms thereof), or any Guarantor or any Person acting for or on behalf of such Guarantor shall deny or disaffirm such Guarantor’s obligations under the Payer Party Guaranty to which it is a party or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the Payer Party Guaranty.
SECTION 9.10 Judgments. One or more judgments or decrees shall be entered against Holdings or any of the other Payer Parties involving in the aggregate for Holdings and the other Payer Parties a liability that equals or exceeds $25,000,000 (to the extent not paid or not covered by a reputable and solvent insurance company pursuant to which the insurer has accepted liability therefor in writing) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of 30 consecutive days.
SECTION 9.11 Nationalization. All or any part of the interest of Holdings or any of the other Payer Parties in any Oil and Gas Property (or any Hydrocarbons or revenues or other monies arising in respect of it) is (o) nationalized, expropriated, compulsorily acquired or seized by any Governmental Authority or (p) any such Governmental Authority takes, or officially announces it will take, any step with a view to any of the foregoing and in either case such action is reasonably likely to result in a Material Adverse Effect.
SECTION 9.12 Cross-Default. Either Term A Borrower shall (i) default in any payment obligation under the Term A Credit Agreement beyond the period of grace, if any, provided thereunder or in the observance or performance of any agreement contained in the Term A Credit Agreement or (ii) any of the Term A Credit Documents shall cease to be in full force and effect, or shall cease to give the Collateral Agent for the benefit of lenders the Term A Credit Agreement the Lien, rights, powers and privileges purported to be created thereby, in favor of the Collateral Agent, or any Payer Party shall default in the due performance or observance of any term, covenant or agreement on its part shall continue beyond the period of grace, if any, specifically applicable thereto pursuant to the terms of such Term A Credit Document or any Payer Party or any Person acting for or on behalf of such Payer Party shall deny or disaffirm such Payer Party’s obligations under the Term A Credit Document to which it is a party.
SECTION 9.13 Change of Control. A Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Payee and/or the Collateral Agent may by written notice to the Payer take any or all of the following actions, without prejudice to the rights of the Payee to enforce its claims against any Payer Party (provided that, if an Event of Default respecting the covenant in Section 9.05 shall occur with respect to the Payer, the result which would occur upon the giving of written notice by the Payee as specified below, shall occur automatically without the giving of any such notice): (1) declare any Fees owing hereunder to be, whereupon the same shall become, forthwith due and payable, together with the Applicable Premium, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Payer Party, (2) terminate the Commitment, and (3) require the Payer to immediately provide to the LC Bank the immediate return to the Payee of the Payer Deposit, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Payer; and (4) enforce, as Collateral Agent, all of the Liens and security interests created pursuant to the Security Documents.
After the occurrence and during the continuance of an Event of Default, any amounts received on account of the Obligations shall be applied by the Payee in the following order (to the fullest extent permitted by mandatory provisions of applicable law):
First, to payment of that portion of the Obligations constituting fees (including the Fees without accounting for any accrued interest thereon), indemnities, expenses and other amounts (other than LC Procurement Obligations, but including attorneys’ and consultant fees and other out-of-pocket expenses payable under Section 11.05) payable to the Payee and the Collateral Agent;
Second, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Obligations owing to the Payee;
Third, to payment of that portion of the Obligations constituting LC Procurement Obligations owing to the Payee;
Fourth, to the payment of all other Obligations that are due and payable to the Payee on such date; and
Fifth, to the Default Deposit; and
Last, the balance, if any, to the Payer or other Payer Party as otherwise required by applicable law.
Article X.
The Collateral Agent.
SECTION 10.01 Appointment and Authority. The Payee hereby irrevocably appoint the Collateral Agent its agent and authorizes the Collateral Agent to take such actions on its behalf and to exercise such powers as are delegated to the Collateral Agent by the terms of the LC Procurement Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, the Collateral Agent is hereby expressly authorized to (i) execute any and all documents (including releases) with respect to the Collateral or any Guarantor and the rights of the Payee with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents and (ii) negotiate, enforce or the settle any claim, action or proceeding affecting the Payee in their capacity as such, at the direction of the Payee, which negotiation, enforcement or settlement will be binding upon the Payee.
SECTION 10.02 Exculpatory Provisions.
(a) The Collateral Agent shall not have any duties or obligations except those expressly set forth in the LC Procurement Documents. Without limiting the generality of the foregoing, (i) the Collateral Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (ii) the Collateral Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Collateral Agent is instructed in
writing to exercise by the Payee, and (iii) except as expressly set forth in the LC Procurement Documents, the Collateral Agent shall not have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to Holdings, the Payer or any of the Subsidiaries that is communicated to or obtained by the bank serving as Collateral Agent or any of its Affiliates in any capacity.
(b) The Collateral Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Payee or in the absence of its own gross negligence or willful misconduct. The Collateral Agent shall not be deemed to have knowledge of any Default unless and until written notice thereof is given to the Collateral Agent by Holdings or the Payee.
(c) The Collateral Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any LC Procurement Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any LC Procurement Document, (iv) the validity, enforceability, effectiveness or genuineness of any LC Procurement Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article V or elsewhere in any LC Procurement Document, other than to confirm receipt of items expressly required to be delivered to the Collateral Agent.
(d) Each of the Payee and the Payer hereby acknowledges and agrees that (i) the Collateral Agent is acting as administrative agent under the Term A Credit Agreement and the Term B Credit Agreement and each of the other agreements and documents executed or made in connection therewith, (ii) the Collateral Agent is acting as the collateral agent and as a secured party under each of the security agreements and documents executed or made pursuant to any of the foregoing agreements, for the benefit of secured parties under each of the this Agreement, the Term A Credit Agreement and the Term B Credit Agreement, (iii) the LC Bank is acting as letter of credit issuing bank under the LC Issuance Agreement and (iv) neither the Collateral Agent nor the LC Bank shall be liable under this Agreement or any Security Document for any actual or deemed conflict of interest as a result thereof, or as a result of any actions which either the Collateral Agent or the LC Bank shall take or fail to take under any such other document.
SECTION 10.03 Reliance by Collateral Agent. The Collateral Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed or sent by the proper Person. The Collateral Agent may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. The Collateral Agent may consult with legal counsel (who may be counsel for the Payer), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
SECTION 10.04 Delegation of Duties. The Collateral Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by it. The Collateral Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers by or through its Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Collateral Agent and any such sub-agent, and shall apply to their respective activities as Collateral Agent. The Collateral Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Collateral Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
SECTION 10.05 Resignation of Collateral Agent. Subject to the appointment and acceptance of a successor Collateral Agent as provided below, the Collateral Agent may resign at any time by notifying the Payee and the Payer; provided that unless a retiring Collateral Agent’s resignation would not, in the judgment of legal counsel, adversely affect the validity, perfection, enforceability or priority of the Liens securing the Obligations, the Collateral Agent’s resignation notice shall only take effect upon: (i) the appointment of a successor Collateral Agent; and (ii) the transfer of all the Collateral to that successor Collateral Agent. Upon any such resignation, the Payee and the Payer agree that the collateral agent appointed under the Term A Credit Agreement shall automatically become the Collateral Agent hereunder. If no successor shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Collateral Agent gives notice of its resignation, then the retiring Collateral Agent may appoint a successor Collateral Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. If no successor Collateral Agent has been appointed pursuant to the immediately preceding sentence by the 30th day after the date such notice of resignation was given by Collateral Agent, Collateral Agent’s resignation shall become effective and the Payee shall thereafter perform all the duties of Collateral Agent hereunder and/or under any other LC Procurement Document until such time, if any, as the Payee, with the consent of the Payer so long as no Event of Default has occurred and is continuing, appoint a successor Collateral Agent. Upon the acceptance of its appointment as Collateral Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Payer to a successor Collateral Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Payer and such successor. After a Collateral Agent’s resignation hereunder, the provisions of this Article and Section 11.05 shall continue in effect for the benefit of the retiring Collateral 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 acting as Collateral Agent.
SECTION 10.06 Non-Reliance on Collateral Agent. The Payee acknowledges that it has, independently and without reliance upon the Collateral Agent and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. The Payee also acknowledges that it will, independently and without reliance upon the Collateral Agent and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other LC Procurement Document, any related agreement or any document furnished hereunder or thereunder.
Article XI.
Miscellaneous.
SECTION 11.01 Notices; Electronic Communications. 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 fax, as follows:
(a) if to the Payer, to it at 21-31 Woodfield Road, London, W9 2BA, England, Attention: Chief Financial Officer, Fax No. 44 20 7451 2351, with a copy to Holdings at 811 Main Street, Suite 2100 Houston, TX 77002, Attention: Chief Financial Officer, Fax No. (713) 307-8794;
(b) if to any Payer Party (other than the Payer), to it at c/o Endeavour International Corporation, 811 Main Street, Suite 2100 Houston, TX, 77002, Attention: Chief Financial Officer;
(c) if to the Payee, to it at 40, avenue Monterey, L-2163 Luxembourg; and
(d) if to the Collateral Agent, to it at Credit Suisse, Eleven Madison Avenue, 23rd Floor, New York, NY 10010, Attn: Loan Operations – Boutique Management, Telephone No.: (212) 538 3525, Email: Ops-collateral@credit-suisse.com.
All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by fax (or other electronic communications pursuant to procedures approved by the Payee) or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 11.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 11.01. As agreed to among Holdings, the Payer, the Payee and the Collateral Agent from time to time, notices and other communications may also be delivered by e‑mail to the e‑mail address of a representative of the applicable Person provided from time to time by such Person and shall be deemed to have been given as of the date of receipt thereof.
The Payer hereby agrees, unless directed otherwise by the Payee or unless the electronic mail address referred to below has not been provided by the Payee to the Payer, that it will, or will cause its Subsidiaries to, provide to the Payee all information, documents and other materials that it is obligated to furnish to the Payee pursuant to the LC Procurement Documents or to the Lenders under Article VII, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to the payment of any Fees or other amounts due under this Agreement prior to the scheduled date therefor, (ii) provides notice of any Default or Event of Default under this Agreement or any other LC Procurement Document or (iii) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium that is properly identified in a format acceptable to the Payee to an electronic mail address as directed by the Payee. In
addition, the Payer agrees, and agrees to cause its Subsidiaries, to continue to provide the Communications to the Payee, as the case may be, in the manner specified in the LC Procurement Documents but only to the extent requested by the Payee.
Nothing herein shall prejudice the right of the Payee or the Collateral Agent to give any notice or other communication pursuant to any LC Procurement Document in any other manner specified in such LC Procurement Document.
SECTION 11.02 Survival of Agreement. All covenants, agreements, representations and warranties made by the Payer or Holdings herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other LC Procurement Document shall be considered to have been relied upon by the Payee and shall survive the consummation of the Transactions, regardless of any investigation made by the Payee or on their behalf, and shall continue in full force and effect as long as any Fee or any other amount payable under this Agreement or any other LC Procurement Document is outstanding and unpaid. The provisions of Section 11.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the invalidity or unenforceability of any term or provision of this Agreement or any other LC Procurement Document, or any investigation made by or on behalf of the Payee or the Collateral Agent.
SECTION 11.03 Binding Effect. This Agreement shall become effective when it shall have been executed by Holdings, the Payer, the Payee and the Collateral Agent and when the Payee shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto.
SECTION 11.04 Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of Holdings, the Payer, the Payee and the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
(b) Neither Holdings nor the Payer shall assign or delegate any of its rights or duties hereunder (other than pursuant to that certain Collateral Assignment Agreement, dated as of the date hereof, among the Payee, in its capacity as a borrower under the Term B Credit Agreement, and the Collateral Agent) without the prior written consent of the Payee and the Collateral Agent, and any attempted assignment without such consent shall be null and void.
(c) Payee shall not consent to any assignment by a Term B Lender of such Term B Lender’s interests, rights and obligations under the Term B Credit Agreement pursuant to Section 9.04(b)(i) of the Term B Credit Agreement unless Payee shall have received Payer’s prior written consent to Payee’s approval of such assignment.
SECTION 11.05 Expenses; Indemnity.
(a) Holdings and the Payer agree, jointly and severally, to pay (i) all reasonable out-of-pocket expenses incurred by the Payee and the Collateral Agent in connection with the preparation and administration of this Agreement and the other LC Procurement Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) including the reasonable and documented fees, charges and disbursements of Latham & Watkins LLP and NautaDutilh, counsel for the Collateral Agent (and, if necessary, by a firm of local counsel in each appropriate jurisdiction and in the case of an actual conflict of interest, one additional firm of counsel to the affected Lenders), (ii) all out-of-pocket expenses incurred by the Payee and the Collateral Agent Lender in connection with the enforcement or protection of its rights in connection with this Agreement and the other LC Procurement Documents, and, in connection with any such enforcement or protection, the reasonable fees, charges and disbursements of any other counsel for the Payee or the Collateral Agent and (iii) without duplication, any Taxes payable by the Payee to maintain its existence or attributable to any income or activities contemplated by this Agreement to the extent such Taxes are not grossed-up or indemnified by other provisions of this Agreement.(b) Holdings and the Payer agree, jointly and severally, to indemnify the Payee, the Collateral Agent and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other LC Procurement Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby, (ii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (and regardless of whether such matter is initiated by a third party or by the Payer, any other Payer Party or any of their respective Affiliates), or (iii) any actual or alleged presence or Release of Hazardous Materials on any property currently or formerly owned or operated by the Payer or any of the Subsidiaries, or any Environmental Liability related in any way to the Payer or the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the willful misconduct, bad faith or gross negligence of such Indemnitee or (iv) any proceeding not involving an act or omission by the Payer or its affiliates that is brought by an Indemnitee against any other Indemnitee (other than disputes involving claims against the Payee in their capacity as such).
(c) To the extent permitted by applicable law, neither Holdings nor the Payer shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby or the Transactions.
(d) The provisions of this Section 11.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the invalidity or unenforceability of any term or provision of this Agreement or any other LC Procurement Document, or any investigation made by or on
behalf of the Payee or the Collateral Agent. All amounts due under this Section 11.05 shall be payable on written demand therefor.
SECTION 11.06 Right of Setoff. If an Event of Default shall have occurred and be continuing, the Payee are hereby authorized at any time and from time to time, except to the extent prohibited by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Payee to or for the credit or the account of the Payer or Holdings against any of and all the obligations of the Payer or Holdings now or hereafter existing under this Agreement and other LC Procurement Documents, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other LC Procurement Document and although such obligations may be unmatured. The rights of the Payee under this Section 11.06 are in addition to other rights and remedies (including other rights of setoff) which the Payee may have.
SECTION 11.07 Applicable Law. THIS AGREEMENT, THE OTHER LC PROCUREMENT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT (INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE) (IN EACH CASE, OTHER THAN AS EXPRESSLY SET FORTH IN OTHER CREDIT DOCUMENTS) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.
SECTION 11.08 Waivers; Amendment.
(a) No failure or delay of the Payee or the Collateral Agent in exercising any power or right hereunder or under any other LC Procurement Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Payee and the Collateral Agent hereunder and under the other LC procurement 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 LC Procurement Document or consent to any departure by the Payer or any other Payer Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Payer in any case shall entitle the Payer to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by Holdings, the Payer, the Payee and the Collateral Agent.
SECTION 11.09 Interest Rate Limitation. Notwithstanding any provision herein to the contrary, if at any time any interest rate applicable to the Obligations, together with all fees,
charges and other amounts which are treated as interest on such Obligations under applicable law (collectively, the “Charges”) shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Payee or the Collateral Agent in accordance with applicable law, the rate of interest payable in respect of such Obligations hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Obligations but were not payable as a result of the operation of this Section 11.09 shall be cumulated and the interest and Charges payable to such Person in respect of other Obligations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate (as defined in the Term A Credit Agreement) to the date of repayment, shall have been received by such Person.
SECTION 11.10 Entire Agreement. This Agreement, the other LC Procurement Documents and any other written agreement regarding the payment of Fees constitute the entire contract between the parties relative to the subject matter hereof. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other LC Procurement Documents. Nothing in this Agreement or in the other LC Procurement Documents, expressed or implied, is intended to confer upon any Person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, the Related Parties of each of the Payee and the Collateral Agent) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other LC Procurement Documents.
SECTION 11.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LC PROCUREMENT DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LC PROCUREMENT DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.11.
SECTION 11.12 Severability. In the event any one or more of the provisions contained in this Agreement or in any other LC Procurement Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 11.13 Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 11.03. Delivery of an executed signature page to this Agreement by facsimile transmission or as a “.pdf” shall be as effective as delivery of a manually signed counterpart of this Agreement.
SECTION 11.14 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 11.15 Jurisdiction; Consent to Service of Process.
(a) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY COMPETENT NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LC PROCUREMENT DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE PAYEE AND THE COLLATERAL AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE OTHER LC PROCUREMENT DOCUMENTS AGAINST THE PAYER OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LC PROCUREMENT DOCUMENTS IN ANY NEW YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(c) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.01. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 11.16 Confidentiality. Each of the Payee and the Collateral Agent agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ officers, directors, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or under the other LC Procurement Documents or any suit, action or proceeding relating to the enforcement of its rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the same as those of this Section 11.16, (i) any actual or prospective assignee of in any of its rights or obligations under this Agreement and the other LC Procurement Documents or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Payee or any Subsidiary or any of their respective obligations as designated by the Payee, (f) on a confidential basis to (i) any rating agency in connection with rating Holdings, the Payer or any of their respective Subsidiaries or the facilities hereunder, (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the facilities or (iii) market data collectors, similar service providers to the lending industry and service providers to the Collateral Agent in connection with the administration, settlement and management of this Agreement and the LC Procurement Documents, (g) with the consent of the Payee or (h) to the extent such Information becomes publicly available other than as a result of a breach of this Section 11.16. For the purposes of this Section, “Information” shall mean all information received from the Payer and related to the Payer or its business, other than any such information that was available to the Payee or the Collateral Agent on a nonconfidential basis prior to its disclosure by the Payer; provided that, in the case of Information received from the Payer 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 11.16 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord its own confidential information.
SECTION 11.17 USA PATRIOT Act Notice. Each of the Payee and the Collateral Agent (for itself) hereby notifies the Payer that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Payer, which information includes the name and address of the Payer and other information that will allow such Person, to identify the Payer in accordance with the USA PATRIOT Act.
SECTION 11.18 Process Agent.
(a) Each Payer Party hereby irrevocably and unconditionally appoints CT Corporation with an office on the date hereof at 111 Eighth Avenue, New York, New York 10011, and its
successors hereunder (the “Process Agent”), as its agent to receive on behalf of such Payer Party and its property all writs, claims, process, and summonses in any action or proceeding brought against such Payer Party in the State of New York. Such service may be made by mailing or delivering a copy of such process to any Payer Party in care of the Process Agent at the address specified above for the Process Agent, and such Payer Party irrevocably authorizes and directs the Process Agent to accept such service on its behalf. Failure by the Process Agent to give notice to the applicable Payer Party, or failure of the applicable Payer Party, to receive notice of such service of process shall not impair or affect the validity of such service on the Process Agent or any such Payer Party, or of any judgment based thereon. Each Payer Party hereto covenants and agrees that it shall take any and all reasonable action, including the execution and filing of any and all documents that may be necessary to continue the designation of the Process Agent above in full force and effect, and to cause the Process Agent to act as such. Each Payer Party hereto further covenants and agrees to maintain at all times an agent with offices in New York City to act as its Process Agent. Nothing herein shall in any way be deemed to limit the ability to serve any such writs, process or summonses in any other manner permitted by applicable law.
(b) Each Payer Party that is not incorporated in England and Wales and that has executed, or will on the Closing Date execute, any LC Procurement Document governed by the law of England and Wales irrevocably and unconditionally appoints Law Debenture Corporate Services Limited, with an office on the date hereof at 100 Wood Street, London, EC2V 7EX, UK., and its successors hereunder (the “UK Process Agent”), as its agent to receive on behalf of such Payer Party and its property all writs, claims, process, and summonses in any action or proceeding brought against such Payer Party in England and Wales. Such service may be made by mailing or delivering a copy of such process to any Payer Party in care of the UK. Process Agent at the address specified above for the UK Process Agent, and such Payer Party irrevocably authorizes and directs the UK Process Agent to accept such service on its behalf. Failure by the UK Process Agent to give notice to such Payer Party, or failure of such Payer Party, to receive notice of such service of process shall not impair or affect the validity of such service on the UK Process Agent or any such Payer Party, or of any judgment based thereon. Each such Payer Party covenants and agrees that it shall take any and all reasonable action, including the execution and filing of any and all documents that may be necessary to continue the designation of the UK Process Agent above in full force and effect, and to cause the UK Process Agent to act as such. Each such Payer Party further covenants and agrees to maintain at all times an agent with offices in England to act as its UK Process Agent. Nothing herein shall in any way be deemed to limit the ability to serve any such writs, process or summonses in any other manner permitted by applicable law. If any person appointed as an agent for service in England and Wales is unable for any reason to act as agent for service of process, Holdings (on behalf of all such Payer Parties) shall immediately (and in any event within five days of such event taking place) appoint another agent on terms acceptable to the Payee. In the event that Holdings fails to appoint such agent on terms acceptable to the Payee, the Payee shall have the right to appoint an agent for service of process.
SECTION 11.19 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other LC Procurement Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Payee could purchase the first currency with
such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Payer Parties in respect of any such sum due from it to the Payee hereunder or under the other LC Procurement Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Payee of any sum adjudged to be so due in the Judgment Currency, the Payee may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Payee from the Payer Parties in the Agreement Currency, the Payer Parties agree, jointly and severally, as a separate obligation and notwithstanding any such judgment, to indemnify the Payee or the Person to whom such obligation was owing against such loss.
SECTION 11.20 Disregarded Entity. The Payee will not change its tax residency. LC Finco US will continue to be a “disregarded entity” for US federal income tax purposes and will not carry out any business activities in the United States.
