EXHIBIT 4.8
------------
===============================================================================
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
among
CHESAPEAKE ENERGY CORPORATION,
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP,
as Borrower,
BANK OF AMERICA, N.A. and UNION BANK OF CALIFORNIA, N.A.,
as Co-Administrative Agents,
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Paying, Receiving and Collateral Agent,
and
BNP PARIBAS,
CALYON NEW YORK BRANCH and
SUNTRUST BANK
as Co-Documentation Agents
and
The Several Lenders from Time to Time Parties Hereto,
Dated as of January 28, 2005
BANC OF AMERICA SECURITIES LLC
and
UNION BANK OF CALIFORNIA, N.A.
as Joint Lead Arrangers and Co-Book Managers
===============================================================================
TABLE OF CONTENTS
SECTION 1. DEFINITIONS.................................................1
1.1. Defined Terms...................................................1
1.2. Other Definitional Provisions..................................24
1.3. Letter of Credit Amounts.......................................25
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS..................26
2.1. Revolving Commitments..........................................26
2.2. Procedure for Revolving Loan Borrowing.........................26
2.3. Commitment Fees, etc...........................................26
2.4. Termination or Reduction of Revolving Commitments..............27
2.5. The Letter of Credit Commitment................................27
2.6. Procedures for Issuance and Amendment of Letters of Credit.....29
2.7. Drawings and Reimbursements; Funding of Participations.........30
2.8. Repayment of Participations....................................31
2.9. Obligations Absolute.:.........................................32
2.10. Role of each Issuing Lender...................................33
2.11. Cash Collateral...............................................34
2.12. Applicability of ISP and UCP..................................34
2.13. Letter of Credit Fees.........................................34
2.14. Borrowing Base and Collateral Value Determination.............35
SECTION 3. GENERAL PROVISIONS APPLICABLE TO REVOLVING LOANS AND
LETTERS OF CREDIT..........................................37
3.1. Optional Prepayments...........................................37
3.2. Mandatory Prepayments..........................................37
3.3. Conversion and Continuation Options............................39
3.4. Limitations on Eurodollar Tranches.............................40
3.5. Interest Rates and Payment Dates...............................40
3.6. Computation of Interest and Fees...............................40
3.7. Inability to Determine Interest Rate...........................41
3.8. Pro Rata Treatment and Payments................................41
3.9. Requirements of Law............................................43
3.10. Taxes.........................................................44
3.11. Indemnity.....................................................46
3.12. Change of Lending Office......................................46
3.13. Replacement of Lenders........................................47
3.14. Evidence of Debt..............................................47
3.15. Illegality....................................................48
3.16. Sharing of Payments by Lenders................................48
i
SECTION 4. REPRESENTATIONS AND WARRANTIES.............................49
4.1. Financial Condition............................................49
4.2. No Change; No Internal Control Event...........................49
4.3. Existence; Compliance with Law.................................49
4.4. Power; Authorization; Enforceable Obligations..................49
4.5. No Legal Bar...................................................50
4.6. Litigation.....................................................50
4.7. No Default.....................................................50
4.8. Ownership of Property; Liens...................................50
4.9. Intellectual Property..........................................51
4.10. Taxes.........................................................51
4.11. Federal Regulations...........................................51
4.12. Labor Matters.................................................51
4.13. ERISA.........................................................51
4.14. Investment Company Act; Other Regulations.....................52
4.15. Subsidiaries..................................................52
4.16. Use of Proceeds...............................................52
4.17. Environmental Matters.........................................52
4.18. Accuracy of Information, etc..................................53
4.19. Security Documents............................................54
4.20. Solvency......................................................54
4.21. Senior Debt Limit.............................................54
4.22. Subsidiary Guarantors.........................................54
SECTION 5. CONDITIONS PRECEDENT.......................................54
5.1. Conditions to Initial Extension of Credit......................54
5.2. Conditions to Each Extension of Credit.........................56
SECTION 6. AFFIRMATIVE COVENANTS......................................56
6.1. Financial Statements...........................................56
6.2. Certificates; Other Information................................57
6.3. Payment of Obligations.........................................60
6.4. Maintenance of Existence; Compliance...........................60
6.5. Maintenance of Property; Insurance.............................60
6.6. Inspection of Property; Books and Records; Discussions.........61
6.7. Notices........................................................61
6.8. Environmental Laws.............................................62
6.9. Collateral Coverage and Guarantees.............................62
6.10. Further Assurances............................................62
ii
SECTION 7. NEGATIVE COVENANTS.........................................63
7.1. Financial Condition Covenants..................................63
7.2. Indebtedness...................................................64
7.3. Liens..........................................................66
7.4. Fundamental Changes............................................67
7.5. Disposition of Property........................................68
7.6. Restricted Payments............................................69
7.7. Investments....................................................70
7.8. Optional Payments and Modifications of
Certain Debt Instruments.......................................71
7.9. Transactions with Affiliates...................................72
7.10. Sales and Leasebacks..........................................72
7.11. Changes in Fiscal Periods.....................................72
7.12. Negative Pledge Clauses.......................................72
7.13. Clauses Restricting Subsidiary Distributions..................72
7.14. Take-or-Pay Contracts.........................................73
7.15. Lines of Business.............................................73
7.16. Senior Debt Limit.............................................73
7.17. Preferred Stock Issuance......................................73
SECTION 8. EVENTS OF DEFAULT..........................................74
SECTION 9. THE AGENTS.................................................77
9.1. Appointment and Authority......................................77
9.2. Rights as a Lender.............................................77
9.3. Exculpatory Provisions.........................................77
9.4. Reliance by Agent..............................................78
9.5. Delegation of Duties...........................................78
9.6. Resignation of Agent...........................................78
9.7. Non-Reliance on Agent and Other Lenders........................79
9.8. No Other Duties, Etc...........................................79
9.9. Administrative Agent May File Proofs of Claim..................79
SECTION 10. MISCELLANEOUS..............................................80
10.1. Amendments and Waivers........................................80
10.2. Notices; Effectiveness; Electronic Communication..............81
10.3. No Waiver; Cumulative Remedies................................83
10.4. Survival of Representations and Warranties....................83
10.5. Expenses; Indemnification; Damage Waiver......................83
10.6. Successors and Assigns; Participations and Assignments........85
10.7. Set-off.......................................................88
10.8. Counterparts..................................................88
10.9. Severability..................................................88
10.10. Integration..................................................89
10.11. GOVERNING LAW................................................89
10.12. Submission To Jurisdiction; Waivers..........................89
10.13. Acknowledgments..............................................89
10.14. Releases of Guarantees and Liens;
Designation of Subsidiaries..................................90
10.15. Confidentiality..............................................91
10.16. WAIVERS OF JURY TRIAL........................................92
10.17. Special Provisions...........................................92
10.18. Limitation on Interest.......................................93
10.19. USA Patriot Act Notice.......................................93
iii
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Property
1.1C Existing Letters of Credit
4.1 Financial Condition
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.15(a) Subsidiaries
4.15(b) Outstanding Subscriptions, Options, Warrants, Calls, Rights etc.
Relating to Capital Stock of the Company or any Subsidiary
4.17(d) Environmental Matters 4.17(f) NonCompliance with Environmental Laws
4.19 Mortgage Filing Jurisdictions 5.1(i) Existing Mortgages 7.2(d)
Existing Indebtedness 7.3(f) Existing Liens 7.7(m) Investments 10.2
Notices
EXHIBITS:
A Form of Guarantee Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Assumption
F Form of Legal Opinion of Commercial Law Group, P.C.
G Form of Exemption Certificate
H Form of Revolving Note
I Form of Pari Passu Hedging Obligation Notice
J Requirements for Hedging Support Credit Facility
iv
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of January 28, 2005, among
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP, an Oklahoma limited partnership (the
"BORROWER"), CHESAPEAKE ENERGY CORPORATION, an Oklahoma corporation (the
"COMPANY"), BANK OF AMERICA, N.A. and UNION BANK OF CALIFORNIA, N.A., as
co-administrative agents, UNION BANK OF CALIFORNIA, N.A., as administrative
paying, receiving and collateral agent, the Issuing Lenders provided herein, BNP
PARIBAS, CALYON NEW YORK BRANCH and SUNTRUST BANK, as Co-Documentation Agents
and the several banks and other financial institutions or entities from time to
time parties to this Agreement (the "LENDERS").
W I T N E S S E T H:
WHEREAS, the Company and the Borrower wish to amend and restate the
Fourth Amended and Restated Credit Agreement, dated as of May 7, 2004 (as
amended, the "EXISTING CREDIT AGREEMENT") to obtain a senior secured revolving
credit facility in an aggregate principal amount of up to $1,250,000,000, and
the parties hereto are willing to amend and restate the Existing Credit
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises set forth, the parties
hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. DEFINED TERMS. As used in this Agreement, the terms listed in
this SECTION 1.1 shall have the respective meanings set forth in this SECTION
1.1.
"ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS":
-----------------------------------------
as defined in the Indentures, as applicable.
"ADJUSTED SPE BASIS PROJECTED PRODUCTION": for any month the
total of (a) SPE Basis Projected Production for such month attributable to
reserves that are, at the time of determination, classified as "Producing"
reserves plus (b) 25% of SPE Basis Projected Production for such month
attributable to "Proved" reserves that are not, at the time of determination,
classified as "Producing" reserves.
"ADMINISTRATIVE AGENT": Union Bank of California, N.A. as
administrative paying, receiving and collateral agent, or any successor in such
capacity.
"ADMINISTRATIVE QUESTIONNAIRE": a questionnaire in a form
supplied by the Administrative Agent.
"AFFILIATE": with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
1
"AGENTS": the collective reference to the Administrative Agent
and the Co-Administrative Agents; "AGENT" means such Agents individually and
collectively.
"AGGREGATE EXPOSURE": with respect to any Lender at any time, an
amount equal to the amount of such Lender's Revolving Commitment then in effect
or, if the Revolving Commitments have been terminated, the amount of such
Lender's Revolving Extensions of Credit then outstanding.
"AGGREGATE EXPOSURE PERCENTAGE": with respect to any Lender at
any time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the Aggregate Exposure of all Lenders at such time.
"AGREEMENT": this Fifth Amended and Restated Credit Agreement,
as amended, supplemented or otherwise modified from time to time.
"APPLICABLE MARGIN": for each Type of Revolving Loan, on any
day, the rate per annum set forth at the appropriate intersection at the
relevant column heading below based on the Applicable Rating Level as of the
close of business on the immediately preceding Business Day:
APPLICABLE BASE RATE LOANS EURODOLLAR LOANS
---------- --------------- ----------------
RATING LEVEL
------------
Level I .25% 1.75%
Level II 0% 1.375%
Level III 0% 1.25%
Level IV 0% 1.125%
"APPLICABLE RATING LEVEL": means the level set forth below that
corresponds to the ratings issued from time to time by Moody's and S&P, as
applicable to the Index Debt:
MOODY'S S&P
------- ---
Level I <B1 <B+
- -
Level II Ba3 BB-
Level III Ba2 BB
Level IV >Ba1 >BB+
- -
For purposes of the foregoing, (i) "=" means a rating equal to or more favorable
than; (ii) "=" means a rating equal to or less favorable than; (iii) if neither
S&P nor Moody's maintains a rating for the Index Debt, Level I shall apply; (iv)
if the ratings for the Index Debt fall within different levels that are one
level apart, the more favorable of the two ratings shall apply (for example, if
the Moody's rating is Ba3 and the S&P rating is BB, Level III shall apply); (v)
if the ratings for the Index Debt fall within different levels that are more
than one level apart, the level that is one level less favorable than the more
favorable of the two ratings shall apply (for example, if the Moody's rating is
Ba3 and the S&P rating is BB+, Level III shall apply; (vi) if only one of S&P or
Moody's provides a rating for the Index Debt, the level corresponding to such
level shall apply; and (vii) if either of the Rating Agencies shall change its
ratings nomenclature prior to the date all Obligations have been paid and the
Commitments canceled, the Borrower and the Majority Lenders shall negotiate in
good faith to amend the references to specific ratings in this definition to
reflect such change, and pending such amendment, if an appropriate Applicable
Rating Level is otherwise not determinable based upon the foregoing grid, the
last Applicable Rating Level in effect at the time of such change shall continue
to apply. A change in the Applicable Rating Level shall be effective as of the
date on which a change in the rating is first announced irrespective of when
notice of such change shall have been furnished by the Borrower to the
Administrative Agent and the Lenders.
2
"APPLICATION": an application, in such form as the Issuing
Lender may specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.
"APPROVED FUND": any Fund that is administered or managed by (a)
a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender
"ASSIGNMENT AND ASSUMPTION": means an assignment and assumption
entered into by a Lender and an Eligible Assignee (with the consent of any party
whose consent is required by SECTION 10.6(B), and accepted by the
Co-Administrative Agents, in substantially the form of EXHIBIT E or any other
form approved by the Co-Administrative Agents.
"AVAILABLE REVOLVING COMMITMENT": as to any Lender at any time,
an amount equal to the excess, if any, of (a) such Lender's Revolving Commitment
then in effect OVER (b) such Lender's Revolving Extensions of Credit then
outstanding.
"BASE RATE": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Reference
Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 0.50%. For purposes hereof: "REFERENCE RATE" shall mean the rate
of interest per annum publicly announced from time to time by Union Bank of
California, N.A. as its "reference rate" (the Reference Rate not intended to be
the lowest rate of interest charged by Union Bank of California, N.A. in
connection with extensions of credit to debtors). Any change in the Base Rate
due to a change in the Reference Rate or the Federal Funds Effective Rate shall
be effective as of the opening of business on the effective day of such change
in the Reference Rate or the Federal Funds Effective Rate, respectively.
"BASE RATE LOANS": Revolving Loans the rate of interest
applicable to which is based upon the Base Rate.
"BOARD": the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"BORROWER": as defined in the preamble to this Agreement.
"BORROWER MATERIALS": as defined in SECTION 6.2.
"BORROWING BASE": at any time the Borrowing Base is in effect,
the amount of the "Borrowing Base" as determined in accordance with SECTION
2.14, as reduced by the Borrower pursuant to SECTION 3.2.
"BORROWING BASE DEFICIENCY": as defined in SECTION 3.2(B).
"BORROWING BASE DEFICIENCY NOTICE": as defined in SECTION
3.2(B).
"BORROWING BASE PERIOD": as defined in SECTION 2.14(B).
"BORROWING DATE": any Business Day specified by the Borrower as
a date on which the Borrower requests the Lenders to make Revolving Loans
hereunder.
"BUDGET BASIS PROJECTED PRODUCTION": at any time of
determination, the projected production of oil or gas (measured by volume unit
or BTU equivalent, not sales price) from properties and interests owned by any
Group Member which are located in or offshore of the United States and Canada,
as such production is projected (i) in the most recent report delivered pursuant
to SECTION 6.2(C) for purposes of management planning and budgeting after
deducting projected production from any properties or interests sold or under
contract for sale that had been included in such report and after adding
projected production from any properties or interests that had not been
reflected in such report.
"BUSINESS": as defined in SECTION 4.17(B).
"BUSINESS DAY": a day other than a Saturday, Sunday or other day
on which commercial banks in New York City or Los Angeles, California are
authorized or required by law to close, PROVIDED, that with respect to notices
and determinations in connection with, and payments of principal and interest
on, Eurodollar Loans, such day is also a day for trading by and between banks in
Dollar deposits in the interbank eurodollar market.
3
"CAPITAL LEASE OBLIGATIONS": as to any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing,
including, without limitation, any preferred stock.
"CASH COLLATERALIZE": to pledge and deposit with or deliver to
the Administrative Agent, for the benefit of the Issuing Lenders and the
Lenders, as collateral for the L/C Obligations, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the Issuing Lenders (which documents are hereby
consented to by the Lenders). Derivatives of such term have corresponding
meanings. "CASH COLLATERAL" means the cash or deposit account balances subject
to such pledge and deposit. References to the amount Cross Collateralized shall
be the lesser of the amount of the Cash Collateral and the amount of L/C
Obligations secured thereby.
"CASH EQUIVALENTS": means the following kinds of instruments if,
in the case of instruments referred to in clauses (i)-(iv) below, on the date of
purchase or other acquisition of any such instrument by the Company or any
Subsidiary, the remaining term to maturity is not more than one year; (i)
readily marketable obligations issued or unconditionally guaranteed as to
principal of and interest thereon by the United States of America or by any
agency or authority controlled or supervised by and acting as an instrumentality
of the United States of America; (ii) repurchase obligations for instruments of
the type described in clause (i) for which delivery of the instrument is made
against payment; (iii) obligations (including, but not limited to, demand or
time deposits, bankers' acceptances and certificates of deposit) issued by a
depositary institution or trust company incorporated or doing business under the
laws of the United States of America, any state thereof or the District of
Columbia or a branch or subsidiary of any such depositary institution or trust
company operating outside the United States, provided, that such depositary
institution or trust company has, at the time of the Company's or such
Subsidiary's investment therein or contractual commitment providing for such
investment, capital surplus or undivided profits (as of the date of such
institution's most recently published financial statements) in excess of
$500,000,000; (iv) commercial paper issued by any corporation, if such
commercial paper has, at the time of the Company's or any Subsidiary's
investment therein or contractual commitment providing for such investment,
credit ratings of A-1 (or higher) by S&P and P-1 (or higher) by Moody's; and (v)
money market mutual or similar funds having assets in excess of $500,000,000.
"CLOSING DATE": the date on which the conditions precedent set
forth in SECTION 5.1 shall have been satisfied, which date is January 28, 2005.
"CO-ADMINISTRATIVE AGENTS": Bank of America N.A. and Union Bank
of California, N.A., as co-administrative agents, or any successor in such
capacity to either of them.
"CODE": the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL": all property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"COLLATERAL COVERAGE RATIO": at any time, the ratio of (a) the
Collateral Value to (b) the greater of (i) the lesser of the Borrowing Base, if
applicable, or the Total Revolving Commitments and (ii) the Total Revolving
Extensions of Credit then outstanding.
"COLLATERAL DEFICIENCY DATE": as defined in SECTION 3.2(A).
"COLLATERAL RELEASE DATE": as defined in SECTION 2.14(G).
"COLLATERAL VALUE": on any date, the net present value (using
the average of the discount rates then customarily utilized by the
Co-Administrative Agents for collateral valuation purposes, which, on the
Closing Date, is a 9% discount rate) of the projected future net revenues
attributable to the portion of the reserves categorized as "Producing" of the
Mortgaged Properties and attributable to the Other Proved Reserves, as
determined from time to time in accordance with SECTION 2.14; PROVIDED, that the
4
portion of the Collateral Value attributable to the net present value (as so
determined) of the Mortgaged Properties owned by the Guarantors (the "GUARANTORS
COLLATERAL VALUE") shall be limited such that the Guarantors Collateral Value
shall not exceed 25% of the resulting total Collateral Value; PROVIDED FURTHER
that the portion of the Collateral Value attributed to Other Proved Reserves
shall be limited such that the Collateral Value attributable to Other Proved
Reserves shall not exceed 25% of the resulting total Collateral Value.
"COMMITMENT FEE RATE": on any day the rate per annum set forth
below based on the Applicable Rating Level as of the close of business on the
preceding Business Day:
APPLICABLE RATING COMMITMENT FEE RATE
----------------- -------------------
LEVEL
-----
Level I .375%
Level II .30%
Level III .30%
Level IV .25%
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, that is under common control with the Company within the meaning
of Section 4001 of ERISA or is part of a group that includes the Company and
that is treated as a single employer under Section 414 of the Code.
"COMPANY": as defined in the preamble to this Agreement.
"COMPANY REPORT": as defined in SECTION 6.2(D).
"COMPLIANCE CERTIFICATE": a certificate duly executed by a
Responsible Officer substantially in the form of EXHIBIT B.
"CONSOLIDATED EBITDA": for any period, Consolidated Net Income
for such period PLUS, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period, the sum
of (a) income tax expense, (b) interest expense, (c) depletion, depreciation and
amortization expense, (d) any extraordinary charges or losses determined in
accordance with GAAP, and (e) any other non-cash charges, non-cash expenses or
non-cash losses of any Group Member for such period (excluding any such charge,
expense or loss incurred in the ordinary course of business that constitutes an
accrual of or reserve for cash charges for any future period) including non-cash
losses or charges resulting from the requirements of SFAS 133 or 143; PROVIDED
that cash payments made during such period or in any future period in respect of
such non-cash charges, expenses or losses (other than any such excluded charge,
expense or loss as described above) shall be subtracted from Consolidated Net
Income in calculating Consolidated EBITDA for the period in which such payments
are made, and MINUS, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (a) interest income, (b) any
extraordinary income or gains determined in accordance with GAAP and (c) any
other non-cash income or gain (excluding any items that represent the reversal
of any accrual of, or cash reserve for, anticipated cash charges in any prior
period that are described in the parenthetical to clause (e) above) including
any non-cash income or gains resulting from the requirements of SFAS 133 or 143,
all as determined on a consolidated basis in accordance with GAAP. For purposes
of SECTION 7.1(B) and 7.2(L) only, and for no other purpose, if, since the
beginning of the four fiscal quarter period ending on the date for which
Consolidated EBITDA is determined, any Group Member shall have made any
acquisition or Disposition of assets other than from or to another Group Member,
shall have consolidated or merged with or into any Person (other than another
Group Member), shall have disposed of the equity interests of a Group Member
other than from or to another Group Member or shall have made any acquisition of
a Person that becomes a Group Member, Consolidated EBITDA shall be calculated
giving pro forma effect thereto as if the acquisition, Disposition,
consolidation or merger had occurred on the first day of such period. Such pro
forma effect shall be determined (i) in good faith by the chief financial
officer, principal accounting officer or treasurer of the Company and acceptable
to Co-Administrative Agents, and (ii) without giving effect to any anticipated
or proposed change in operations, revenues, expenses or other items included in
the computation of Consolidated EBITDA.
5
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO": for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Fixed
Charges for such period.
"CONSOLIDATED FIXED CHARGES": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, and (b) all
dividends (other than dividends payable in Capital Stock) declared by the
Company and attributable to such period. For purposes of this Agreement, a
dividend is "attributed" to the fiscal quarter immediately preceding the quarter
in which such dividend is actually declared by the Company.
"CONSOLIDATED INDEBTEDNESS": the indebtedness of the Group
Members (without duplication) of the type described in clauses (a), (b), (c),
(d), (e), (g) and (h) of the definition of Indebtedness as determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE": for any period, the sum of (a)
all interest, commitment fees and loan fees in respect of Indebtedness
(including that attributable to Capital Lease Obligations) of any Group Member
deducted in determining Consolidated Net Income for such period, together with
all interest, commitment fees and loan fees capitalized or deferred during such
period and not deducted in determining Consolidated Net Income for such period
but excluding amortization of interest, commitment fees and loan fees
capitalized or deferred during an earlier period plus (b) all fees, expenses and
charges in respect of letters of credit issued for the account of any Group
Member deducted in determining Consolidated Net Income for such period, together
with all such fees, expenses and charges in respect of letters of credit
capitalized or deferred during such period and not deducted in determining
Consolidated Net Income for such period, all as determined on a consolidated
basis in accordance with GAAP. Revenues and expenses derived from Hedge
Agreements related to interest rates or dividend rates will be treated as
adjustments to interest expense for purposes of this definition.
"CONSOLIDATED NET INCOME": for any period, the consolidated net
income (or loss) of the Group Members, determined on a consolidated basis in
accordance with GAAP; PROVIDED that there shall be excluded (a) the income (or
deficit) of any Person accrued prior to the date it becomes a Subsidiary of the
Company or is merged into or consolidated with the Company or any of its
Subsidiaries except for purposes of SECTION 7.1(B) and 7.2(L) as provided in the
definition of Consolidated EBITDA, (b) the income (or deficit) of any Person
(other than a Subsidiary of the Company) in which the Company or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Company or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of the Company to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.
"CONSOLIDATED TOTAL CAPITALIZATION": Consolidated Indebtedness
plus stockholders' equity of the Loan Parties as determined on a consolidated
basis in accordance with GAAP.
"CONTINUING DIRECTORS": the directors of the Company on the
Closing Date and each other director, if, in each case, such other director's
nomination for election to the board of directors of the Company is recommended
by at least 66-2/3% of the then Continuing Directors.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTROL": the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING," "CONTROLS" and "CONTROLLED" have meanings correlative thereto.
6
"DEBTOR RELIEF LAW": the Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
"DEFAULT": any of the events specified in SECTION 8, whether or
not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"DEFAULTING LENDER": any Lender that (a) has failed to fund any
portion of the Revolving Loans or participations in L/C Obligations required to
be funded by it hereunder within one Business Day of the date required to be
funded by it hereunder, (b) has otherwise failed to pay over to an Agent or any
other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.
"DERIVATIVES COUNTERPARTY": as defined in SECTION 7.6.
"DETERMINATION DATE": as defined in SECTION 2.14.
"DISPOSITION": with respect to any Property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other disposition
thereof. The terms "DISPOSE" and "DISPOSED OF" shall have correlative meanings.
"DOLLARS" and "$": dollars in lawful currency of the United
States.
"ELIGIBLE ASSIGNEE": (a) a Lender; (b) an Affiliate of a Lender;
(c) an Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) the Co-Administrative Agents, the Issuing Lenders, and (ii)
unless an Event of Default has occurred and is continuing, the Borrower (each
such approval not to be unreasonably withheld or delayed); PROVIDED that
notwithstanding the foregoing, "Eligible Assignee" shall not include the
Borrower or any of the Borrower's Affiliates or Subsidiaries.
"ENGINEERING REPORTS": as defined in SECTION 6.2(D).
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"EURODOLLAR BASE RATE": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum determined
on the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing on
Page 3750 of the Dow Jones Markets screen as of 9:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period. In the event that
such rate does not appear on Page 3750 of the Dow Jones Markets screen (or
otherwise on such screen), the "EURODOLLAR BASE RATE" shall be determined by
reference to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Administrative Agent or, in the
absence of such availability, by reference to the rate at which the
Administrative Agent is offered Dollar deposits at or about 9:00 A.M., New York
City time, two Business Days prior to the beginning of such Interest Period in
the interbank eurodollar market where its eurodollar and foreign currency and
exchange operations are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein.
7
"EURODOLLAR LOANS": Revolving Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined by the
Administrative Agent for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
EURODOLLAR BASE RATE
---------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EURODOLLAR TRANCHE": the collective reference to Eurodollar
Loans the then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such Eurodollar
Loans shall originally have been made on the same day).
"EVALUATION DATE": (a) in the case of the Borrowing Base, if
applicable, December 31 of each year, and in the case of the Collateral Value,
if applicable, June 30 and December 31 of each year, (b) such other dates as the
Majority Lenders, at their option, determine pursuant to a notice executed by
the Majority Lenders that the Borrowing Base, if applicable, and the Collateral
Value, if applicable, shall be redetermined and (c) such other dates as the
Borrower shall request; PROVIDED, that the Borrower shall not be entitled to
request that a date be an "Evaluation Date" more than once during any six month
period beginning January 1 and July 1. Notwithstanding anything herein to the
contrary, the first Evaluation Date under this Agreement shall be deemed to be
December 31, 2004.
"EVENT OF DEFAULT": any of the events specified in SECTION 8,
PROVIDED that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"EXCESS AMOUNT": as defined in SECTION 7.5.
"EXCHANGE ACT": as defined in SECTION 8(K).
"EXISTING CREDIT AGREEMENT": as defined in the preamble to this
Agreement.
"EXITING LENDERS": any Lender (as defined in the Existing Credit
Agreement) that is not also a Lender under this Agreement.
"EXISTING LETTERS OF CREDIT": the Letters of Credit (as defined
in the Existing Credit Agreement) issued pursuant to the Existing Credit
Agreement listed on SCHEDULE 1.1C.
"EXISTING MORTGAGES": the collective reference to each existing
deed of trust, mortgage, chattel mortgage, security agreement, financing
statement and other security documents delivered pursuant to the Existing Credit
Agreement and listed on SCHEDULE 5.1(I).
8
"FEDERAL FUNDS EFFECTIVE RATE": 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 of such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it.
"FUNDING OFFICE": the office of the Administrative Agent specified in SECTION
10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"FUND": any Person (other than a natural person) that is (or
will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business.
"GAAP": generally accepted accounting principles in the United
States as in effect from time to time except for purposes of SECTION 7.1, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements referred to in SECTION 4.1. In the event that any
Accounting Change (as defined below) shall occur and such change results in a
change in the method of calculation of financial covenants, standards or terms
in this Agreement, then the Company and the Co-Administrative Agents agree to
enter into negotiations in order to amend such provisions of this Agreement so
as to equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Company's financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Company, the Borrower, the Co-Administrative Agents and the Majority
Lenders, all financial covenants, standards and terms in this Agreement shall
continue to be calculated or construed as if such Accounting Changes had not
occurred. "ACCOUNTING CHANGES" refers to changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants or, if applicable, the SEC.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"GROUP MEMBERS": the collective reference to the Company, the
Borrower and their respective Subsidiaries.
"GUARANTEE AGREEMENT": the Guarantee Agreement to be executed
and delivered by the Company and each Subsidiary Guarantor, substantially in the
form of EXHIBIT A.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING
PERSON"), any obligation, contingent or otherwise, of the guaranteeing person
guaranteeing or having the economic effect of guaranteeing any Indebtedness,
leases, dividends or other obligations (the "PRIMARY OBLIGATIONS") of any other
third Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the
obligee of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; PROVIDED, HOWEVER, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Company or the Borrower in good faith.
9
"GUARANTORS": the collective reference to the Company and the
Subsidiary Guarantors.
"HEDGE AGREEMENT": any (a) agreement (including each
confirmation entered into under a master agreement) providing for options,
swaps, floors, caps, collars, forward sales or forward purchases involving
interest rates, commodities or commodity prices, equities, currencies, bonds, or
indexes based on any of the foregoing, (b) option, futures or forward contract
traded on an exchange, and (c) other derivative agreement or other similar
agreement or arrangement.
"HEDGING SUPPORT CREDIT FACILITY": an agreement governing and
securing only Indebtedness in respect of certain of the Hedge Agreements
permitted under SECTION 7.2(G) which agreement, all amendments, supplements and
modifications thereto, all documents executed in connection therewith, and all
Liens securing the Indebtedness thereunder comply substantially with the Hedging
Support Credit Facility Limitations.
"HEDGING SUPPORT CREDIT FACILITY LIMITATIONS": the aggregate
exposure and collateral coverage terms set forth in the Agreement between the
Borrower and the counterparty named therein dated May 28, 2004, as such
requirements and limitations may be modified or replaced as determined by the
Borrower and a counterparty from time to time party to a Hedging Support Credit
Facility so long as such modified or replacement requirements and limitations
comply with the requirements and limitations as set forth on EXHIBIT J hereto.
"INDEBTEDNESS": of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's business
and other obligations to the extent such obligations may be satisfied at such
Person's sole discretion by the issuance of common stock of such Person), (c)
all obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations of such Person, (f)
all obligations of such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit, surety bonds or
similar arrangements, (g) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (f) above, (h) all
obligations of the kind referred to in clauses (a) through (f) above secured by
(or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation, (i) liabilities with respect
to payments received in consideration of oil, gas, or other minerals yet to be
acquired or produced at the time of payment (including obligations under
"take-or-pay" contracts to deliver gas in return for payments already received
and the undischarged balance of any production payment created by such Person or
for the creation of which such Person directly or indirectly received payment),
and (j) for the purposes of SECTIONS 7.2, 7.3 and 8(e) only, all obligations of
such Person in respect of Hedge Agreements. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person's ownership interest in or other relationship with
such entity, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor.
10
"INDEMNITEE": as defined in SECTION 10.5(B).
"INDENTURES": to the extent that the notes issued thereunder
remain outstanding, each Indenture governing the Index Debt issued prior to the
Closing Date or issued from time to time after the Closing Date as permitted
under SECTION 7.2.
"INDEPENDENT REPORT": as defined in SECTION 6.2(D).
"INDEX DEBT": the Company's long-term, unsecured, senior,
non-credit enhanced debt.
"INFORMATION": as defined in SECTION 10.15.
"INITIAL ENGINEERING REPORT": the following engineering report
concerning oil and gas properties of the Company and
its Subsidiaries: Report dated September 30, 2004 prepared by the Company's
employee engineers.
"INSOLVENCY": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"INTEREST PAYMENT DATE": (a) as to any Base Rate Loan, the last
day of each March, June, September and December to occur while such Base Rate
Loan is outstanding and the final maturity date of such Base Rate Loan, (b) as
to any Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day that is three months, or a
whole multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period and (d) as to any Eurodollar Loan, the date of any
repayment or prepayment made in respect thereof.
"INTEREST PERIOD": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent no later than 9:00 A.M., Los Angeles, California time,
three Business Days prior to the last day of the then current Interest Period
with respect thereto; PROVIDED that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) the Borrower may not select an Interest Period that would
extend beyond the Revolving Termination Date;
(iii) any Interest 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 Interest Period)
shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an Interest
Period for such Eurodollar Loan.
"INTERNAL CONTROL EVENT": a material weakness in, or fraud that
involves management or other employees who have a significant role in, the
Borrower's internal controls over financial reporting, in each case as described
in the Securities Laws.
11
"INVESTMENTS": as defined in SECTION 7.7.
"ISP": with respect to any Letter of Credit, the "International
Standby Practices 1998" published by the Institute of International Banking Law
& Practice (or such later version thereof as may be in effect at the time of
issuance).
"ISSUER DOCUMENTS": with respect to any Letter of Credit, the
L/C Application, and any other document, agreement and instrument entered into
by the Issuing Lender and the Borrower (or any Subsidiary) or in favor the
Issuing Lender and relating to any such Letter of Credit.
"ISSUING LENDER": each of Union Bank of California, N.A. and
Bank of America, N.A., in its capacity as issuer of any Letter of Credit. The
Co-Administrative Agents may, with the consent of the Borrower and the relevant
Lender, appoint such Lender hereunder as an Issuing Lender in place of or in
addition to Union Bank of California, N.A. and Bank of America, N.A, which
appointment may be subject to an L/C Sublimit in respect of such Issuing Lender
specified by Co-Administrative Agents and such Lender.
"L/C ADVANCE": with respect to each Lender, such Lender's
funding of its participation in any L/C Borrowing in accordance with its
Revolving Percentage.
"L/C APPLICATION": an application and agreement for the issuance
or amendment of a Letter of Credit in the form from time to time in use by the
Issuing Lender.
"L/C BORROWING": an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Revolving Loan.
"L/C COMMITMENT": $500,000,000.
"L/C CREDIT EXTENSION": with respect to any Letter of Credit,
the issuance thereof or extension of the expiry date thereof, or the increase of
the amount thereof.
"L/C EXPIRATION DATE": the day that is seven days prior to the
Revolving Termination Date then in effect (or, if such day is not a Business
Day, the next preceding Business Day).
"L/C FEE PAYMENT DATE": the last day of each March, June,
September and December and the last day of the Revolving Commitment Period.
"L/C OBLIGATIONS": as at any date of determination, the
aggregate amount available to be drawn under all outstanding Letters of Credit
PLUS the aggregate of all Unreimbursed Amounts, including all L/C Borrowings.
For purposes of computing the amount available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance
with SECTION 1.3. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP,
such Letter of Credit shall be deemed to be "outstanding" in the amount so
remaining available to be drawn.
"L/C SUBLIMIT": with respect to each of Bank of America, N.A.
and Union Bank of California, N.A., the lesser of (i) $250,000,000, or (ii) 50%
of the L/C Commitment, and with respect to any other Issuing Lender, the amount
and/or percentage of the L/C Commitment specified by the Co-Administrative
Agents and such Issuing Lender in connection with its appointment as an Issuing
Lender.
"LENDER AFFILIATE": (a) any Affiliate of any Lender, (b) any
Person that is administered or managed by any Lender and that is engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business and (c) with
respect to any Lender which is a fund that invests in commercial loans and
similar extensions of credit, any other fund that invests in commercial loans
and similar extensions of credit and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such Lender or
investment advisor.
"LENDER HEDGE AGREEMENT": a Hedge Agreement between the Company
or the Borrower and a Lender or an affiliate of a Lender (including each
confirmation or modification in respect of such Hedge Agreement).
12
"LENDERS": as defined in the preamble hereto.
"LETTERS OF CREDIT": the Existing Letters of Credit and any
letter of credit issued hereunder including amendments thereto.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"LOAN DOCUMENTS": this Agreement, the Security Documents, the
Guarantee Agreement and the Notes.
"LOAN PARTIES": each Group Member that is a party to a Loan
Document.
"MAJORITY LENDERS": at any time, the holders of more than 50% of
the Total Revolving Commitments then in effect or, if the
Revolving Commitments have been terminated, the Total Revolving Extensions of
Credit then outstanding.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, property, operations, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries taken as a whole or
(b) the validity or enforceability of this Agreement or any of the other Loan
Documents or the rights or remedies of the Agents or the Lenders hereunder or
thereunder.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.
"MOODY'S": Moody's Investors Service, Inc. and any successor
thereto.
"MORTGAGED PROPERTIES": the properties listed on SCHEDULE 1.1B,
as to which the Administrative Agent for the benefit of the Lenders shall be
granted a Lien pursuant to the Mortgages and such other properties as to which
amendments to the relevant Existing Mortgages as contemplated by SECTION 5.1(I)
have been executed, but excluding properties as to which releases have been
executed pursuant to SECTION 10.14.
"MORTGAGES": each of the mortgages and deeds of trust made by
any Loan Party in favor of, or for the benefit of, the Administrative Agent for
the benefit of the Lenders, substantially in the form of EXHIBIT D (with such
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded), including, without
limitation, the Existing Mortgages and amendments to the relevant Existing
Mortgages as contemplated by SECTION 5.1(I).
"MULTIEMPLOYER PLAN": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS": in connection with any Disposition, the
proceeds thereof in the form of cash and Cash Equivalents (including any such
proceeds received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or by the
Disposition of any non-cash consideration received in connection therewith or
otherwise, but only as and when received), net of attorneys' fees, accountants'
fees, investment banking fees, amounts required to be applied to the repayment
of Indebtedness secured by a Lien expressly permitted hereunder on any asset
that is the subject of such Disposition (other than any Lien pursuant to a
Security Document) and other customary fees and expenses actually incurred in
connection therewith and net of taxes paid or reasonably estimated to be payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements).
"NON-EXCLUDED TAXES": as defined in SECTION 3.10(A).
"NON-U.S. LENDER": as defined in SECTION 3.10(D).
"NOTES": the collective reference to any promissory note
evidencing Revolving Loans.
"OBLIGATIONS": the unpaid principal of and interest on
(including interest and fees accruing after the maturity of the Revolving Loans
and L/C Obligations and interest and fees accruing after the commencement of any
proceeding under any Debtor Relief Law, relating to the Borrower, whether or not
a claim for post-filing or post-petition interest is allowed in such proceeding)
the Revolving Loans, L/C Obligations, Pari Passu Hedging Obligations and all
other obligations and liabilities of the Borrower and the other Loan Parties to
any Agent or to any Lender, whether direct or indirect, absolute or contingent,
13
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, this Agreement, any other Loan Document,
the Letters of Credit or any other document made, delivered or given in
connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including all
fees, charges and disbursements of counsel to any Agent or to any Lender that
are required to be paid by the Borrower and the other Loan Parties pursuant
hereto) or otherwise. It is expressly agreed that Pari Passu Hedging Obligations
shall be limited to the maximum aggregate amount and to the allocations thereof
as set forth in SECTION 3.8(F), but that Pari Passu Hedging Obligations shall
not be treated as Obligations for purposes of the provisions for acceleration in
SECTION 8 and for adjustments and set-off in SECTION 10.7.
"OTHER PROVED RESERVES": the portion of the reserves
attributable to the Mortgaged Properties which are categorized as Proved but
which are not then categorized as Producing, and, without limitation on such
other adjustments or assumptions which may be used by the Co-Administrative
Agents or any Lender in the determination of Collateral Value, such reserves
shall be reduced to the risk adjusted values determined by the Co-Administrative
Agents at the time of such determination, which, as of the Closing Date, are 50%
of Proved Undeveloped reserves and 75% of Proved Developed Behind Pipe reserves,
Proved Developed Shut-in reserves and other Proved Developed Non-Producing
reserves.
"OTHER TAXES": any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"PARI PASSU HEDGING OBLIGATION ALLOCATION": as defined in
SECTION 3.8(F).
"PARI PASSU HEDGING OBLIGATION NOTICE": a notice delivered
pursuant to SECTION 3.8(F), substantially in the form of EXHIBIT I.
"PARI PASSU HEDGING OBLIGATIONS": obligations arising from time
to time under any Lender Hedge Agreement if an effective Lender Pari Passu
Hedging Obligation Allocation has been made in respect of such Lender and its
Affiliate, limited to the amount of such Lender's Pari Passu Hedging Obligation
Allocation.
"PARTICIPANT": as defined in SECTION 10.6(D).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"PERMITTED PREFERRED STOCK": Preferred Stock of the Company
either (a) outstanding on the Closing Date or (b) issued or modified after the
Closing Date as permitted by SECTION 7.17.
"PERMITTED SECURITIZATION": any transfer by the Company, the
Borrower, or any Subsidiary of accounts receivable or interests therein
(collectively, "Receivables") and all collateral securing such Receivables, all
contracts and contract rights that are guarantees or other obligations in
respect of such Receivables, all lockbox accounts, collection accounts and other
assets that are customarily granted in connection with asset securitization
transactions involving Receivables and all proceeds of any of the foregoing
(collectively, the "Related Security") (i) to a Securitization Subsidiary, which
transfer is funded in whole or in part, directly or indirectly, by the
incurrence or issuance by the transferee or any successor transferee of
indebtedness or other securities that are to receive payments from, or that
represent interests in, the cash flow derived from such Receivables and Related
Security, or (ii) directly to one or more investors or other purchasers (other
than the Company, the Borrower or a Subsidiary), in any case involving an
aggregate principal amount at any time not to exceed $150,000,000. The
"principal amount" of any Permitted Securitization shall be deemed at any time
to be (x) in the case of a transaction described in clause (i) of the preceding
sentence, the aggregate principal or stated amount of the indebtedness or
securities referred to in such clause incurred or issued for the purpose of
funding the Securitization Subsidiary's acquisition of Receivables and Related
Security (exclusive of any subordinated notes that the Securitization Subsidiary
may issue to the Company, the Borrower or any other Subsidiary) or, if there
shall be no such principal or stated amount, the uncollected amount of the
Receivables transferred pursuant to such Permitted Securitization net of any
such Receivables that have been written off as uncollectible, and (y) in the
case of a transaction described in clause (ii) of the preceding sentence, the
lesser of the aggregate outstanding principal amount of the subject Receivables
or the indebtedness secured by Liens on the subject Receivables and Related
Security, as applicable. The term "Permitted Securitization" shall also include
refinancings of the foregoing within such limitation on the aggregate principal
amount of such Permitted Securitization.
14
"PERSON": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"PLAN": at a particular time, any employee benefit plan that is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLATFORM": as defined in SECTION 6.2.
"PREFERRED STOCK": as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated), which
is preferred as to the payment of dividends, or upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares of Capital
Stock of any other class of such Person.
"PRO FORMA INCURRENCE TESTS": on the date of the transaction
giving rise to the need to calculate the Pro Forma Incurrence Tests (the
"Transaction Date"), on a pro forma basis after giving effect to such
transaction: (a) the ratio of Consolidated EBITDA for the period of four
consecutive fiscal quarters of the Company most recently ended prior to the
Transaction Date (the "Reference Period") to Consolidated Fixed Charges for the
Reference Period is not less than 2.5 to 1.0 and (b) the ratio of Consolidated
Indebtedness to Consolidated Total Capitalization is not greater than .65 to
1.0. In calculating Consolidated Fixed Charges on a pro forma basis (i) the
incurrence of any Indebtedness or issuance of any Preferred Stock during the
Reference Period or subsequent to the Reference Period and on or prior to the
Transaction Date shall be assumed to have occurred on the first day of such
Reference Period, (ii) all dividends on Preferred Stock outstanding or assumed
to be outstanding during the Reference Period are assumed to have been paid,
(iii) any Indebtedness or Preferred Stock that had been outstanding during the
Reference Period that has been repaid, repurchased or redeemed on or prior to
the Transaction Date shall be assumed to have been repaid, repurchased or
redeemed as of the first day of such Reference Period, (iv) the Consolidated
Interest Expense attributable to interest on any Indebtedness or dividends on
any Preferred Stock bearing a floating interest (or dividend) rate shall be
computed on a pro forma basis as if the rate in effect on the Transaction Date
were the average rate in effect during the entire Reference Period and (v) to
the extent the net proceeds from the incurrence or issuance of Indebtedness or
Preferred Stock are used to retire Indebtedness, the application of the proceeds
therefrom shall be assumed to have occurred on the first day of the Reference
Period.
"PROJECTIONS": as defined in SECTION 6.2(C).
"PROPERTIES": as defined in SECTION 4.17(A).
"PROPERTY": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, Capital Stock.
"PROVED DEVELOPED PROPERTIES": as defined in the Indenture dated
April 6, 2001, governing the Company's 8.125% notes.
"PROVED", "PRODUCING", "PROVED UNDEVELOPED" and "PROVED
DEVELOPED NON PRODUCING": will have the meaning given under the Definitions for
Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or any
generally recognized successors), and the references to "BEHIND PIPE" and
"SHUT-IN" will have the meaning used in such Definitions.
"PV": as of any date of determination, the calculation of the
present value (utilizing the average of the discount rates customarily utilized
by the Co-Administrative Agents for collateral valuation purposes, which, on the
Closing Date, is 9%) of the projected future net revenues attributable to SPE
Basis Projected Production as such production is projected in the most recent
report delivered pursuant to SECTION 6.2(D), utilizing the average of the
applicable price assumptions used by the Co-Administrative Agents in evaluating
their oil and gas loans generally as determined by the Co-Administrative Agents,
adjusted to give effect to applicable commodity prices (or caps or floors) under
the Loan Parties' Hedge Agreements.
15
"RATING AGENCIES": the collective reference to S&P and Moody's.
"RECEIVABLES": as defined in the definition of "Permitted
Securitization."
"REFERENCE RATE": as defined in the definition of "Base Rate."
"REGISTER": as defined in SECTION 10.6(C).
"REGISTERED PUBLIC ACCOUNTING FIRM": will have the meaning
specified in the Securities Laws and shall be independent of the Company and the
Borrower as prescribed by the Securities Laws.
"REGULATION U": Regulation U of the Board as in effect from time
to time.
"RELATED PARTIES": with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person's Affiliates.
"RELATED SECURITY": as defined in the definition of "Permitted
Securitization."
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. ss. 4043.
"REQUIRED LENDERS": at any time, the holders of more than 75% of
the Total Revolving Commitments then in effect or, if the Revolving Commitments
have been terminated, the Total Revolving Extensions of Credit then outstanding.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, president,
chief financial officer or treasurer of the Company or the Borrower, but in any
event, with respect to financial matters, the chief financial officer or
treasurer of the Company or the Borrower.
16
"RESTRICTED PAYMENTS": as defined in SECTION 7.6.
"REVOLVING COMMITMENT": as to any Lender, the obligation of such
Lender, if any, to make Revolving Loans and participate in Letters of Credit in
an aggregate principal and/or face amount not to exceed the amount set forth
under the heading "Revolving Commitment" opposite such Lender's name on SCHEDULE
1.1A or in the Assignment and Acceptance pursuant to which such Lender became a
party hereto, as the same may be changed from time to time pursuant to the terms
hereof. The amount of the Total Revolving Commitments as of the Closing Date is
$1,250,000,000.
"REVOLVING COMMITMENT PERIOD": the period from and including the
Closing Date to the Revolving Termination Date.
"REVOLVING EXTENSIONS OF CREDIT": as to any Lender at any time,
an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Loans held by such Lender then outstanding and (b) such Lender's
Revolving Percentage of the L/C Obligations then outstanding.
"REVOLVING LOANS": as defined in SECTION 2.1(A).
"REVOLVING PERCENTAGE": as to any Lender at any time, the
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments (or, at any time after the Revolving Commitments
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Extensions of Credit then outstanding
constitutes of the aggregate principal amount of the Revolving Extensions of
Credit then outstanding).
"REVOLVING TERMINATION DATE": January 29, 2010.
"S&P": Standard& Poor's Ratings Services and any successor
thereto.
"SARBANES-OXLEY": the Sarbanes-Oxley Act of 2002.
"SEC": the Securities and Exchange Commission, any successor
thereto and any analogous Governmental Authority.
"SECURITIES LAWS": the Securities Act of 1933, the Securities
Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing
principles, rules, standards and practices promulgated, approved or incorporated
by the SEC or the Public Company Accounting Oversight Board, as each of the
foregoing may be amended and in effect on any applicable date hereunder.
"SECURITIZATION SUBSIDIARY": a Subsidiary established for the
limited purpose of facilitating a Permitted Securitization and whose only assets
are Receivables and Related Securities to be subject to the Permitted
Securitization. In no event may the Securitization Subsidiary guarantee any
indebtedness of the Company, the Borrower or any other Subsidiary or be
obligated to pledge security therefor.
"SECURITY DOCUMENTS": the collective reference to the Mortgages
and all other security documents hereafter delivered to the Administrative Agent
granting a Lien on any property of any Person to secure the obligations and
liabilities of any Loan Party under any Loan Document.
"SENIOR DEBT LIMIT": the maximum amount of Indebtedness that the
Company and its Subsidiaries may incur and secure pursuant to the terms of
clause (i) of the definition of "Permitted Indebtedness" and clause (ii) of the
definition of "Permitted Liens" under the Indentures, minus the amount of
Indebtedness (other than Indebtedness under this Agreement) that the Company or
any of its Subsidiaries have incurred and/or secured by Liens as of such day
that counts against the restrictions on the maximum amount of Indebtedness
referred to in such clause (i). For purposes of this definition, the term
"Indebtedness" shall have the meaning given in the Indentures.
"SFAS": Statement of Financial Accounting Standard No. 133 or
No. 143 as promulgated by the Financial Accounting Standards Board.
17
"SINGLE EMPLOYER PLAN": any Plan that is covered by Title IV of
ERISA, but that is not a Multiemployer Plan.
"SOLVENT": when used with respect to any Person, means that, as
of any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the amount of
all "liabilities of such Person, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) 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 (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"SPE BASIS PROJECTED PRODUCTION": at any time of determination,
the projected production of oil or gas (measured by volume unit or BTU
equivalent, not sales price) from properties and interests owned by any Group
Member which are located in or offshore of the United States and Canada
attributable to the portion of the reserves categorized as "Proved", as such
production is projected in the most recent report delivered pursuant to SECTION
6.2(D), after deducting projected production from any properties or interests
sold or under contract for sale that had been included in such report and after
adding projected production from any properties or interests that had not been
reflected in such report but that are reflected in a separate or supplemental
report which is satisfactory to the Co-Administrative Agents.
"SPECIFIED CHANGE OF CONTROL": a "Change of Control" (or any
other defined term having a similar purpose) as defined in any instrument
governing any Indebtedness of the Company or any of its Subsidiaries including,
without limitation, the Indentures.
"SUBSIDIARY": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Company.
"SUBSIDIARY GUARANTOR": each Subsidiary of the Company (other
than the Borrower and any Subsidiary that is an "Unrestricted Subsidiary" under
the Indentures).
"SYNTHETIC PURCHASE AGREEMENT": any agreement pursuant to which
any Group Member is or may become obligated to make (a) any payment in
connection with the purchase by any third party from a Person other than a Group
Member of any Capital Stock of any Group Member or (b) any payment (except as
otherwise expressly permitted by SECTION 7.6) the amount of which is determined
by reference to the price or value at any time of any such Capital Stock or
Indebtedness; PROVIDED, that no phantom stock or similar plan providing for
payments only to current or former directors, officers or employees of any Group
Member (or to their heirs or estates) shall be deemed to be a Synthetic Purchase
Agreement.
18
"TOTAL REVOLVING COMMITMENTS": at any time, the aggregate amount
of the Revolving Commitments then in effect.
"TOTAL REVOLVING EXTENSIONS OF CREDIT": at any time, the
aggregate amount of the Revolving Extensions of Credit of the Lenders
outstanding at such time.
"TRANSFEREE": any Participant.
"TYPE": as to any Revolving Loan, its nature as a Base Rate Loan
or a Eurodollar Loan.
"UNITED STATES": the United States of America.
"UNREIMBURSED AMOUNT": as defined in SECTION 2.7(A).
"UNRESTRICTED SUBSIDIARY INVESTMENT": (a) in connection with the
designation of a Subsidiary Guarantor or any newly created or acquired
Subsidiary as an "Unrestricted Subsidiary" under the Indentures, an amount equal
to the greater of (x) the book value (determined in accordance with GAAP) at the
date of such designation of the aggregate Investments made by the Company and
its other Subsidiary Guarantors in such Subsidiary Guarantor or newly created or
acquired Subsidiary and (y) the fair market value of such Investments in such
Subsidiary Guarantor or newly created or acquired Subsidiary at the time of such
designation and (b) in connection with the designation of an "Unrestricted
Subsidiary" as a "Restricted Subsidiary" under the Indentures and a Subsidiary
Guarantor hereunder, an amount equal to the lesser of (x) the book value
(determined in accordance with GAAP) at the date of such designation of the
aggregate Investments made by the Company and its other Subsidiary Guarantors in
such Subsidiary and (y) the fair market value of such Investments in such
Subsidiary at the time of such designation.
"UNUSED COMMITMENTS": at any time, the excess of (i) the lesser
of the Borrowing Base, if applicable, at such time and the Total Revolving
Commitments at such time over (ii) the Total Revolving Extensions of Credit at
such time.
19
1.2. OTHER DEFINITIONAL PROVISIONS
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the other Loan
Documents or any certificate or other document made or delivered pursuant hereto
or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to any Group Member not defined in SECTION 1.1 and
accounting terms partly defined in SECTION 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), and (iv) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, and (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) All references herein to consolidated financial statements
of the Company and its Subsidiaries or to the determination of any amount for
the Company and its Subsidiaries on a consolidated basis or any similar
reference shall, in each case, be deemed to include each variable interest
entity that the Company is required to consolidate pursuant to FASB
Interpretation No. 46 - Consolidation of Variable Interest Entities: an
interpretation of ARB No. 51 (January 2003) as if such variable interest entity
were a Subsidiary as defined herein.
1.3. LETTER OF CREDIT AMOUNTS. Unless otherwise specified herein, the
amount of a Letter of Credit at any time shall be deemed to be the stated amount
of such Letter of Credit in effect at such time; PROVIDED, HOWEVER, that with
respect to any Letter of Credit that, by its terms or the terms of any Issuer
Document related thereto, provides for one or more automatic increases in the
stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all
such increases, whether or not such maximum stated amount is in effect at such
time; AND, PROVIDED FURTHER that with respect to any Letter of Credit that, by
its terms or the terms of any Issuer Document related thereto, provides for one
or more automatic decreases in the stated amount thereof, the amount of such
Letter of Credit shall be deemed to be the maximum stated amount of such Letter
of Credit after giving effect to all such decreases, as of the date of
determination.
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS
2.1. REVOLVING COMMITMENTS
(a) Subject to the terms and conditions hereof, each Lender
severally agrees to make revolving credit loans ("REVOLVING LOANS") to the
Borrower from time to time during the Revolving Commitment Period in an
aggregate principal amount at any one time outstanding which, when added to such
Lender's Revolving Percentage of the L/C Obligations then outstanding, does not
exceed such Lender's Revolving Commitment; provided, that, after giving effect
thereto, the aggregate amount of Revolving Extensions of Credit then outstanding
shall not exceed the lesser of (i) Senior Debt Limit at such time, (ii) if the
Borrowing Base is in effect on the date the Revolving Loan is made, the
Borrowing Base on such date or (iii) the Total Revolving Commitments at such
time. During the Revolving Commitment Period, the Borrower may use the Revolving
Commitments by borrowing, prepaying and reborrowing the Revolving Loans, in
whole or in part, all in accordance with the terms and conditions hereof. The
Revolving Loans may from time to time be Eurodollar Loans or Base Rate Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with SECTIONS 2.2 and 3.3.
(b) The Borrower shall repay all outstanding Revolving Loans on
the Revolving Termination Date.
20
2.2. PROCEDURE FOR REVOLVING LOAN BORROWING. The Borrower may borrow
under the Revolving Commitments during the Revolving Commitment Period on any
Business Day, PROVIDED that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 9:00 A.M., Los Angeles, California time, (a) three Business Days prior
to the requested Borrowing Date, in the case of Eurodollar Loans, or (b) on the
day of the requested Borrowing Date, in the case of Base Rate Loans), specifying
(i) the amount and Type of Revolving Loans to be borrowed, (ii) the requested
Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts
of each such Type of Revolving Loan and the respective lengths of the initial
Interest Period therefor. Each borrowing under the Revolving Commitments shall
be in an amount equal to $5,000,000 or whole multiples of $1,000,000 in excess
thereof (or, if the Unused Commitments of the Lenders is less than $5,000,000,
such lesser amount). Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify each Lender thereof. Each Lender will
make the amount of its PRO RATA share of each borrowing available to the
Administrative Agent for the account of the Borrower at the Funding Office prior
to 11:00 a.m., Los Angeles, California time, on the Borrowing Date requested by
the Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the Administrative
Agent crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Administrative Agent by the
Lenders and in like funds as received by the Administrative Agent.
2.3. COMMITMENT FEES, ETC.
(a) The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a commitment fee for the period from and including
the Closing Date to the last day of the Revolving Commitment Period, computed at
the Commitment Fee Rate on the daily amount of such Lender's Revolving
Percentage of the Unused Commitments during the period for which payment is
made, payable quarterly in arrears on the last day of each March, June,
September and December and on the Revolving Termination Date, commencing on
March 31, 2005.
(b) The Borrower agrees to pay to the Co-Administrative Agents
the fees in the amounts and on the dates previously agreed to in writing by the
Borrower and each of the Co-Administrative Agents.
2.4. TERMINATION OR REDUCTION OF REVOLVING COMMITMENTS. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Co-Administrative Agents, to terminate the Revolving Commitments or, from time
to time, to reduce the amount of the Revolving Commitments; PROVIDED that no
such termination or reduction of Revolving Commitments shall be permitted if,
after giving effect thereto and to any prepayments of the Revolving Loans made
on the effective date thereof, the Total Revolving Extensions of Credit would
exceed the Total Revolving Commitments. Any such reduction shall be in an amount
equal to $5,000,000, or whole multiples of $1,000,000 in excess thereof, and
shall reduce permanently the Revolving Commitments then in effect.
2.5. THE LETTER OF CREDIT COMMITMENT.
(a) Subject to the terms and conditions set forth herein, (A)
each Issuing Lender agrees, in reliance upon the agreements of the Lenders set
forth in this SECTION 2.5, (1) from time to time on any Business Day during the
period from the Closing Date until the L/C Expiration Date, to issue Letters of
Credit for the account of the Borrower, the Company or any Subsidiary, and to
amend Letters of Credit previously issued by it, in accordance with subsection
(b) below, and (2) to honor drawings under the Letters of Credit; and (B) the
Lenders severally agree to participate in Letters of Credit issued for the
account of the Borrower, the Company or any Subsidiary and any drawings
thereunder; PROVIDED that after giving effect to any L/C Credit Extension with
respect to any Letter of Credit, (x) the Total Revolving Extensions of Credit
shall not exceed the Revolving Commitments, (y) the Aggregate Exposure of any
Lender shall not exceed such Lender's Revolving Commitment, and (z) the
aggregate amount of L/C Obligations shall not exceed the L/C Commitment;
PROVIDED FURTHER that each Issuing Lender may, but shall have no obligations to,
issue any Letter of Credit if, after giving effect to such issuance, the
aggregate L/C Obligations in respect of Letters of Credit issued by such Issuing
Lender would exceed such Issuing Lender's L/C Sublimit. Each request by the
Borrower for the issuance or amendment of a Letter of Credit shall be deemed to
be a representation by the Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding sentence.
Within the foregoing limits, and subject to the terms and conditions hereof, the
Borrower's ability to obtain Letters of Credit shall be fully revolving, and
accordingly the Borrower may, during the period from the Closing Date through
the L/C Expiration Date, obtain Letters of Credit to replace Letters of Credit
that have expired or that have been drawn upon and reimbursed. All Existing
Letters of Credit shall be deemed to have been issued pursuant hereto, and from
and after the Closing Date shall be subject to and governed by the terms and
conditions hereof.
21
(b) No Issuing Lender shall issue any Letter of Credit, if:
(i) the expiry date of such requested Letter of Credit would
occur more than thirteen months after the date of issuance or last
extension, unless the Required Lenders have approved such expiry date; or
(ii) the expiry date of such requested Letter of Credit would
occur after the L/C Expiration Date, unless all the Lenders have approved
such expiry date;
except Letters of Credit not to exceed an aggregate amount at any one time
outstanding of $100,000,000 that are automatically renewed annually and that may
be terminated by notice not more than ninety days prior to such Letter of
Credit's annual renewal date, provided that such Letters of Credit are so
terminated prior to the L/C Expiration Date.
(c) No Issuing Lender shall be under any obligation to issue any
Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority
or arbitrator shall by its terms purport to enjoin or restrain the Issuing
Lender from issuing such Letter of Credit, or any Law applicable to such
Issuing Lender or any request or directive (whether or not having the force
of law) from any Governmental Authority with jurisdiction over such Issuing
Lender shall prohibit, or request that such Issuing Lender refrain from,
the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Issuing Lender with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which
such Issuing Lender is not otherwise compensated hereunder) not in effect
on the Closing Date, or shall impose upon such Issuing Lender any
unreimbursed loss, cost or expense which was not applicable on the Closing
Date and which such Issuing Lender in good faith deems material to it;
(ii) the issuance of such Letter of Credit would violate one or
more policies of such Issuing Lender;
(iii) except as otherwise agreed by the Administrative Agent and
such Issuing Lender, such Letter of Credit is in an initial stated amount
less than $100,000, in the case of a commercial Letter of Credit, or
$500,000, in the case of a standby Letter of Credit;
(iv) such Letter of Credit is to be denominated in a currency
other than Dollars; or
(v) a default of any Lender's obligations to fund under SECTION
2.7(B) exists or any Lender is at such time a Defaulting Lender hereunder,
unless such Issuing Lender has entered into satisfactory arrangements with
the Borrower or such Lender to eliminate such Issuing Lender's risk with
respect to such Lender.
(d) No Issuing Lender shall amend any Letter of Credit if such
Issuing Lender would not be permitted at such time to issue such Letter of
Credit in its amended form under the terms hereof.
(e) No Issuing Lender shall be under any obligation to amend any
Letter of Credit if (A) such Issuing Lender would have no obligation at such
time to issue such Letter of Credit in its amended form under the terms hereof,
or (B) the beneficiary of such Letter of Credit does not accept the proposed
amendment to such Letter of Credit.
(f) Each Issuing Lender shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents associated
therewith, and such Issuing Lender shall have all of the benefits and
immunities (A) provided to the Agents in SECTION 9 with respect to any acts
taken or omissions suffered by such Issuing Lender in connection with
Letters of Credit issued by it or proposed to be issued by it and Issuer
Documents pertaining to such Letters of Credit as fully as if the term
"Agent" as used in SECTION 9 included such Issuing Lender with respect to
such acts or omissions, and (B) as additionally provided herein with
respect to such Issuing Lender.
22
2.6. PROCEDURES FOR ISSUANCE AND AMENDMENT OF LETTERS OF CREDIT.
(a) Each Letter of Credit shall be issued or amended, as the
case may be, upon the request of the Borrower delivered to an Issuing Lender
(with a copy to the Administrative Agent) in the form of a L/C Application,
appropriately completed and signed by a Responsible Officer of the Borrower.
Such L/C Application must be received by such Issuing Lender and the
Administrative Agent not later than 11:00 a.m. at least two Business Days (or
such later date and time as the Administrative Agent and such Issuing Lender may
agree in a particular instance in their sole discretion) prior to the proposed
issuance date or date of amendment, as the case may be. In the case of a request
for an initial issuance of a Letter of Credit, such L/C Application shall
specify in form and detail satisfactory to such Issuing Lender: (A) the proposed
issuance date of the requested Letter of Credit (which shall be a Business Day);
(B) the amount thereof; (C) the expiry date thereof; (D) the name and address of
the beneficiary thereof; (E) the documents to be presented by such beneficiary
in case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as such Issuing Lender may require. In the case of a request for
an amendment of any outstanding Letter of Credit, such L/C Application shall
specify in form and detail satisfactory to such Issuing Lender (A) the Letter of
Credit to be amended; (B) the proposed date of amendment thereof (which shall be
a Business Day); (C) the nature of the proposed amendment; and (D) such other
matters as such Issuing Lender may require. Additionally, the Borrower shall
furnish to such Issuing Lender and the Administrative Agent such other documents
and information pertaining to such requested Letter of Credit issuance or
amendment as such Issuing Lender or the Administrative Agent may require.
(b) Promptly after receipt of any L/C Application, such Issuing
Lender will confirm with the Administrative Agent (by telephone or in writing)
that the Administrative Agent has received a copy of such L/C Application from
the Borrower and, if not, such Issuing Lender will provide the Administrative
Agent with a copy thereof. Unless such Issuing Lender has received written
notice from any Lender, the Administrative Agent or any Loan Party, at least one
Business Day prior to the requested date of issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions contained in
SECTION 5 shall not then be satisfied, then, subject to the terms and conditions
hereof, such Issuing Lender shall, on the requested date, issue a Letter of
Credit for the account of the Borrower (or the Company or a Subsidiary, as
applicable) or enter into the applicable amendment, as the case may be, in each
case in accordance with such Issuing Lender's usual and customary business
practices. Immediately upon the issuance of each Letter of Credit, each Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from such Issuing Lender a risk participation in such Letter of Credit
in an amount equal to the product of such Lender's Aggregate Exposure Percentage
times the amount of such Letter of Credit.
(c) Promptly after its delivery of any Letter of Credit or any
amendment to a Letter of Credit to an advising bank with respect thereto or to
the beneficiary thereof, such Issuing Lender will also deliver to the Borrower
and the Administrative Agent a true and complete copy of such Letter of Credit
or amendment.
(d) In the event of any conflict between the terms hereof and
the terms of any L/C Application, the terms hereof shall control.
23
2.7. DRAWINGS AND REIMBURSEMENTS; FUNDING OF PARTICIPATIONS.
(a) Upon receipt from the beneficiary of any Letter of Credit of
any notice of a drawing under such Letter of Credit, the Issuing Lender shall
notify the Borrower and the Administrative Agent thereof. Not later than 11:00
a.m. on the date of any payment by such Issuing Lender under a Letter of Credit
(each such date, an "HONOR DATE"), the Borrower shall reimburse such Issuing
Lender through the Administrative Agent in an amount equal to the amount of such
drawing. If the Borrower fails to so reimburse such Issuing Lender by such time,
the Administrative Agent shall promptly notify each Lender of the Honor Date,
the amount of the unreimbursed drawing (the "UNREIMBURSED AMOUNT"), and the
amount of such Lender's Revolving Percentage thereof. In such event, the
Borrower shall be deemed to have requested a borrowing of Base Rate Revolving
Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed
Amount, without regard to the minimum and multiples specified in SECTION 2.2 for
the principal amount of Base Rate Revolving Loans, but subject to the amount of
the unutilized portion of the Revolving Commitments and the conditions set forth
in SECTION 5.2. Any notice given by such Issuing Lender or the Administrative
Agent pursuant to this SECTION 2.7(A) may be given by telephone if immediately
confirmed in writing; provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such notice.
(b) Each Lender shall upon any notice pursuant to SECTION 2.7(A)
make funds available to the Administrative Agent for the account of such Issuing
Lender at the Administrative Agent's office in an amount equal to its Revolving
Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business
Day specified in such notice by the Administrative Agent, whereupon, subject to
the provisions of SECTION 2.7(C), each Lender that so makes funds available
shall be deemed to have made a Base Rate Revolving Loan to the Borrower in such
amount. The Administrative Agent shall remit the funds so received to such
Issuing Lender.
(c) With respect to any Unreimbursed Amount that is not fully
refinanced by a borrowing of Base Rate Revolving Loans because the conditions
set forth in SECTION 5.2 cannot be satisfied or for any other reason, the
Borrower shall be deemed to have incurred from such Issuing Lender an L/C
Borrowing in the amount of the Unreimbursed Amount that is not so refinanced,
which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at the rate determined in accordance with SECTION
3.5(C). In such event, each Lender's payment to the Administrative Agent for the
account of such Issuing Lender pursuant to SECTION 2.7(B) shall be deemed
payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this SECTION 2.7.
(d) Until each Lender funds its Revolving Loan or LC Advance
pursuant to this SECTION 2.7 to reimburse such Issuing Lender for any amount
drawn under any Letter of Credit, interest in respect of such Lender's Revolving
Percentage of such amount shall be solely for the account of such Issuing
Lender.
(e) Each Lender's obligation to make Revolving Loans or LC
Advances to reimburse such Issuing Lender for amounts drawn under Letters of
Credit, as contemplated by this SECTION 2.7, shall be absolute and unconditional
and shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have
against such Issuing Lender, the Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
PROVIDED, HOWEVER, that each Lender's obligation to make Revolving Loans
pursuant to this SECTION 2.7 is subject to the conditions set forth in SECTION
5.2. No such making of an L/C Advance shall relieve or otherwise impair the
obligation of the Borrower to reimburse such Issuing Lender for the amount of
any payment made by such Issuing Lender under any Letter of Credit, together
with interest as provided herein.
(f) If any Lender fails to make available to the Administrative
Agent for the account of such Issuing Lender any amount required to be paid by
such Lender pursuant to the foregoing provisions of this SECTION 2.7 by the time
specified in SECTION 2.7(B), such Issuing Lender shall be entitled to recover
from such Lender (acting through the Administrative Agent), on demand, such
amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to such
Issuing Lender at a rate per annum equal to the greater of the Federal Funds
Rate and a rate determined by such Issuing Lender in accordance with banking
industry rules on interbank compensation. A certificate of such Issuing Lender
submitted to any Lender (through the Administrative Agent) with respect to any
amounts owing under this SECTION 2.7(F) shall be conclusive absent manifest
error.
(g) Notwithstanding that a Letter of Credit issued or
outstanding hereunder is in support of any obligations of, or is for the account
of, the Company or a Subsidiary, the Borrower shall be obligated to reimburse
the L/C Issuer hereunder for any and all drawings under such Letter of Credit.
The Borrower hereby acknowledges that the issuance of Letters of Credit for the
account of the Company or Subsidiaries inures to the benefit of the Borrower,
and that the Borrower's business derives substantial benefits from the
businesses of the Company and the Subsidiaries.
24
2.8. REPAYMENT OF PARTICIPATIONS.
(a) At any time after such Issuing Lender has made a payment
under any Letter of Credit and has received from any Lender such Lender's L/C
Advance in respect of such payment in accordance with SECTION 2.7, if the
Administrative Agent receives for the account of such Issuing Lender any payment
in respect of the related Unreimbursed Amount or interest thereon (whether
directly from the Borrower or otherwise, including proceeds of Cash Collateral
applied thereto by the Administrative Agent), the Administrative Agent will
distribute to such Lender its Revolving Percentage thereof (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Lender's L/C Advance was outstanding) in the same funds as those
received by the Administrative Agent.
(b) If any payment received by the Administrative Agent for the
account of such Issuing Lender pursuant to SECTION 2.7(A) is required to be
returned under any of the circumstances described in SECTION 10.7 (including
pursuant to any settlement entered into by such Issuing Lender in its
discretion), each Lender shall pay to the Administrative Agent for the account
of such Issuing Lender its Revolving Percentage thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned by such Lender, at a rate per annum equal to the
Federal Funds Rate from time to time in effect. The obligations of the Lenders
under this clause shall survive the payment in full of the Obligations and the
termination of this Agreement.
2.9. OBLIGATIONS ABSOLUTE. The obligation of the Borrower to reimburse
such Issuing Lender for each drawing under each Letter of Credit and to repay
each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:
(a) any lack of validity or enforceability of such Letter of
Credit, this Agreement, or any other Loan Document;
(b) the existence of any claim, counterclaim, setoff, defense or
other right that the Borrower or any Subsidiary may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), such Issuing Lender
or any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;
(c) any draft, demand, certificate or other document presented
under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; or any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under such Letter of Credit;
(d) any payment by such Issuing Lender under such Letter of
Credit against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit; or any payment made by such
Issuing Lender under such Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including any arising in
connection with any proceeding under any Debtor Relief Law; or
(e) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrower or
any Subsidiary.
25
The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower's instructions or other irregularity, the
Borrower will immediately notify such Issuing Lender. The Borrower shall be
conclusively deemed to have waived any such claim against such Issuing Lender
and its correspondents unless such notice is given as aforesaid.
2.10. ROLE OF EACH ISSUING LENDER. Each Lender and the Borrower agree
that, in paying any drawing under a Letter of Credit, such Issuing Lender shall
not have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None of such
Issuing Lender, the Administrative Agent, any of their respective Related
Parties nor any correspondent, participant or assignee of such Issuing Lender
shall be liable to any Lender for (i) any action taken or omitted in connection
herewith at the request or with the approval of the Lenders or the Required
Lenders, as applicable; (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any document or instrument related to any Letter
of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude the Borrower's pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. None of such Issuing Lender, the Co-Administrative Agents, any of
their respective Related Parties nor any correspondent, participant or assignee
of such Issuing Lender shall be liable or responsible for any of the matters
described in clauses (a) through (e) of SECTION 2.9; provided, however, that
anything in such clauses to the contrary notwithstanding, the Borrower may have
a claim against such Issuing Lender, and such Issuing Lender may be liable to
the Borrower, to the extent, but only to the extent, of any direct, as opposed
to consequential or exemplary, damages suffered by the Borrower which the
Borrower proves were caused by such Issuing Lender's willful misconduct or gross
negligence or such Issuing Lender's willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing, such Issuing
Lender may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and such Issuing Lender shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof.
2.11. CASH COLLATERAL. Upon the request of the Administrative Agent,
(i) if such Issuing Lender has honored any full or partial drawing request under
any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii)
if, as of the L/C Expiration Date, any L/C Obligation for any reason remains
outstanding, the Borrower shall, in each case, immediately Cash Collateralize
the then outstanding amount of all L/C Obligations.
2.12. APPLICABILITY OF ISP AND UCP. Unless otherwise expressly agreed
by such Issuing Lender and the Borrower when a Letter of Credit is issued
(including any such agreement applicable to an Existing Letter of Credit), (i)
the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the
rules of the Uniform Customs and Practice for Documentary Credits, as most
recently published by the International Chamber of Commerce at the time of
issuance shall apply to each commercial Letter of Credit.
26
2.13. LETTER OF CREDIT FEES.
(a) The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Revolving Percentage a Letter of
Credit fee (the "LETTER OF CREDIT FEE") (i) for each commercial Letter of Credit
equal to the Applicable Margin then in effect with respect to Eurodollar Loans
per annum times the daily amount available to be drawn under such Letter of
Credit, and (ii) for each standby Letter of Credit equal to the Applicable
Margin then in effect with respect to Eurodollar Loans per annum times the daily
amount available to be drawn under such Letter of Credit. For purposes of
computing the daily amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with SECTION
1.3. Letter of Credit Fees shall be (i) computed on a quarterly basis in arrears
and (ii) due and payable on the L/C Fee Payment Date, commencing with the first
such date to occur after the issuance of such Letter of Credit, on the L/C
Expiration Date and thereafter on demand. If there is any change in the
Applicable Margin in effect with respect to Eurodollar Loans during any quarter,
the daily amount available to be drawn under each standby Letter of Credit shall
be computed and multiplied by the Applicable Margin in effect with respect to
Eurodollar Loans separately for each period during such quarter that such
Applicable Margin was in effect. Notwithstanding anything to the contrary
contained herein, upon the request of the Required Lenders, while any Event of
Default exists, all Letter of Credit Fees shall accrue at the rate determined in
accordance with SECTION 3.5(C).
(b) The Borrower shall pay directly to such Issuing Lender for
its own account a fronting fee (i) with respect to each commercial Letter of
Credit, at the rate of 0.125% per annum, computed on the amount of such Letter
of Credit, and payable upon the issuance thereof, (ii) with respect to any
amendment of a commercial Letter of Credit increasing the amount of such Letter
of Credit, at a rate separately agreed between the Borrower and such Issuing
Lender, computed on the amount of such increase, and payable upon the
effectiveness of such amendment, and (iii) with respect to each standby Letter
of Credit, at the rate of 0.125% per annum, computed on the daily amount
available to be drawn under such Letter of Credit on a quarterly basis in
arrears, and due and payable on the L/C Fee Payment Date, commencing with the
first such date to occur after the issuance of such Letter of Credit, on the L/C
Expiration Date and thereafter on demand. For purposes of computing the daily
amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with SECTION 1.3. In
addition, the Borrower shall pay directly to such Issuing Lender for its own
account the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of such Issuing Lender relating to
letters of credit as from time to time in effect. Such customary fees and
standard costs and charges are due and payable on demand and are nonrefundable.
2.14. BORROWING BASE AND COLLATERAL VALUE DETERMINATION
(a) The Borrowing Base will be in effect at any time that (i)
the rating for the Index Debt by S&P is equal to or less favorable than BB or
(ii) the rating for the Index Debt by Moody's is equal to or less favorable than
Ba2 or (iii) neither S&P nor Moody's maintains a rating for Index Debt; PROVIDED
that if a rating for the Index Debt shall be maintained by only one of S&P and
Moody's, the Borrowing Base will be in effect at any time that such rating is
the applicable rating specified under clause (i) or (ii). At any time that the
foregoing sentence is not applicable, the Borrowing Base will be in effect, but
will cease to be in effect when the Borrower has provided the Co-Administrative
Agents and the Lenders written notice of its election to have availability under
this Agreement governed without reference to the Borrowing Base no later than 30
days prior to the effective date of such election, except during any period as
the Borrower has otherwise elected in accordance with SECTION 2.14(B) to have
availability under this Agreement governed by the Borrowing Base. If the
Borrowing Base shall not be in effect, availability under this Agreement shall
be determined with reference to the Senior Debt Limit and the Total Revolving
Commitments. The Collateral Value determination shall cease to be made after the
Collateral Release Date.
(b) If the Borrower has previously elected to have availability
under this Agreement governed without reference to the Borrowing Base, the
Borrower may from time to time elect to have availability under this Agreement
governed by the Borrowing Base for the period between the next two successive
scheduled Determination Dates (a "BORROWING BASE PERIOD") by giving the
Co-Administrative Agents and the Lenders written notice of its election no later
than 30 days prior to the delivery under SECTION 6.2(D) of the next scheduled
semi-annual Engineering Report. Once such election is made, the Borrower may
elect to opt out of such election only at the end of any Borrowing Base Period,
if the Borrowing Base is not required to be in effect under SECTION 2.14(A), by
giving the Co-Administrative Agents and the Lenders written notice of its
election to opt out of its election no later than 30 days prior to the delivery
under SECTION 6.2(D) of the next scheduled semi-annual Engineering Report prior
to the end of such Borrowing Base Period.
27
(c) During the period from the Closing Date to the first
Determination Date following the Closing Date redetermining the Borrowing Base,
the Borrowing Base is $1,250,000,000. During the period from the Closing Date to
the first Determination Date redetermining the Collateral Value, the Collateral
Value is $1,875,000,000.
(d) Within 45 days after receiving the relevant Engineering
Reports with respect to any Evaluation Date and the respective accompanying
reports and information thereto required to be furnished pursuant to SECTION
6.2(D), or as promptly thereafter as practicable, the Required Lenders (or, in
the case of any increase in the Borrowing Base, the holders of more than 90% of
the Total Revolving Commitments then in effect or, if the Revolving Commitments
have been terminated, the Total Revolving Extensions of Credit then outstanding)
shall agree upon an amount for the Collateral Value or the Borrowing Base, as
the case may be, as applicable with respect to such Evaluation Date, and the
Co-Administrative Agents shall by notice to the Borrower designate such amounts
as the new Collateral Value and Borrowing Base, respectively, which designation
shall take effect immediately on the date of such notice (herein called a
"DETERMINATION DATE") and shall remain in effect until but not including the
next date as of which the Collateral Value or the Borrowing Base, as the case
may be, are redetermined. If the Borrower does not furnish all such information,
reports and data by the date specified in SECTION 6.2(D), the Co-Administrative
Agents may nonetheless designate the Collateral Value or the Borrowing Base, as
the case may be, at any amount which the Required Lenders determine and may
redesignate the Collateral Value or the Borrowing Base, as the case may be, from
time to time thereafter in a similar manner until each Lender receives all
information, reports and data, whereupon the Required Lenders shall designate
the Collateral Value or the Borrowing Base, as the case may be, as described
above. The Required Lenders shall determine the Collateral Value based on the
reports delivered pursuant to SECTION 6.2(D) and the average of the applicable
price assumptions used by the Co-Administrative Agents in evaluating their oil
and gas loans generally as determined by the Co-Administrative Agents and such
determination of the Collateral Value shall deduct the net present value of the
reserves projected to be produced on or prior to the next scheduled Evaluation
Date. The Required Lenders shall determine the amount of the Borrowing Base
based (i) upon the total debt of the Company and its Subsidiaries and upon the
loan value which they in their discretion assign to the various oil and gas
properties of the Company and its Subsidiaries at such time and (ii) upon such
other credit factors (including, without limitation, (A) the assets,
liabilities, cash flow, hedged and unhedged exposure to price, agreements
affecting reserves, business, properties, prospects, production history of
reserves, nature of the ownership of the reserves, Liens affecting properties,
management and ownership of the Company and its Subsidiaries, (B) foreign
exchange rate changes and interest rate changes, (C) the general policies of the
Required Lenders from time to time with respect to the prices used in evaluating
their oil and gas loans generally and (D) the Collateral) as they in their
discretion deem significant. It is expressly understood that the Lenders and the
Co-Administrative Agents have no obligation to agree upon or designate the
Collateral Value or the Borrowing Base at any particular amount. It is further
expressly understood that no determinations or designations of the Borrowing
Base will be made or will be effective, and the references to the Borrowing Base
in this SECTION 2.14(D) shall be disregarded, at any time that the Borrowing
Base is not in effect as provided in SECTION 2.14(A).
(e) Until the termination of the Revolving Commitment Period,
the Borrower may, during the 15-day period beginning on each Determination Date,
reduce the Borrowing Base, when in effect, from the amount designated by the
Co-Administrative Agents to any lesser amount by delivering a notice during such
period to the Co-Administrative Agents to that effect, with such reduction to be
effective as of the date such notice is received by the Co-Administrative Agents
and shall continue in effect until such time as the Borrowing Base is
redetermined in accordance with SECTION 2.14(D) or not in effect in accordance
with SECTION 2.14(A).
28
(f) Concurrently with the delivery of the notice by the Borrower
of its election to have availability under this Agreement governed without
reference to the Borrowing Base and with each delivery of an Engineering Report
pursuant to SECTION 6.2(D) when the ratio of PV to Consolidated Indebtedness
contained in SECTION 7.1(C) is applicable, the Borrower will provide to the
Co-Administrative Agents and Lenders a certificate of a Responsible Officer of
the Company and the Borrower reflecting in reasonable detail the calculation of
PV.
(g) All of the Collateral consisting of the Mortgaged Properties
(but excluding Cash Collateral to the extent applicable) shall be released by
the Administrative Agent promptly following the written request of the Borrower
made to the Co-Administrative Agents so long as all of the following conditions
are satisfied on the date of such actual release (the date of the actual release
called "COLLATERAL RELEASE DATE"): (i) the ratings of the Index Debt shall be
maintained by S&P at BBB- or better and shall be maintained by Moody's at Baa3
or better; provided that if only one of S&P or Moody's provides a rating for the
Index Debt such rating shall be maintained at BBB- or better or Baa3 or better,
as applicable, (ii) all Liens permitted under SECTION 7.3(J) or (M) and all
covenants and agreements relating to the Indebtedness and obligations referred
to in SECTION 7.3(J) or (M) that require or could require Liens to secure such
Indebtedness and obligations have been released and discharged; and (iii) no
Default or Event of Default shall have occurred and be continuing or shall
result therefrom.
SECTION 3. GENERAL PROVISIONS APPLICABLE TO REVOLVING LOANS
AND LETTERS OF CREDIT
3.1. OPTIONAL PREPAYMENTS. The Borrower may at any time and from time
to time prepay the Revolving Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at least
three Business Days prior thereto in the case of Eurodollar Loans and at least
one Business Day prior thereto in the case of Base Rate Loans, which notice
shall specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or Base Rate Loans; PROVIDED, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to SECTION 3.11.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
(except in the case of Revolving Loans that are Base Rate Loans) accrued
interest to such date on the amount prepaid. Partial prepayments of Revolving
Loans shall be in an aggregate principal amount of $5,000,000 or whole multiples
of $1,000,000 in excess thereof.
29
3.2. MANDATORY PREPAYMENTS
(a) If at any time prior to the Collateral Release Date the
Collateral Coverage Ratio is less than 1.5 to 1.0 (the "COLLATERAL DEFICIENCY
DATE"), the Borrower shall either:
(i) Give notice to the Co-Administrative Agents that it elects
to reduce the Borrowing Base, if applicable, or the Total Revolving
Commitments and prepay the Revolving Loans to the extent necessary to
comply with the Collateral Coverage Ratio at such time whereupon the
Borrowing Base, if applicable, or the Total Revolving Commitments shall be
so reduced with immediate effect and the Borrower shall make such
prepayment on or before the date that is 30 days after the related
Collateral Deficiency Date and to the extent such prepayment of the
aggregate principal amount of Revolving Loans then outstanding is
insufficient to result in compliance with the Collateral Coverage Ratio,
the Borrower shall, to the extent of such insufficiency, replace
outstanding Letters of Credit and/or Cash Collateralize L/C Obligations; or
(ii) Certify to the Co-Administrative Agents that the Borrower
has good and defensible title, free of any Liens, to Proved Developed
Properties in an amount which, if subject to one or more Mortgages, would
result in the Borrower being in compliance with such Collateral Coverage
Ratio (including the value of the related Other Proved Reserves to the
extent provided in the definition of Collateral Value), and provide to each
Lender the same information regarding such Proved Developed Properties as
would be required for an evaluation of the Collateral Value attributable
thereto by the Required Lenders under SECTION 2.14. Within 10 days after
such certification, the Required Lenders shall either (x) determine that
such properties, if subject to a Mortgage, would result in the Borrower
being in compliance with such Collateral Coverage Ratio, in which case, the
Borrower shall within 20 days of such certification, and in any event, no
later than within 30 days of the Collateral Deficiency Date, deliver a
Mortgage (or a satisfactory amendment to an Existing Mortgage) to the
Administrative Agent with respect to each of such Proved Developed
Properties, executed and delivered by a duly authorized officer of each
party thereto and accompanied by such other documentation as the
Co-Administrative Agents shall reasonably request (including, without
limitation, legal opinions in form and substance satisfactory to the
Co-Administrative Agents relating thereto) or (y) determine that such
properties, if subject to a Mortgage, would not result in the Borrower
being in compliance with such Collateral Coverage Ratio, in which case, the
Borrower shall make the prepayments specified in subsection (i) of this
SECTION 3.2(A) within 30 days of the Collateral Deficiency Date.
(b) If at any time the Borrowing Base is in effect (A) the Total
Revolving Extensions of Credit exceed (B) the Borrowing Base at such time (such
excess, the "BORROWING BASE DEFICIENCY") the Administrative Agent shall give
notice thereof to the Borrower (a "BORROWING BASE DEFICIENCY NOTICE") and within
30 days after the date of such Borrowing Base Deficiency Notice, the Borrower
shall either:
(i) Give notice to the Co-Administrative Agents that it elects
to prepay the Revolving Loans in an amount at least equal to the Borrowing
Base Deficiency whereupon the Borrower shall make such prepayment on or
before the date that is 60 days after the date of the Borrowing Base
Deficiency and, to the extent such prepayment of the aggregate principal
amount of Revolving Loans then outstanding is less than such Borrowing Base
Deficiency, the Borrower shall, to the extent of such shortfall, replace
outstanding Letters of Credit and/or Cash Collateralize L/C Obligations; or
(ii) Give notice to the Co-Administrative Agents that it elects
to prepay the Revolving Loans in an aggregate amount equal to the Borrowing
Base Deficiency (or, to the extent such prepayments of the aggregate
principal amount of Revolving Loans then outstanding are less than the
Borrowing Base Deficiency, replace outstanding Letters of Credit and/or
Cash Collateralize L/C Obligations) in six consecutive equal monthly
installments, whereupon the Borrower shall pay the first such installment
30 days after the date of the Borrowing Base Deficiency and the next five
such installments on the same day of each consecutive month thereafter; or
30
(iii) (A) Certify to the Co-Administrative Agents that the
Borrower has good and defensible title, free of any Liens, to oil and gas
properties not included in the determination of the Borrowing Base then in
effect in an amount which, if taken into account in such determination,
would eliminate the Borrowing Base Deficiency, and (B) provide to each
Lender the same information regarding such properties as would be required
for an evaluation of the value attributable thereto by the Required Lenders
under SECTION 2.14 in calculating the Borrowing Base. Within 30 days after
such certification, if the Required Lenders shall determine that taking
into account such properties in the determination of the Borrowing Base
would not be sufficient to result in the elimination of the Borrowing Base
Deficiency, the Borrower shall either (x) make the prepayments specified in
subsection (i) of this SECTION 3.2(B) immediately or (y) make the
installment prepayments specified in subsection (ii) of this SECTION 3.2(B)
with the first such installment due immediately.
(c) The Total Revolving Commitments shall be reduced by an
amount equal to any Excess Amount and shall be accompanied by prepayment of the
Revolving Loans to the extent, if any, that the Total Revolving Extensions of
Credit exceed the Total Revolving Commitments as so reduced, PROVIDED that if
the aggregate amount of Revolving Loans then outstanding is less than the amount
of such Excess Amount (because L/C Obligations constitute a portion of the Total
Revolving Extensions of Credit), the Borrower shall, to the extent of the
balance of such Excess Amount, replace outstanding Letters of Credit and/or Cash
Collateralize L/C Obligations.
3.3. CONVERSION AND CONTINUATION OPTIONS
(a) The Borrower may elect from time to time to convert
Eurodollar Loans to Base Rate Loans by giving the Administrative Agent prior
irrevocable notice of such election by 9:00 A.M., Los Angeles, California time,
three Business Days preceding the day on which such conversion is to occur,
provided that any such conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to convert Base Rate Loans to Eurodollar Loans by giving prior
irrevocable notice to the Administrative Agent by 9:00 A.M., Los Angeles,
California time, three Business Days prior to such conversion (which notice
shall specify the length of the initial Interest Period therefor), provided that
no Base Rate Loan may be converted into a Eurodollar Loan when any Event of
Default has occurred and is continuing and the Administrative Agent or the
Majority Lenders have determined in its or their sole discretion not to permit
such conversions. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
SECTION 1.1, of the length of the next Interest Period to be applicable to such
Eurodollar Loans, PROVIDED that no Eurodollar Loan may be continued as such when
any Event of Default has occurred and is continuing and the Administrative Agent
has or the Majority Lenders have determined in its or their sole discretion not
to permit such continuations, and PROVIDED, FURTHER, that if the Borrower shall
fail to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Eurodollar
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each Lender thereof.
31
3.4. LIMITATIONS ON EURODOLLAR TRANCHES. Notwithstanding anything to
the contrary in this Agreement, all borrowings, conversions and continuations of
Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or whole
multiples of $1,000,000 in excess thereof and (b) no more than five Eurodollar
Tranches shall be outstanding at any one time. 3.5. INTEREST RATES AND PAYMENT
DATES
3.5 INTEREST RATES AND PAYMENT DATES
(a) Each Eurodollar Loan shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any
Revolving Loan or L/C Obligation shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to (x) in the case of the Revolving Loans,
the rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section PLUS 2% or (y) in the case of L/C Obligations, the
rate applicable to Base Rate Loans PLUS 2%, and (ii) if all or a portion of any
interest payable on any Revolving Loan or L/C Obligation or any commitment fee
or other amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate then applicable to Base Rate
Loans PLUS 2%, in each case, with respect to clauses (i) and (ii) above, from
the date of such non-payment until such amount is paid in full (as well after as
before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, PROVIDED that interest accruing pursuant to paragraph (c) of this
Section shall be payable from time to time on demand.
3.6. COMPUTATION OF INTEREST AND FEES
(a) Interest and fees payable pursuant hereto shall be
calculated on the basis of a 360-day year for the actual days elapsed, except
that, with respect to Base Rate Loans the rate of interest on which is
calculated on the basis of the Reference Rate, the interest thereon shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the Lenders of each determination of a Eurodollar Rate.
Any change in the interest rate on a Revolving Loan resulting from a change in
the Base Rate or the Eurocurrency Reserve Requirements shall become effective as
of the opening of business on the day on which such change becomes effective.
The Administrative Agent shall as soon as practicable notify the Borrower and
the Lenders of the effective date and the amount of each such change in interest
rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to SECTION 3.5(A).
32
3.7. INABILITY TO DETERMINE INTEREST RATE. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period; or
(b) the Administrative Agent shall have received notice from the
Majority Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining
their affected Revolving Loans during such Interest Period, the Administrative
Agent shall give telefacsimile, email or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Revolving Loans that
were to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding
Eurodollar Loans shall be converted, on the last day of the then-current
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or continued as
such, nor shall the Borrower have the right to convert Revolving Loans to
Eurodollar Loans.
3.8. PRO RATA TREATMENT AND PAYMENTS
(a) Each borrowing by the Borrower from the Lenders hereunder,
each payment by the Borrower on account of any commitment fee and any reduction
of the Revolving Commitments of the Lenders shall be made pro rata according to
the Revolving Percentages of the Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Loans shall be made PRO
RATA according to the respective outstanding principal amounts of the Revolving
Loans then held by the Lenders.
(c) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 11:00 A.M., Los Angeles, California time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Funding Office, in
Dollars and in immediately available funds. The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day. If any payment on a Eurodollar
Loan becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day. In the case of any extension of any payment of principal pursuant to the
preceding two sentences, interest thereon shall be payable at the then
applicable rate during such extension.
(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans, on demand, from the Borrower.
33
(e) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment due to be made by the
Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective PRO RATA shares of a corresponding amount. If such payment is not
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
(f) The Borrower and any Lender shall have the option, from time
to time, to execute and deliver to the Administrative Agent a Pari Passu Hedging
Obligation Notice designating a fixed dollar amount as the allocation of the
maximum amount of Pari Passu Hedging Obligations for a stated Lender and its
Affiliates (a "PARI PASSU HEDGING OBLIGATION ALLOCATION"), and the Pari Passu
Hedging Obligation Allocation of any Lender and its Affiliates may be
terminated, increased or decreased from time to time by a subsequent Pari Passu
Hedging Obligation Notice executed by the Borrower and such Lender; provided
that (i) the maximum aggregate amount of all Pari Passu Hedge Obligation
Allocations at any one time shall not exceed $150,000,000 and (ii) no such Pari
Passu Hedging Obligation Notice shall be effective until the Administrative
Agent shall have executed and delivered to the Borrower and such Lender such
notice confirming such Pari Passu Hedging Obligation Allocation. The
Administrative Agent shall maintain a register to record all Pari Passu Hedging
Obligation Allocations. The obligations under the Lender Hedge Agreements with
such Lender and its Affiliates that exceed such Lender's Pari Passu Hedging
Obligation Allocation shall not be Pari Passu Hedging Obligations. The aggregate
amount of Pari Passu Hedging Obligations outstanding from time to time shall be
considered Obligations for purposes of each of the Security Documents and shall
be secured by all the Collateral granted thereunder in accordance with the
following SECTION 3.8(G).
(g) Notwithstanding anything in this SECTION 3.8 or in any of
the Loan Documents to the contrary, in the event that the Revolving Loans shall
have become due and payable, and the Revolving Commitments shall have been
terminated, pursuant to SECTION 8, any amounts received by the Administrative
Agent from the Loan Parties or their Subsidiaries or from the Collateral in
respect of the Borrower's Obligations shall be applied in the following order of
priority:
(i) First, to reimburse each of the Co-Administrative Agents for
its fees, costs and expenses pursuant to the Loan Documents;
(ii) Second, to pay unpaid interest accrued on the Revolving
Loans;
(iii) Third, (A) to pay all other outstanding Obligations
(whether or not contingent) under, out of, or in connection with any of the
Loan Documents or Letters of Credit, including the outstanding principal of
the Revolving Loans and, after the payment of the outstanding principal of
the Revolving Loans, to Cash Collateralize outstanding L/C Obligations and
(B) to pay Pari Passu Hedging Obligations (applied ratably to (A) and to
(B) based upon the total outstanding Obligations under (A) and the lesser
of the total outstanding Pari Passu Hedging Obligations under (B) or
$150,000,000); and
(iv) Fourth, once all of the foregoing Obligations (whether or
not contingent) and Pari Passu Hedging Obligations have been indefeasibly
paid in full and all Letters of Credit have been terminated or Cash
Collateralized, to the Borrower.
Administrative Agent shall have no responsibility to determine the existence or
amount of Pari Passu Hedging Obligations and may reserve from the application of
amounts under this SECTION 3.8(G) amounts distributable in respect of Pari Passu
Hedging Obligations until it has received evidence satisfactory to it of the
existence and amount of such Pari Passu Hedging Obligations.
3.9. REQUIREMENTS OF LAW
(a) If the adoption of or any change in any Requirement of Law
or in the interpretation or application thereof or compliance by any Lender with
any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application or
any Eurodollar Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof (except for Non-Excluded Taxes covered by
SECTION 3.10 and changes in the rate of tax on the overall net income of
such Lender);
34
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this paragraph, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such corporation
for such reduction.
(c) A certificate as to any additional amounts payable pursuant
to this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Revolving Loans and all
other amounts payable hereunder.
3.10. TAXES
(a) All payments made by the Borrower under this Agreement shall
be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on any Agent or any Lender as a result of a present or former connection
between such Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from such
Agent or such Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any other Loan
Document). If any such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions or withholdings ("NON-EXCLUDED TAXES") or Other Taxes are
required to be withheld from any amounts payable to any Agent or any Lender
hereunder, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph.
35
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for its own account or for the account of the relevant
Agent or Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the Agents and
the Lenders for any incremental taxes, interest or penalties that may become
payable by any Agent or any Lender as a result of any such failure.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "NON-U.S. LENDER") shall deliver
to the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-89ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit G and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction
of non-U.S. withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrower, such properly completed and
executed documentation prescribed by applicable law as will permit such payments
to be made without withholding or at a reduced rate, PROVIDED that such Lender
is legally entitled to complete, execute and deliver such documentation and in
such Lender's judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
(f) The agreements in this Section shall survive the termination
of this Agreement and the payment of the Revolving Loans and all other amounts
payable hereunder.
36
3.11. INDEMNITY. The Borrower agrees to indemnify each Lender and the
Administrative Agent and to hold each Lender and the Administrative Agent
harmless from any loss or expense that such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by the Borrower in making any prepayment of or conversion from
Eurodollar Loans after the Borrower has given a notice thereof in accordance
with the provisions of this Agreement or (c) the making of a prepayment of
Eurodollar Loans on a day that is not the last day of an Interest Period with
respect thereto. Such indemnification may include an amount equal to the excess,
if any, of (i) the amount of interest that would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such
Eurodollar Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any) OVER (ii) the amount of interest (as reasonably
determined by such Lender) that would have accrued to such Lender on such amount
by placing such amount on deposit for a comparable period with leading banks in
the interbank eurodollar market. A certificate as to any amounts payable
pursuant to this Section submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Revolving Loans and all
other amounts payable hereunder.
3.12. CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of SECTION 3.9 or 3.10(A)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Revolving Loans affected by such event
with the object of avoiding the consequences of such event; PROVIDED, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and PROVIDED, FURTHER, that nothing in this Section shall affect
or postpone any of the obligations of the Borrower or the rights of any Lender
pursuant to SECTION 3.9 or 3.10(A).
3.13. REPLACEMENT OF LENDERS. The Borrower shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
SECTION 3.9 or 3.10(A) or (B) defaults in its obligation to make Revolving Loans
hereunder, with a replacement financial institution; PROVIDED that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under SECTION 3.12 so as to eliminate the continued need for payment of amounts
owing pursuant to SECTION 3.9 or 3.10(A), (iv) the replacement financial
institution shall purchase, at par, all Revolving Loans and other amounts owing
to such replaced Lender on or prior to the date of replacement, (v) the Borrower
shall be liable to such replaced Lender under SECTION 3.11 if any Eurodollar
Loan owing to such replaced Lender shall be purchased other than on the last day
of the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of SECTION 10.6 (provided that the
Borrower shall be obligated to pay the registration and processing fee referred
to therein), (viii) until such time as such replacement shall be consummated,
the Borrower shall pay all additional amounts (if any) required pursuant to
SECTION 3.9 or 3.10(A), as the case may be, and (ix) any such replacement shall
not be deemed to be a waiver of any rights that the Borrower, the Administrative
Agent or any other Lender shall have against the replaced Lender.
37
3.14. EVIDENCE OF DEBT
(a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Revolving Loan of such Lender from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time under this Agreement.
(b) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to SECTION 10.6(C), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Revolving Loan
made hereunder and any Note evidencing such Revolving Loan, the Type of such
Revolving Loan and each Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(c) The entries made in the Register and the accounts of each
Lender maintained pursuant to SECTION 3.14(A) shall, to the extent permitted by
applicable law, be PRIMA FACIE evidence of the existence and amounts of the
obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Revolving
Loans made to the Borrower by such Lender in accordance with the terms of this
Agreement.
(d) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing any Revolving Loan of
such Lender, substantially in the form of EXHIBIT H, with appropriate insertions
as to date and principal amount.
3.15. ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Lender's Revolving Loans then outstanding as Eurodollar Loans, if any,
shall be converted automatically to Base Rate Loans on the respective last days
of the then current Interest Periods with respect to such Revolving Loans or
within such earlier period as required by law. If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to SECTION 3.11.
3.16. SHARING OF PAYMENTS BY LENDERS. If any Lender shall, by
exercising any right of setoff or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of the Revolving Loans made by
it, or the participations in L/C Obligations held by it resulting in such
Lender's receiving payment of a proportion of the aggregate amount of such
Committed Loans or participations and accrued interest thereon greater than its
PRO RATA share thereof as provided herein, then the Lender receiving such
greater proportion shall (a) notify the Administrative Agent of such fact, and
(b) purchase (for cash at face value) participations in the Revolving Loans and
subparticipations in L/C Obligations of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans and
other amounts owing them, PROVIDED that:
(a) if any such participations or subparticipations are purchased
and all or any portion of the payment giving rise thereto is recovered, such
participations or subparticipations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest; and
(b) the provisions of this Section shall not be construed to apply
to (x) any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Revolving Loans or subparticipations in L/C Obligations to any assignee or
participant, other than to the Borrower or any Subsidiary thereof (as to which
the provisions of this Section shall apply).
38
Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and
to make the Revolving Loans and issue or participate in the Letters of Credit,
the Company and the Borrower hereby jointly and severally represent and warrant
to each Agent and each Lender that:
4.1. FINANCIAL CONDITION. The audited consolidated balance sheets
of the Company as at December 31, 2001, December 31, 2002 and December 31, 2003,
and the related consolidated statements of operations and of cash flows for the
fiscal years ended on such dates, reported on by and accompanied by an
unqualified report from PricewaterhouseCoopers, present fairly the consolidated
financial condition of the Company as at such dates, and their respective
consolidated results of operations and consolidated cash flows for the
respective fiscal years then ended. All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). Except as set forth
on SCHEDULE 4.1, no Group Member has any material Guarantee Obligations,
contingent liabilities or liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from September 30, 2004, to and
including the date hereof there has been no Disposition by the Company of any
material part of its business or property.
4.2. NO CHANGE; NO INTERNAL CONTROL EVENT. Since September 30, 2004,
there has been (i) no development or event that has had or could reasonably be
expected to have a Material Adverse Effect and (ii) no Internal Control Event.
4.3. EXISTENCE; COMPLIANCE WITH LAW. Each Group Member (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation, partnership or limited liability company and
in good standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification and (d) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.4. POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each Loan Party
has the power and authority, and the legal right, to make, deliver and perform
the Loan Documents to which it is a party and, in the case of the Borrower, to
obtain extensions of credit hereunder. Each Loan Party has taken all necessary
organizational action to authorize the execution, delivery and performance of
the Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the extensions of credit on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the transactions contemplated hereby and the extensions of
credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i)
consents, authorizations, filings and notices described in SCHEDULE 4.4, which
consents, authorizations, filings and notices have been obtained or made and are
in full force and effect and (ii) the filings referred to in SECTION 4.19. Each
Loan Document has been duly executed and delivered on behalf of each Loan Party
thereto. This Agreement constitutes, and each other Loan Document upon execution
will constitute, a legal, valid and binding obligation of each Loan Party
thereto, enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
39
4.5. NO LEGAL BAR. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of the Company, the Borrower or
any of their respective Subsidiaries and will not result in, or require, the
creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such Contractual Obligation
(other than the Liens created by the Security Documents). No Requirement of Law
or Contractual Obligation applicable to the Company, the Borrower or any of
their respective Subsidiaries could reasonably be expected to have a Material
Adverse Effect.
4.6. LITIGATION. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Company or the Borrower, threatened by or against the Company, the
Borrower or any of their respective Subsidiaries or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby or (b) that, except as
set forth on SCHEDULE 4.6, could reasonably be expected to have a Material
Adverse Effect.
4.7. NO DEFAULT. Neither the Company, the Borrower nor any of their
respective Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect that could reasonably be expected to have
a Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
4.8. OWNERSHIP OF PROPERTY; LIENS. Each Group Member has good and
defensible title to all of its material properties and assets, free and clear of
all Liens other than Liens permitted under SECTION 7.3 and of all impediments to
the use of such properties and assets in such Group Member's business, except
that no representation or warranty is made with respect to any oil, gas or
mineral property or interest to which no proved oil or gas reserves are properly
attributed. Except for Liens permitted under SECTION 7.3, each Group Member will
respectively own in the aggregate, in all material respects, the net interests
in production attributable to all material wells and units owned by the Group
Members. The ownership of such properties shall not in the aggregate in any
material respect obligate such Group Member to bear the costs and expenses
relating to the maintenance, development and operations of such properties in an
amount materially in excess of the working interest of such properties. Each
Group Member has paid all royalties payable under the oil and gas leases to
which it is operator, except those contested in accordance with the terms of the
applicable joint operating agreement or otherwise contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Company, the Borrower or its
Subsidiaries, as the case may be.
4.9. INTELLECTUAL PROPERTY. The Company, the Borrower and each of
their respective Subsidiaries owns, or is licensed to use, all Intellectual
Property necessary for the conduct of its business as currently conducted. No
material claim has been asserted and is pending by any Person challenging or
questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does the Company or the Borrower
know of any valid basis for any such claim. The use of Intellectual Property by
the Company, the Borrower and their respective Subsidiaries does not infringe on
the rights of any Person in any material respect.
4.10. TAXES. Each of the Company, the Borrower and each of their
respective Subsidiaries has filed or caused to be filed all Federal, state and
other material tax returns that are required to be filed and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any the
amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Company, the Borrower or its
Subsidiaries, as the case may be); no tax Lien has been filed, and, to the
knowledge of the Company and the Borrower, no claim is being asserted, with
respect to any such tax, fee or other charge.
4.11. FEDERAL REGULATIONS. No part of the proceeds of any Revolving
Loans, and no other extensions of credit hereunder, will be used for "buying" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U as now and from time to time hereafter in effect
or for any purpose that violates the provisions of the Regulations of the Board.
If requested by any Lender or the Administrative Agent, the Borrower will
furnish to the Administrative Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as
applicable, referred to in Regulation U.
40
4.12. LABOR MATTERS. Except as, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect: (a) there are no strikes or other
labor disputes against any Group Member pending or, to the knowledge of the
Company or the Borrower, threatened; (b) hours worked by and payment made to
employees of each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from any Group Member on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the relevant Group Member.
4.13. ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Company nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a material liability
under ERISA, and neither the Company nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Company or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
4.14. INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15. SUBSIDIARIES. Except as disclosed to the Co-Administrative
Agents by the Borrower in writing from time to time after the Closing Date, (a)
SCHEDULE 4.15(A) sets forth the name and jurisdiction of incorporation,
organization or formation of each Subsidiary and, as to each such Subsidiary,
the percentage of each class of Capital Stock owned by any Loan Party and (b)
except as set forth on SCHEDULE 4.15(B), there are no outstanding subscriptions,
options, warrants, calls, rights or other agreements or commitments (other than
stock options granted to employees or directors and directors' qualifying
shares) of any nature relating to any Capital Stock of the Company or any
Subsidiary.
4.16. USE OF PROCEEDS. The proceeds of the Revolving Loans shall be
used for general corporate purposes of the Company, the Borrower and their
Subsidiaries. The Letters of Credit shall be used for the general corporate
purposes of the Company, the Borrower and the Company's Subsidiaries.
41
4.17. ENVIRONMENTAL MATTERS
(a) The facilities and properties owned, leased or operated by
any Group Member (the "Properties") do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
or under circumstances that constitute or constituted a violation of, or could
give rise to material liability under, any Environmental Law.
(b) No Group Member has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the business operated by any Group Member
(the "BUSINESS"), nor does the Company or the Borrower have knowledge or reason
to believe that any such notice will be received or is being threatened.
(c) Materials of Environmental Concern have not been transported
or disposed of from the Properties in violation of, or in a manner or to a
location that could give rise to liability under, any Environmental Law, nor
have any Materials of Environmental Concern been generated, treated, stored or
disposed of at, on or under any of the Properties in violation of, or in a
manner that could give rise to liability under, any applicable Environmental
Law.
(d) Except as set forth on SCHEDULE 4.17(D), no judicial
proceeding or governmental or administrative action is pending or, to the
knowledge of the Company and the Borrower, threatened, under any Environmental
Law to which any Group Member is or will be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business.
(e) There has been no release or threat of release of Materials
of Environmental Concern at or from the Properties, or arising from or related
to the operations of any Group Member in connection with the Properties or
otherwise in connection with the Business, in violation of or in amounts or in a
manner that could give rise to material liability under Environmental Laws.
(f) Except as set forth on SCHEDULE 4.17(F), the Properties and
all operations at the Properties are in compliance, and have in the last five
years been in compliance, in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties or violation of any Environmental Law with respect to the Properties
or the Business.
(g) No Group Member has assumed any liability of any other
Person under Environmental Laws, other than as a result of a merger or
consolidation of such Person into a Group Member or in connection with an asset
acquisition, and then only with respect to the acquired assets, in each case
where the transaction did not result in the assumption of any known material
liabilities.
4.18. ACCURACY OF INFORMATION, ETC.. No statement or information
contained in this Agreement, any other Loan Document or any other document,
certificate or statement furnished by or on behalf of any Loan Party to the
Co-Administrative Agents or the Lenders, or any of them, for use in connection
with the transactions contemplated by this Agreement or the other Loan
Documents, contained as of the date such statement, information, document or
certificate was so furnished, any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements contained herein or
therein not misleading. The projections and PRO FORMA financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Company to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. There is no
fact known to any Loan Party that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents or in any other documents, certificates and statements
furnished to the Co-Administrative Agents and the Lenders for use in connection
with the transactions contemplated hereby and by the other Loan Documents.
42
4.19. SECURITY DOCUMENTS. Each of the Mortgages is effective to create
in favor of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable Lien on the Mortgaged Properties described therein and
proceeds thereof, and when the Mortgages (or amendments to the relevant Existing
Mortgages as contemplated by SECTION 5.1(J)) are filed in the offices specified
on SCHEDULE 4.19, each such Mortgage shall constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the Loan Parties in
the Mortgaged Properties and the proceeds thereof, as security for the
Obligations (as defined in the relevant Mortgage), in each case prior and
superior in right to any other Person. Each of the Mortgaged Properties
qualifies as Proved Developed Properties.
4.20. SOLVENCY. Each Loan Party is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred in connection
herewith will be, and will continue to be, Solvent.
4.21. SENIOR DEBT LIMIT. The aggregate amount of Revolving Extensions
of Credit outstanding at any time does not exceed the Senior Debt Limit at such
time.
4.22. SUBSIDIARY GUARANTORS. Each "Restricted Subsidiary" under the
Indentures is a Subsidiary Guarantor.
SECTION 5. CONDITIONS PRECEDENT
5.1. CONDITIONS TO INITIAL EXTENSION OF CREDIT. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction of, among other things, the following conditions
precedent (the date upon which all such conditions precedent shall be satisfied,
the "CLOSING DATE").
(a) CREDIT AGREEMENT; GUARANTEE AGREEMENT. The Co-Administrative
Agents shall have received (i) this Agreement executed and delivered by each
Agent, the Company and the Borrower and each Person listed on SCHEDULE 1.1A, and
(ii) the Guarantee Agreement, executed and delivered by the Company and each
Subsidiary Guarantor.
(b) APPROVALS. All governmental and third party approvals
necessary or, in the discretion of the Co-Administrative Agents, advisable in
connection with the transactions contemplated hereby and the continuing
operations of the Company and its subsidiaries shall have been obtained and be
in full force and effect, and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority which
would restrain, prevent or otherwise impose adverse conditions on the
transactions contemplated hereby.
(c) LIEN SEARCHES. The Co-Administrative Agents shall have
received the results of a recent lien search in the central filing office (and,
to the extent requested by the Co-Administrative Agents, the local filing
offices) of each of the jurisdictions where assets of the Loan Parties are
located, and such search shall reveal no liens on any of the assets of the Loan
Parties except for liens permitted by SECTION 7.3 or discharged on or prior to
the Closing Date pursuant to documentation satisfactory to the Co-Administrative
Agents.
43
(d) REPORTS; OFFICER'S CERTIFICATE. The Company shall have
delivered to the Co-Administrative Agents, prior to the Closing Date, (i) the
Initial Engineering Reports and (ii) a certificate of the chief financial
officer or the treasurer of the Company certifying (A) the calculation of
Adjusted Consolidated Net Tangible Assets as of September 30, 2004, (B) that the
liens securing the Collateral are permitted under the Indentures, (C) the
calculation of the Senior Debt Limit as of September 30, 2004, and (D) the
calculation of the Collateral Value (based upon the Initial Engineering Reports
and deducting the reserves projected to be produced on or prior to the June 30,
2005 Evaluation Date), which certificate shall attach all reports and appraisals
used to make such calculations.
(e) FEES. The Lenders and the Agents shall have received all
fees required to be paid, and all expenses for which invoices have been
presented (including the reasonable fees and expenses of legal counsel), on or
before the Closing Date. All such amounts will be paid with proceeds of
Revolving Loans made on the Closing Date and will be reflected in the funding
instructions given by the Borrower to the Co-Administrative Agents on or before
the Closing Date.
(f) CLOSING CERTIFICATE. The Co-Administrative Agents shall have
received a certificate of each Loan Party, dated the Closing Date, substantially
in the form of EXHIBIT C, with appropriate insertions and attachments.
(g) LEGAL OPINIONS. The Co-Administrative Agents shall have
received the following executed legal opinions:
(i) the legal opinion of Commercial Law Group, P.C., counsel to
the Company and its Subsidiaries, substantially in the form of Exhibit F; and
(ii) the legal opinion of Thompson & Knight and such other
special and local counsel as may be required by the Co-Administrative Agents.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Co-Administrative Agents may
reasonably require.
(h) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including any Uniform Commercial Code financing statement) required by the
Security Documents or under law or reasonably requested by the
Co-Administrative Agents to be filed, registered or recorded in order to
create in favor of the Co-Administrative Agents, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by SECTION 7.3), shall be in proper form for filing,
registration or recordation.
(i) MORTGAGES, ETC.
(i) The Administrative Agent shall have received a Mortgage
(together with any other documents requested to be delivered thereunder) to be
filed in each county in which the Mortgaged Properties are located or
satisfactory amendments to each Existing Mortgage, executed and delivered by a
duly authorized officer of each party thereto. The aggregate Collateral Value of
such Mortgaged Properties as of the Closing Date shall be sufficient to cause
the Collateral Coverage Ratio to be at least 1.5 to 1.0 on the Closing Date.
Upon receipt of the Mortgages, the Administrative Agent will be responsible for,
and arrange for, the recording thereof.
(ii) If requested by the Administrative Agent, the
Administrative Agent shall have received (A) copies of all material contracts
relating to the Mortgaged Properties and (B) copies of satisfactory legal
opinions as to title to the Mortgaged Properties representing not more than 50%
of the Collateral Value.
44
(j) SOLVENCY CERTIFICATE. Each of the Lenders shall have
received and shall be satisfied with a solvency certificate of a Responsible
Officer of the Company which shall document the solvency of the Company and its
subsidiaries after giving effect to the transactions contemplated hereby.
(k) INSURANCE. The Co-Administrative Agents shall have received
insurance certificates satisfying the requirements of this Agreement.
5.2. CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by any Loan Party in or pursuant to the Loan Documents shall
be true and correct on and as of such date as if made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the extensions
of credit requested to be made on such date.
(c) SENIOR DEBT LIMIT. The Total Revolving Extensions of Credit
do not exceed the Senior Debt Limit after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
SECTION 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Company and the Borrower hereby jointly and severally agree that,
so long as the Revolving Commitments remain in effect, any Letter of Credit
remains outstanding or any Revolving Loan or other amount is owing to any Lender
or Agent hereunder, each of the Company and the Borrower shall and shall cause
each of its Subsidiaries to:
6.1. FINANCIAL STATEMENTS. Furnish to the Co-Administrative Agents
and each Lender:
(a) as soon as available, but in any event within 95 days after
the end of each fiscal year of the Company beginning with the fiscal year ended
December 31, 2004, (i) a copy of the audited consolidated balance sheet of the
Company and its consolidated Subsidiaries as at the end of such year and the
related audited consolidated statements of operations and cash flows for such
year, setting forth in each case in comparative form the figures for the
previous year, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by a
Registered Public Accounting Firm selected by the Company and acceptable to the
Co-Administrative Agents, (ii) to the extent that there are any "Unrestricted
Subsidiaries" under the Indentures at such fiscal year end, the unaudited
consolidating balance sheets of the Company and its consolidated Subsidiaries as
at the end of such fiscal year and the related unaudited consolidating
statements of operations and cash flows for such year setting forth in each case
in comparative form the figures for the previous year certified by a Responsible
Officer as being fairly stated in all material respects, and (iii) an
attestation report of such Registered Public Accounting Firm as to the Company's
internal controls pursuant to Section 404 of Sarbanes-Oxley; and
(b) as soon as available, but in any event not later than 50
days after the end of each of the first three quarterly periods of each fiscal
year of the Company, the unaudited consolidated and, to the extent there are any
"Unrestricted Subsidiaries" under the Indentures at such fiscal year end,
consolidating balance sheet of the Company and its consolidated Subsidiaries as
at the end of such quarter and the related unaudited consolidated and to the
extent there are any "Unrestricted Subsidiaries" under the Indentures at such
fiscal year end, consolidating statements of operations and cash flows for such
quarter and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures for the previous
year, certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein) and applicable Securities Laws.
45
6.2. CERTIFICATES; OTHER INFORMATION. Furnish to the Co-
Administrative Agents who will forward to each Lender (or, in the case of
clause (f), to the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in SECTION 6.1(A), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefore no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to SECTION 6.1, (i) a certificate of a Responsible Officer of the
Company and the Borrower stating that, to the best of such Responsible Officer's
knowledge, each Loan Party during such period has observed or performed all of
its covenants and other agreements, and satisfied every condition, contained in
this Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as specified in
such certificate and (ii) in the case of quarterly or annual financial
statements, a Compliance Certificate (A) containing all information and
calculations necessary for determining compliance by each Group Member with the
provisions of this Agreement (including, without limitation, SECTION 7.1)
referred to therein as of the last day of the fiscal quarter or fiscal year of
the Company, as the case may be, and, if applicable, for determining the
Applicable Margins and Commitment Fee Rate, (B) certifying the calculation of
the Senior Debt Limit as of the last day of the fiscal quarter or fiscal year of
the Company, as the case may be, and (C) certifying the value of the oil and gas
properties of the Company and its Subsidiaries over which a Lien has been
created pursuant to SECTION 7.3(J) and such certificate shall set forth such
calculation based on the applicable Engineering Reports delivered pursuant to
SECTION 6.2(E) and the average of the applicable price assumptions and the
current risk adjusted values for Other Proved Reserves used by the
Co-Administrative Agents in the most recent determination of the Collateral
Value pursuant to SECTION 2.14;
(c) concurrently with the delivery of any financial statements
pursuant to SECTION 6.1, a detailed consolidated budget for the following fiscal
year (including a projected consolidated balance sheet of the Company and its
Subsidiaries as of the end of the following fiscal year, the related
consolidated statements of projected cash flow, projected changes in financial
position and projected income)(collectively, the "Projections"), which
Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on reasonable estimates,
information and assumptions and that such Responsible Officer has no reason to
believe that such Projections are incorrect or misleading in any material
respect;
(d) within (i) 120 days following each Evaluation Date occurring on
December 31 and (ii) 75 days following each other Evaluation Date, one or more
engineering reports, prepared by the Company's engineers and certified by a
Responsible Officer as to the accuracy and completeness thereof (each, a
"COMPANY REPORT") or, in the case of each Evaluation Date occurring on December
31, prepared with respect to not less than 70% of the reserve volume of the
Company and its Subsidiaries (but in any event, not less than 90% of the reserve
volume used in the determination of the Collateral Value with respect to such
Evaluation Date) by independent petroleum engineers chosen by the Company and
acceptable to the Majority Lenders (each such report, an "INDEPENDENT REPORT",
the Independent Reports collectively with the Company Reports, the "ENGINEERING
REPORTS") together with all other information, reports and data which the
Co-Administrative Agents have requested in connection therewith, which shall set
forth for each oil and gas property or interest of the Company and its
Subsidiaries the separate categories of Proved Developed Producing reserves,
Proved Developed Non Producing reserves, Proved Developed Behind Pipe reserves,
Proved Developed Shut-in reserves, and Proved Undeveloped reserves attributable
to such properties together with a projection of the rate of production with
respect thereto as of the date that is (A) with respect to any Evaluation Date
that is December 31 and June 30, such Evaluation Date and (B) with respect to
any other Evaluation Date, the last day of the fiscal quarter immediately
preceding such Evaluation Date for which the Engineering Reports so required may
be reasonably prepared, which report(s), in any case, shall distinguish (or
shall be delivered together with a certificate from an appropriate officer of
46
the Borrower which distinguishes) those properties treated in the report which
are Collateral, from those properties treated in the report which are not
Collateral. Each Engineering Report shall be satisfactory to the
Co-Administrative Agents and, without limitation, shall (i) contain sufficient
information to enable the Borrower to meet the reporting requirements concerning
oil and gas reserves contained in Regulations S-K and S-X promulgated by the SEC
and to ascertain projected future production attributable to the portion of the
reserves of the Mortgaged Properties categorized as "Producing", "Proved
Developed Producing", "Proved Developed Non Producing", "Proved Developed Behind
Pipe", "Proved Developed Shut-in", other "Proved Developed Non Producing" and
"Proved Undeveloped", (ii) take into account any "over-produced" status under
gas balancing arrangements, and (iii) contain information and analysis
comparable in scope to that contained in the Initial Engineering Reports.
Accompanying each Engineering Report, the Borrower shall deliver a report
reflecting the occurrence of the following events since the date of the most
recent Engineering Report: (i) all property sales and pending property sales
identifying the property and sale price therefor, (ii) all property purchases
and pending property purchases (unless such disclosure will in the reasonable
judgment of counsel to the Borrower violate a confidentiality agreement)
identifying the property and the purchase price therefor, and (iii) changes in
the categories of proved developed and proved undeveloped reserves attributable
to each oil and gas property or interest of the Company and its Subsidiaries;
(e) concurrently with the delivery of the budgets and
projections referred to in SECTION 6.2(C), a report of the Budget Basis
Projected Production on a month by month basis for each of the next 36 months,
together with such supporting detail as Co-Administrative Agents may request,
which report shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Budget Basis Projected Production is based on
reasonable estimates, information and assumptions and that such Responsible
Officer has no reason to believe that such Budget Basis Projected Production is
incorrect or misleading in any material respect; and
(f) promptly, such additional financial and other information as
any Lender may from time to time reasonably request.
The Company and the Borrower hereby acknowledge that (a) the Co-Administrative
Agents will make available to the Lenders and the Issuing Lender materials
and/or information provided by or on behalf of the Company and the Borrower
hereunder (collectively, "BORROWER MATERIALS") by posting the Borrower Materials
on IntraLinks or another similar electronic system (the "PLATFORM") and (b)
certain of the Lenders may be "public-side" Lenders (i.e., Lenders that do not
wish to receive material non-public information with respect to the Borrower or
its securities) (each, a "PUBLIC LENDER"). The Company and the Borrower hereby
agree that so long as the Company is the issuer of any outstanding debt or
equity securities that are registered or issued pursuant to a private offering
or is actively contemplating issuing any such securities (w) all Borrower
Materials that are to be made available to Public Lenders shall be clearly and
conspicuously marked "PUBLIC" which, at a minimum, shall mean that the word
"PUBLIC" shall appear prominently on the first page thereof; (x) by marking
Borrower Materials "PUBLIC," the Company and the Borrower shall be deemed to
have authorized the Co-Administrative Agents, the Issuing Lender and the Lenders
to treat such Borrower Materials as not containing any material non-public
information with respect to the Company or its securities for purposes of United
States Federal and state securities laws (PROVIDED, HOWEVER, that to the extent
such Borrower Materials constitute Information, they shall be treated as set
forth in SECTION 10.15); (y) all Borrower Materials marked "PUBLIC" are
permitted to be made available through a portion of the Platform designated
"Public Investor;" and (z) the Co-Administrative Agents shall be entitled to
treat any Borrower Materials that are not marked "PUBLIC" as being suitable only
for posting on a portion of the Platform not designated "Public Investor."
Notwithstanding the foregoing, the Company and the Borrower shall be under no
obligation to mark any Borrower Materials "PUBLIC."
6.3. PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the relevant Group Member.
6.4. MAINTENANCE OF EXISTENCE; COMPLIANCE. (a) (i) Preserve, renew
and keep in full force and effect its existence and (ii) take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of its business, except, in each case, as otherwise
permitted by SECTION 7.4 and except, in the case of clause (ii) above, to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (b) comply with all Contractual Obligations and Requirements
of Law except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
47
6.5. MAINTENANCE OF PROPERTY; INSURANCE
(a) (i) Do or cause to be done all things reasonably necessary
to preserve and keep in good repair, working order and efficiency (ordinary wear
and tear excepted) all of the properties owned by each Group Member, including
without limitation, all equipment, machinery and facilities, and (ii) make all
the reasonably necessary repairs, renewals and replacements so that at all times
the state and condition of the properties owned by each Group Member will be
fully preserved and maintained, except to the extent a portion of such
properties are oil and gas properties no longer capable of producing
hydrocarbons in economically reasonable amounts.
(b) Promptly pay and discharge or cause to be paid and
discharged all delay rentals, royalties, expenses and indebtedness accruing
under, and perform or cause to be performed each and every act, matter or thing
required by, each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its properties and will do
all other things necessary to keep unimpaired each Group Member's rights with
respect thereto and prevent any forfeiture thereof or a default thereunder,
except to the extent a portion of oil and gas properties is no longer capable of
producing hydrocarbons in economically reasonable amounts.
(c) Operate its properties or cause or use commercially
reasonable efforts to cause such properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance in all
material respects with all laws.
(d) Maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks (but including in any event general liability) as are usually
insured against in the same general area by companies engaged in the same or a
similar business and in any case no less comprehensive in scope than that
maintained by the Company and its Subsidiaries as of the Closing Date.
6.6. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and account 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 and permit
representatives of any Lender (coordinated through the Co-Administrative Agents)
to visit and inspect any of its properties and examine and make abstracts from
any of its books and records at any reasonable time and as often as may
reasonably be desired and to discuss the business, operations, properties and
financial and other condition of the Group Members with officers and employees
of the Group Members and with their independent certified public accountants.
6.7. NOTICES. Promptly give notice to the Co-Administrative Agents
and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Group Member or (ii) litigation, investigation or proceeding
that may exist at any time between any Group Member and any Governmental
Authority, that in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Group Member (i)
in which the amount involved is $25,000,000 or more and not covered by
insurance, (ii) in which injunctive or similar relief is sought which, if
granted, could reasonably be expected to have a Material Adverse Effect or (iii)
which relates to any Loan Document;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan;
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect; and
(f) the occurrence of any Internal Control Event.
Each notice pursuant to this SECTION 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Company, the Borrower or the relevant
Subsidiary proposes to take with respect thereto.
48
6.8. ENVIRONMENTAL LAWS
(a) Comply in all material respects with, and ensure compliance
in all material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws, and obtain and comply in all material respects
with and maintain, and ensure that all tenants and subtenants obtain and comply
in all material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws as well as all contractual obligations and agreements with respect to
environmental remediation or other environmental matters.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
(c) Promptly furnish to the Co-Administrative Agents all written
notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by any Group Member, or of
which it has notice, pending or threatened against any Group Member, by any
governmental authority with respect to any alleged violation of or
non-compliance in any material respect with any Environmental Laws or any
permits, licenses or authorizations in connection with its ownership or use of
its properties or the operation of its business.
(d) Promptly furnish to the Co-Administrative Agents all
requests for information, notices of claim, demand letters, and other
notifications, received by any Group Member in connection with its ownership or
use of its properties or the conduct of its business, relating to potential
responsibility which could if adversely determined result in fines or liability
of a material amount with respect to any investigation or clean-up of Hazardous
Material at any location.
6.9. COLLATERAL COVERAGE AND GUARANTEES
(a) Prior to the Collateral Release Date, maintain a Collateral
Coverage Ratio at all times of at least 1.5 to 1.0 in accordance with the
provisions set forth in SECTION 3.2(A).
(b) Subject to SECTION 10.14(B), with respect to any new
Subsidiary created or acquired after the Closing Date by any Group Member
(which, for the purposes of this paragraph (b), shall include any existing
Subsidiary that ceases to be an "Unrestricted Subsidiary" under the Indentures),
promptly (i) cause such new Subsidiary (A) to become a party to the Guarantee
Agreement and (B) to deliver to the Administrative Agent a certificate of such
Subsidiary, substantially in the form of EXHIBIT C, with appropriate insertions
and attachments, and (ii) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
6.10. FURTHER ASSURANCES. From time to time prior to the Collateral
Release Date, execute and deliver, or cause to be executed and delivered, such
additional mortgages, deeds of trust, chattel mortgages, security agreements,
financing statements, reports (including reports of the type described in
SECTION 6.2(D)), instruments, legal opinions, certificates or documents
(including, without limitation, documents of the type described in SECTION
5.1(I)), all in form and substance satisfactory to the Administrative Agent, and
take all such actions as may be requested hereunder (including, without
limitation, in order to comply with SECTION 6.9) or as the Administrative Agent
may reasonably request for the purposes of implementing or effectuating the
provisions of this Agreement and the other Loan Documents (including, without
limitation, SECTION 6.9), or of more fully perfecting or renewing the rights of
the Administrative Agent and the Lenders with respect to the Collateral (or with
respect to any additions thereto or replacements or proceeds thereof or with
respect to any other property or assets hereafter acquired by the Borrower or
any Subsidiary which may be deemed to be part of the Collateral) pursuant hereto
or thereto. Without limiting any of the forgoing, within 45 days following the
Closing Date, the Company and the Borrower will permit a review of title by
counsel or other Person designated by the Administrative Agent with respect to
the title of the applicable Loan Parties to any property in which a Lien is
granted under the Mortgages, such title review to be satisfactory to the
Administrative Agent in its sole discretion. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy
pursuant to this Agreement or the other Loan Documents which requires any
consent, approval, recording qualification or authorization of any Governmental
Authority, the Company and the Borrower will execute and deliver, or will cause
the execution and delivery of, all applications, certifications, instruments and
other documents and papers that the Administrative Agent or such Lenders may be
required to obtain from the Company, the Borrower or any of their respective
Subsidiaries for such governmental consent, approval, recording, qualification
or authorization.
49
SECTION 7. NEGATIVE COVENANTS
The Company and the Borrower hereby jointly and severally agree that,
so long as the Revolving Commitments remain in effect, any Letter of Credit
remains outstanding or any Revolving Loan or other amount is owing to any Lender
or Agent hereunder, each of the Company and the Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly:
7.1. FINANCIAL CONDITION COVENANTS
(a) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Company then most recently ended (beginning with the
quarter ended December 31, 2004) to be less than 2.5 to 1.0.
(b) CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA RATIO.
Permit the ratio of (i) Consolidated Indebtedness to (ii) Consolidated EBITDA
for the period of four consecutive fiscal quarters of the Company then most
recently ended to be greater than 3.5 to 1.0.
(c) PRESENT VALUE TO CONSOLIDATED INDEBTEDNESS RATIO. At all
times while availability under this Agreement is not then being governed by a
Borrowing Base as provided in SECTION 2.14(A), except during any period when
ratings for the Index Debt shall be equal to or more favorable than BBB- by S&P
and shall be equal to or more favorable than Baa3 by Moody's permit the ratio of
(i) PV to (ii) Consolidated Indebtedness to be less than 1.33 to 1.0.
7.2. INDEBTEDNESS. Create, issue, incur, assume, become liable in
respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness (i) of the Borrower to the Company or to any
Subsidiary of the Company, (ii) of the Company or any Subsidiary Guarantor to
the Borrower (except in the event that there has been an acceleration of the
maturity of any Obligation) or to any other Subsidiary of the Company, (iii) of
any Subsidiary of the Company (other than the Borrower or a Subsidiary
Guarantor) to any Subsidiary of the Company (other than the Borrower or a
Subsidiary Guarantor), and (iv) subject to SECTION 7.7(G), of any Subsidiary
(other than the Borrower or a Subsidiary Guarantor) to the Borrower or any
Subsidiary Guarantor;
(c) Guarantee Obligations incurred in the ordinary course of
business by the Borrower and the Company or any of its Subsidiaries of
obligations of the Borrower, any Subsidiary Guarantor and, subject to SECTION
7.7(G), of any Subsidiary (other than the Borrower or a Subsidiary Guarantor);
(d) Indebtedness outstanding on the date hereof and listed on
SCHEDULE 7.2(D) and any refinancings, refundings, renewals or extensions thereof
(without increasing, or shortening the maturity of, the principal amount
thereof);
(e) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by SECTION 7.3(G) in an aggregate
principal amount not to exceed $150,000,000 at any one time outstanding;
(f) Indebtedness under the Indentures as of the Closing Date;
(g) Hedge Agreements entered into with the purpose and effect of
hedging price risk on oil or gas expected to be produced by Group Members,
PROVIDED that at all times: (i) no such contract has, or fixes a price for, a
term including any month later than 60 months from the date such Hedge Agreement
is entered into (except Hedge Agreements hedging only basis differential risk);
(ii) the aggregate notional amount covered by all such Hedge Agreements (except
Hedge Agreements hedging only basis differential risk) for each single future
month (determined, in the case of Hedge Agreements that are not settled on a
monthly basis, by a monthly proration acceptable to the Co-Administrative
Agents) does not exceed (A) if such month is or is prior to the 36th month after
the month in which such determination is being made, 100% of Budget Basis
Projected Production projected to be produced during such month, and (B) if such
month is later than the 36th month after the month in which such determination
is being made, 100% of Adjusted SPE Basis Projected Production projected to be
produced during such month, and (iii) each such contract is with a counterparty
or has a guarantor of the obligation of the counterparty who (unless such
counterparty is a Lender or one of its Affiliates) is a nationally recognized,
well-capitalized hedging counterparty or is an investment grade-rated industry
participant;
50
(h) Hedge Agreements entered into by a Group Member with the
purpose and effect of fixing interest rates on a principal amount of
Indebtedness of such Group Member that is accruing interest at a variable rate,
PROVIDED that the aggregate notional amount of such contracts never exceeds 75%
of the anticipated outstanding principal balance of the Indebtedness to be
hedged by such contracts or an average of such principal balances calculated
using a generally accepted method of matching interest swap contracts to
declining principal balances, and the floating rate index of each such contract
generally matches the index used to determine the floating rates of interest on
the corresponding indebtedness to be hedged by such contract; and the fixed rate
index of each such contract generally matches the interest on the corresponding
obligation to be hedged by such contract; PROVIDED further that each such
contract is with a counterparty or has a guarantor of the obligation of the
counterparty who (unless such counterparty is a Lender or one of its Affiliates)
is a nationally recognized, well-capitalized hedging counterparty;
(i) liabilities with respect to accrued revenues and royalties
due to others during the period the payment thereof has been properly suspended
in accordance with applicable agreements and applicable law;
(j) Hedging Agreements entered into by the Company with the
purpose and effect of contracting for variable interest rates on a principal
amount of Indebtedness of the Company (which, for purposes of this subsection
only, shall include the liquidation preference on preferred stock of the
Company) that is accruing interest or dividends at a fixed rate, provided that
(1) the ratio of fixed rate Indebtedness of the Company to total Indebtedness of
the Company (excluding Indebtedness outstanding under this Agreement) remains at
least sixty-five percent (65%), and (2) each such contract is with a
counterparty or has a guarantor of the obligation of the counterparty who
(unless such counterparty is a Lender or one of its Affiliates) is a nationally
recognized well capitalized hedging counterparty or is an investment grade
industry participant; plus the Guarantee Obligations of one or more of the Group
Members of the obligations of the Company permitted to be incurred under this
SECTION 7.2(J);
(k) additional Indebtedness of the Company or any of its
Subsidiaries in an aggregate principal amount (for the Company and all
Subsidiaries) not to exceed $150,000,000 at any one time outstanding, PLUS, the
lesser of (i) for a period limited to 90 days after an acquisition permitted
under SECTION 7.7(H), the amount of indebtedness secured by Liens upon any
property so acquired or owing by the Person so acquired and existing at the time
of such acquisition and not incurred in contemplation thereof, and, after the
end of such 90 day period, zero, and (ii) $100,000,000;
(l) Indebtedness evidenced by senior or subordinated notes
issued by the Company, and Guarantees thereof by the Borrower and the Subsidiary
Guarantors; PROVIDED that (i) such Indebtedness is unsecured, (ii) such notes
are issued in a public offering under a registration statement, or are issued to
accredited institutional investors pursuant to Rule 144A or Regulation S of the
Securities Exchange Commission with a covenant to exchange such notes for
substantially identical notes offered under such a registration statement (and
the issuance of such registered notes upon such exchange shall not be considered
a new incurrence of Indebtedness under this SECTION 7.2(L)), (iii) at the time
of such issuance and after giving effect thereto, each of the Pro Forma
Incurrence Tests are met, (iv) no principal amount of such Indebtedness matures
earlier than two (2) years after the Revolving Termination Date, (v) at the time
of such issuance and after giving effect thereto, no Default or Event of Default
shall exist or would occur, (vi) such Indebtedness is governed by an Indenture
where none of the covenants and events of default are more restrictive on the
Company and its Subsidiaries than the covenants and events of default under the
Indenture dated as of December 8, 2004, (vii) at the time of such issuance and
after giving effect thereto, (a) if rated by both such rating agencies, each of
Moody's and S&P maintains its rating applicable to the Index Debt equal to or
more favorable than its rating of such debt in effect on the Closing Date and
equal to or more favorable than its most favorable rating of such debt during
the 180 days preceding the issuance of such notes, (b) if only one of Moody's or
S&P provides a rating, that agency maintains its rating applicable to the Index
Debt equal to or more favorable than its rating of such debt in effect on the
Closing Date and equal to or more favorable than its most favorable rating of
such debt during the 180 days preceding the issuance of such notes and (viii)
the Company shall have delivered to the Co-Administrative Agents a certificate
in reasonable detail reflecting compliance with each of the forgoing
requirements of this SECTION 7.2(L), including calculations with supporting
detail regarding each of the Pro Forma Incurrence Tests, together with such
other evidence of compliance with the forgoing requirements of this SECTION
7.2(L) as the Co-Administrative Agents may reasonably request; and
51
(m) The Permitted Securitization (and any performance guaranty
given by the Company in connection with the Permitted Securitization provided
such performance guaranty applies only to the servicer's or originator's
obligations thereunder).
7.3. LIENS. Create, incur, assume orsuffer to exist any Lien upon any
of its property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or that are being contested in
good faith by appropriate proceedings, PROVIDED that adequate reserves with
respect thereto are maintained on the books of the Company or its Subsidiaries,
as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business that
are not overdue for a period of more than 30 days or that are being contested in
good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate,
are not substantial in amount and that do not in any case materially detract
from the value of the property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on SCHEDULE
7.3(F), securing Indebtedness permitted by SECTION 7.2(D), PROVIDED that no such
Lien is spread to cover any additional property after the Closing Date and that
the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Company or any other
Subsidiary incurred pursuant to SECTION 7.2(E) to finance the acquisition of
fixed or capital assets, PROVIDED that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness and (iii) the amount of Indebtedness
secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered
into by the Company or any Subsidiary in the ordinary course of its business and
covering only the assets so leased;
(j) Prior to the Collateral Release Date, Liens on oil and gas
properties (that are not Collateral) of the Company and its Subsidiaries the
aggregate value of which does not exceed, at any time, $50,000,000 securing
Indebtedness under any Hedge Agreement with any Lender or any affiliate thereof
(not otherwise permitted under SECTION 7.3(M));
(k) any (i) pledge of cash to secure the obligations of the
Company and its Subsidiaries with respect to any Hedge Agreement or (ii)
issuance of letters of credit (other than Letters of Credit issued under this
Agreement) to secure such obligations or other obligations arising in the
ordinary course of business (which letters of credit shall be deemed to not be
Indebtedness for purposes of SECTION 7.2), in the case of both (i) and (ii) not
to exceed, at any time, an amount of cash and face amount of letters of credit
equal to $50,000,000 in the aggregate;
(l) for a period limited to 90 days after an acquisition
permitted under SECTION 7.7(H), Liens upon property so acquired, existing at the
time of such acquisition and not incurred in contemplation thereof, and not upon
any other property, securing only Indebtedness permitted by SECTION 7.2(K);
(m) Prior to the Collateral Release Date, Liens securing the
Indebtedness under any Hedging Support Credit Facility on oil and gas properties
(that are not Collateral) of the Company and its Subsidiaries, the aggregate
value of which does not materially exceed, at the time any such Lien is created
or modified, the Hedging Support Credit Facility Limitations; and
(n) Liens in respect of Permitted Securitization on Receivables
and Related Security assigned from time to time to a Securitization Subsidiary
or one or more investors or other purchasers (other than the Company, Borrower
or a Subsidiary), as permitted by SECTION 7.5(E).
7.4. FUNDAMENTAL CHANGES. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except that:
52
(a) any Subsidiary of the Borrower may be merged or consolidated
with or into the Borrower (PROVIDED that the Borrower shall be the continuing or
surviving entity) or with or into any Subsidiary of the Borrower that is a
Subsidiary Guarantor (PROVIDED that the Subsidiary Guarantor shall be the
continuing or surviving entity) or, subject to SECTION 7.7(G), with or into any
other Subsidiary of the Borrower;
(b) any Subsidiary of the Borrower may Dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Borrower, to any
Subsidiary of the Borrower that is a Subsidiary Guarantor or, subject to SECTION
7.7(G), to any other Subsidiary of the Borrower;
(c) any Subsidiary of the Company (other than the Borrower and
its Subsidiaries) may be consolidated with or into the Company (PROVIDED that
the Company shall be the continuing or surviving entity) or with or into any
Subsidiary Guarantor (other than the Borrower or any of its Subsidiaries)
(PROVIDED that the Subsidiary Guarantor shall be the continuing or surviving
entity) or, subject to SECTION 7.7(G), any Subsidiary (other than the Borrower
or any of its Subsidiaries and any Subsidiary Guarantor); and
(d) any Subsidiary of the Company (other than the Borrower and
its Subsidiaries) may Dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Company or any Subsidiary Guarantor (other than
the Borrower or any of its Subsidiaries) or, subject to SECTION 7.7(G), any
Subsidiary (other than the Borrower or any of its Subsidiaries and any
Subsidiary Guarantor).
7.5. DISPOSITION OF PROPERTY. Dispose of any of its property,
whether now owned or hereafter acquired, or, in the case of any Subsidiary of
the Company, issue or sell any shares of such Subsidiary's Capital Stock to any
Person, except:
(a) the Disposition of obsolete or worn out property in the
ordinary course of business;
(b) inventory (including oil and gas sold as produced and
seismic data) which is sold in the ordinary course of business on ordinary trade
terms;
(c) interests in oil and gas properties, or portions thereof, to
which no proved reserves of oil, gas or other liquid or gaseous hydrocarbons are
properly attributed;
(d) Dispositions permitted by SECTION 7.4(B) or 7.4(D);
(e) Receivables and Related Security assigned from time to time
to a Securitization Subsidiary or one or more investors or other purchasers
(other than the Company, Borrower or a Subsidiary); PROVIDED that no assignment
or other disposition of Receivables or Related Securities may be made after an
Event of Default specified in SECTION 8(F) or after Borrower has received
written notice from a Co-Administrative Agent that no such assignments shall be
made as a result of the occurrence and during the continuance of any other Event
of Default; and
(f) other property that is sold for fair consideration to a
Person who is not an Affiliate; PROVIDED that (i) at all times while
availability under this Agreement is then being governed by a Borrowing Base as
provided in SECTION 2.14(A), the maximum amount of Proved properties sold in the
period between any two regular annual Determination Dates on which the Borrowing
Base is designated (or the period between the last regular annual Determination
Date on which the Borrowing Base is designated in the Revolving Commitment
Period and the Revolving Termination Date) shall not exceed 5% of the Proved
properties of the Company and its Subsidiaries as of the December 31 Evaluation
Date with respect of the first such Determination Date and based upon the value
set forth in the Engineering Report with respect to the first such Determination
Date, (ii) at the time of such sale and after giving effect thereto on a pro
forma basis no Default or Event of Default shall exist or would result and (iii)
at all times prior to the Collateral Release Date, the maximum amount of
Collateral sold in the period between any two regular semi-annual Determination
Dates on which the Collateral Value is designated (or the period between the
last regular semi-annual Determination Date on which the Collateral Value is
designated in the Revolving Commitment Period and the Revolving Termination
Date) shall not exceed the sum of (A) the amount, if any, by which the
Collateral Value most recently designated exceeded 150% of the greater of the
Total Revolving Commitments and, if applicable, the Borrowing Base plus (B)
$20,000,000; PROVIDED that to the extent the aggregate Net Cash Proceeds of all
such Dispositions after the date of this Agreement exceeds $15,000,000 (i) so
53
long as no Default or Event of Default shall have occurred and be continuing,
within six months following the receipt of such proceeds by the Group Member the
amount of such excess shall be either applied to permanently repay outstanding
Indebtedness of any Group Member or to pay the purchase price of proved oil and
gas properties acquired by a Group Member or to pay development costs with
respect to proved oil and gas properties then owned by a Group Member, or (ii)
if a Default or Event of Default shall have occurred and be continuing at the
time of such Disposition, the amount of such excess (any such excess, the
"EXCESS AMOUNT") shall be applied in accordance with SECTION 3.2(C).
7.6. RESTRICTED PAYMENTS. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Group Member (or enter into or be party
to, or make any payment under, any Synthetic Purchase Agreement with respect to
any such Capital Stock if the purchase, redemption, defeasance, retirement or
other acquisition thereof by the Company and its Subsidiaries would otherwise be
prohibited under this SECTION 7.6), whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Company, the Borrower or
any Subsidiary of the Company, or enter into any derivatives or other
transaction with any financial institution, commodities or stock exchange or
clearinghouse (a "DERIVATIVES COUNTERPARTY") obligating any Group Member to make
payments to such Derivatives Counterparty as a result of any change in market
value of any such Capital Stock (collectively, "RESTRICTED PAYMENTS"), except
that:
(a) any Subsidiary of the Company may pay cash dividends or
distributions on its Capital Stock to the Company or any of its Subsidiaries;
(b) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, the Company may (i)
purchase the Company's common stock or common stock options from present or
former officers or employees of any Group Member upon the death, disability or
termination of employment of such officer or employee, PROVIDED, that the
aggregate amount of payments under this clause (b)(i) after the Closing Date
shall not exceed $5,000,000, or (ii) purchase the Company's common stock, other
than from present or former officers or employees of any Group Member in the
circumstance set forth in the preceding clause (b)(i), provided, that the
aggregate amount of payments under this clause (b)(ii) after the Closing Date
shall not exceed $100,000,000; and
(c) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom at the time such dividends
are declared (determined on a pro forma basis as if such dividends were paid in
cash on the date so declared), the Company may pay cash dividends on its
Permitted Preferred Stock and its common stock.
7.7. INVESTMENTS. Make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "INVESTMENTS"), except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by SECTION 7.2;
(d) loans and advances to employees of any Group Member of the
Company in the ordinary course of business (including for travel, entertainment
and relocation expenses) in an aggregate amount for all Group Members not to
exceed $1,000,000 at any one time outstanding;
(e) the purchase by the Company of its outstanding senior notes
to the extent permitted by SECTION 7.8;
(f) intercompany Investments by any Group Member in the Borrower
or any Person that, prior to such Investment, is a Subsidiary Guarantor (and, in
the case of Investments by the Borrower or any of its Subsidiaries, a Subsidiary
of the Borrower);
(g) intercompany Investments in a Securitization Subsidiary
consisting of equity interests in or debt obligations of such Securitization
Subsidiary resulting from assignments permitted under SECTION 7.5(E) in excess
of the cash payment received in exchange for such assignments, not to exceed
amounts consistent with requirements for similar securitizations of accounts
receivable of other companies generally;
54
(h) intercompany Investments by the Company or any of its
Subsidiaries in any Person, that, prior to such Investment, is a Subsidiary but
not a Subsidiary Guarantor (including, without limitation, Guarantee Obligations
with respect to obligations of any such Subsidiary, loans made to any such
Subsidiary and Investments resulting from mergers with or sales of assets to any
such Subsidiary) PLUS any Unrestricted Subsidiary Investments in connection with
the designation of a Subsidiary Guarantor or any newly created or acquired
Subsidiary as an "Unrestricted Subsidiary" under the Indentures (MINUS any
Unrestricted Subsidiary Investment in connection with the designation of a
Subsidiary that is not a Subsidiary Guarantor as a "Restricted Subsidiary" under
the Indentures and a Subsidiary Guarantor hereunder) in an aggregate outstanding
amount (valued at cost) not to exceed at any time, together with any Investment
pursuant to paragraph (l) of this Section that results in the creation or
acquisition of a Subsidiary that is not a Subsidiary Guarantor or the
acquisition of assets by, or the contribution or transfer of assets to, a
Subsidiary that is not a Subsidiary Guarantor, $100,000,000 in the aggregate
(except to the extent the Investment is made in the form of the common stock of
the Company);
(i) acquisitions of oil and gas properties and oil and gas
exploration and extraction assets and assets directly related thereto and
acquisitions of all the Capital Stock of any Person whose assets consist
primarily of oil and gas properties and oil and gas exploration and extraction
assets and assets directly related thereto the consideration for which is in the
form of cash or Capital Stock of the Company;
(j) the entry into operating agreements, processing agreements,
farm-out agreements, development agreements, area of mutual interest agreements,
contracts for the transportation or exchange of oil and natural gas, unitization
agreements, pooling arrangements, joint bidding agreements, service contracts,
or other similar customary agreements, transactions, properties, interests or
arrangements, in each case made or entered into in the ordinary course of
business as conducted by the Company and its Subsidiaries as of the Closing
Date;
(k) Investments pursuant to the employment agreements between
each of Aubrey K. McClendon and Tom L. Ward and the Company as are in effect as
of the Closing Date;
(l) Investments resulting from Indebtedness permitted under
SECTION 7.2(B);
(m) Investments set forth on SCHEDULE 7.7(M);
(n) Investments by the Company or any of its Subsidiaries in any
publicly traded securities of a company whose business consists primarily of oil
and gas exploration, development, production, drilling or field services; and
(o) in addition to Investments otherwise expressly permitted by
this Section, Investments by the Company or any of its Subsidiaries (including,
without limitation, joint ventures and partnerships) in an aggregate outstanding
amount at any time (valued at cost) not to exceed $100,000,000 during the term
of this Agreement (except to the extent such consideration is in the form of the
common stock of the Company);
provided that, with respect to any Investment under SUBSECTIONS 7.7(C), (H),
(I), (N) or (O), no Default or Event of Default shall have occurred and be
continuing or would result therefrom.
7.8. OPTIONAL PAYMENTS AND MODIFICATIONS OF CERTAIN DEBT INSTRUMENTS.
(a) Make or offer to make any optional or voluntary payment, prepayment,
repurchase or redemption of or otherwise optionally or voluntarily defease or
segregate funds with respect to Indebtedness under any Indenture or enter into
any derivative or other transaction with any Derivatives Counterparty obligating
the Company, the Borrower or any Subsidiary to make payments to such Derivatives
Counterparty as a result of any change in market value of any such Indebtedness;
(b) amend, modify, waive or otherwise change, or consent or agree to any
amendment, modification, waiver or other change to, any of the terms of
Indebtedness under the Indentures (other than any such amendment, modification,
waiver or other change that (i) would extend the maturity or reduce the amount
of any payment of principal thereof or reduce the rate or extend any date for
payment of interest thereon and (ii) does not involve the payment of a consent
fee); or (c) enter into or be party to, or make any payment under, any Synthetic
Purchase Agreement with respect to any Indebtedness the making or offering to
make of any optional or voluntary payment or prepayment thereon, or any
repurchase or redemption thereof, or the optional or voluntary defeasance or
segregation of funds with respect thereto, the Company and its Subsidiaries are
otherwise prohibited from doing under this SECTION 7.8; except optional or
voluntary payments, prepayments, exchanges, redemptions, or repurchases in
market transactions of Indebtedness under any Indenture if before and, on a
proforma basis after giving effect to such purchase, no Default or Event of
Default shall exist.
55
7.9. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than the Company, the Borrower or any Subsidiary Guarantor)
unless such transaction is (a) otherwise permitted under this Agreement, (b) in
the ordinary course of business of the relevant Group Member, and (c) upon fair
and reasonable terms no less favorable to the relevant Group Member, than it
would obtain in a comparable arm's length transaction with a Person that is not
an Affiliate.
7.10. SALES AND LEASEBACKS. Enter into any arrangement with any Person
providing for the leasing by any Group Member of real or personal property that
has been or is to be sold or transferred by such Group Member to such Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of such Group Member
(including, without limitation, any Sale/Leaseback Transaction as defined in
each of the Indentures) unless the proceeds received by any Group Member
therefrom (i) in the aggregate for all such arrangements after the date hereof
does not exceed $50,000,000 and (ii) for each such arrangement is certified by a
Responsible Officer to be at least equal to the fair market value of the
property sold under such arrangement.
7.11. CHANGES IN FISCAL PERIODS. Permit the fiscal year of the Company
to end on a day other than December 31 or change the Company's method of
determining fiscal quarters.
7.12. NEGATIVE PLEDGE CLAUSES. Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of any Group Member
to create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, other than (a) this Agreement
and the other Loan Documents, (b) the Indentures, (c) any agreements governing
any purchase money Liens or Capital Lease Obligations otherwise permitted hereby
(in which case, any prohibition or limitation shall only be effective against
the assets financed thereby), (d) any Permitted Securitization (in which case,
any prohibition or limitation shall only be effective against the Receivables
and Related Security assigned thereunder), and (e) any Hedging Support Credit
Facility (in which case, any prohibition or limitation shall comply with the
limitations set forth on EXHIBIT J).
7.13. CLAUSES RESTRICTING SUBSIDIARY DISTRIBUTIONS. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Company or the Borrower to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, the Company, the Borrower or any other
Subsidiary of the Company or the Borrower, as the case may be, (b) make loans or
advances to, or other Investments in, the Company or the Borrower or any other
Subsidiary of the Company or the Borrower, as the case may be, or (c) transfer
any of its assets to the Company or the Borrower or any other Subsidiary of the
Company or the Borrower, as the case may be, except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing under
the Loan Documents, (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement that has been entered into in connection with the
Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary, and (iii) any restrictions under the Indentures applicable to
"Unrestricted Subsidiaries" thereunder, so long as such entities remain
"Unrestricted Subsidiaries" thereunder.
7.14. TAKE-OR-PAY CONTRACTS. No Group Member will enter into any
"take-or-pay" contract or other contract or arrangement for the purchase of
goods or services which obligates it to pay for such goods or service regardless
of whether they are delivered or furnished to it other than from oil and natural
gas fixed transportation arrangements.
7.15. LINES OF BUSINESS. Enter into any business, either directly or
through any Subsidiary, except for the marketing, exploration and extraction of
oil and gas and services related thereto which constitutes the business the
Company and its Subsidiaries are engaged in as of the date of this Agreement.
7.16. SENIOR DEBT LIMIT. Permit the Total Revolving Extensions of
Credit at any time to exceed the Senior Debt Limit at such time.
56
7.17. PREFERRED STOCK ISSUANCE. Create, issue, incur, assume, become
liable in respect of or suffer to exist any Preferred Stock other than Preferred
Stock outstanding on the Closing Date, unless: (i) at the time of such issuance
and after giving effect thereto, the portion of the Pro Forma Incurrence Tests
set forth in clause (a) of the definition of Pro Forma Incurrence Tests is met,
(ii) by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable), or upon the happening of any event or with the
passage of time, no amount, other than quarterly cash dividends, is payable,
matures, is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is exchangeable or convertible at the option of the holder
thereof, in whole or in part, on or prior to the date that is two (2) years
after the Revolving Termination Date other than any redemption, exchange or
conversion only into common stock of the Company or any other redemption,
exchange or conversion rights that cannot be exercised prior to the date that is
two (2) years after the Revolving Termination Date, (iii) at the time of such
issuance and after giving effect thereto, no Default or Event of Default shall
exist or would exist, and (iv) the Company shall have delivered to the
Co-Administrative Agents a certificate in reasonable detail reflecting
compliance with each of the forgoing requirements of this SECTION 7.17,
including calculation with supporting detail regarding the portion of the Pro
Forma Incurrence Tests set forth in clause (a) of the definition of Pro Forma
Incurrence Tests is met, together with such other evidence of compliance with
the forgoing requirements of this SECTION 7.17 as the Co-Administrative Agents
may reasonably request.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any
Revolving Loan or L/C Obligation when due in accordance with the terms hereof;
or the Borrower shall fail to pay any interest on any Revolving Loan or L/C
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount becomes due
in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made; or
(c) (i) any Loan Party shall default in the observance or
performance of any agreement contained in SECTION 6.2(D), clause (I) or (II) of
SECTION 6.4(A) (with respect to the Company and the Borrower only), SECTION
6.7(A), 6.9 or SECTION 7 of this Agreement or (ii) a "default" under and as
defined in any Mortgage shall have occurred and be continuing; or
(d) any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a) through (c) of this Section),
and such default shall continue unremedied for a period of 30 days after notice
to the Borrower from either Co-Administrative Agent; or
(e) any Group Member (i) defaults in making any payment of any
principal of any Indebtedness (including any Guarantee Obligation, but excluding
the Revolving Loans) on the scheduled or original due date with respect thereto;
or (ii) defaults in making any payment of any interest on any such Indebtedness
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created; or (iii) defaults in the observance
or performance of any other agreement or condition relating to any such
Indebtedness 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, or to permit the
holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of
such holder or beneficiary) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or to become
subject to a mandatory offer to purchase by the obligor thereunder or (in the
case of any such Indebtedness constituting a Guarantee Obligation) to become
payable; PROVIDED, that a default, event or condition described in clause (i),
(ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of
Default unless, at such time, one or more defaults, events or conditions of the
type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $50,000,000; or
57
(f) (i) any Group Member shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or any Group Member shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Group Member any case, proceeding or other action of a
nature referred to in clause (i) above that (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against any Group Member any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets that results in the entry of
an order for any such relief that shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv)any Group Member shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(g) (i) any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the Company or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Majority Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Majority Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could, in the sole
judgment of the Majority Lenders, reasonably be expected to have a Material
Adverse Effect; or
(h) one or more judgments or decrees shall be entered against
any Group Member involving in the aggregate a liability (not paid or fully
covered by insurance as to which the relevant insurance company has acknowledged
coverage) of $50,000,000 or more, and all such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal within 30 days
from the entry thereof; or
(i) any of the Security Documents shall cease, for any reason,
to be in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any time prior to the Collateral Release Date, any
Lien created by any of the Security Documents with respect to Mortgaged
Properties with an aggregate value in excess of $50,000,000 shall cease to be
enforceable and of the same effect and priority purported to be created thereby;
or
58
(j) the guarantee contained in SECTION 2 of the Guarantee
Agreement shall cease, for any reason, to be in full force and effect or any
Loan Party or any Affiliate of any Loan Party shall so assert; or
(k) (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")), shall become, or obtain rights (whether by means or warrants,
options or otherwise) to become, the "beneficial owner" (as defined in Rules
13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more
than 35% of the outstanding common stock of the Company; (ii) the board of
directors of the Company shall cease to consist of a majority of Continuing
Directors; (iii) the Company shall cease to own and control, of record and
beneficially, directly or indirectly, 100% of each class of outstanding Capital
Stock of the Borrower and each Guarantor free and clear of all Liens; or (iv) a
Specified Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Revolving Commitments shall immediately terminate and the
Revolving Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement and the other Loan Documents (including all amounts
of L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) shall
immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Majority Lenders, either Co-Administrative Agent may, or upon the
request of the Majority Lenders, either Co-Administrative Agent shall, by notice
to the Borrower declare the Revolving Commitments to be terminated forthwith,
whereupon the Revolving Commitments shall immediately terminate; and (ii) with
the consent of the Majority Lenders, either Co-Administrative Agent may, or upon
the request of the Majority Lenders, the Co-Administrative Agents shall, by
notice to the Borrower, declare the Revolving Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the other
Loan Documents (including all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. With respect to all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time Cash Collateralize the aggregate L/C Obligations. Amounts of Cash
Collateral shall be applied by either Co-Administrative Agent to the payment of
drafts drawn under such Letters of Credit, and the unused portion thereof after
all such Letters of Credit shall have expired or been fully drawn upon, if any,
shall be applied to repay other Obligations of the Borrower hereunder and under
the other Loan Documents. After all such Letters of Credit shall have expired or
been fully drawn upon, all L/C Obligations shall have been satisfied and all
other Obligations of the Borrower hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, of Cash Collateral shall be
returned to the Borrower (or such other Person as may be lawfully entitled
thereto). Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived by
the Borrower.
SECTION 9. THE AGENTS
9.1. APPOINTMENT AND AUTHORITY. Each of the Lenders and the Issuing
Lender hereby irrevocably appoints each of Union Bank of California, N.A. and
Bank of America, N.A. to act on its behalf as the Co-Administrative Agents
hereunder and Union Bank of California, N.A. to act on its behalf as the
Administrative Agent hereunder and under the other Loan Documents and authorizes
each Agent to take such actions on its behalf and to exercise such powers as are
delegated to such Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto. The provisions of this
Section are solely for the benefit of each Agent, the Lenders and the Issuing
Lender, and neither the Borrower nor any other Loan Party shall have rights as a
third party beneficiary of any of such provisions.
59
9.2. RIGHTS AS A LENDER. The Person serving as an Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Agent and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the
context otherwise requires, include the Person serving as the Agent hereunder in
its individual capacity. Such Person and its Affiliates may accept deposits
from, lend money to, act as the financial advisor or in any other advisory
capacity for and generally engage in any kind of business with the Borrower or
any Subsidiary or other Affiliate thereof as if such Person were not the Agent
hereunder and without any duty to account therefor to the Lenders.
9.3. EXCULPATORY PROVISIONS. The Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, the Agent:
(a) shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the Agent is
required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), PROVIDED that the Agent shall not be
required to take any action that, in its opinion or the opinion of its counsel,
may expose the Agent to liability or that is contrary to any Loan Document or
applicable law; and
(c) shall not, except as expressly set forth herein and in the
other Loan Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Agent or any of its Affiliates in any capacity.
The Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Agent shall believe
in good faith shall be necessary, under the circumstances as provided in
SECTIONS 10.1 and SECTION 8) or (ii) in the absence of its own gross negligence
or willful misconduct. The Agent shall be deemed not to have knowledge of any
Default unless and until notice describing such Default is given to the Agent by
the Borrower, a Lender or the Issuing Lender.
The Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
this Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any condition
set forth in SECTION 5 or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Agent.
60
9.4. RELIANCE BY AGENT. The Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. The Agent also may 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. In
determining compliance with any condition hereunder to the making of a Revolving
Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled
to the satisfaction of a Lender or the Issuing Lender, the Agent may presume
that such condition is satisfactory to such Lender or the Issuing Lender unless
the Agent shall have received notice to the contrary from such Lender or the
Issuing Lender prior to the making of such Revolving Loan or the issuance of
such Letter of Credit. The Agent may consult with legal counsel (who may be
counsel for the Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
9.5. DELEGATION OF DUTIES. The Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by the Agent. Except
(i) in circumstances in which such Agent determines in good faith that such
appointment is advisable to comply with applicable law or to avoid a
disadvantageous economic, legal or regulatory consequence or (ii) when a Default
shall have occurred and be continuing, any such sub-agent shall be approved by
the Borrower, such approval to not be unreasonably withheld or delayed. The
Agent and any such sub-agent may perform any and all of its duties and exercise
its rights and powers by or through their respective Related Parties. The
exculpatory provisions of this SECTION 9 shall apply to any such sub-agent and
to the Related Parties of the Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.
9.6. RESIGNATION OF AGENT. The Agent may at any time give notice of
its resignation to the Lenders, the Issuing Lender and the Borrower. Upon
receipt of any such notice of resignation, the Majority Lenders shall have the
right, in consultation with the Borrower, to appoint a successor, which shall be
a bank with an office in the United States, or an Affiliate of any such bank
with an office in the United States. If no such successor shall have been so
appointed by the Majority Lenders, in consultation with the Borrower, and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation, then the retiring Agent may on behalf of the Lenders
and the Issuing Lender, appoint a successor Agent meeting the qualifications set
forth above; PROVIDED that if the Agent shall notify the Borrower and the
Lenders that no qualifying Person has accepted such appointment, then such
resignation shall nonetheless become effective in accordance with such notice
and (1) the retiring Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Agent on behalf of the Lenders or the Issuing
Lender under any of the Loan Documents, the retiring Agent shall continue to
hold such collateral security until such time as a successor Agent is appointed)
and (2) all payments, communications and determinations provided to be made by,
to or through the Agent shall instead be made by or to each Lender and the
Issuing Lender directly, until such time as the Majority Lenders appoint a
successor Agent as provided for above in this Section. Upon the acceptance of a
successor's appointment as Agent hereunder, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Agent, and the retiring Agent shall be discharged from all
of its duties and obligations hereunder or under the other Loan Documents (if
not already discharged therefrom as provided above in this Section). The fees
payable by the Borrower to a successor Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the retiring Agent's resignation hereunder and under the other
Loan Documents, the provisions of this SECTION 9 and SECTION 10.5 shall continue
in effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Agent was acting as Agent.
9.7. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender and the
Issuing Lender acknowledges that it has, independently and without reliance upon
the Agent or any other Lender or any of their Related Parties and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender and the Issuing
Lender also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender or any of their Related Parties and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or any related agreement or any
document furnished hereunder or thereunder.
61
9.8. NO OTHER DUTIES, ETC. Anything herein to the contrary
notwithstanding, none of the Co-Book Managers, Joint Lead Arrangers, or
Co-Documentation Agents listed on the cover page hereof shall have any powers,
duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Agent, a Lender or the
Issuing Lender hereunder.
9.9. ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Revolving Loan or L/C Obligation shall then be due
and payable as herein expressed or by declaration or otherwise and irrespective
of whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(a) to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Revolving Loans, L/C
Obligations and all other Obligations that are owing and unpaid and to file such
other documents as may be necessary or advisable in order to have the claims of
the Lenders, the Issuing Lender and the Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Lenders, the Issuing Lender and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders, the Issuing
Lender and the Administrative Agent under SECTIONS 2.3, 2.7 and 10.5) allowed in
such judicial proceeding; and
(b) to collect and receive any monies or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the Issuing Lender to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the
making of such payments directly to the Lenders and the Issuing Lender, to pay
to the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents
and counsel, and any other amounts due the Administrative Agent under SECTIONS
2.3 and 10.5.
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or the
Issuing Lender any plan of reorganization, arrangement, adjustment or
composition affecting the Obligations or the rights of any Lender or to
authorize the Administrative Agent to vote in respect of the claim of any Lender
in any such proceeding.
SECTION 10. MISCELLANEOUS
10.1. AMENDMENTS AND WAIVERS. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this SECTION 10.1. The
Majority Lenders and each Loan Party to the relevant Loan Document may, or, with
the written consent of the Majority Lenders, the Co-Administrative Agents and
each Loan Party to the relevant Loan Document may, from time to time, (a) enter
into written amendments, supplements or modifications hereto and to the other
Loan Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Majority Lenders or the Co-Administrative Agents, as the case
may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; PROVIDED, HOWEVER, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Revolving Loan, reduce the stated rate
of any interest or fee payable hereunder (except in connection with the waiver
of applicability of any post-default increase in interest rates, which waiver
shall be effective with the consent of the Majority Lenders) or extend the
scheduled date of any payment thereof, or increase the amount or extend the
expiration date of any Lender's Revolving Commitment, in each case without the
written consent of each Lender directly affected thereby; (ii) eliminate or
reduce the voting rights of any Lender under this SECTION 10.1 without the
written consent of such Lender; (iii) reduce any percentage specified in the
62
definition of Required Lenders, Majority Lenders, consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral, other than in connection with the Collateral Release Date, or
release all or substantially all of the Guarantors from their obligations under
the Guarantee Agreement, in each case without the written consent of all
Lenders; (iv) (A) increase the Borrowing Base without the consent of Lenders
holding more than 90% of the Total Revolving Commitments then in effect, or, if
the Revolving Commitments have been terminated, the Total Revolving Extensions
of Credit then outstanding , (B) reduce the Borrowing Base or change the
Collateral Coverage Ratio required under SECTION 3.2(A), in each case, without
the consent of the Required Lenders or (C) otherwise amend or waive any other
provision of SECTION 2.14 or 3.2 without the consent of the Required Lenders;
(v) amend, modify or waive any provision of SECTION 9 without the written
consent of each Agent adversely affected thereby; (vi) amend, modify or waive
any provision of SECTIONS 2.5 to 2.12 without the written consent of each
Issuing Lender; or (vii) amend, modify or waive any provisions of SECTION
10.7(A) with out the written consent of each affected Lender. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon the Loan Parties, the Lenders, the
Agents and all future holders of the Revolving Loans. In the case of any waiver,
the Loan Parties, the Lenders and the Agents shall be restored to their former
position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon. Co-Administrative
Agents may, without the consent of any Lender, enter into any Security Document
or any amendment, waiver, or release to the extent necessary to provide for
additional Collateral as contemplated by any provision of this Agreement or to
provide for the release of Collateral to the extent permitted by the terms of
this Agreement.
10.2. NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION.
(a) NOTICES GENERALLY. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier as
follows, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:
(i) if to the Borrower, the Co-Administrative Agents or the
Issuing Lender, to the address, telecopier number, electronic mail address or
telephone number specified for such Person on SCHEDULE 10.2; and
(ii) if to any other Lender, to the address, telecopier number,
electronic mail address or telephone number specified in its Administrative
Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in SECTION 10.2(B) below, shall be effective as provided in such
SECTION 10.2(B).
(b) ELECTRONIC COMMUNICATIONS. Notices and other communications
to the Lenders and the Issuing Lender hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided that the
foregoing shall not apply to notices to any Lender or the Issuing Lender
pursuant to SECTION 2 if such Lender or the Issuing Lender, as applicable, has
notified the Co-Administrative Agents that it is incapable of receiving notices
under such Section by electronic communication. The Co-Administrative Agents or
the Borrower may, in their discretion, agree to accept notices and other
communications to them hereunder by electronic communications pursuant to
procedures approved by them, provided that approval of such procedures may be
limited to particular notices or communications.
Unless the Co-Administrative Agents otherwise prescribe, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
63
(c) THE PLATFORM. THE PLATFORM IS PROVIDED "AS IS" AND "AS
AVAILABLE." THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR
COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER
MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no
event shall the Co-Administrative Agents or any of their Related Parties
(collectively, the "AGENT PARTIES") have any liability to the Borrower, any
Lender, the Issuing Lender or any other Person for losses, claims, damages,
liabilities or expenses of any kind (whether in tort, contract or otherwise)
arising out of the Borrower's or the Co-Administrative Agents' transmission of
Borrower Materials through the Internet, except to the extent that such losses,
claims, damages, liabilities or expenses are determined by a court of competent
jurisdiction by a final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Agent Party; PROVIDED, HOWEVER,
that in no event shall any Agent Party have any liability to the Borrower, any
Lender, the Issuing Lender or any other Person for indirect, special,
incidental, consequential or punitive damages (as opposed to direct or actual
damages).
(d) CHANGE OF ADDRESS, ETC. Each of the Borrower, the
Co-Administrative Agents and the Issuing Lender may change its address,
telecopier or telephone number for notices and other communications hereunder by
notice to the other parties hereto. Each other Lender may change its address,
telecopier or telephone number for notices and other communications hereunder by
notice to the Borrower, the Co-Administrative Agents and the Issuing Lender. In
addition, each Lender agrees to notify the Co-Administrative Agents from time to
time to ensure that the Co-Administrative Agents have on record (i) an effective
address, contact name, telephone number, telecopier number and electronic mail
address to which notices and other communications may be sent and (ii) accurate
wire instructions for such Lender.
(e) RELIANCE BY CO-ADMINISTRATIVE AGENTS, ISSUING LENDER AND
LENDERS. The Co-Administrative Agents, the Issuing Lender and the Lenders shall
be entitled to rely and act upon any notices (including telephonic borrowing
notices) purportedly given by or on behalf of the Borrower even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Borrower shall indemnify the Co-Administrative Agents, the Issuing
Lender, each Lender and the Related Parties of each of them from all losses,
costs, expenses and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of the Borrower. All telephonic
notices to and other telephonic communications with the Co-Administrative Agents
may be recorded by the Co-Administrative Agents, and each of the parties hereto
hereby consents to such recording.
10.3. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Revolving Loans and other extensions of credit hereunder.
10.5. EXPENSES; INDEMNIFICATION; DAMAGE WAIVER.
(a) COSTS AND EXPENSES. The Borrower shall pay (i) all
reasonable out of pocket expenses incurred by the Co-Administrative Agents and
their Affiliates (including the reasonable fees, charges and disbursements of
counsel for the Co-Administrative Agents), in connection with the syndication of
the credit facilities provided for herein, the preparation, negotiation,
execution, delivery and administration of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), (ii) all reasonable out of pocket expenses incurred by the
Issuing Lender in connection with the issuance, amendment, renewal or extension
of any Letter of Credit or any demand for payment thereunder and (iii) all out
64
of pocket expenses incurred by the Co-Administrative Agents, any Lender or the
Issuing Lender (including the fees, charges and disbursements of any counsel for
the Administrative Agent, any Lender or the Issuing Lender), including the
allocated cost of internal counsel, in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other
Loan Documents, including its rights under this Section, or (B) in connection
with the Revolving Loans made or Letters of Credit issued hereunder, including
all such out of pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Revolving Loans or Letters of Credit.
(b) INDEMNIFICATION BY THE BORROWER. The Borrower shall
indemnify the Co-Administrative Agents (and any sub-agent thereof), each Lender
and the Issuing Lender, and each Related Party of any of the foregoing Persons
(each such Person being called an "INDEMNITEE") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses (including the fees, charges and disbursements of any counsel
for any Indemnitee), including the allocated cost of internal counsel, incurred
by any Indemnitee or asserted against any Indemnitee by any third party or by
the Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder, the consummation of the transactions contemplated hereby or thereby,
or, in the case of the Co-Administrative Agents (and any sub-agent thereof) and
its Related Parties only, the administration of this Agreement and the other
Loan Documents, (ii) any Revolving Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the Issuing
Lender to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
hazardous materials on or from any property owned or operated by the Company,
the Borrower or any of their Subsidiaries, or any environmental liability
related in any way to the Company, the Borrower or any of their Subsidiaries, or
(iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory, whether brought by a third party or by the Borrower or any other Loan
Party, and regardless of whether any Indemnitee is a party thereto, IN ALL
CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE
COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE; PROVIDED that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses (x) are determined
by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by the Borrower or any other Loan Party against
an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder
or under any other Loan Document, if the Borrower or such Loan Party has
obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.
(c) REIMBURSEMENT BY LENDERS. To the extent that the Borrower
for any reason fails to indefeasibly pay any amount required under subsection
(a) or (b) of this Section to be paid by it to the Co-Administrative Agents (or
any sub-agent thereof), the Issuing Lender or any Related Party of any of the
foregoing, each Lender severally agrees to pay to the Co-Administrative Agents
(or any such sub-agent), the Issuing Lender or such Related Party, as the case
may be, such Lender's Applicable Exposure Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount, provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Co-Administrative Agents (or any such sub-agent) or the
Issuing Lender in its capacity as such, or against any Related Party of any of
the foregoing acting for the Co-Administrative Agents (or any such sub-agent) or
Issuing Lender in connection with such capacity.
(d) WAIVER OF CONSEQUENTIAL DAMAGES, ETC. To the fullest extent
permitted by applicable law, the Borrower shall not assert, and hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Revolving Loan or Letter of
Credit or the use of the proceeds thereof. No Indemnitee referred to in
subsection (b) above shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.
(e) PAYMENTS. All amounts due under this Section shall be
payable not later than ten Business Days after demand therefor.
(f) SURVIVAL. The agreements in this Section shall survive the
resignation of an Administrative Agent and Issuing Lender, the replacement of
any Lender, the termination of the Revolving Commitments and the repayment,
satisfaction or discharge of all the other Obligations.
65
10.6. SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS
(a) SUCCESSORS AND ASSIGNS GENERALLY. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that
neither the Borrower nor any other Loan Party may assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Co-Administrative Agents and each Lender and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of subsection (b) of this
Section, (ii) by way of participation in accordance with the provisions of
subsection (d) of this Section, or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of subsection (f) of this Section
(and any other attempted assignment or transfer by any party hereto shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of the Co-Administrative
Agents, the Issuing Lenders and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
(b) ASSIGNMENTS BY LENDERS. Any Lender may at any time assign to
one or more Eligible Assignee all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Revolving Commitment and
the Revolving Loans (including for purposes of this subsection (b),
participations in L/C Obligations) at the time owing to it); PROVIDED that
(i) except in the case of an assignment of the entire remaining
amount of the assigning Lender's Revolving Commitment and the Revolving
Loans at the time owing to it or in the case of an assignment to a Lender
or an Affiliate of a Lender or an Approved Fund with respect to a Lender,
the aggregate amount of the Revolving Commitment (which for this purpose
includes Revolving Loans outstanding thereunder) or, if the Revolving
Commitment is not then in effect, the principal outstanding balance of the
Revolving Loans of the assigning Lender subject to each such assignment,
determined as of the date the Assignment and Assumption with respect to
such assignment is delivered to the Co-Administrative Agents or, if the
"Trade Date" is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $10,000,000 (or in the case of a Lender,
$5,000,000) unless each of the Co-Administrative Agents and, so long as no
Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed);
(ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations
under this Agreement with respect to the Revolving Loans or the Revolving
Commitment assigned;
(iii) any assignment of a Commitment must be approved by the
Co-Administrative Agents, and the Issuing Lenders unless the Person that is
the proposed assignee is itself a Lender (whether or not the proposed
assignee would otherwise qualify as an Eligible Assignee); and
(iv) the parties to each assignment shall execute and deliver to
the Co-Administrative Agents an Assignment and Assumption, together with a
processing and recordation fee of $3,500, and the Eligible Assignee, if it
shall not be a Lender, shall deliver to the Co-Administrative Agents an
Administrative Questionnaire.
Subject to acceptance and recording thereof by the Co-Administrative Agents
pursuant to subsection (c) of this Section, from and after the effective date
specified in each Assignment and Assumption, the Eligible Assignee thereunder
shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of SECTIONS 3.1, 3.4, 3.5, and 10.4 with respect
to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
66
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.
(c) REGISTER. The Co-Administrative Agents, acting solely for
this purpose as an agent of the Borrower, shall maintain at the
Co-Administrative Agents' office a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Revolving Commitments of, and principal amounts of the
Revolving Loans and L/C Obligations owing to, each Lender pursuant to the terms
hereof from time to time (the "REGISTER"). The entries in the Register shall be
conclusive, and the Borrower, the Co-Administrative Agents and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by each
of the Borrower and the Issuing Lender at any reasonable time and from time to
time upon reasonable prior notice. In addition, at any time that a request for a
consent for a material or substantive change to the Loan Documents is pending,
any Lender may request and receive from the Co-Administrative Agents a copy of
the Register.
(d) PARTICIPATIONS. Any Lender may at any time, without the
consent of, or notice to, the Borrower or the Co-Administrative Agents, sell
participations to any Person (other than a natural person or the Borrower or any
of the Borrower's Affiliates) (each, a "PARTICIPANT") in all or a portion of
such Lender's rights and/or obligations under this Agreement (including all or a
portion of its Revolving Commitment and/or the Revolving Loans (including such
Lender's participations in L/C Obligations) owing to it); provided that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Co-Administrative
Agents, the Lenders and the Issuing Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; PROVIDED that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in clause (i) of the
first proviso to SECTION 10.1 that affects such Participant. Subject to
subsection (e) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of SECTIONS 3.9, 3.10 and 3.11 to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to
subsection (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of SECTION 10.7 as though it were a
Lender, PROVIDED such Participant agrees to be subject to SECTION 3.16 as though
it were a Lender.
(e) LIMITATIONS UPON PARTICIPANT RIGHTS. A Participant shall not
be entitled to receive any greater payment under SECTION 3.9 or 3.10 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of SECTION 3.10 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with SECTION 3.10 as though it were a Lender.
(f) CERTAIN PLEDGES. Any Lender may at any time pledge or assign
a security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.
(g) ELECTRONIC EXECUTION OF ASSIGNMENTS. The words "execution,"
"signed," "signature," and words of like import in any Assignment and Assumption
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.
67
10.7. SET-OFF. In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Company or the Borrower, any such notice being expressly waived by the Company
and the Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by the Company or the Borrower hereunder (whether at
the stated maturity, by acceleration or otherwise), to set off and appropriate
and apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of the Company or the Borrower, as the case may be. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such setoff and application.
10.8. COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9. SEVERABILITY. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10. INTEGRATION. This Agreement and the other Loan Documents
represent the entire agreement of the Company, the Borrower, the Agents and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by any Agent or any Lender
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Loan Documents. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
10.11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS.
10.12. SUBMISSION TO JURISDICTION; WAIVERS. Each of the Company and
the Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
Texas, the courts of the United States for the Northern District of Texas, and
appellate courts from any thereof;
68
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Company or the Borrower, as the case may be at its address set forth on SCHEDULE
10.2 or at such other address of which the Co-Administrative Agents shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential damages.
10.13. ACKNOWLEDGMENTS. Each of the Company and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents;
(b) no Agent or Lender has any fiduciary relationship with or
duty to the Company or the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the
Agents and Lenders, on one hand, and the Company and the Borrower, on the other
hand, in connection herewith or therewith is solely that of creditor and debtor;
and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Company, the Borrower and the Lenders.
10.14. RELEASES OF GUARANTEES AND LIENS; DESIGNATION OF SUBSIDIARIES.
(a) Notwithstanding anything to the contrary contained herein or
in any other Loan Document, the Administrative Agent is hereby irrevocably
authorized by each Lender (without requirement of notice to or consent of any
Lender except as expressly required by SECTION 10.1) to take any action
requested by the Borrower having the effect of releasing any Collateral or
guarantee obligations (i) to the extent necessary to permit consummation of any
transaction not prohibited by any Loan Document or that has been consented to in
accordance with SECTION 10.1 or (ii) to release Collateral to the extent
provided in paragraph (c) of this SECTION 10.14 or (iii) at such time as the
Revolving Loans, the L/C Obligations and the other obligations under the Loan
Documents (other than obligations under or in respect of Hedge Agreements) shall
have been paid in full, the Revolving Commitments have been terminated and no
Letters of Credit shall be outstanding. In connection with the releases of
Collateral and guarantee obligations under subpart (iii) of this Section, the
Collateral shall be released from the Liens created by the Security Documents,
and the Security Documents and all obligations (other than those expressly
stated to survive such termination) of the Administrative Agent and each Loan
Party under the Security Documents shall terminate, all without delivery of any
instrument or performance of any act by any Person.
(b) Notwithstanding anything to the contrary contained herein or
in any other Loan Document, in the event that, after the Closing Date, the
Borrower shall designate a Subsidiary Guarantor or any newly created or acquired
Subsidiary as an "Unrestricted Subsidiary" under the Indentures, and so long as
the Unrestricted Subsidiary Investment resulting from such designation is
permitted under SECTION 7.7(G) (and a Responsible Officer has certified in
writing thereto to the Administrative Agent), the Administrative Agent is hereby
irrevocably authorized by each Lender (without requirement of notice to or
consent of any Lender except as expressly required by SECTION 10.1) to take any
action requested by the Borrower having the effect of releasing any guarantee
obligations of any such Subsidiary Guarantor or newly created or acquired
Subsidiary that has been so designated.
69
(c) The Administrative Agent may release a portion of the
Collateral from time to time without notice to or consent of any Lender so long
as (i) no Default or Event of Default has occurred and is continuing, (ii) no
Borrowing Base Deficiency shall exist and (iii) the aggregate value of the
Collateral released in the period between any two regular semi-annual
Determination Dates on which the Collateral Value is designated (or the period
between the last regular semi-annual Determination Date on which the Collateral
Value is designated in the Revolving Commitment Period and the Revolving
Termination Date) including any Collateral released pursuant to a Disposition
permitted under SECTION 7.5 shall not exceed the sum of (A) the amount, if any,
by which the Collateral Value most recently designated exceeded 150% of the then
effective Borrowing Base plus (B) $25,000,000. The Administrative Agent shall
release Collateral pursuant to this paragraph (c) only upon, and shall be
protected in relying upon, a certificate of Borrower to the effect that the
conditions of the preceding sentence exist with respect to the requested release
of Collateral.
10.15. CONFIDENTIALITY. Each of the Agents, the Lenders and the
Issuing Lenders agree to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its Affiliates
and to its and its Affiliates' respective partners, directors, officers,
employees, agents, advisors and representatives (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
purporting to have jurisdiction over it (including any self-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) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to
any Agent, any Lender, any Issuing Lender or any of their respective Affiliates
on a nonconfidential basis from a source other than a Group Member, unless such
Agent, Lender, Issuing Lender or Affiliate has actual knowledge that such source
owes an obligation of confidence to a Group Member with respect to such
Information. For purposes of this Section, "Information" means all information
received from the Company, the Borrower or any Subsidiary relating to the
Company, the Borrower or any Subsidiary or any of their respective businesses,
other than any such information that is available to any Agent, any Lender or
any Issuing Lender on a nonconfidential basis prior to disclosure by the
Company, the Borrower or any Subsidiary, PROVIDED that, in the case of
information received from the Company, the Borrower or any Subsidiary after the
date hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
Each of the Agents and the Lenders acknowledges that (a) the Information may
include material non-public information concerning the Company, the Borrower or
a Subsidiary, as the case may be, (b) it has developed compliance procedures
regarding the use of material non-public information and (c) it will handle such
material non-public information in accordance with applicable Law, including
Federal and state securities Laws.
70
10.16. WAIVERS OF JURY TRIAL. THE COMPANY, THE BORROWER, THE AGENTS
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
10.17. SPECIAL PROVISIONS
(a) From and after the Closing Date, (i) each Exiting Lender
shall cease to be a party to this Agreement, (ii) no Exiting Lender shall have
any obligations or liabilities under this Agreement with respect to the period
from and after the Closing Date and, without limiting the foregoing, no Exiting
Lender shall have any Revolving Commitment under this Agreement or any
participation in any Letter of Credit outstanding hereunder and (iii) no Exiting
Lender shall have any rights under the Existing Credit Agreement, this Agreement
or any other Loan Document (other than rights under the Existing Credit
Agreement expressly stated to survive the termination of the Existing Credit
Agreement and the repayment of amounts outstanding thereunder).
(b) The Lenders (which are Lenders under the Existing Credit
Agreement) hereby waive any requirements for notice of prepayment, minimum
amounts of prepayments of Revolving Credit Loans (as defined in the Existing
Credit Agreement), ratable reductions of the commitments of the Lenders under
the Existing Credit Agreement and ratable payments on account of the principal
or interest of any Loan (as defined in the Existing Credit Agreement) under the
Existing Credit Agreement.
(c) The Lenders hereby authorize the Administrative Agent and
the Borrower to request borrowings from the Lenders, to make prepayments of
Loans (as defined in the Existing Credit Agreement) and to reduce commitments
under the Existing Credit Agreement among the Lenders (as defined in the
Existing Credit Agreement) in order to ensure that, upon the effectiveness of
this Agreement, the Revolving Loans of the Lenders shall be outstanding on a
ratable basis in accordance with their respective Revolving Percentages and that
the Revolving Commitments shall be as set forth on SCHEDULE 1.1A hereto and no
such borrowing, prepayment or reduction shall violate any provisions of the
Existing Credit Agreement or this Agreement. The Lenders hereby confirm that,
from and after the Closing Date, all participations of the Lenders in respect of
Letters of Credit outstanding hereunder pursuant to SUBSECTION 2.7(B) shall be
based upon the Revolving Percentages of the Lenders (after giving effect to this
Agreement).
(d) The Borrower hereby terminates, effective as of the Closing
Date, in full the commitments under the Existing Credit Agreement of the Exiting
Lenders.
71
10.18. LIMITATION ON INTEREST. The Lenders, the Loan Parties and any
other parties to the Loan Documents intend to contract in strict compliance with
applicable usury law from time to time in effect. In furtherance thereof such
Persons stipulate and agree that none of the terms and provisions contained in
the Loan Documents shall ever be construed to create a contract to pay, for the
use, forbearance or detention of money, interest in excess of the maximum amount
of interest permitted to be charged by applicable law from time to time in
effect. No Loan Party nor any present or future guarantors, endorsers, or other
Persons hereafter becoming liable for payment of any Obligation shall ever be
liable for unearned interest thereon or shall ever be required to pay interest
thereon in excess of the maximum amount that may be lawfully charged under
applicable law from time to time in effect, and the provisions of this Section
shall control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith. The Lenders expressly disavow any
intention to charge or collect excessive unearned interest or finance charges in
the event the maturity of any Obligation is accelerated. If (a) the maturity of
any Obligation is accelerated for any reason, (b) any Obligation is prepaid and
as a result any amounts held to constitute interest are determined to be in
excess of the legal maximum, or (c) any Lender or any other holder of any or all
of the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all of
the Obligations to an amount in excess of that permitted to be charged by
applicable law then in effect, then all sums determined to constitute interest
in excess of such legal limit shall, without penalty, be promptly applied to
reduce the then outstanding principal of the related Obligations or, at such
Lender's or holder's option, promptly returned to the Borrower or the other
payor thereof upon such determination. In determining whether or not the
interest paid or payable, under any specific circumstances, exceeds the maximum
amount permitted under applicable law, the Lenders and the Loan Parties (and any
other payors thereof) shall to the greatest extent permitted under applicable
law, (i) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (ii) exclude voluntary prepayments and the effects
thereof, and (iii) amortize, prorate, allocate, and spread the total amount of
interest throughout the entire contemplated term of the instruments evidencing
the Obligations in accordance with the amounts outstanding from time to time
thereunder and the maximum legal rate of interest from time to time in effect
under applicable law in order to lawfully charge the maximum amount of interest
permitted under applicable law. In the event applicable law provides for an
interest ceiling under Chapter 303 of the Texas Finance Code, that ceiling shall
be the weekly ceiling and shall be used when appropriate in determining the
Highest Lawful Rate.
10.19. USA PATRIOT ACT NOTICE. Each Lender that is subject to the Act
(as hereinafter defined) and each of the Agents (each for itself and not on
behalf of any Lender) hereby notifies the Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001))(the "ACT"), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
the Agents, as applicable, to identify the Borrower in accordance with the Act.
72
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]
73
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
CHESAPEAKE ENERGY CORPORATION
By: /s/ MARTHA A. BURGER
-----------------------------------
Name: Martha A. Burger
Title: Treasurer and
Senior Vice President - Human Resources
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP
By: Chesapeake Operating, Inc.,
its general partner
By: /s/ MARTHA A. BURGER
---------------------------------------
Name: Martha A. Burger
Title: Treasurer and
Senior Vice President - Human Resources
BANK OF AMERICA, N.A., as a
Co-Administrative Agent, as an
Issuing Lender and as a Lender
By: /s/ RONALD E. MCKAIG
---------------------------------------
Name: Ronald E. McKaig
Title: Senior Vice President
UNION BANK OF CALIFORNIA, N.A.,
as a Co- Administrative Agent, as the
Administrative Agent, as an Issuing Lender
and as a Lender
By: /s/ RANDALL OSTERBERG
---------------------------------------
Name: Randall Osterberg
Title: Senior Vice President
By: /s/ SEAN MURPHY
---------------------------------------
Name: Sean Murphy
Title: Vice President