FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
among
DENBURY ONSHORE, LLC,
as Borrower,
DENBURY RESOURCES INC.,
as Parent Guarantor,
The Financial Institutions Listed on Schedule 2.1 Hereto,
as Banks,
BANK ONE, NA,
as Administrative Agent,
CALYON NEW YORK BRANCH
and
FORTIS CAPITAL CORP.,
as Syndication Agents,
and
UNION BANK OF CALIFORNIA, N.A.
and
COMERICA BANK,
as Documentation Agents
$300,000,000
dated as of
September 1, 2004
J.P. MORGAN SECURITIES INC.,
as Sole Lead Arranger and Book Manager
TABLE OF CONTENTS
Page No.
Article I AMENDMENT AND RESTATEMENT...................................................................................1
Article II TERMS DEFINED..............................................................................................2
Section 2.1 Definitions.....................................................................................2
Section 2.2 Accounting Terms and Determinations............................................................24
Section 2.3 Petroleum Terms................................................................................25
Section 2.4 Money..........................................................................................25
Article III THE CREDIT...............................................................................................25
Section 3.1 Commitments....................................................................................25
Section 3.2 Method of Borrowing............................................................................29
Section 3.3 Method of Requesting Letters of Credit.........................................................29
Section 3.4 Notes..........................................................................................30
Section 3.5 Interest Rates; Payments.......................................................................30
Section 3.6 Mandatory Prepayments..........................................................................32
Section 3.7 Voluntary Prepayments..........................................................................32
Section 3.8 Voluntary Reduction of Commitments.............................................................32
Section 3.9 Termination of Commitments; Final Maturity of Revolving Loan...................................32
Section 3.10 Voluntary Increase of Total Commitment.........................................................32
Section 3.11 Application of Payments........................................................................33
Section 3.12 Commitment Fee.................................................................................33
Section 3.13 Agency and other Fees..........................................................................33
Article IV GENERAL PROVISIONS........................................................................................33
Section 4.1 Delivery and Endorsement of Notes..............................................................33
Section 4.2 General Provisions as to Payments..............................................................34
Article V BORROWING BASE.............................................................................................35
Section 5.1 Reserve Report; Proposed Borrowing Base........................................................35
Section 5.2 Scheduled Redeterminations of the Borrowing Base; Procedures and Standards.....................35
Section 5.3 Special Redetermination........................................................................36
Section 5.4 Borrowing Base Deficiency......................................................................36
Section 5.5 Initial Borrowing Base.........................................................................36
Article VI COLLATERAL AND GUARANTEES.................................................................................37
Section 6.1 Security.......................................................................................37
Section 6.2 Guarantees.....................................................................................38
Article VII CONDITIONS PRECEDENT.....................................................................................38
Section 7.1 Conditions to Amendment and Restatement and Initial Borrowing and Participation in
Letter of Credit Exposure....................................................................38
Section 7.2 Conditions to Each Borrowing and each Letter of Credit.........................................42
Section 7.3 Agreements Regarding Initial Borrowing.........................................................42
Section 7.4 Materiality of Conditions......................................................................43
Article VIII REPRESENTATIONS AND WARRANTIES..........................................................................43
Section 8.1 Corporate Existence and Power..................................................................43
Section 8.2 Credit Party and Governmental Authorization; Contravention.....................................43
Section 8.3 Binding Effect.................................................................................43
Section 8.4 Financial Information..........................................................................44
Section 8.5 Litigation.....................................................................................44
Section 8.6 ERISA..........................................................................................44
Section 8.7 Taxes and Filing of Tax Returns................................................................45
Section 8.8 Ownership of Properties Generally..............................................................45
Section 8.9 Mineral Interests..............................................................................45
Section 8.10 Licenses, Permits, Etc.........................................................................46
Section 8.11 Compliance with Law............................................................................46
Section 8.12 Full Disclosure................................................................................46
Section 8.13 Organizational Structure; Nature of Business...................................................46
Section 8.14 Environmental Matters..........................................................................47
Section 8.15 Burdensome Obligations.........................................................................47
Section 8.16 Fiscal Year....................................................................................48
Section 8.17 No Default.....................................................................................48
Section 8.18 Government Regulation..........................................................................48
Section 8.19 Insider........................................................................................48
Section 8.20 Gas Balancing Agreements and Advance Payment Contracts.........................................48
Section 8.21 Bond Documents.................................................................................48
Article IX AFFIRMATIVE COVENANTS.....................................................................................49
Section 9.1 Information....................................................................................49
Section 9.2 Business of Credit Parties.....................................................................51
Section 9.3 Maintenance of Existence.......................................................................51
Section 9.4 Title Data.....................................................................................51
Section 9.5 Right of Inspection............................................................................52
Section 9.6 Maintenance of Insurance.......................................................................52
Section 9.7 Payment of Taxes and Claims....................................................................52
Section 9.8 Compliance with Laws and Documents.............................................................52
Section 9.9 Operation of Properties and Equipment..........................................................53
Section 9.10 Environmental Law Compliance...................................................................53
Section 9.11 ERISA Reporting Requirements...................................................................53
Section 9.12 Additional Documents...........................................................................54
Section 9.13 Environmental Review...........................................................................54
Article X NEGATIVE COVENANTS.........................................................................................55
Section 10.1 Incurrence of Debt.............................................................................55
Section 10.2 Restricted Payments............................................................................55
Section 10.3 Negative Pledge................................................................................55
Section 10.4 Consolidations and Mergers.....................................................................56
Section 10.5 Asset Dispositions.............................................................................56
Section 10.6 Amendments to Organizational and Other Documents...............................................56
Section 10.7 Use of Proceeds...............................................................................56
Section 10.8 Investments....................................................................................57
Section 10.9 Transactions with Affiliates...................................................................57
Section 10.10 ERISA..........................................................................................57
Section 10.11 Hedge Transactions.............................................................................57
Section 10.12 Fiscal Year....................................................................................58
Section 10.13 Change in Business.............................................................................58
Section 10.14 Intentionally Deleted..........................................................................58
Section 10.15 Obligations of Unrestricted Subsidiaries.......................................................58
Section 10.16 Borrowings Related to Bond Offering............................................................59
Section 10.17 Speculative Hedge Transactions.................................................................59
Article XI FINANCIAL COVENANTS.......................................................................................59
Section 11.1 Current Ratio of Borrower......................................................................59
Section 11.2 Minimum Consolidated Tangible Net Worth........................................................59
Section 11.3 Consolidated EBITDA to Consolidated Net Interest Expense.......................................59
Article XII DEFAULTS.................................................................................................60
Section 12.1 Events of Default..............................................................................60
Article XIII AGENTS..................................................................................................62
Section 13.1 Appointment; Nature of Relationship............................................................62
Section 13.2 Powers.........................................................................................62
Section 13.3 General Immunity...............................................................................62
Section 13.4 No Responsibility for Loans, Recitals, etc.....................................................62
Section 13.5 Action on Instructions of Banks................................................................63
Section 13.6 Employment of Agents and Counsel...............................................................63
Section 13.7 Reliance on Documents; Counsel.................................................................63
Section 13.8 Administrative Agent's Reimbursement and Indemnification.......................................63
Section 13.9 Notice of Default..............................................................................64
Section 13.10 Rights as a Bank...............................................................................64
Section 13.11 Bank Credit Decision...........................................................................64
Section 13.12 Successor Administrative Agent.................................................................64
Section 13.13 Delegation to Affiliates.......................................................................65
Section 13.14 Execution of Collateral Documents..............................................................65
Section 13.15 Collateral Releases............................................................................65
Section 13.16 Agents.........................................................................................66
Section 13.17 Bond Documents.................................................................................66
Article XIV CHANGE IN CIRCUMSTANCES..................................................................................66
Section 14.1 Increased Cost and Reduced Return..............................................................66
Section 14.2 Limitation on Type of Loans....................................................................68
Section 14.3 Illegality.....................................................................................68
Section 14.4 Treatment of Affected Loans....................................................................68
Section 14.5 Compensation...................................................................................69
Section 14.6 Taxes..........................................................................................69
Section 14.7 Discretion of Banks as to Manner of Funding....................................................71
Article XV MISCELLANEOUS.............................................................................................71
Section 15.1 Notices........................................................................................71
Section 15.2 No Waivers.....................................................................................71
Section 15.3 Expenses; Indemnification......................................................................71
Section 15.4 Right of Set-off; Adjustments..................................................................73
Section 15.5 Amendments and Waivers.........................................................................73
Section 15.6 Survival.......................................................................................74
Section 15.7 Limitation on Interest.........................................................................74
Section 15.8 Invalid Provisions.............................................................................74
Section 15.9 Waiver of Consumer Credit Laws.................................................................74
Section 15.10 Assignments and Participations.................................................................75
Section 15.11 TEXAS LAW......................................................................................78
Section 15.12 Consent to Jurisdiction; Waiver of Immunities..................................................78
Section 15.13 Counterparts; Effectiveness....................................................................79
Section 15.14 No Third Party Beneficiaries...................................................................79
Section 15.15 COMPLETE AGREEMENT.............................................................................79
Section 15.16 WAIVER OF JURY TRIAL...........................................................................79
Section 15.17 Confidentiality................................................................................80
Section 15.18 USA Patriot Act Notification...................................................................80
EXHIBITS
EXHIBIT A FORM OF AMENDMENT TO MORTGAGES
EXHIBIT B FORM OF FACILITY GUARANTY
EXHIBIT C FORM OF PROMISSORY NOTE
EXHIBIT D FORM OF PARENT PLEDGE AGREEMENT
EXHIBIT E FORM OF SUBSIDIARY PLEDGE AGREEMENT
EXHIBIT F FORM OF REQUEST FOR BORROWING
EXHIBIT G FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT H FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT I FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT J FORM OF CERTIFICATE OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
EXHIBIT K FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT L FORM OF CERTIFICATE OF EFFECTIVENESS
EXHIBIT M FORM OF AMENDMENT FOR INCREASED OR NEW COMMITMENT
SCHEDULES
SCHEDULE 2.1 FINANCIAL INSTITUTIONS
SCHEDULE 8.5 LITIGATION
SCHEDULE 8.10 LICENSES, PERMITS, ETC.
SCHEDULE 8.13 JURISDICTIONS, ETC.
SCHEDULE 9.10 ENVIRONMENTAL DISCLOSURE
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------------
THIS FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
entered into effective as of the 1st day of September, 2004, among DENBURY
ONSHORE, LLC, a Delaware limited liability company ("Borrower"), DENBURY
RESOURCES INC., a Delaware corporation ("Parent"), BANK ONE, NA, with its main
office in Chicago, Illinois, as Administrative Agent ("Administrative Agent"),
CALYON NEW YORK BRANCH (successor by consolidation to Credit Lyonnais New York
Branch) and FORTIS CAPITAL CORP., as Syndication Agents ("Syndication Agents"),
UNION BANK OF CALIFORNIA, N.A. and COMERICA BANK, as Documentation Agents
("Documentation Agents") and the financial institutions listed on Schedule 2.1
hereto as Banks (individually a "Bank" and collectively "Banks").
W I T N E S S E T H:
-------------------
WHEREAS, Borrower, Administrative Agent, and each of the financial
institutions named and defined therein as Banks (the "Existing Banks") and
agents, are parties to that certain Fourth Amended and Restated Credit Agreement
dated as of December 30, 2003, pursuant to which Existing Banks provided certain
loans and extensions of credit to Borrower (as heretofore amended, the "Existing
Credit Agreement"); and
WHEREAS, concurrently with the closing and consummation of the Closing
Transactions (as hereinafter defined), and subject to the conditions precedent
set forth herein, the parties hereto desire to amend and restate the Existing
Credit Agreement in its entirety in the form of this Agreement, and Borrower
desires to obtain Borrowings (as herein defined) (a) to refinance the
indebtedness under the Existing Credit Agreement, and (b) for other purposes
permitted herein; and
WHEREAS, after giving effect to the Closing Transactions and the amendment
and restatement of the Existing Credit Agreement pursuant to the terms hereof,
the Commitment Percentage (as herein defined) of each Bank hereunder will be as
set forth on Schedule 2.1 hereto; and
WHEREAS, J.P. Morgan Securities Inc. has been appointed Sole Lead Arranger
and Book Manager for the credit facility provided herein.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Parent, Borrower, Administrative Agent and Banks agree as follows:
ARTICLE I
AMENDMENT AND RESTATEMENT
-------------------------
Subject to the satisfaction of each condition precedent contained in
Section 7.1 hereof, the satisfaction of which shall be evidenced by the
execution by Parent, Borrower and Administrative Agent of the Certificate of
Effectiveness (as herein defined), the Existing Credit Agreement shall be
amended and restated as of the Closing Date in the form of this Agreement.
1
It is the intention of Parent, Borrower, Administrative Agent and Banks that
this Agreement supersedes and replaces the Existing Credit Agreement in its
entirety; provided that, (a) such amendment and restatement shall operate to
renew, amend and modify certain of the rights and obligations of the parties
under the Existing Credit Agreement as provided herein, but shall not act as a
novation thereof, and (b) the Liens securing the Obligations under and as
defined in the Existing Credit Agreement shall not be extinguished, but shall be
carried forward and shall secure such obligations and indebtedness as renewed,
amended, restated and modified hereby.
ARTICLE II
TERMS DEFINED
-------------
Section 2.1 Definitions. The following terms, as used herein, have the
following meanings:
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by Administrative Agent to be equal to the
quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar Loan
for such Interest Period by (b) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Administrative Agent" means Bank One, NA, in its capacity as
Administrative Agent for Banks hereunder or any successor thereto.
"Advance Payment Contract" means any contract whereby any Credit Party
either (a) receives or becomes entitled to receive (either directly or
indirectly) any payment (an "Advance Payment") to be applied toward payment of
the purchase price of Hydrocarbons produced or to be produced from Mineral
Interests owned by any Credit Party and which Advance Payment is, or is to be,
paid in advance of actual delivery of such production to or for the account of
the purchaser regardless of such production, or (b) grants an option or right of
refusal to the purchaser to take delivery of such production in lieu of payment,
and, in either of the foregoing instances, the Advance Payment is, or is to be,
applied as payment in full for such production when sold and delivered or is, or
is to be, applied as payment for a portion only of the purchase price thereof or
of a percentage or share of such production; provided that inclusion of the
standard "take or pay" provision in any gas sales or purchase contract or any
other similar contract shall not, in and of itself, constitute such contract as
an Advance Payment Contract for the purposes hereof.
"Affiliate" means, as to any Person, any Subsidiary of such Person, or any
other Person which, directly or indirectly, controls, is controlled by, or is
under common control with, such Person and, with respect to any Credit Party,
means, any director, executive officer, general partner or manager of such
Credit Party and any Person who holds ten percent (10%) or more of the voting
stock, partnership interests, membership interests or other ownership interests
of such Credit Party. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
membership interests or partnership interests, or by contract or otherwise.
2
"Agent" means Administrative Agent, each Syndication Agent, each
Documentation Agent, Sole Lead Arranger or Book Manager, and "Agents" means
Administrative Agent, each Syndication Agent, each Documentation Agent, Sole
Lead Arranger and Book Manager, collectively.
"Agreement" means this Fifth Amended and Restated Credit Agreement, as the
same may hereafter be modified, amended, restated or supplemented from time to
time.
"Amendment to Mortgages" means an Amendment to and Ratification of
Mortgages to be entered into between the Credit Parties (as applicable) and
Administrative Agent, substantially in the form of Exhibit A attached hereto,
pursuant to which, among other things, the Existing Mortgages shall be amended
to reflect the amendment and restatement of the Existing Credit Agreement
pursuant hereto.
"Applicable Environmental Law" means any federal, state or local law,
common law, ordinance, regulation or policy, as well as order, decree, permit,
judgment or injunction issued, promulgated, approved, or entered thereunder,
relating to the environment, health and safety, or Hazardous Substances
(including, without limitation, the use, handling, transportation, production,
disposal, discharge or storage thereof) or to industrial hygiene or the
environmental conditions on, under, or about any real property owned, leased or
operated at any time by any Credit Party or any real property owned, leased or
operated by any other party including, without limitation, soil, groundwater,
and indoor and ambient air conditions.
"Applicable Lending Office" means, for each Bank and for each Type of Loan,
the "Lending Office" of such Bank (or of an affiliate of such Bank) designated
for such Type of Loan on the signature pages hereof or such other office of such
Bank (or an affiliate of such Bank) as such Bank may from time to time specify
to Administrative Agent and Borrower by written notice in accordance with the
terms hereof as the office by which Loans of such Type are to be made and
maintained.
"Applicable Margin" means, on any date, with respect to each Type of Loan,
an amount determined by reference to the ratio of Outstanding Credit to the
Borrowing Base on such date in accordance with the table below:
Ratio of Outstanding Credit to Applicable Margin for Applicable Margin for
Borrowing Base Eurodollar Loans Base Rate Loans
< .25 to 1 1.125% 0%
> or = .25 to 1 and < .50 to 1 1.250% 0%
> or = .50 to 1 and < .75 to 1 1.500% .250%
> or = .75 to 1 1.750% .500%
"Approved Fund" means any Fund that is administered or managed by (a) a
Bank, (b) an Affiliate of a Bank, or (c) an entity or an Affiliate of an entity
that administers or manages a Bank.
3
"Approved Petroleum Engineer" means DeGolyer and MacNaughton or any other
reputable firm of independent petroleum engineers as shall be selected by
Borrower and approved by Required Banks, such approval not to be unreasonably
withheld.
"Assignment and Acceptance Agreement" has the meaning given such term in
Section 15.10(c)(i).
"Authorized Officer" means, as to any Person, its Chief Executive Officer,
its President, its Chief Financial Officer, its Chief Accounting Officer, any of
its Vice Presidents, its Treasurer or its corporate Secretary.
"Availability" means, as of any date, (a) the lesser of (i) the Borrowing
Base in effect on such date, or (ii) the Total Commitment in effect on such
date, minus (b) the Outstanding Credit on such date.
"Bank" means any financial institution reflected on Schedule 2.1 hereto as
having a Commitment and its successors and permitted Assignees, and "Banks"
means all Banks.
"Bank One" means Bank One, NA, a national banking association, with its
main office in Chicago, Illinois, in its capacity as a Bank.
"Base Rate" means, for any day, the rate per annum equal to the higher of
(a) the Federal Funds Rate for such day plus one-half of one percent (.5%) and
(b) the Prime Rate for such day. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Rate shall be effective automatically and
without notice to Borrower or any Bank on the effective date of such change in
the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means the portion of the principal of the Revolving Loan
bearing interest with reference to the Base Rate.
"Bond Disbursement" means an advance of proceeds of the Bonds by the Bond
Purchaser to the Bond Trustee pursuant to the Bond Documents.
"Bond Documents" means, collectively, the Bonds, the Bond Loan Agreement,
the Bond Note, the Bond Purchase Agreement, the Bond Indenture and all other
agreements, documents and instruments now, heretofore or hereafter executed
and/or delivered by, between or among any Credit Party, Bond Issuer, Bond
Trustee and/or Bond Purchaser pursuant to the Bonds, the Bond Loan Agreement,
the Bond Purchase Agreement, the Bond Indenture or otherwise in connection with
the Bond Offering, each of which agreements, documents and instruments shall be
in form and substance acceptable to Administrative Agent in its sole discretion.
"Bond Exposure" means, at any time, without duplication, the aggregate
amount of proceeds of the Bonds which have not been advanced at such time by the
Bond Purchaser. The Bond Exposure of any Bank at any time shall be its
Commitment Percentage of the total Bond Exposure at such time.
"Bond Indenture" means that certain Indenture, dated as of May 1, 2003,
between Bond Issuer and Bond Trustee.
4
"Bond Issuer" means Mississippi Business Finance Corporation, a public
corporation organized and existing under the laws of the State of Mississippi.
"Bond Loan Agreement" means that certain Loan Agreement, dated as of May 1,
2003, by and between Bond Issuer and Borrower.
"Bond Note" means that certain promissory note of Former Borrower, dated of
even date with the Bond Loan Agreement, payable to the order of Bond Issuer,
which promissory note has been pledged and assigned to Bond Trustee to secure
the obligations of Bond Issuer under the Bond Indenture and the Bonds.
"Bond Offering" means the issuance and sale by Bond Issuer of the Bonds to
Bond Purchaser, the proceeds of which are to be advanced, from time to time, by
Bond Purchaser to Bond Trustee to fund the "Project Fund" as created under, and
defined in, the Bond Indenture, which Project Fund will be utilized to finance
the Cost of the Project (as defined in the Bond Loan Agreement) located in the
State of Mississippi. Upon the date of the issuance of the Bonds, Bond Purchaser
was deemed to have sold to each Bank, and each Bank was deemed to have
unconditionally and irrevocably purchased from Bond Purchaser, a participation
in the Bonds and Bond Exposure equal to such Bank's Commitment Percentage of
such Bonds and Bond Exposure.
"Bond Purchase Agreement" means that certain Bond Purchase Agreement, dated
as of May 1, 2003, among Bond Purchaser, Bond Issuer and Former Borrower.
"Bond Purchaser" means Administrative Agent, as "Purchaser" of the Bonds
under the Bond Purchase Agreement.
"Bond Trustee" means JPMorgan Illinois Trust, successor trustee to Bank
One, NA, in its capacity as "Trustee" under the Bond Indenture.
"Bonds" means, whether one or more, Bond Issuer's Taxable Industrial
Development Revenue Bonds, Series 2003 (Denbury Resources Inc. Project), which
Bonds shall (a) be in a maximum aggregate principal amount of $20,000,000, (b)
bear interest at rates identical to the interest rates set forth in this
Agreement, (c) have a maturity date of April 30, 2006, and (d) provide that Bond
Purchaser's obligation to make advances of the proceeds thereof shall expire two
(2) years from the date of issuance of such Bonds.
"Book Manager" means JPMSI, in its capacity as book manager for the credit
facility hereunder or any successor thereto.
"Borrower" means Denbury Onshore, LLC, a Delaware limited liability
company.
"Borrowing" means any disbursement to Borrower under, or to satisfy the
obligations of any Credit Party under, any of the Loan Papers. Any Borrowing
which will constitute a part of the Base Rate Loan is referred to herein as a
"Base Rate Borrowing," and any Borrowing which will constitute a Eurodollar
Loan, is referred to herein as a "Eurodollar Borrowing."
"Borrowing Base" has the meaning set forth in Section 5.1 hereof.
5
"Borrowing Base Deficiency" means, as of any date, the amount, if any, by
which the Outstanding Credit on such date exceeds the Borrowing Base in effect
on such date; provided, that, for purposes of determining the existence and
amount of any Borrowing Base Deficiency, Letter of Credit Exposure will not be
deemed to be outstanding to the extent it is secured by cash in the manner
contemplated by Section 3.1(b).
"Borrowing Base Properties" means all Mineral Interests owned by the Credit
Parties and evaluated by Banks for purposes of establishing the Borrowing Base.
"Borrowing Date" means the Eurodollar Business Day or the Domestic Business
Day, as the case may be, upon which the proceeds of any Borrowing are made
available to Borrower or to satisfy any obligation of any Credit Party.
"Certificate of Effectiveness" means a Certificate of Effectiveness in the
form of Exhibit L attached hereto to be executed by Parent, Borrower and
Administrative Agent upon the satisfaction of each of the conditions precedent
contained in Section 7.1 hereof.
"Certificate of Ownership Interests" means a Certificate of Ownership
Interests in the form of Exhibit I attached hereto to be executed and delivered
by an Authorized Officer of Borrower pursuant to Section 7.1(a)(xvi) hereof.
"Change of Control" means the occurrence of any of the following, whether
voluntary or involuntary, including by operation of law: (a) any Credit Party
(other than Parent) shall cease to be a wholly owned direct or indirect
Subsidiary of Parent, or (b) for any reason, any Person or group (as defined in
Section 13(d)(3) or 14(d)(2) of the Exchange Act) shall become (i) the direct or
indirect beneficial owner (as defined in Rule 13(d)(3) of the Exchange Act) of
greater than thirty percent (30%) of the total voting power of all classes of
capital stock then outstanding of Parent entitled (without regard to the
occurrence of any contingency) to vote in elections of directors of Parent, and
(ii) the largest shareholder of the total voting power of all classes of capital
stock then outstanding of Parent entitled (without regard to the occurrence of
any contingency) to vote in elections of directors of Parent.
"Closing Date" means the date upon which all of the conditions precedent
set forth in Section 7.1 have been satisfied, and Parent, Borrower and
Administrative Agent have executed and delivered the Certificate of
Effectiveness; provided, that, in no event shall such date be later than
September 1, 2004.
"Closing Transactions" means the transactions to occur on the Closing Date,
including, without limitation: (a) the refinancing in full, with proceeds of a
Borrowing under this Agreement, of all Obligations accrued and outstanding under
the Existing Credit Agreement as of the Closing Date, including, without
limitation, (i) the entire outstanding principal balance of the "Revolving
Loans" made (and as defined) thereunder, (ii) all accrued but unpaid interest,
and (iii) all accrued but unpaid commitment and other fees, and (b) the payment
of all fees and expenses of Administrative Agent in connection with the credit
facilities provided herein.
"Code" means the Internal Revenue Code of 1986, as amended.
6
"Commitment" means, with respect to any Bank, the commitment of such Bank
to lend its Commitment Percentage of the Total Commitment to Borrower pursuant
to Section 3.1 hereof, as such Commitment may be terminated, reduced and/or
increased from time to time in accordance with the provisions hereof. On the
Closing Date, the amount of each Bank's Commitment is the amount set forth
opposite such Bank's name on Schedule 2.1 hereto; provided, that after giving
effect to any Assignment and Acceptance Agreement, the Commitment of each Bank
shall be the amount set forth in the Register maintained by Administrative Agent
pursuant to Section 15.10(c)(iv) hereof.
"Commitment Fee Percentage" means, on any date, the percentage determined
by reference to the ratio of Outstanding Credit to the Borrowing Base on such
date in accordance with the table below:
Ratio of Outstanding Credit to Commitment Fee
Borrowing Base Percentage
< .25 to 1 .250%
> or = .25 to 1 and < .50 to 1 .300%
> or = .50 to 1 and < .75 to 1 .375%
> or = .75 to 1 .375%
"Commitment Increase" has the meaning given such term in Section 3.10.
"Commitment Percentage" means, with respect to each Bank, the Commitment
Percentage for such Bank set forth on Schedule 2.1 hereto; provided, that after
giving effect to any Assignment and Acceptance Agreement, the Commitment
Percentage of each Bank shall be the amount set forth in the Register maintained
by Administrative Agent pursuant to Section 15.10(c)(iv) hereof.
"Consolidated Current Assets" means, for any Person at any time, the
current assets of such Person and its Consolidated Subsidiaries at such time,
plus, in the case of Borrower, the Availability at such time. For purposes of
this definition, any non-cash gains on any Hedge Agreement resulting from the
requirements of SFAS 133 for any period of determination shall be excluded from
the determination of current assets of such Person and its Consolidated
Subsidiaries.
"Consolidated Current Liabilities" means, for any Person at any time, the
current liabilities of such Person and its Consolidated Subsidiaries at such
time, but, in the case of Borrower, excluding the current portion (if any) of
the outstanding principal balance of the Revolving Loan. For purposes of this
definition, any non-cash losses or charges on any Hedge Agreement resulting from
the requirements of SFAS 133 for any period of determination shall be excluded
from the determination of current liabilities of such Person and its
Consolidated Subsidiaries.
"Consolidated EBITDA" means, for any Person for any period: (a)
Consolidated Net Income of such Person for such period; plus, to the extent
deducted in the calculation of Consolidated Net Income, (b) the sum of (i)
income or franchise Taxes paid or accrued; (ii) Consolidated Net Interest
Expense; (iii) amortization, depletion and depreciation expense;
7
(iv) any non-cash losses or charges on any Hedge Agreement resulting from the
requirements of SFAS 133 for that period; and (v) other non-cash charges
(excluding accruals for cash expenses made in the ordinary course of business);
less, to the extent included in the calculation of Consolidated Net Income, (c)
the sum of (i) the income of any Person (other than wholly-owned Subsidiaries of
such Person) unless such income is received by such Person in a cash
distribution; (ii) gains or losses from sales or other dispositions of assets
(other than Hydrocarbons produced in the normal course of business); (iii) any
non-cash gains on any Hedge Agreement resulting from the requirements of SFAS
133 for that period; and (iv) extraordinary or non-recurring gains, but not net
of extraordinary or non-recurring "cash" losses. Notwithstanding anything to the
contrary contained herein, all calculations of Consolidated EBITDA shall be, for
any applicable period of determination during which Borrower has consummated an
acquisition or disposition (to the extent permitted hereunder) of properties or
assets, calculated and determined on a pro forma basis as if such acquisition or
disposition was consummated on the first day of such applicable period.
"Consolidated Net Income" means, for any Person for any period, the net
income (or loss) of such Person and its Consolidated Subsidiaries for such
period.
"Consolidated Net Interest Expense" means, for any Person for any period,
the remainder of the following for such Person and its Consolidated Subsidiaries
for such period: (a) interest expense, minus (b) interest income.
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements.
"Consolidated Tangible Net Worth" means, with respect to any Person at any
time, (a) the consolidated shareholder's equity of such Person at such time,
less (b) the consolidated Intangible Assets of such Person at such time. For
purposes of this definition, (i) any non-cash gains, losses or charges on any
Hedge Agreement resulting from the requirements of SFAS 133 for any period of
determination shall be excluded from the determination of such shareholder's
equity, and (ii) "Intangible Assets" means the amount (to the extent reflected
in determining such consolidated shareholder's equity) of all unamortized debt
discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, organization expenses and
other intangible items.
"Continue," "Continuation" and "Continued" shall refer to the continuation
pursuant to Section 3.5 hereof and/or Article XIV hereof of a Eurodollar Loan
from one Interest Period to the next Interest Period.
"Convert," "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 3.5 and/or Article XIV hereof of all or a portion of one
Type of Revolving Loan into another Type of Revolving Loan.
"Credit Parties" means, collectively, Parent, Borrower and each Restricted
Subsidiary, and "Credit Party" means any one of the foregoing.
8
"Current Financials" means (a) the annual audited consolidated balance
sheet of Parent and the related consolidated statements of operations and cash
flows for the Fiscal Year ended December 31, 2003, and (b) the quarterly
unaudited consolidated balance sheet of Parent for the Fiscal Quarter ended June
30, 2004, and the related unaudited consolidated statements of operations and
cash flows for the portion of Parent's Fiscal Year ended June 30, 2004.
"Debt" means, for any Person at any time, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all other indebtedness (including capitalized lease obligations, other than
usual and customary oil and gas leases) of such Person on which interest charges
are customarily paid or accrued, (d) all Guarantees by such Person, (e) the
unfunded or unreimbursed portion of all letters of credit issued for the account
of such Person, (f) any amount owed by such Person representing the deferred
purchase price of property or services other than accounts payable incurred in
the ordinary course of business and in accordance with customary trade terms and
which are not more than one hundred twenty (120) days past the invoice date, and
(g) all liability of such Person as a general partner of a partnership for
obligations of such partnership of the nature described in (a) through (f)
preceding.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"Default Rate" means, in respect of any principal of the Revolving Loan or
any other amount payable by Borrower under any Loan Paper which is not paid when
due (whether at stated maturity, by acceleration, or otherwise), a rate per
annum during the period commencing on the due date until such amount is paid in
full equal to the sum of (i) three percent (3%), plus (ii) the Applicable
Margin, plus (iii) the Base Rate as in effect from time to time (provided, that
if such amount in default is principal of a Eurodollar Borrowing and the due
date is a day other than the last day of an Interest Period therefor, the
"Default Rate" for such principal shall be, for the period from and including
the due date and to but excluding the last day of the Interest period therefor,
the sum of (a) three percent (3%), plus (b) the Applicable Margin, plus (c) the
Eurodollar Rate for such Borrowing for such Interest Period as provided in
Section 3.5 hereof, and thereafter, the rate provided for above in this
definition).
"DG&M" means Denbury Gathering & Marketing, Inc., a Delaware corporation,
which is a wholly owned Subsidiary of Parent.
"Distribution" by any Person, means (a) with respect to any stock issued by
such Person or any partnership, joint venture, limited liability company,
membership or other interest of such Person, the retirement, redemption,
purchase, or other acquisition for value of any such stock or partnership, joint
venture, limited liability company, membership or other interest, (b) the
declaration or payment of any dividend or other distribution on or with respect
to any stock, partnership, joint venture, limited liability company, membership
or other interest of any Person, and (c) any other payment by such Person with
respect to such stock, partnership, joint venture, limited liability company,
membership or other interest of such Person.
9
"Documentation Agent" means Union Bank of California, N.A. or Comerica Bank
in its capacity as Documentation Agent for Banks hereunder or any successor
thereto, and "Documentation Agents" means Union Bank of California, N.A. and
Comerica Bank, collectively, in their capacities as Documentation Agents for
Banks hereunder.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which national banks in Chicago, Illinois or Dallas, Texas, are
authorized by Law to close.
"Domestic Lending Office" means, as to each Bank, (a) its office located at
its address identified on Schedule 2.1 hereto as its Domestic Lending Office,
(b) its office located at its address identified on the Register as its Domestic
Lending Office, or (c) such other office as such Bank may hereafter designate as
its Domestic Lending Office by notice to Borrower and Administrative Agent.
"Environmental Complaint" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, proceeding, judgment, letter
or other communication from any federal, state or municipal authority or any
other party against any Credit Party involving (a) a Hazardous Discharge from,
onto or about any real property owned, leased or operated at any time by any
Credit Party, (b) a Hazardous Discharge caused, in whole or in part, by any
Credit Party or by any Person acting on behalf of or at the instruction of any
Credit Party, or (c) any violation of any Applicable Environmental Law by any
Credit Party.
"Equity" means shares of capital stock or a partnership, profits, capital,
member or other equity interest, or options, warrants or any other rights to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital, member or other equity interest of any Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any corporation or trade or business under common
control with any Credit Party as determined under section 4001(a)(14) of ERISA.
"Eurodollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in the applicable Eurodollar interbank market.
"Eurodollar Lending Office" means, as to each Bank, (a) its office, branch
or affiliate located at its address identified on Schedule 2.1 hereto as its
Eurodollar Lending Office, (b) its office, branch or affiliate located at its
address identified on the Register as its Eurodollar Lending Office, or (c) such
other office, branch or affiliate of such Bank as it may hereafter designate as
its Eurodollar Lending Office by notice to Borrower and Administrative Agent.
"Eurodollar Loans" means Revolving Loans that bear interest at rates based
upon the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period
therefor, the applicable British Bankers' Association LIBOR rate for deposits in
Dollars as reported by any generally recognized financial information service as
of 11:00 a.m. (London time) two (2) Eurodollar Business Days prior to the first
day of such Interest Period, and having a maturity
10
equal to such Interest Period; provided, that, if no such British Bankers'
Association LIBOR rate is available to Administrative Agent, the applicable
Eurodollar Rate for the relevant Interest Period shall instead be the rate
determined by Administrative Agent to be the rate at which Bank One or one of
its Affiliate banks offers to place deposits in Dollars with first-class banks
in the London interbank market at approximately 11:00 a.m. (London time) two (2)
Eurodollar Business Days prior to the first day of such Interest Period, in the
appropriate amount of Bank One's relevant Eurodollar Loan and having a maturity
equal to such Interest Period.
"Events of Default" has the meaning set forth in Section 12.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exhibit" refers to an exhibit attached to this Agreement and incorporated
herein by reference, unless specifically provided otherwise.
"Existing Banks" has the meaning assigned to such term in the recitals
hereto.
"Existing Credit Agreement" has the meaning assigned to such term in the
recitals hereto.
"Existing Mortgages" means the mortgages, deeds of trust, security
agreements, assignments, pledges, assignments and amendments to mortgages,
amendments to mortgages and other documents, instruments and agreements which
establish Liens on certain Mineral Interests to secure the Obligations under and
as defined in the Existing Credit Agreement.
"Existing Reserve Report" means, collectively, (i) an engineering and
economic analysis of all Borrowing Base Properties prepared as of December 31,
2003, by DeGolyer and MacNaughton, and (ii) an engineering and economic analysis
of all Borrowing Base Properties prepared as of June 30, 2004, by Borrower's
in-house staff.
"Facility Guaranty" means a Guaranty substantially in the form of Exhibit B
attached hereto to be executed by Parent and (as applicable) each Restricted
Subsidiary (other than Borrower) in favor of Banks, pursuant to which Parent
and/or such Restricted Subsidiary guarantees payment and performance in full of
the Obligations.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day; provided that (a) if the day for which such rate is to be
determined is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business Day, and (b) if
such rate is not so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for any day shall be the average rate charged to
Administrative Agent on such day on such transactions as determined by
Administrative Agent.
11
"Financial Officer" of any Person means its Chief Financial Officer;
provided, that if no Person serves in such capacity, "Financial Officer" shall
mean the highest ranking executive officer of such Person with responsibility
for accounting, financial reporting, cash management and similar functions.
"First Genesis Letter Agreement" means that certain letter agreement, dated
as of October 28, 2003, by and among Former Borrower, Administrative Agent and
the banks party thereto, pursuant to which such banks consented to the First
Genesis VPP Transaction.
"First Genesis VPP Transaction" means the "Genesis VPP Transaction" as
defined in the First Genesis Letter Agreement.
"Fiscal Quarter" means the three (3) month periods ending on March 31, June
30, September 30 and December 31 of each Fiscal Year.
"Fiscal Year" means a twelve (12) month period ending December 31.
"Former Borrower" has the meaning given such term in the Existing Credit
Agreement.
"Fund" means 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" means those generally accepted accounting principles and practices
which are recognized as such by the SEC, the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
Closing Date so as to properly reflect the financial condition, and the results
of operations and changes in financial position, of Parent and its Consolidated
Subsidiaries, except that any accounting principle or practice required to be
changed by the said SEC, Accounting Principles Board or Financial Accounting
Standards Board (or other appropriate board or committee thereof) in order to
continue as a generally accepted accounting principle or practice may be so
changed.
"Gas Balancing Agreement" means any agreement or arrangement whereby any
Credit Party, or any other party having an interest in any Hydrocarbons to be
produced from Mineral Interests in which any Credit Party owns an interest, has
a right to take more than its proportionate share of production therefrom.
"Genesis" means Genesis Crude Oil, L.P., a Delaware limited partnership.
"Genesis Energy" means Genesis Energy, Inc., a Delaware corporation, which
is a wholly owned Subsidiary of DG&M and the general partner of Genesis.
"Genesis Letter Agreements" means, collectively, the First Genesis Letter
Agreement and the Second Genesis Letter Agreement.
12
"Genesis Transaction Documents" means, collectively, (i) the
"Transaction Documents" as defined in the Genesis Letter Agreements, and (ii)
all material documents, instruments and agreements entered into in connection
with any Permitted Genesis VPP Transaction described in clause (iii) of the
definition thereof.
"Governmental Authority" means any court or governmental department,
commission, board, bureau, agency, or instrumentality of any nation or of any
province, state, commonwealth, nation, territory, possession, county, parish, or
municipality, whether now or hereafter constituted or existing.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions, by "comfort letter"
or other similar undertaking of support or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided, that the term "Guarantee" shall
not include endorsements for collection or deposit in the ordinary course of
business.
"Hazardous Discharge" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Substance from or onto any real property
owned, leased or operated at any time by any Credit Party or any real property
owned, leased or operated by any other party.
"Hazardous Substance" means any pollutant, toxic substance, hazardous
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or infectious pursuant to any Applicable Environmental Law or
which is otherwise regulated by any Applicable Environmental Law or is required
to be investigated and/or remediated by or pursuant to any Applicable
Environmental Law.
"Hedge Agreements" means, collectively, any agreement, instrument,
arrangement or schedule or supplement thereto evidencing any Hedge Transaction.
"Hedge Transaction" means any commodity, interest rate, currency or other
swap, option, collar, futures contract or other contract pursuant to which a
Person hedges risks related to commodity prices, interest rates, currency
exchange rates, securities prices or financial market conditions. Hedge
Transactions expressly includes Oil and Gas Hedge Transactions.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasolines, natural
gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons
produced or to be produced in conjunction therewith, and all products,
by-products and all other substances derived therefrom or the processing
thereof, and all other minerals and substances, including, but not limited to,
sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon
dioxide, helium, and any and all other minerals, ores, or substances of value,
and the products and proceeds therefrom, including, without limitation, all gas
resulting from the in-situ combustion of coal or lignite.
13
"Immaterial Title Deficiencies" means, with respect to Borrowing Base
Properties, defects or clouds on title, discrepancies in reported net revenue
and working interest ownership percentages and other Liens, defects,
discrepancies and similar matters which do not, individually or in the
aggregate, affect Borrowing Base Properties with a Recognized Value greater than
five percent (5%) of the Recognized Value of all of such Borrowing Base
Properties.
"Indirect Subsidiary" has the meaning given such term in the definition of
"Subsidiary Pledge Agreement."
"Initial Borrowing Base" means a Borrowing Base in the amount of
$200,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Redetermination after the Closing
Date.
"Initial Total Commitment" means a Total Commitment in the amount of
$100,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Commitment Increase (if any) after
the Closing Date.
"Interest Period" means, with respect to each Eurodollar Borrowing and each
Continuation of Eurodollar Loans and each Conversion of all or part of the Base
Rate Loan to Eurodollar Loans, the period commencing on the date of such
Borrowing, Continuation or Conversion and ending one (1), two (2), three (3) or
six (6), and, if available to all Banks, nine (9) or twelve (12) months
thereafter, as Borrower may elect in the applicable Request for Borrowing or
Notice of Continuation or Conversion; provided, that:
(a) any Interest Period which would otherwise end on a day which is not a
Eurodollar Business Day shall be extended to the next succeeding Eurodollar
Business Day unless such Eurodollar Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Eurodollar Business Day;
(b) any Interest Period which begins on the last Eurodollar 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, subject to clause (c) below, end on the last Eurodollar Business Day
of a calendar month;
(c) if any Interest Period includes a date on which any payment of
principal of the Eurodollar Loans which are the subject of such Borrowing,
Continuation or Conversion is required to be made hereunder, but does not
end on such date, then (i) the principal amount of such Eurodollar Loans
required to be repaid on such date shall have an Interest Period ending on
such date, and (ii) the remainder of each such Eurodollar Loans shall have
an Interest Period determined as set forth above; and
(d) no Interest Period shall extend past the Termination Date.
14
"Investment" means, with respect to any Person, any loan, advance,
extension of credit, capital contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person; provided, that,
"Investment" shall not include current customer and trade accounts which are
payable in accordance with customary trade terms.
"JPMSI" means J.P. Morgan Securities Inc.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any state, commonwealth, nation,
territory, possession, county, township, parish, municipality or Governmental
Authority.
"Lending Office" means, as to any Bank, its Domestic Lending Office or its
Eurodollar Lending Office, as the context may require.
"Letter of Credit Exposure" of any Bank means such Bank's aggregate
participation in the unfunded portion and the funded but unreimbursed portion of
Letters of Credit outstanding at any time.
"Letter of Credit Fee" means, with respect to any Letter of Credit issued
hereunder, a fee in an amount equal to the greater of (a) $500, or (b) a
percentage of the stated amount of such Letter of Credit (calculated on a per
annum basis based on the stated term of such Letter of Credit) determined by
reference to the ratio of the Outstanding Credit to the Borrowing Base in effect
on the date such Letter of Credit is issued in accordance with the table below:
Ratio of Outstanding Credit to Per Annum Letter of Credit Fee
Borrowing Base Percentage
< .25 to 1 1.125%
> or = .25 to 1 and < .50 to 1 1.250%
> or = .50 to 1 and < .75 to 1 1.500%
> or = .75 to 1 1.750%
"Letter of Credit Fronting Fee" means, with respect to any Letter of Credit
issued hereunder, a fee equal to one eighth of one percent (.125%) per annum of
the stated amount of such Letter of Credit.
"Letter of Credit Issuer" has the meaning set forth in Section 3.1(b).
"Letters of Credit" means letters of credit issued for the account of
Borrower pursuant to Section 3.1(b).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, financing statement or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, the Credit Parties
shall be deemed to own subject to a Lien any asset which is acquired or held
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
15
"Loan Papers" means this Agreement, the Notes, each Facility Guaranty which
may now or hereafter be executed, each Parent Pledge Agreement which may now or
hereafter be executed, each Subsidiary Pledge Agreement which may now or
hereafter be executed, the Existing Mortgages (as amended by the Amendments to
Mortgages), all Mortgages now or at any time hereafter delivered pursuant to
Section 6.1, the Amendments to Mortgages, and all other certificates, documents
or instruments delivered in connection with this Agreement, as the foregoing may
be amended from time to time.
"Margin Regulations" means Regulations T, U and X of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Marine" means Denbury Marine, L.L.C., a Louisiana limited liability
company, which is a wholly owned Subsidiary of Operating.
"Material Adverse Change" means any circumstance or event that has or would
reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a) the
assets, liabilities, financial condition, results of operations or prospects of
any Credit Party, or the Credit Parties taken as a whole, (b) the right or
ability of any Credit Party to fully, completely and timely perform its
obligations under the Loan Papers, (c) the validity or enforceability of any
Loan Paper against any Credit Party which is a party thereto, or (d) the
validity, perfection or priority of any material Lien intended to be created
under or pursuant to any Loan Paper to secure the Obligations.
"Material Agreement" means any material written or oral agreement,
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
thirty (30) days or less without liability for further payment other than
nominal penalty.
"Material Gas Imbalance" means, with respect to all Gas Balancing
Agreements to which any Credit Party is a party or by which any Mineral Interest
owned by any Credit Party is bound, a net gas imbalance to any Credit Party in
excess of $2,000,000.
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if the
context so permits or requires, an amount calculated at such rate) of interest
which, at the time in question would not cause the interest charged on the
portion of the Revolving Loan owed to such Bank at such time to exceed the
maximum amount which such Bank would be allowed to contract for, charge, take,
reserve, or receive under applicable Laws after taking into account, to the
extent required by applicable Laws, any and all relevant payments or charges
under the Loan Papers. To the extent the Laws of the State of Texas are
applicable for purposes of determining the "Maximum Lawful Rate," such term
shall mean the "indicated rate ceiling" from time to time in effect under
Chapter 303 of the Texas Finance Code, as amended, substituted for or restated,
or, if permitted by applicable Law and effective upon the giving of the notices
required by such Chapter 303 (or effective upon any other date otherwise
specified by applicable Law), the "quarterly ceiling" or "annualized ceiling"
16
from time to time in effect under such Chapter 303, whichever Administrative
Agent (with the approval of Required Banks) shall elect to substitute for the
"indicated rate ceiling," and vice versa, each such substitution to have the
effect provided in such Chapter 303, and Administrative Agent (with the approval
of Required Banks) shall be entitled to make such election from time to time and
one or more times and, without notice to Borrower, to leave any such substitute
rate in effect for subsequent periods in accordance with such Chapter 303.
"Maximum Total Commitment Amount" means $300,000,000.
"Mineral Interests" means rights, estates, titles, and interests in and to
oil and gas leases and any oil and gas interests, royalty and overriding royalty
interest, production payment, net profits interests, oil and gas fee interests,
and other rights therein, including, without limitation, any reversionary or
carried interests relating to the foregoing, together with rights, titles, and
interests created by or arising under the terms of any unitization,
communization, and pooling agreements or arrangements, and all properties,
rights and interests covered thereby, whether arising by contract, by order, or
by operation of Laws, which now or hereafter include all or any part of the
foregoing.
"Minimum Collateral Amount" means, at any time, an amount equal to the
lesser of (i) seventy-five percent (75%) of the Recognized Value of all
Borrowing Base Properties at such time, and (ii) a Recognized Value of all
Borrowing Base Properties at such time equal to not less than 125% of the Total
Commitment then in effect.
"Mortgages" means all mortgages, deeds of trust, amendments to mortgages,
security agreements, assignments of production, pledge agreements, collateral
mortgages, collateral chattel mortgages, collateral assignments, financing
statements and other documents, instruments and agreements evidencing, creating,
perfecting or otherwise establishing the Liens required by Section 6.1 hereof.
All Mortgages shall be in form and substance satisfactory to Administrative
Agent in its sole discretion. The term "Mortgages" shall include, without
limitation, the Existing Mortgages, as amended pursuant to the Amendments to
Mortgages.
"Note" means a promissory note of Borrower payable to the order of a Bank,
in substantially the form of Exhibit C hereto, in the amount of such Bank's
Commitment, evidencing the obligation of Borrower to repay to such Bank its
Commitment Percentage of the Revolving Loan, together with all modifications,
extensions, renewals, and rearrangements thereof, and "Notes" means all of such
Notes collectively.
"Notice of Continuation or Conversion" has the meaning set forth in Section
3.5(c).
"Obligations" means all present and future indebtedness, obligations and
liabilities, and all renewals and extensions thereof, or any part thereof, of
each Credit Party to Administrative Agent or to any Bank or any Affiliate of any
Bank arising pursuant to the Loan Papers or pursuant to any Hedge Agreement or
Hedge Transaction entered into with any Bank or any Affiliate of any Bank, and
all interest accrued thereon and costs, expenses, and attorneys' fees incurred
in the enforcement or collection thereof, regardless of whether such
indebtedness, obligations and liabilities are direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several or joint and several.
17
"Oil and Gas Hedge Transaction" means a Hedge Transaction pursuant to which
any Person hedges the price to be received by it for future production of
Hydrocarbons.
"Operating" means Denbury Operating Company, a Delaware corporation, which
is a wholly owned Subsidiary of Parent.
"Outstanding Credit" means, on any date, the sum of (a) the aggregate
outstanding Letter of Credit Exposure on such date including the Letter of
Credit Exposure attributable to Letters of Credit to be issued on such date,
plus (b) the aggregate outstanding principal balance of the Revolving Loan on
such date, including the amount of any Borrowing to be made on such date.
"Parent" means Denbury Resources Inc., a Delaware corporation.
"Parent Pledge Agreement" means a Pledge Agreement substantially in the
form of Exhibit D attached hereto (with applicable conforming changes) to be
executed by Parent pursuant to which Parent shall pledge to Administrative
Agent, for the ratable benefit of Banks, all of the issued and outstanding
Equity owned by Parent of each Subsidiary of Parent described therein to secure
the Obligations.
"Participant" has the meaning given such term in Section 15.10(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means with respect to any asset:
(a) Liens securing the Obligations;
(b) minor defects in title which do not secure the payment of money
and otherwise have no material adverse effect on the value or the
operation of the subject property, and for the purposes of this
Agreement, a minor defect in title shall include, but not be limited
to, easements, rights-of-way, servitudes, permits, surface leases and
other similar rights in respect of surface operations, and easements
for pipelines, streets, alleys, highways, telephone lines, power
lines, railways and other easements and rights-of-way, on, over or in
respect of any of the properties of any Credit Party that are
customarily granted in the oil and gas industry;
(c) inchoate statutory or operators' Liens securing obligations for
labor, services, materials and supplies furnished to Mineral Interests
which are not delinquent (except to the extent permitted by Section
9.7);
(d) mechanic's, materialmen's, warehouseman's, journeyman's and
carrier's Liens and other similar Liens arising by operation of Law in
the ordinary course of business which are not delinquent (except to
the extent permitted by Section 9.7);
18
(e) Liens for Taxes or assessments not yet due or not yet delinquent,
or, if delinquent, that are being contested in good faith in the
normal course of business by appropriate action, as permitted by
Section 9.7;
(f) lease burdens payable to third parties which are deducted in the
calculation of discounted present value in the Reserve Report
including, without limitation, any royalty, overriding royalty, net
profits interest, production payment, carried interest or reversionary
working interest;
(g) "Permitted Encumbrances" as that term is defined in the Existing
Mortgages;
(h) Liens granted pursuant to the express terms of any Genesis
Transaction Document; provided, however, that no Lien permitted under
this clause (h) will extend to any Borrowing Base Property that
constitutes a Proved Mineral Interest; and
(i) Liens, charges and encumbrances upon Borrower's assets, other than
Proved Mineral Interests, which in the aggregate, do not have a value
in excess of $1,000,000.
"Permitted Genesis VPP Transactions" means, collectively, (i) the First
Genesis VPP Transaction, (ii) the Second Genesis VPP Transaction, and (iii) any
additional transaction entered into between Borrower and Genesis after the date
hereof for the purchase and sale of carbon dioxide volumetric production
payments, if, with respect to this clause (iii), each of the following
conditions is met:
(a) no Default, Event of Default or Borrowing Base Deficiency then
exits or would result therefrom;
(b) such transaction is on substantially similar terms, and pursuant
to substantially similar Genesis Transaction Documents, as the First
Genesis VPP Transaction and the Second Genesis VPP Transaction;
(c) such transaction is as favorable to Borrower as could be obtained
in an arm's length transaction with an unaffiliated Person in
accordance with prevailing industry customs and practices;
(d) at least five (5) Domestic Business Days prior to the date of the
consummation of the proposed transaction, Borrower shall have
delivered to Administrative Agent (i) all material documents,
instruments and agreements to be entered into in connection with such
proposed transaction, each of which shall be in substantially final
form, and (ii) a certificate signed by an Authorized Officer of
Borrower certifying that such transaction complies with this
definition;
19
(e) Borrower shall have provided Administrative Agent with copies of
resolutions and comparable authorizations approving such transaction,
accompanied by a certificate of the Secretary or comparable Authorized
Officer of Borrower that such copies are true and correct;
(f) as soon as reasonably practicable, but in any event no later than
two (2) Domestic Business Days after the applicable transaction is
consummated, Borrower shall have provided Administrative Agent with
fully executed copies of each of the material documents, instruments
and agreements entered into in connection with such transaction,
together with a certificate from an Authorized Officer of Borrower
certifying that such copies are accurate and complete and represent
the complete understanding and agreement of the parties with respect
to the subject matter thereof;
(g) Administrative Agent shall have been provided with such other
documents, instruments and agreements as Administrative Agent may
reasonably request in connection with such transaction; and
(h) the aggregate consideration paid or to be paid in such transaction
or transactions shall not exceed an amount equal to $20,000,000 in the
aggregate during the term of this Agreement.
"Permitted Investments" means (a) readily marketable direct obligations of
the United States of America (or investments in mutual funds or similar funds
which invest solely in such obligations), (b) fully insured time deposits and
certificates of deposit with maturities of one year or less of any commercial
bank operating in the United States having capital and surplus in excess of
$500,000,000, (c) commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest ratings categories of
Standard and Poor's Corporation or Moody's Investors Service, (d) Investments by
any Credit Party in a Subsidiary of Parent that has provided a Facility Guaranty
and the Equity of which has been pledged to Administrative Agent pursuant to a
Parent Pledge Agreement or a Subsidiary Pledge Agreement, and (e) other
Investments; provided, that, the aggregate amount of all other Investments made
pursuant to this clause (e) outstanding at any time shall not exceed $5,000,000
(measured on a cost basis).
"Permitted Subordinate Debt" means Debt of Borrower resulting from a single
issue of Borrower's 7.5% Senior Subordinated Notes Due 2013 in an aggregate
outstanding principal balance of not greater than $225,000,000, and which (a) is
fully subordinated to the Obligations pursuant to subordination provisions which
have been approved by the Existing Banks prior to the date hereof, (b) is not
subject to negative covenants or events of default (or other provisions which
have the same effect as negative covenants or events of default) which have not
been approved by the Existing Banks prior to the date hereof, and (c) Debt has
been assumed by Parent as a co-obligor with Borrower pursuant to that certain
First Supplemental Indenture, dated as of December 29, 2003.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a Government Authority.
20
"Plan" means an employee benefit plan within the meaning of section 3(3) of
ERISA, and any other similar plan, policy or arrangement, including an
employment contract, whether formal or informal and whether legally binding or
not, under which any Credit Party or an ERISA Affiliate of a Credit Party has
any current or future obligation or liability or under which any present or
former employee of any Credit Party or an ERISA Affiliate of a Credit Party, or
such present or former employee's dependents or beneficiaries, has any current
or future right to benefits resulting from the present or former employee's
employment relationship with any Credit Party or an ERISA Affiliate of a Credit
Party.
"Prime Rate" means the per annum rate of interest established from time to
time by Administrative Agent as its prime rate, which rate may not be the lowest
rate of interest charged by Administrative Agent to its customers.
"Proved Mineral Interests" means, collectively, Proved Producing Mineral
Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped Mineral
Interests.
"Proved Nonproducing Mineral Interests" means all Mineral Interests which
constitute proved developed nonproducing reserves.
"Proved Producing Mineral Interests" means all Mineral Interests which
constitute proved developed producing reserves.
"Proved Undeveloped Mineral Interests" means all Mineral Interests which
constitute proved undeveloped reserves.
"Purchasers" has the meaning given such term in Section 15.10(c).
"Quarterly Date" means the last day of each March, June, September and
December.
"Recognized Value" means, with respect to the Borrowing Base Properties,
the value which Administrative Agent, in its sole discretion, attributes to such
Borrowing Base Properties based upon the discounted present value of the
estimated net cash flow to be realized from the production of Hydrocarbons from
such Borrowing Base Properties.
"Redetermination" means any Scheduled Redetermination or Special
Redetermination.
"Redetermination Date" means (a) with respect to any Scheduled
Redetermination, each October 1 and April 1, commencing April 1, 2005, and (b)
with respect to any Special Redetermination, the first day of the first month
which is not less than twenty (20) Domestic Business Days following the date of
a request for a Special Redetermination.
"Register" has the meaning given such term in Section 15.10(c)(iv).
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
21
"Request for Borrowing" has the meaning set forth in Section 3.2(a).
"Request for Letter of Credit" has the meaning set forth in Section 3.3(a).
"Required Banks" means Banks holding at least sixty-six and two-thirds
percent (66 2/3%) of the Total Commitment.
"Required Consolidated Tangible Net Worth" means, initially, $382,000,000;
provided, that, the Required Consolidated Tangible Net Worth shall increase (but
not decrease) above the Required Consolidated Tangible Net Worth previously in
effect pursuant to this definition (i) on each Quarterly Date (commencing
September 30, 2004) by an amount equal to fifty percent (50%) of Parent's
Consolidated Net Income for the Fiscal Quarter then ended, and (ii) on the date
of any issuance by Parent of its equity securities by an amount equal to fifty
percent (50%) of the net proceeds received by Parent from the issuance of such
securities.
"Reserve Report" means an unsuperseded engineering analysis of the Mineral
Interests owned by any Credit Party, in form and substance reasonably acceptable
to Required Banks, prepared in accordance with customary and prudent practices
in the petroleum engineering industry and Financial Accounting Standards Board
Statement 69. Each Reserve Report required to be delivered by February 28 of
each year pursuant to Section 5.1 shall be prepared by the Approved Petroleum
Engineer. Each other Reserve Report shall be prepared by either (i) the Approved
Petroleum Engineer, or (ii) Borrower's in-house staff. Notwithstanding the
foregoing, in connection with any Special Redetermination requested by Borrower,
the Reserve Report shall be in form and scope mutually acceptable to Borrower
and Required Banks. Until superseded, the Existing Reserve Report shall be
considered the Reserve Report.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against in the case of
Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Adjusted Eurodollar Rate is to be determined, or (ii) any category
of extensions of credit or other assets which include Eurodollar Loans. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Restricted Payment" means, with respect to any Person, (a) any
Distribution by such Person, (b) any capital contribution, loan or advance by
any Credit Party to any Unrestricted Subsidiary, (c) the issuance of a Guarantee
by any Credit Party with respect to any Debt or other obligation of any
Unrestricted Subsidiary, (d) the retirement, redemption, defeasance, repurchase
or prepayment prior to scheduled maturity by such Person or any Affiliate of
such Person of any Debt of such Person, or (e) except as otherwise approved by
Required Banks, the retirement, redemption or payment by Parent, Borrower or any
affiliate of Parent of any part of the principal of the Permitted Subordinate
Debt at any time prior to the termination of all Commitments and the payment and
performance in full of the Obligations.
22
"Restricted Subsidiary" means, as of the date hereof, Operating, Marine,
TRF and DG&M. "Restricted Subsidiary" shall also refer to any other Subsidiary
or Indirect Subsidiary of Parent which Parent and Borrower hereafter designate
as a "Restricted Subsidiary;" provided, that no Subsidiary or Indirect
Subsidiary of Parent will be a Restricted Subsidiary unless (a) one hundred
percent (100%) of its issued and outstanding Equity has been pledged to
Administrative Agent to secure the Obligations pursuant to a Parent Pledge
Agreement or a Subsidiary Pledge Agreement, and (b) it has executed a Facility
Guaranty.
"Revolving Loan" means the revolving credit loan in an amount outstanding
at any time not to exceed the amount of the Total Commitment then in effect less
the amount of the Letter Credit Exposure then outstanding to be made by Banks to
Borrower in accordance with Section 3.1 hereof. The Revolving Loan may be
comprised of the Base Rate Loan and one or more Eurodollar Loans as Borrower may
select in a Request for Borrowing or a Notice of Continuation or Conversion.
"Schedule" means a "schedule" attached to this Agreement and incorporated
herein by reference, unless specifically indicated otherwise.
"Scheduled Redetermination" means any Redetermination of the Borrowing Base
pursuant to Section 5.2.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Second Genesis Letter Agreement" means that certain letter agreement dated
as of July 1, 2004, by and among Borrower, Administrative Agent and Existing
Banks, pursuant to which Existing Banks consented to the Second Genesis VPP
Transaction.
"Second Genesis VPP Transaction" means the "2004 Genesis VPP Transaction"
as defined in the Second Genesis Letter Agreement.
"Section" refers to a "section" or "subsection" of this Agreement unless
specifically indicated otherwise.
"Sole Lead Arranger" means JPMSI, in its capacity as sole lead arranger for
the credit facility hereunder or any successor thereto.
"Special Redetermination" means any Redetermination of the Borrowing Base
pursuant to Section 5.3.
"Subsidiary" means, for any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions (including that of a general partner) are at the time directly or
indirectly owned, collectively, by such Person and any Subsidiaries of such
Person. The term "Subsidiary" shall include Subsidiaries of Subsidiaries (and so
on).
"Subsidiary Pledge Agreement" means a Pledge Agreement substantially in the
form of Exhibit E attached hereto (with applicable conforming changes) which may
23
be executed by each existing and/or future Subsidiary of Parent to the extent
such Subsidiary owns any outstanding Equity of any other Subsidiary (for
purposes of this definition and Section 6.1(d) hereof, such Subsidiary is
referred to herein and therein as an "Indirect Subsidiary"), pursuant to which
such Indirect Subsidiary shall pledge to Administrative Agent, for the ratable
benefit of Banks, all of the issued and outstanding Equity owned by such
Indirect Subsidiary of each Subsidiary of such Indirect Subsidiary described
therein to secure the Obligations.
"Syndication Agent" means Calyon New York Branch or Fortis Capital Corp.,
in its capacity as Syndication Agent for Banks hereunder or any successor
thereto, and "Syndication Agents" means Calyon New York Branch and Fortis
Capital Corp., collectively, in their capacities as Syndication Agents for Banks
hereunder.
"Taxes" means all taxes, assessments, filing or other fees, levies,
imposts, duties, deductions, withholdings, stamp taxes, capital transaction
taxes, foreign exchange taxes or other charges, or other charges of any nature
whatsoever, from time to time or at any time imposed by Law or any Governmental
Authority. "Tax" means any one of the foregoing.
"Termination Date" means April 30, 2009.
"Total Commitment" means the aggregate Commitments of all Banks as such
amount may be reduced or increased from time to time pursuant to the terms
hereof; provided, that, the Total Commitment shall never exceed the lesser of
(i) the Borrowing Base then in effect, or (ii) the Maximum Total Commitment
Amount.
"Transferee" has the meaning given such term in Section 15.10(d).
"TRF" means Tuscaloosa Royalty Fund LLC, a Mississippi limited liability
company, which is a wholly owned Subsidiary of Operating.
"Type" means, with reference to a Revolving Loan, the characterization of
such Revolving Loan as the Base Rate Loan or a Eurodollar Loan based on the
method by which the accrual of interest on such Revolving Loan is calculated.
"Unproved Reserves" means Mineral Interests which do not constitute Proved
Mineral Interests.
"Unrestricted Subsidiary" means any Subsidiary or Indirect Subsidiary of
Parent which is not a Restricted Subsidiary, and shall include, without
limitation, Genesis Energy.
Section 2.2 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be expressed in U.S. dollars and shall be prepared
in accordance with GAAP, applied on a basis consistent with the most recent
audited consolidated financial statements of Parent and its Consolidated
Subsidiaries delivered to Banks except for changes concurred in by Parent's
independent certified public accountants and which are disclosed to
Administrative Agent on the next date on which financial statements are required
to be delivered to Banks pursuant to Section 9.1(a) or Section 9.1(b); provided,
that, unless Required Banks shall otherwise agree in writing, no such change
24
shall modify or affect the manner in which compliance with the covenants
contained in Article XI are computed such that all such computations shall be
conducted utilizing financial information presented consistently with prior
periods.
Section 2.3 Petroleum Terms. As used herein, the terms "proved reserves,"
"proved developed reserves," "proved developed producing reserves," "proved
developed nonproducing reserves," and "proved undeveloped reserves" have the
meaning given such terms from time to time and at the time in question by the
Society of Petroleum Engineers of the American Institute of Mining Engineers.
Section 2.4 Money. Unless expressly stipulated otherwise, all references
herein to "dollars," "money," "funds," "payments," "prepayments" or similar
financial or monetary terms, are references to currency of the United States of
America.
ARTICLE III
THE CREDIT
-----------
Section 3.1 Commitments.
(a) Each Bank severally agrees, subject to Section 3.1(c), Section 7.1
and Section 7.2 and the other terms and conditions set forth in this
Agreement, to lend to Borrower from time to time prior to the Termination
Date amounts requested by Borrower not to exceed in the aggregate at any
one time outstanding, the amount of such Bank's Commitment reduced by an
amount equal to such Bank's Letter of Credit Exposure. Each Borrowing shall
be (i) in an aggregate principal amount of $1,000,000 or any larger
integral multiple of $100,000 (except that any Base Rate Borrowing may be
in an amount equal to the Availability at such time), and (ii) made from
the Banks ratably in accordance with their respective Commitment
Percentages. Subject to the foregoing limitations and the other provisions
of this Agreement, prior to the Termination Date Borrower may borrow under
this Section 3.1(a), repay amounts borrowed and request new Borrowings to
be made under this Section 3.1(a). The Total Commitment as of the Closing
Date is the Initial Total Commitment.
(b) Administrative Agent, or such Bank designated by Administrative
Agent which (without obligation to do so) consents to the same ("Letter of
Credit Issuer") will, from time to time prior to the date which is five (5)
Domestic Business Days prior to the Termination Date, upon request by
Borrower, issue Letters of Credit for the account of Borrower or any
Restricted Subsidiary designated by Borrower, so long as (i) the sum of (A)
the total Letter of Credit Exposure then existing, and (B) the amount of
the requested Letter of Credit does not exceed ten percent (10%) of the
Borrowing Base then in effect (provided, that, in no event shall such sum
exceed the Total Commitment then in effect), and (ii) Borrower would be
entitled to a Borrowing under Section 3.1(a) and Section 3.1(c) in the
amount of the requested Letter of Credit. Not less than three (3) Domestic
Business Days prior to the requested date of issuance of any such Letter of
Credit, Borrower (and any Restricted Subsidiary for whose account such
Letter of Credit is being issued) shall execute and deliver to Letter of
Credit Issuer, Letter of Credit Issuer's customary letter of credit
application. Each Letter of Credit shall be in the minimum amount of
$10,000 and shall be in form and substance acceptable to Letter of Credit
Issuer. No Letter of Credit shall have an expiration date later than the
earlier of (A) one (1) year after the Termination Date, or (B) one (1) year
25
from the date of issuance (or, in the case of any renewal or extension
thereof, one (1) year after such renewal or extension). Upon the date of
issuance of a Letter of Credit, Letter of Credit Issuer shall be deemed to
have sold to each other Bank, and each other Bank shall be deemed to have
unconditionally and irrevocably purchased from Letter of Credit Issuer, a
non recourse participation in the related Letter of Credit and Letter of
Credit Exposure equal to such Bank's Commitment Percentage of such Letter
of Credit and Letter of Credit Exposure. Upon request of any Bank, but not
less often than quarterly, Administrative Agent shall provide notice to
each Bank by telephone, teletransmission or telex setting forth each Letter
of Credit issued and outstanding pursuant to the terms hereof and
specifying the beneficiary and expiration date of each such Letter of
Credit, each Bank's percentage of each such Letter of Credit and the actual
dollar amount of each Bank's participation held by Letter of Credit Issuer
thereof for such Bank's account and risk. At the time of issuance of each
Letter of Credit, Borrower shall pay to Administrative Agent in respect of
such Letter of Credit (1) the applicable Letter of Credit Fee, and (2) the
applicable Letter of Credit Fronting Fee. Administrative Agent shall
distribute the Letter of Credit Fee payable upon the issuance of each
Letter of Credit to Banks in accordance with their respective Commitment
Percentages, and Administrative Agent shall distribute the Letter of Credit
Fronting Fee to Letter of Credit Issuer for its own account. Any (y)
material amendment or modification, or (z) renewal or extension of any
Letter of Credit shall be deemed to be the issuance of a new Letter of
Credit for purposes of this Section 3.1(b). Notwithstanding anything to the
contrary contained herein, Borrower shall pay to Administrative Agent in
connection with the issuance of each Letter of Credit and/or any amendment
or modification of any nature to any existing Letter of Credit,
Administrative Agent's usual and customary fees for the issuance of,
amendments or modifications to, and processing of, Letters of Credit.
Immediately upon the occurrence of an Event of Default and the acceleration
of the Obligations hereunder, and also on the date which is five (5) Domestic
Business Days prior to the Termination Date, Borrower shall deposit with
Administrative Agent cash in such amounts as Administrative Agent may request,
up to a maximum amount equal to the aggregate existing Letter of Credit Exposure
of all Banks; provided, that, in the case of any of the Events of Default
specified in Section 12.1(g) or Section 12.1(h), an amount equal to the
aggregate existing Letter of Credit Exposure of all Banks shall be due and
payable without any notice to Borrower or any other act by Administrative Agent
or any Bank. Any amounts so deposited shall be held by Administrative Agent for
the ratable benefit of all Banks as security for the outstanding Letter of
Credit Exposure and the other Obligations, and Borrower will, in connection
therewith, execute and deliver (and cause each other Credit Party to execute and
deliver) such security agreements in form and substance satisfactory to
Administrative Agent which Administrative Agent may, in its discretion, require.
As drafts or demands for payment are presented under any Letter of Credit,
Administrative Agent shall apply such cash to satisfy such drafts or demands.
When all Letters of Credit have expired and the Obligations have been repaid in
full (and no Bank has any obligation to lend or issue Letters of Credit
hereunder) or such Event of Default has been cured to the satisfaction of
Required Banks, Administrative Agent shall release to Borrower any remaining
cash deposited under this Section 3.1(b). Whenever Borrower is required to make
deposits under this Section 3.1(b) and fails to do so on the day such deposit is
due, Administrative Agent or any Bank may, without notice to Borrower, make such
deposit (whether by application of proceeds of any collateral for the
Obligations, by transfers from other accounts maintained with any Bank or
26
otherwise) using any funds then available to any Bank of any Credit Party, any
guarantor or any other party liable for repayment of the Obligations.
Notwithstanding anything to the contrary contained herein, Borrower hereby
agrees to reimburse each Letter of Credit Issuer immediately upon demand by such
Letter of Credit Issuer, and in immediately available funds, for any payment or
disbursement made by such Letter of Credit Issuer under any Letter of Credit
issued by it. Payment shall be made by Borrower with interest on the amount so
paid or disbursed by Letter of Credit Issuer from and including the date payment
is made under any Letter of Credit to and including the date of payment, at the
lesser of (i) the Maximum Lawful Rate, or (ii) the Default Rate. The obligations
of Borrower under this paragraph will continue until all Letters of Credit have
expired and all reimbursement obligations with respect thereto have been paid in
full by Borrower and until all other Obligations shall have been paid in full.
Borrower shall be obligated to reimburse Letter of Credit Issuer upon
demand for all amounts paid under Letters of Credit as set forth in the
immediately preceding paragraph hereof; provided, however, if Borrower for any
reason fails to reimburse Letter of Credit Issuer in full upon demand, Banks
shall reimburse Letter of Credit Issuer in accordance with each Banks'
Commitment Percentage for amounts due and unpaid from Borrower as set forth
hereinbelow; provided, however, that no such reimbursement made by Banks shall
discharge Borrower's obligations to reimburse Letter of Credit Issuer. All
reimbursement amounts payable by any Bank under this Section 3.1(b) shall
include interest thereon at the Federal Funds Rate, from the date of the payment
of such amounts by Letter of Credit Issuer to the date of reimbursement by such
Bank. No Bank shall be liable for the performance or nonperformance of the
obligations of any other Bank under this paragraph. The reimbursement
obligations of Banks under this paragraph shall continue after the Termination
Date and shall survive termination of this Agreement and the other Loan Papers.
Borrower shall indemnify and hold Administrative Agent, Letter of Credit
Issuer and each Bank, and their respective officers, directors, representatives
and employees harmless from loss for any claim, demand or liability which may be
asserted against any or such indemnified party in connection with actions taken
under Letters of Credit or in connection therewith (including losses resulting
from the negligence of any or such indemnified party), and shall pay each
indemnified party for reasonable fees of attorneys and legal costs paid or
incurred by each indemnified party in connection with any matter related to
Letters of Credit, except for losses and liabilities incurred as a direct result
of the gross negligence or willful misconduct of such indemnified party, IT
BEING THE EXPRESS INTENTION OF THE PARTIES THAT EACH INDEMNIFIED PARTY SHALL BE
INDEMNIFIED FOR THE CONSEQUENCES OF ITS OWN ORDINARY NEGLIGENCE. If Borrower for
any reason fails to indemnify or pay such indemnified party as set forth herein
in full, Banks shall indemnify and pay such indemnified party upon demand, in
accordance with each Bank's Commitment Percentage of such amounts due and unpaid
from Borrower; provided, however, that, no such payment made by Banks shall
discharge Borrower's obligation to indemnify or pay such indemnified party in
accordance with the terms hereof. The provisions of this paragraph shall survive
the termination of this Agreement.
27
Neither Administrative Agent nor any other Letter of Credit Issuer makes
any representation or warranty, nor assumes any responsibility with respect to
the validity, legality, sufficiency or enforceability of any letter of credit
application executed and delivered in connection with any Letter of Credit
issued hereunder or any document relative thereto or to the collectibility
thereunder. Neither Administrative Agent nor any other Letter of Credit Issuer
assumes any responsibility for the financial condition of Borrower or for the
performance of any obligation of Borrower. Administrative Agent and each other
Letter of Credit Issuer may use its discretion with respect to exercising or
refraining from exercising any rights, or taking or refraining from taking any
action which may be vested in it or which it may be entitled to take or assert
with respect to any Letter of Credit or any letter of credit application.
FURTHERMORE, EXCEPT AS SET FORTH HEREIN, NEITHER ADMINISTRATIVE AGENT NOR ANY
OTHER LETTER OF CREDIT ISSUER SHALL BE UNDER ANY LIABILITY TO ANY BANK, WITH
RESPECT TO ANYTHING ADMINISTRATIVE AGENT OR ANY SUCH LETTER OF CREDIT ISSUER MAY
DO OR REFRAIN FROM DOING IN THE EXERCISE OF ITS JUDGMENT, THE SOLE LIABILITY AND
RESPONSIBILITY OF ADMINISTRATIVE AGENT AND SUCH LETTER OF CREDIT ISSUER BEING TO
HANDLE EACH BANK'S SHARE ON AS FAVORABLE A BASIS AS ADMINISTRATIVE AGENT OR SUCH
LETTER OF CREDIT ISSUER HANDLES ITS OWN SHARE. NEITHER ADMINISTRATIVE AGENT NOR
ANY OTHER LETTER OF CREDIT ISSUER SHALL HAVE ANY DUTIES OR RESPONSIBILITIES
EXCEPT THOSE EXPRESSLY SET FORTH HEREIN AND THOSE DUTIES AND LIABILITIES SHALL
BE SUBJECT TO THE LIMITATIONS AND QUALIFICATIONS SET FORTH HEREIN. FURTHERMORE,
NEITHER ADMINISTRATIVE AGENT, ANY LETTER OF CREDIT ISSUER, NOR ANY OF THEIR
DIRECTORS, OFFICERS, OR EMPLOYEES SHALL BE LIABLE FOR ANY ACTION TAKEN OR
OMITTED (WHETHER OR NOT SUCH ACTION TAKEN OR OMITTED IS EXPRESSLY SET FORTH
HEREIN) UNDER OR IN CONNECTION HEREWITH OR UNDER ANY OTHER INSTRUMENT OR
DOCUMENT IN CONNECTION HEREWITH, EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Neither Administrative Agent nor any other Letter of Credit Issuer
shall incur any liability to any Bank, Borrower, or any Affiliate of any Bank or
Borrower, in acting upon any notice, document, order, consent, certificate,
warrant or other instrument reasonably believed by Administrative Agent or such
Letter of Credit Issuer to be genuine or authentic and to be signed by the
proper party.
(c) No Bank will be obligated to lend to Borrower hereunder or incur
Letter of Credit Exposure, and Borrower shall not be entitled to borrow
hereunder or obtain Letters of Credit hereunder, in an amount which would
cause, after giving effect to the making of any Revolving Loan or issuance
of any Letter of Credit (i) the sum of the aggregate principal balance of
such Bank's Revolving Loans on such date plus its Commitment Percentage of
the Letter of Credit Exposure on such date, to exceed its Commitment, or
(ii) the Outstanding Credit to exceed the lesser of (A) the Borrowing Base
then in effect, or (B) the Total Commitment then in effect. No Bank shall
be obligated to fund Borrowings hereunder and Borrower shall not be
entitled to Borrowings hereunder during the existence of a Borrowing Base
Deficiency. Nothing in this Section 3.1(c) shall be deemed to limit any
Bank's obligation to reimburse any Letter of Credit Issuer with respect to
its participation in Letters of Credit as a result of the drawing under any
Letter of Credit pursuant to Section 3.1(b).
28
Section 3.2 Method of Borrowing.
(a) In order to request any Borrowing under Section 3.1, Borrower
shall hand deliver, telex or telecopy to Administrative Agent a duly
completed Request for Borrowing (herein so called) prior to 11:00 a.m.
(Chicago, Illinois time), (i) on the Borrowing Date specified for a
proposed Base Rate Borrowing, and (ii) at least three (3) Eurodollar
Business Days before the Borrowing Date of a proposed Eurodollar Borrowing.
Each such Request for Borrowing shall be substantially in the form of
Exhibit F attached hereto, and shall specify:
(A) the Borrowing Date of such Borrowing, which shall be a
Domestic Business Day in the case of a Base Rate Borrowing or a
Eurodollar Business Day in the case of a Eurodollar Borrowing;
(B) the aggregate amount of such Borrowing;
(C) whether such Borrowing is to be a Base Rate Borrowing or a
Eurodollar Borrowing; and
(D) in the case of a Eurodollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
(b) Upon receipt of a Request for Borrowing, Administrative Agent
shall promptly notify each Bank of the contents thereof and the amount of
the Borrowing to be loaned by such Bank pursuant thereto, and such Request
for Borrowing shall not thereafter be revocable by Borrower.
(c) Not later than 12:00 noon (Chicago, Illinois time) on the date of
each Borrowing, each Bank shall make available its Commitment Percentage of
such Borrowing, in Federal or other funds immediately available in Chicago,
Illinois to Administrative Agent at its address set forth on Schedule 2.1
hereto. Unless Administrative Agent determines that any applicable
condition specified in Section 7.2 has not been satisfied, Administrative
Agent will make the funds so received from Banks available to Borrower at
Administrative Agent's aforesaid address.
Section 3.3 Method of Requesting Letters of Credit.
(a) In order to request any Letter of Credit hereunder, Borrower shall
hand deliver, telex or telecopy to Administrative Agent a duly completed
Request for Letter of Credit (herein so called) prior to 12:00 noon
(Chicago, Illinois time) at least three (3) Domestic Business Days before
the date specified for issuance of such Letter of Credit. Each Request for
Letter of Credit shall be substantially in the form of Exhibit G attached
hereto, shall be accompanied by the applicable Letter of Credit Issuer's
duly completed and executed letter of credit application and agreement and
shall specify:
(i) the requested date for issuance of such Letter of Credit;
29
(ii) the terms of such requested Letter of Credit, including the
name and address of the beneficiary, the stated amount, the expiration
date and the conditions under which drafts under such Letter of Credit
are to be available; and
(iii) the purpose of such Letter of Credit.
(b) Upon receipt of a Request for Letter of Credit, Administrative
Agent shall promptly notify each Bank and the proposed Letter of Credit
Issuer of the contents thereof, including the amount of the requested
Letter of Credit, and such Request for Letter of Credit shall not
thereafter be revocable by Borrower.
(c) No later than 12:00 noon (Chicago, Illinois time) on the date each
Letter of Credit is requested, unless Administrative Agent or the
applicable Letter of Credit Issuer determines that any applicable condition
precedent set forth in Section 7.2 hereof has not been satisfied,
Administrative Agent or such other applicable Letter of Credit Issuer will
issue and deliver such Letter of Credit pursuant to the instructions of
Borrower.
Section 3.4 Notes. Each Bank's Commitment Percentage of the Revolving Loan
shall be evidenced by a single Note payable to the order of such Bank in an
amount equal to such Bank's Commitment.
Section 3.5 Interest Rates; Payments.
(a) The principal amount of the Base Rate Loan outstanding from day to
day shall bear interest at a rate per annum equal to the sum of (i) the
Applicable Margin plus (ii) the applicable Base Rate in effect from day to
day; provided that in no event shall the rate charged hereunder or under
the Notes exceed the Maximum Lawful Rate. Interest on the Base Rate Loan
shall be payable as it accrues on each Quarterly Date, and on the
Termination Date.
(b) The principal amount of each Eurodollar Loan outstanding from day
to day shall bear interest for the Interest Period applicable thereto at a
rate per annum equal to the sum of (i) the Applicable Margin plus (ii) the
applicable Adjusted Eurodollar Rate; provided that in no event shall the
rate charged hereunder or under the Notes exceed the Maximum Lawful Rate.
Interest on any portion of the principal of each Eurodollar Loan subject to
an Interest Period of one (1), two (2) or three (3) months shall be payable
on the last day of the Interest Period applicable thereto. Interest on any
portion of the principal of each Eurodollar Loan subject to an Interest
Period of six (6), nine (9), or twelve (12) months shall be payable on the
last day of the Interest Period applicable thereto and on each Quarterly
Date.
(c) So long as no Default or Event of Default shall be continuing,
subject to the provisions of this Section 3.5, Borrower shall have the
option of having all or any portion of the principal outstanding under the
Revolving Loan be a Base Rate Loan or one (1) or more Eurodollar Loans,
which shall bear interest at rates determined by reference to the Base Rate
and the Adjusted Eurodollar Rate, respectively; provided, that each
Eurodollar Loan shall be in a minimum amount of $2,000,000 and shall be in
an amount which is an integral multiple of $500,000. Prior to the
termination of each Interest Period with respect to each Eurodollar Loan,
Borrower shall give written notice (a "Notice of Continuation or
Conversion") in the form of Exhibit H attached hereto to Administrative
30
Agent of the Type of Loan which shall be applicable to the principal of
such Eurodollar Loan upon the expiration of such Interest Period. Such
Notice of Continuation or Conversion shall be given to Administrative Agent
at least one (1) Domestic Business Day, in the case of a Base Rate Loan
selection and three (3) Eurodollar Business Days, in the case of a
Eurodollar Loan selection, prior to the termination of the Interest Period
then expiring. If Borrower shall specify a Eurodollar Loan, such Notice of
Continuation or Conversion shall also specify the length of the succeeding
Interest Period (subject to the provisions of the definition of such term)
selected by Borrower. Each Notice of Continuation or Conversion shall be
irrevocable and effective upon notification thereof to Administrative
Agent. If the required Notice of Continuation or Conversion shall not have
been timely received by Administrative Agent, Borrower shall be deemed to
have elected that the principal of the Eurodollar Loan subject to the
Interest Period then expiring be Converted to the Base Rate Loan upon the
expiration of such Interest Period and Borrower will be deemed to have
given Administrative Agent notice of such election. Subject to the
limitations set forth in this Section 3.5(c) on the amount and number of
Eurodollar Loans, Borrower shall have the right to Convert all or any part
of the Base Rate Loan to a Eurodollar Loan by giving Administrative Agent a
Notice of Continuation or Conversion of such election at least three (3)
Eurodollar Business Days prior to the date on which Borrower elects to make
such Conversion (a "Conversion Date"). The Conversion Date selected by
Borrower shall be a Eurodollar Business Day. Notwithstanding anything in
this Section 3.5 to the contrary, no portion of the principal of the Base
Rate Loan may be Converted to a Eurodollar Loan and no Eurodollar Loan may
be Continued as such when any Default or Event of Default has occurred and
is continuing, but each such Eurodollar Loan shall be automatically
Converted to the Base Rate Loan on the last day of each applicable Interest
Period. Borrower shall not be permitted to have more than seven (7)
Eurodollar Loans in effect at any time.
(d) Notwithstanding anything to the contrary set forth in Section
3.5(a) or Section 3.5(b) above, after the occurrence of an Event of
Default, interest shall accrue on the outstanding principal balance of the
Revolving Loan, and to the extent permitted by Law, on the accrued but
unpaid interest on the Revolving Loan and all other Obligations from the
period from and including the occurrence of such Event of Default to but
excluding the date the same is remedied at a rate per annum equal to the
lesser of (i) the Default Rate, and (ii) the Maximum Lawful Rate.
(e) Administrative Agent shall determine each interest rate applicable
to the Revolving Loan in accordance with the terms hereof. Administrative
Agent shall promptly notify Borrower and Banks by telex, telecopy or cable
of each rate of interest so determined, and its determination thereof shall
be conclusive in the absence of manifest error.
(f) Notwithstanding the foregoing, if at any time the rate of interest
calculated with reference to the Base Rate or the Eurodollar Rate hereunder
(the "contract rate") is limited to the Maximum Lawful Rate, any subsequent
reductions in the contract rate shall not reduce the rate of interest on
the Revolving Loan below the Maximum Lawful Rate until the total amount of
interest accrued equals the amount of interest which would have accrued if
the contract rate had at all times been in effect. In the event that at
maturity (stated or by acceleration), or at final payment of any Note, the
total amount of interest paid or accrued on such Note is less than the
amount of interest which would have accrued if the contract rate had at all
times been in effect with respect thereto, then at such time, to the extent
31
permitted by law, Borrower shall pay to the holder of such Note an amount
equal to the difference between (i) the lesser of the amount of interest
which would have accrued if the contract rate had at all times been in
effect and the amount of interest which would have accrued if the Maximum
Lawful Rate had at all times been in effect, and (ii) the amount of
interest actually paid on such Note.
(g) Interest payable hereunder on each Eurodollar Loan shall be
computed based on the number of actual days elapsed assuming that each
calendar year consisted of 360 days. Interest payable hereunder on the Base
Rate Loan shall be computed based on the actual number of days elapsed
assuming that each calendar year consisted of 365 days (or 366 days in a
leap year).
Section 3.6 Mandatory Prepayments. Upon the occurrence of any Borrowing
Base Deficiency, Borrower shall make the mandatory prepayments of the Revolving
Loan required by Section 5.4 hereof. Additionally, if at any time the
Outstanding Credit is in excess of the Total Commitment (as used in this Section
3.6, a "deficiency"), Borrower shall immediately make a principal payment on the
Revolving Loan sufficient to cause the principal balance of the Revolving Loan
then outstanding to be equal to or less than the Total Commitment then in
effect. If a deficiency cannot be eliminated pursuant to this Section 3.6 by
prepayment of the Revolving Loan (as a result of outstanding Letter of Credit
Exposure), Borrower shall also deposit cash with Administrative Agent, to be
held by Administrative Agent to secure outstanding Letter of Credit Exposure in
the manner contemplated by Section 3.1(b).
Section 3.7 Voluntary Prepayments. Borrower may, subject to Section 14.5
and the other provisions of this Agreement, prepay the principal of the
Revolving Loan in whole or in part. Any partial prepayment shall be in a minimum
amount of $500,000 and shall be in an integral multiple of $100,000.
Section 3.8 Voluntary Reduction of Commitments. Borrower may, by notice to
Administrative Agent five (5) Domestic Business Days prior to the effective date
of any such reduction, reduce the Total Commitment (and thereby reduce the
Commitment of each Bank ratably) in amounts not less than $5,000,000 and in an
amount which is an integral multiple of $1,000,000. On the effective date of any
such reduction, Borrower shall, to the extent required as a result of such
reduction, make a principal payment on the Revolving Loan in an amount
sufficient to cause the principal balance of the Revolving Loan then outstanding
to be equal to or less than the Total Commitment as thereby reduced.
Notwithstanding the foregoing, Borrower shall not be permitted to voluntarily
reduce the Total Commitment to an amount less than the aggregate Letter of
Credit Exposure of all Banks.
Section 3.9 Termination of Commitments; Final Maturity of Revolving Loan.
The Total Commitment (and the Commitment of each Bank) shall terminate, and the
entire outstanding principal balance of the Revolving Loan, all interest accrued
thereon, all accrued but unpaid fees hereunder and all other outstanding
Obligations shall be due and payable in full on the Termination Date.
Section 3.10 Voluntary Increase of Total Commitment. So long as no Default
or Event of Default has occurred and is continuing, and so long as no Borrowing
Base Deficiency exists, Borrower shall have the right to increase the Total
Commitment by increasing the existing Commitments and/or obtaining additional
32
Commitments (the amount of such increase is herein called the "Commitment
Increase"), either from (a) one or more of the Banks, or (b) another financial
institution; provided, that (i) Borrower shall have notified Administrative
Agent (which shall promptly deliver a copy to each Bank) in writing of the
amount of the Commitment Increase, (ii) each Bank shall have had the option to
increase its Commitment up to its pro rata share (such pro rata share to be
computed prior to the addition of any new Bank under the terms of this Section
3.10 and Section 15.10(f) hereof) of the Commitment Increase within ten (10)
Domestic Business Days following receipt of notice from Administrative Agent
pursuant to clause (i) above, (iii) Administrative Agent shall have approved any
new Bank (such approval not to be unreasonably withheld after giving effect to
the terms of clause (ii) hereof), (iv) any such new Bank shall have assumed all
of the rights and obligations of a "Bank" hereunder, (v) the procedure described
in Section 15.10(f) shall have been complied with, (vi) first and prior Liens
(subject only to Permitted Encumbrances) shall have been created by Mortgages in
favor of Administrative Agent encumbering Borrowing Base Properties comprising
the Minimum Collateral Amount after giving effect to the Commitment Increase,
and (vii) after giving effect to the Commitment Increase, the Total Commitment
shall not exceed the Borrowing Base then in effect. Notwithstanding anything to
the contrary contained herein, the Commitment of any Bank may not be increased
without the prior written consent of such Bank.
Section 3.11 Application of Payments. Each repayment pursuant to Section
3.6, Section 3.7, Section 3.8, Section 3.9 and Section 5.4 shall be made
together with accrued interest on the amount repaid to the date of payment, and
shall be applied in accordance with Section 4.2 and the other provisions of this
Agreement.
Section 3.12 Commitment Fee. On the Termination Date, on each Quarterly
Date prior to the Termination Date, and, in the event the Commitments are
terminated in their entirety prior to the Termination Date, on the date of such
termination, Borrower shall pay to Administrative Agent, for the ratable benefit
of each Bank based on each Bank's Commitment Percentage, a commitment fee equal
to the Commitment Fee Percentage in effect from day to day (applied on a per
annum basis and computed on the basis of actual days elapsed and as if each
calendar year consisted of 365 days (or 366 days in a leap year)) of the average
daily Availability for the Fiscal Quarter (or portion thereof) ending on the
date such payment is due.
Section 3.13 Agency and other Fees. Borrower shall pay to Administrative
Agent and its Affiliates such other fees and amounts as Borrower shall be
required to pay to Administrative Agent and its Affiliates from time to time
pursuant to any separate agreement between Borrower and Administrative Agent or
such Affiliates. Such fees and other amounts shall be retained by Administrative
Agent and its Affiliates, and no Bank (other than Bank One) shall have any
interest therein. Administrative Agent may disburse any fees paid to
Administrative Agent and its Affiliates pursuant to this Section 3.13 in any
manner Administrative Agent desires in its sole discretion.
ARTICLE IV
GENERAL PROVISIONS
------------------
Section 4.1 Delivery and Endorsement of Notes. On the Closing Date,
Administrative Agent shall deliver to each Bank the Note payable to such Bank.
33
Each Bank may endorse (and prior to any transfer of its Note shall endorse) on
the schedules attached and forming a part thereof appropriate notations to
evidence the date and amount of its Commitment Percentage of each Borrowing, the
Interest Period applicable thereto, and the date and amount of each payment of
principal made by Borrower with respect thereto; provided that the failure by
any Bank to so endorse its Note shall not affect the liability of Borrower for
the repayment of all amounts outstanding under such Note together with interest
thereon. Each Bank is hereby irrevocably authorized by Borrower to endorse its
Note and to attach to and make a part of any such Note a continuation of any
such schedule as required.
Section 4.2 General Provisions as to Payments.
(a) Borrower shall make each payment of principal of, and interest on,
the Revolving Loan, and all fees payable hereunder shall be paid, not later
than 12:00 noon (Chicago, Illinois time) on the date when due, in Federal
or other funds immediately available in Chicago, Illinois, to
Administrative Agent at its address set forth on Schedule 2.1 hereto,
without defense, set-off, deduction or counterclaim. Administrative Agent
will promptly (and if such payment is received by Administrative Agent by
10:00 a.m. (Chicago, Illinois time), and otherwise if reasonably possible,
on the same Domestic Business Day) distribute to each Bank its Commitment
Percentage of each such payment received by Administrative Agent for the
account of Banks. Whenever any payment of principal of, or interest on, the
Base Rate Loan or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, any portion of any Eurodollar Loan shall be due on a day which
is not a Eurodollar Business Day, the date for payment thereof shall be
extended to the next succeeding Eurodollar Business Day (subject to the
provisions of the definition of Interest Period). If the date for any
payment of principal is extended by operation of Law or otherwise, interest
thereon shall be payable for such extended time. Borrower hereby authorizes
Administrative Agent to charge from time to time against Borrower's
accounts with Administrative Agent any amount then due.
(b) Prior to the occurrence of an Event of Default, all principal
payments received by Banks with respect to the Revolving Loan shall be
applied first to Eurodollar Loans outstanding with Interest Periods ending
on the date of such payment, then to the Base Rate Loan, and then to
Eurodollar Loans next maturing until such principal payment is fully
applied.
(c) After the occurrence of an Event of Default, all amounts collected
or received by Administrative Agent or any Bank shall be applied first to
the payment of all proper costs incurred by Administrative Agent in
connection with the collection thereof (including reasonable expenses and
disbursements of Administrative Agent), second to the payment of all proper
costs incurred by Banks in connection with the collection thereof
(including reasonable expenses and disbursements of Banks), third to the
reimbursement of any advances made by Banks to effect performance of any
unperformed covenants of any Credit Party under any of the Loan Papers,
fourth to the payment of any unpaid fees required pursuant to Section 3.13,
fifth to the payment of any unpaid fees required pursuant to Section 3.1(b)
and Section 3.12, sixth, to the payment of all accrued but unpaid interest,
seventh, to the payment to each Bank of its Commitment Percentage of the
outstanding principal of the Revolving Loan and to satisfy all obligations
and liabilities then due under Hedge Agreements, such payments to be made
34
pro rata to each Bank owed such Obligations in proportion to all such
payments owed to all Banks in respect of such Obligations, and eighth, to
establish the deposits required in Section 3.1(b). All payments received by
a Bank after the occurrence of an Event of Default for application to the
principal of the Revolving Loan shall be applied by such Bank in the manner
provided in Section 4.2(b).
ARTICLE V
BORROWING BASE
--------------
Section 5.1 Reserve Report; Proposed Borrowing Base.. The aggregate amount
of credit available to Borrower under this Agreement shall be limited by a
Borrowing Base (herein so called) which shall be determined by Banks at the
times and in accordance with the standards and procedures set forth in this
Article V. As soon as available and in any event by February 28 and August 31 of
each year commencing February 28, 2005, Borrower shall deliver to Administrative
Agent and each Bank a Reserve Report prepared as of the immediately preceding
December 31 and June 30 respectively. Simultaneously with the delivery to
Administrative Agent and each Bank of each Reserve Report, Borrower shall notify
Administrative Agent and each Bank of the amount of the Borrowing Base which
Borrower requests become effective on the next Redetermination Date (or such
date promptly following such Redetermination Date as Required Banks shall
elect).
Section 5.2 Scheduled Redeterminations of the Borrowing Base; Procedures
and Standards.. Based in part on the Reserve Reports made available to Banks
pursuant to Section 5.1, Banks shall redetermine the Borrowing Base on or prior
to the next Redetermination Date (or such date promptly thereafter as reasonably
possible based on the engineering and other information available to Banks). Any
Borrowing Base which becomes effective as a result of any Redetermination of the
Borrowing Base shall be subject to the following restrictions: (a) such
Borrowing Base shall not exceed the Borrowing Base requested by Borrower
pursuant to Section 5.1 or Section 5.3 (as applicable), (b) such Borrowing Base
shall not exceed the Maximum Total Commitment Amount, (c) to the extent such
Borrowing Base represents an increase from the Borrowing Base in effect prior to
such Redetermination, such Borrowing Base shall be approved by all Banks, and
(d) to the extent such Borrowing Base represents a decrease in the Borrowing
Base in effect prior to such Redetermination, or a reaffirmation of such prior
Borrowing Base, such Borrowing Base shall be approved by Required Banks. Each
Redetermination shall be made by Banks in their sole discretion. Without
limiting such discretion, Parent and Borrower acknowledge and agree that Banks
(i) may make such assumptions regarding appropriate existing and projected
pricing for Hydrocarbons as they deem appropriate in their sole discretion, (ii)
may make such assumptions regarding projected rates and quantities of future
production of Hydrocarbons from the Mineral Interests owned by Borrower as they
deem appropriate in their sole discretion, (iii) may consider the projected cash
requirements of the Credit Parties, (iv) are not required to consider any asset
other than Proved Mineral Interests owned by Borrower which are subject to first
and prior Liens in favor of Administrative Agent for the ratable benefit of
Banks to the extent required by Section 6.1 hereof, and (v) may make such other
assumptions, considerations and exclusions as Banks deem appropriate in the
exercise of their sole discretion. It is further acknowledged and agreed that
each Bank may consider such other credit factors as it deems appropriate in the
exercise of its sole discretion and shall have no obligation in connection with
35
any Redetermination to approve any increase from the Borrowing Base in effect
prior to such Redetermination. Promptly following any Redetermination of the
Borrowing Base, Administrative Agent shall notify Borrower of the amount of the
Borrowing Base as redetermined, which Borrowing Base shall be effective as of
the date specified in such notice, and shall remain in effect for all purposes
of this Agreement until the next Redetermination.
Section 5.3 Special Redetermination.
(a) In addition to Scheduled Redeterminations, Borrower and Required
Banks shall each be permitted to request a Special Redetermination of the
Borrowing Base once in each Fiscal Year. Any request by Required Banks
pursuant to this Section 5.3(a) shall be submitted to Administrative Agent
and Borrower. Any request by Borrower pursuant to this Section 5.3(a) shall
be submitted to Administrative Agent and each Bank and at the time of such
request Borrower shall (i) deliver to Administrative Agent and each Bank a
Reserve Report, and (ii) also notify Administrative Agent and each Bank of
the Borrowing Base requested by Borrower in connection with such Special
Redetermination.
(b) Any Special Redetermination shall be made by Banks in accordance
with the procedures and standards set forth in Section 5.2; provided, that,
no Reserve Report will be required to be delivered to Administrative Agent
and Banks in connection with any Special Redetermination requested by
Required Banks pursuant to Section 5.3(a) above.
Section 5.4 Borrowing Base Deficiency. To the extent a Borrowing Base
Deficiency exists after giving effect to any Redetermination, Borrower shall be
obligated to eliminate such Borrowing Base Deficiency over a period not to
exceed six (6) months from the effective date of such Redetermination by making
six (6) mandatory, equal, consecutive, monthly payments of principal on the
Revolving Loan, each of which shall be in the amount of one sixth (1/6th) of
such Borrowing Base Deficiency, or in the event that the remaining principal
outstanding under the Revolving Loan is less than the Borrowing Base Deficiency,
then in the amount of one sixth (1/6th) of the remaining principal outstanding
under the Revolving Loan. The first of such six (6) payments shall be due on the
thirtieth (30th) day following the effective date of each such Redetermination
and each subsequent payment shall be due on the same day of each month
thereafter (or if there is no corresponding day of any subsequent month, then on
the last day of such month) (each such date is referred to herein as a
"borrowing base deficiency payment date"). If a Borrowing Base Deficiency cannot
be eliminated pursuant to this Section 5.4 by prepayment of the Revolving Loan
in full (as a result of outstanding Letter of Credit Exposure), on each
borrowing base deficiency payment date, Borrower shall also deposit cash with
Administrative Agent, to be held by Administrative Agent to secure outstanding
Letter of Credit Exposure in the manner contemplated by Section 3.1(b), an
amount at least equal to one sixth (1/6th) of the balance of such Borrowing Base
Deficiency (i.e., one-sixth of the difference between the Borrowing Base
Deficiency and the remaining outstanding principal under the Revolving Loan on
the effective date of such Redetermination).
Section 5.5 Initial Borrowing Base.. Notwithstanding anything to the
contrary contained herein, the Borrowing Base in effect during the period
commencing on the Closing Date and ending on the effective date of the first
Redetermination after the Closing Date shall be the Initial Borrowing Base.
36
ARTICLE VI
COLLATERAL AND GUARANTEES
-------------------------
Section 6.1 Security.
(a) The Obligations shall be secured by first and prior Liens (subject
only to Permitted Encumbrances) covering and encumbering (i) Borrowing Base
Properties comprising the Minimum Collateral Amount, and prior to any
Distributions being permitted to be made to any Restricted Subsidiary
pursuant to the terms of Section 10.2(b) and/or the definition of
"Permitted Investments," all of the issued and outstanding Equity owned by
Parent, Borrower and each Restricted Subsidiary of Borrower and each such
Restricted Subsidiary. On the Closing Date, the Credit Parties (as
applicable) shall deliver to Administrative Agent for the ratable benefit
of each Bank, the Mortgages and Amendments to Mortgages in form and
substance acceptable to Administrative Agent and duly executed by each such
Credit Party (as applicable), together with such other assignments,
conveyances, amendments, agreements and other writings, including, without
limitation, UCC-1 and UCC-3 financing statements (each duly authorized and
executed, as applicable) as Administrative Agent shall deem necessary or
appropriate to grant, evidence and perfect first and prior Liens in the
Borrowing Base Properties and other interests of any Credit Party required
by this Section 6.1(a). Parent and Borrower hereby authorize Administrative
Agent, and its agents, successors and assigns, to file any and all
necessary financing statements under the Uniform Commercial Code,
assignments or continuation statements as necessary from time to time (in
Administrative Agent's discretion) to perfect (or continue perfection of)
the Liens granted pursuant to the Loan Papers.
(b) On or before each Redetermination Date after the Closing Date and
at such other times as Administrative Agent or Required Banks shall
request, Parent, Borrower and each Restricted Subsidiary shall execute and
deliver to Administrative Agent, for the ratable benefit of each Bank,
Mortgages in form and substance acceptable to Administrative Agent and duly
executed by Parent, Borrower and any such Restricted Subsidiary (as
applicable) together with such other assignments, conveyances, amendments,
agreements and other writings, including, without limitation, UCC-1
financing statements (each duly authorized and executed) as Administrative
Agent shall deem necessary or appropriate to grant, evidence and perfect
the Liens required by Section 6.1(a) preceding with respect to the
Borrowing Base Properties acquired by Parent, Borrower and each Restricted
Subsidiary subsequent to the last date on which Parent, Borrower or any
such Restricted Subsidiary was required to execute and deliver Mortgages
pursuant to this Section 6.1(b), or which, for any other reason are not the
subject of valid, enforceable, perfected first priority Liens (subject only
to Permitted Encumbrances) in favor of Administrative Agent for the ratable
benefit of Banks; provided, however, that nothing contained in this Section
6.1(b) shall be construed to require Liens covering and encumbering
Borrowing Base Properties comprising more than the Minimum Collateral
Amount.
(c) At any time Parent, Borrower or any of their Subsidiaries are
required to execute and deliver Mortgages and/or Amendments to Mortgages to
Administrative Agent pursuant to this Section 6.1, Borrower shall also
deliver to Administrative Agent such opinions of counsel (including, if so
requested, title opinions, and in each case addressed to Administrative
Agent) and other evidence of title as Administrative Agent shall deem
necessary or appropriate to verify (i) Parent's, Borrower's or such
37
Subsidiary's title to the Borrowing Base Properties comprising the Minimum
Collateral Amount which are subject to such Mortgages, and (ii) the
validity, perfection and priority of the Liens created by such Mortgages
(as amended by the Amendments to Mortgages, as applicable) and such other
matters regarding such Mortgages as Administrative Agent shall reasonably
request.
(d) To the extent required or contemplated by the terms of Section
6.1(a)(ii), Section 10.2 and the definition of "Permitted Investments,"
Parent, Operating, Borrower or any Indirect Subsidiary (as applicable)
shall execute and deliver to Administrative Agent a Parent Pledge Agreement
or a Subsidiary Pledge Agreement (as applicable) together with (i) all
certificates (or other evidence acceptable to Administrative Agent)
evidencing the issued and outstanding Equity of Operating, Borrower and any
such Restricted Subsidiary of every class owned by Parent or such Indirect
Subsidiary (as applicable) which shall be duly endorsed or accompanied by
stock powers executed in blank (as applicable), and (ii) such UCC-1
financing statements as Administrative Agent shall deem necessary or
appropriate to grant, evidence and perfect the Liens required by Section
6.1(a)(ii) and Section 10.2 in the issued and outstanding Equity of
Operating, Borrower and each such Restricted Subsidiary.
Section 6.2 Guarantees. Payment and performance of the Obligations shall be
fully guaranteed by Parent and, prior to any Distributions being permitted to be
made to any Restricted Subsidiary pursuant to the terms of Section 10.2(b), each
Restricted Subsidiary pursuant to a Facility Guaranty, and Parent and Borrower
shall cause any such applicable Restricted Subsidiary to execute and deliver to
Administrative Agent such Facility Guaranty.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
Section 7.1 Conditions to Amendment and Restatement and Initial Borrowing
and Participation in Letter of Credit Exposure. The amendment and restatement of
the Existing Credit Agreement on the terms set forth herein, and the obligation
of each Bank to loan its Commitment Percentage of the initial Borrowing
hereunder and the obligation of Administrative Agent to issue (or cause another
Bank to issue) any Letter of Credit issued hereunder is subject to the
satisfaction of each of the following conditions:
(a) Closing Deliveries. Administrative Agent shall have received each
of the following documents, instruments and agreements, each of which shall
be in form and substance and executed in such counterparts as shall be
acceptable to Administrative Agent and each Bank and each of which shall,
unless otherwise indicated, be dated the Closing Date:
(i) a Note payable to the order of each Bank, each in the amount
of such Bank's Commitment, duly executed by Borrower;
(ii) the Mortgages and Amendments to Mortgages to be executed on
the Closing Date pursuant to Section 6.1(a), duly executed and
delivered by each Credit Party (as applicable), and such other
assignments, conveyances, amendments, agreements and other writings,
including, without limitation, UCC-1 and UCC-3 financing statements,
38
in form and substance satisfactory to Administrative Agent, creating
first and prior Liens in the Borrowing Base Properties comprising the
Minimum Collateral Amount;
(iii) a Parent Pledge Agreement duly executed and delivered by
Parent, together with (A) all certificates (or other evidence
acceptable to Administrative Agent) evidencing one hundred percent
(100%) of the issued and outstanding Equity of Operating and DG&M of
every class, which certificates shall be duly endorsed or accompanied
by appropriate stock powers (as applicable) executed in blank, and (B)
such other agreements and writings, including, without limitation,
UCC-1 financing statements, in form and substance satisfactory to
Administrative Agent;
(iv) a Subsidiary Pledge Agreement duly executed and delivered by
Operating, together with (A) all certificates (or other evidence
acceptable to Administrative Agent) evidencing one hundred percent
(100%) of the issued and outstanding Equity of Borrower, Marine and
TRF of every class, which certificates shall be duly endorsed or
accompanied by appropriate stock powers (as applicable) executed in
blank, and (B) such other agreements and writings, including, without
limitation, UCC-1 financing statements, in form and substance
satisfactory to Administrative Agent;
(v) Facility Guarantees duly executed and delivered by Parent and
each Restricted Subsidiary;
(vi) such financing statements (including, without limitation,
the financing statements referenced in subclause (ii) above) in form
and substance acceptable to Administrative Agent and executed by each
Credit Party (as applicable) as Administrative Agent shall specify to
fully evidence and perfect all Liens contemplated by the Loan Papers,
all of which shall be filed of record in such jurisdictions as
Administrative Agent shall require in its sole discretion;
(vii) a copy of the articles or certificate of incorporation,
certificate of organization, or comparable charter documents, and all
amendments thereto, of each Credit Party accompanied by a certificate
that such copy is true, correct and complete, and dated within ten
(10) days of the Closing Date (or within such other period as
acceptable to Administrative Agent), issued by the appropriate
Governmental Authority of the jurisdiction of incorporation of each
such Credit Party, and accompanied by a certificate of the Secretary
or comparable Authorized Officer of each such Credit Party that such
copy is true, correct and complete on the Closing Date;
(viii) a copy of the bylaws, regulations or comparable charter
documents, and all amendments thereto, of each Credit Party
accompanied by a certificate of the Secretary or comparable Authorized
Officer of each such Credit Party that such copy is true, correct and
complete as of Closing Date;
(ix) certain certificates and other documents issued by the
appropriate Governmental Authorities of such jurisdictions as
Administrative Agent has requested (or such other evidence
satisfactory to Administrative Agent) relating to the existence of
39
each Credit Party and to the effect that each such Credit Party is in
good standing with respect to the payment of franchise and similar
Taxes and is duly qualified to transact business in such
jurisdictions;
(x) a certificate of incumbency of all officers of each Credit
Party who will be authorized to execute or attest to any Loan Paper,
dated the Closing Date, executed by the Secretary or comparable
Authorized Officer of each such Credit Party;
(xi) copies of resolutions or comparable authorizations approving
the Closing Transactions and Loan Papers, and authorizing the
transactions contemplated by this Agreement and the other Loan Papers,
duly adopted by the Board of Directors (or comparable authority) of
each Credit Party accompanied by certificates of the Secretary or
comparable officer of each such Credit Party that such copies are true
and correct copies of resolutions duly adopted at a meeting of or (if
permitted by applicable Law and, if required by such Law, by the
bylaws or comparable charter documents of each such Credit Party, as
applicable) by the unanimous written consent of the Board of Directors
(or comparable authority) of each such Credit Party, as applicable,
and that such resolutions constitute all the resolutions adopted with
respect to such transactions, have not been amended, modified, or
revoked in any respect, and are in full force and effect as of the
Closing Date;
(xii) an opinion of Jenkens & Gilchrist, P.C., special counsel
for the Credit Parties dated the Closing Date, favorably opining as to
the enforceability of each of the Loan Papers and otherwise in form
and substance satisfactory to Administrative Agent and Banks;
(xiii) an opinion of Casten & Pearce, special Louisiana counsel
for Administrative Agent dated the Closing Date, favorably opining as
to the enforceability of the Existing Mortgages (as amended by the
Amendments to Mortgages), the Mortgages and the Amendments to
Mortgages in Louisiana and otherwise in form and substance
satisfactory to Administrative Agent and Banks;
(xiv) an opinion of Young, Williams, Henderson & Fuselier, P.A.,
special Mississippi counsel for Administrative Agent dated the Closing
Date, favorably opining as to the enforceability of the Existing
Mortgages (as amended by the Amendments to Mortgages), the Mortgages
and the Amendments to Mortgages in Mississippi and otherwise in form
and substance satisfactory to Administrative Agent and Banks;
(xv) a certificate signed by an Authorized Officer of Borrower
stating that (A) the representations and warranties contained in this
Agreement and the other Loan Papers are true and correct in all
respects, (B) no Default or Event of Default has occurred and is
continuing, and (C) all conditions set forth in this Section 7.1 and
Section 7.2 have been satisfied;
(xvi) a Certificate of Ownership Interests signed by an
Authorized Officer of Borrower (after giving effect to the Closing
Transactions) in the form of Exhibit I attached hereto; and
40
(xvii) certificates from Borrower's insurance broker setting
forth the insurance maintained by Borrower, stating that such
insurance is in full force and effect, that all premiums due have been
paid and stating that such insurance is adequate and complies with the
requirements of Section 9.6.
(b) Closing Transactions. Subject only to the disbursement and
application of the initial Borrowing, the Closing Transactions shall have
occurred (or Administrative Agent shall be satisfied that such transactions
will occur simultaneously with the Closing Date).
(c) No Material Adverse Change. In the sole discretion of each Bank,
no Material Adverse Change shall have occurred.
(d) No Legal Prohibition. The transactions contemplated by this
Agreement shall be permitted by applicable Law and regulation and shall not
subject any Agent or any Bank to any material adverse change in its assets,
liabilities, financial condition, operations or prospects or subject any
Credit Party to a Material Adverse Change.
(e) No Litigation. No litigation, arbitration or similar proceeding
shall be pending or threatened which calls into question the validity or
enforceability of this Agreement, the other Loan Papers or the transactions
contemplated hereby or thereby.
(f) Closing Fees. Borrower shall have paid to Administrative Agent for
the ratable benefit of each Bank, and shall have paid to Administrative
Agent and its Affiliates (for its own account), the fees to be paid on the
Closing Date pursuant to Section 3.13.
(g) Organizational Structure. Each Bank shall be satisfied in its sole
judgment with the organizational, capital, legal and management structure
and tax liabilities of each Credit Party.
(h) Other Matters. All matters related to this Agreement, the other
Loan Papers, the Credit Parties, and the Closing Transactions shall be
acceptable to each Bank in its sole discretion, and each Credit Party shall
have delivered to Administrative Agent and each Bank such evidence as they
shall request to substantiate any matters related to this Agreement, the
other Loan Papers, the Credit Parties, and the Closing Transactions as
Administrative Agent or any Bank shall request.
Upon satisfaction of each of the conditions set forth in this Section 7.1,
Parent, Borrower and Administrative Agent shall execute the Certificate of
Effectiveness. Upon the execution and delivery of the Certificate of
Effectiveness, the Existing Credit Agreement shall automatically and completely
be amended and restated on the terms set forth herein without necessity of any
other action on the part of any Bank, any Agent, Parent or Borrower. Until
execution and delivery of the Certificate of Effectiveness, the Existing Credit
Agreement shall remain in full force and effect in accordance with its terms.
Each Bank hereby authorizes Administrative Agent to execute the Certificate of
Effectiveness on its behalf and acknowledges and agrees that the execution of
the Certificate of Effectiveness by Administrative Agent shall be binding on
each such Bank.
41
Section 7.2 Conditions to Each Borrowing and each Letter of Credit. The
obligation of each Bank to loan its Commitment Percentage of each Borrowing and
the obligation of any Letter of Credit Issuer to issue, extend, amend or renew
any Letter of Credit on the date such Letter of Credit is to be issued,
extended, amended or renewed is subject to the further satisfaction of the
following conditions:
(a) timely receipt by Administrative Agent of a Request for Borrowing
or a Request for Letter of Credit (as applicable);
(b) immediately before and after giving effect to such Borrowing or
issuance of such Letter of Credit, no Default or Event of Default shall
have occurred and be continuing and the funding of such Borrowing or the
issuance of the requested Letter of Credit (as applicable) shall not cause
a Default or Event of Default;
(c) the representations and warranties of each Credit Party contained
in this Agreement and the other Loan Papers shall be true and correct on
and as of the date of such Borrowing or issuance of such Letter of Credit
(as applicable);
(d) the amount of the requested Borrowing or the amount of the
requested Letter of Credit (as applicable) shall not exceed the
Availability;
(e) no Material Adverse Change shall have occurred; and
(f) the funding of such Borrowing or the issuance of such Letter of
Credit (as applicable) shall be permitted by applicable Law.
The funding of each Borrowing and the issuance of each Letter of Credit
hereunder shall be deemed to be a representation and warranty by Borrower on the
date of such Borrowing and the date of issuance of each Letter of Credit as to
the facts specified in Section 7.2(b) through Section 7.2(e).
Section 7.3 Agreements Regarding Initial Borrowing. Parent, Borrower,
Administrative Agent and each Bank acknowledge that all the proceeds of the
initial Borrowing to be made on the Closing Date are to be applied to refinance
in full all Obligations outstanding under and as defined in the Existing Credit
Agreement (the "Refinancing Borrowing"). Administrative Agent and each Bank
hereby waive the requirements of Section 3.2(a) and Section 7.2(a) with respect
to the Refinancing Borrowing to the extent, but only to the extent, such
Sections require the delivery of a Request for Borrowing as a condition
precedent to the obligation of each Bank to loan its Commitment Percentage of
each Borrowing. Each Bank, Administrative Agent, Parent and Borrower further
acknowledge and agree that, notwithstanding the contrary provisions of Section
3.2(c), each Bank shall only be required to fund as part of such Refinancing
Borrowing the remainder, if any (and as applicable), of (a) its Commitment
Percentage of such Refinancing Borrowing, minus (b) the amount it is to receive
as a result of the application of the proceeds of the Refinancing Borrowing to
refinance all obligations outstanding under and as defined in the Existing
Credit Agreement.
42
Section 7.4 Materiality of Conditions. Each condition precedent herein is
material to the transactions contemplated herein, and time is of the essence in
respect of each thereof.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
------------------------------
Parent and Borrower jointly and severally represent and warrant to
Administrative Agent and each Bank that each of the following statements is true
and correct on the date hereof (and after giving effect to the Closing
Transactions), and will be true and correct on the occasion of each Borrowing,
and the issuance of each Letter of Credit (except to the extent such
representations and warranties are expressly made as of a particular date, in
which event such representations and warranties shall be true and correct as of
such date):
Section 8.1 Corporate Existence and Power. Each Credit Party (a) is a
corporation, partnership or limited liability company duly incorporated or
organized (as applicable), validly existing and in good standing under the Laws
of its jurisdiction of incorporation or organization, (b) has all corporate,
partnership or limited liability company power (as applicable) and all material
governmental licenses, authorizations, consents and approvals required to carry
on its businesses as now conducted and as proposed to be conducted, and (c) is
duly qualified to transact business as a foreign corporation, partnership or
limited liability company (as applicable) in each jurisdiction where a failure
to be so qualified could have a Material Adverse Effect.
Section 8.2 Credit Party and Governmental Authorization; Contravention. The
execution, delivery and performance of this Agreement and the other Loan Papers
by each Credit Party (to the extent each Credit Party is a party to this
Agreement and such Loan Papers) are within such Credit Party's corporate,
partnership or limited liability company powers (as applicable), when executed
will be duly authorized by all necessary corporate, partnership or limited
liability company action (as applicable), require no action by or in respect of,
or filing with, any Governmental Authority (including, without limitation, Bond
Issuer) and do not contravene, or constitute a default under, any provision of
applicable Law (including, without limitation, the Margin Regulations) or of the
articles or certificate of incorporation, bylaws, regulations, partnership
agreement or comparable charter documents of any Credit Party or of any
agreement, judgment, injunction, order, decree or other instrument (including,
without limitation, the Bond Documents) binding upon any Credit Party or result
in the creation or imposition of any Lien on any asset of any Credit Party other
than the Liens securing the Obligations.
Section 8.3 Binding Effect. This Agreement constitutes a valid and binding
agreement of Parent and Borrower; the other Loan Papers when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of each Credit Party executing the same; and each Loan Paper is, or
when executed and delivered, will be, enforceable against each Credit Party
which executes the same in accordance with its terms except as (a) the
enforceability thereof may be limited by bankruptcy, insolvency or similar Laws
affecting creditors rights generally, and (b) the availability of equitable
remedies may be limited by equitable principles of general applicability.
43
Section 8.4 Financial Information
(a) The Current Financials fairly present, in conformity with GAAP,
the consolidated financial position of Parent and its consolidated results
of operations and cash flows as of the dates and for the periods covered
thereby.
(b) The most recent annual audited consolidated balance sheet of
Parent and the related consolidated statements of operations and cash flows
for the Fiscal Year then ended, copies of which have been delivered to each
Bank, fairly present, in conformity with GAAP, the consolidated financial
position of Parent as of the end of such Fiscal Year and its consolidated
results of operations and cash flows for such Fiscal Year.
(c) The most recent quarterly unaudited consolidated balance sheet of
Parent delivered to Banks, and the related unaudited consolidated
statements of operations and cash flows for the portion of Parent's Fiscal
Year then ended, fairly present, in conformity with GAAP applied on a basis
consistent with the financial statements referred to in Section 8.4(a), the
consolidated financial position of Parent as of such date and its
consolidated results of operations and cash flows for such portion of
Parent's Fiscal Year.
(d) Except as disclosed in writing to Banks prior to the execution and
delivery of this Agreement, since the date of Parent's most recent annual
and quarterly consolidated balance sheet and consolidated statements of
operations and cash flow delivered to Banks, there has been no material
adverse change in the assets, liabilities, financial position, results of
operations or prospects of any Credit Party.
Section 8.5 Litigation. Except for matters disclosed on Schedule 8.5
attached hereto, there is no action, suit or proceeding pending against, or to
the knowledge of any Credit Party, threatened against or affecting any Credit
Party before any Governmental Authority in which there is a reasonable
possibility of an adverse decision which could have a Material Adverse Effect or
which could in any manner draw into question the validity of the Loan Papers.
Section 8.6 ERISA. No Credit Party nor any ERISA Affiliate of any Credit
Party maintains or has ever maintained or been obligated to contribute to any
Plan covered by Title IV of ERISA or subject to the funding requirements of
section 412 of the Code or section 302 of ERISA. Each Plan maintained by any
Credit Party or any ERISA Affiliate of any Credit Party is in compliance in all
material respects with all applicable Laws. Except in such instances where an
omission or failure would not have a Material Adverse Effect, (a) all returns,
reports and notices required to be filed with any regulatory agency with respect
to any Plan have been filed timely, and (b) no Credit Party nor any ERISA
Affiliate of any Credit Party has failed to make any contribution or pay any
amount due or owing as required by the terms of any Plan. There are no pending
or, to the best of Parent's or Borrower's knowledge, threatened claims,
lawsuits, investigations or actions (other than routine claims for benefits in
the ordinary course) asserted or instituted against, and no Credit Party nor any
ERISA Affiliate of any Credit Party has knowledge of any threatened litigation
or claims against, the assets of any Plan or its related trust or against any
fiduciary of a Plan with respect to the operation of such Plan that are likely
to result in liability of any Credit Party having a Material Adverse Effect.
44
Except in such instances where an omission or failure would not have a Material
Adverse Effect, each Plan that is intended to be "qualified" within the meaning
of section 401(a) of the Code is, and has been during the period from its
adoption to date, so qualified, both as to form and operation and all necessary
governmental approvals, including a favorable determination as to the
qualification under the Code of such Plan and each amendment thereto, have been
or will be timely obtained. No Credit Party nor any ERISA Affiliate of any
Credit Party has engaged in any prohibited transactions, within the meaning of
section 406 of ERISA or section 4975 of the Code, in connection with any Plan
which would result in liability of any Credit Party having a Material Adverse
Effect. No Credit Party nor any ERISA Affiliate of any Credit Party maintains or
contributes to any Plan that provides a post-employment health benefit, other
than a benefit required under section 601 of ERISA, or maintains or contributes
to a Plan that provides health benefits that is not fully funded except where
the failure to fully fund such Plan would not have a Material Adverse Effect. No
Credit Party nor any ERISA Affiliate of any Credit Party maintains, has
established or has ever participated in a multiple employer welfare benefit
arrangement within the meaning of section 3(40)(A) of ERISA.
Section 8.7 Taxes and Filing of Tax Returns. Each Credit Party has filed
all tax returns required to have been filed and has paid all Taxes shown to be
due and payable on such returns, including interest and penalties, and all other
Taxes which are payable by such party, to the extent the same have become due
and payable, other than Taxes with respect to which a failure to pay would not
have a Material Adverse Effect. No Credit Party knows of any proposed material
Tax assessment against it and all Tax liabilities of each Credit Party are
adequately provided for. Except as disclosed in writing to Banks prior to the
date hereof, no income tax liability in excess of $50,000 of any Credit Party
has been asserted by the Internal Revenue Service or other Governmental
Authority for Taxes in excess of those already paid.
Section 8.8 Ownership of Properties Generally. Each Credit Party has good
and valid fee simple or leasehold title to all material properties and assets
purported to be owned by it, including, without limitation, all assets reflected
in the balance sheets referred to in Section 8.4(a), Section 8.4(b) and Section
8.4(c) and all assets which are used by the Credit Parties in the operation of
their respective businesses, and none of such properties or assets is subject to
any Lien other than Permitted Encumbrances.
Section 8.9 Mineral Interests. Each Credit Party (as applicable) has good
and defensible title to all Mineral Interests described in the Reserve Report,
including, without limitation, all Borrowing Base Properties, free and clear of
all Liens except Permitted Encumbrances and Immaterial Title Deficiencies. With
the exception of Immaterial Title Deficiencies, all such Mineral Interests are
valid, subsisting, and in full force and effect, and all rentals, royalties, and
other amounts due and payable in respect thereof have been duly paid. Without
regard to any consent or non-consent provisions of any joint operating agreement
covering any of such Credit Party's Proved Mineral Interests, and with the
exception of Immaterial Title Deficiencies, each Credit Party's (as applicable)
share of (a) the costs for each Proved Mineral Interest described in the Reserve
Report is not greater than the decimal fraction set forth in the Reserve Report,
before and after payout, as the case may be, and described therein by the
respective designations "working interests," "WI," "gross working interest,"
"GWI," or similar terms, and (b) production from, allocated to, or attributed to
each such Proved Mineral Interest is not less than the decimal fraction set
forth in the Reserve Report, before and after payout, as the case may be, and
45
described therein by the designations "net revenue interest," "NRI," or similar
terms. Except in the case of wells which, in the aggregate, represent less than
two percent (2%) of the production from the Proved Producing Mineral Interests
described in the Reserve Report, each well drilled in respect of each Proved
Producing Mineral Interest described in the Reserve Report (y) is capable of,
and is presently, producing hydrocarbons in commercially profitable quantities,
and each Credit Party (as applicable) is currently receiving payments for its
share of production, with no funds in respect of any thereof being presently
held in suspense, other than any such funds being held in suspense pending
delivery of appropriate division orders, and (z) has been drilled, bottomed,
completed, and operated in compliance with all applicable Laws and no such well
which is currently producing Hydrocarbons is subject to any penalty in
production by reason of such well having produced in excess of its allowable
production.
Section 8.10 Licenses, Permits, Etc. Except as disclosed on Schedule 8.10
attached hereto, each Credit Party possesses such valid franchises, certificates
of convenience and necessity, operating rights, licenses, permits, consents,
authorizations, exemptions and orders of Governmental Authorities, as are
necessary to carry on its business as now conducted and as proposed to be
conducted, except to the extent a failure to obtain any such item would not have
a Material Adverse Effect.
Section 8.11 Compliance with Law. The business and operations of each
Credit Party have been and are being conducted in accordance with all applicable
Laws other than violations of Laws which do not (either individually or
collectively) have a Material Adverse Effect.
Section 8.12 Full Disclosure. All information heretofore furnished by each
Credit Party to Administrative Agent or any Bank for purposes of or in
connection with this Agreement, any Loan Paper, any transaction contemplated
hereby or thereby, or the Closing Transactions is, and all such information
hereafter furnished by or on behalf of any Credit Party to Administrative Agent
or any Bank will be, true, complete and accurate in every material respect. The
Credit Parties have disclosed or have caused to be disclosed to Banks in writing
any and all facts (other than facts of general public knowledge) which might
reasonably be expected to result in a Material Adverse Change.
Section 8.13 Organizational Structure; Nature of Business. Parent is a
holding company owning one hundred percent (100%) of the issued and outstanding
Equity in Operating and DG&M. Parent has no direct, wholly-owned Subsidiaries
other than Operating and DG&M. Marine, Borrower and TRF have no Subsidiaries.
Operating is a holding company owning one hundred percent (100%) of the Equity
in Marine, Borrower and TRF. Operating has no direct, wholly-owned Subsidiaries
other than Marine, Borrower and TRF. Borrower is engaged only in the business of
acquiring, exploring, developing and operating Mineral Interests and the
production and marketing of Hydrocarbons therefrom. Marine is engaged only in
the business of marine oil field services. DG&M is a holding company owning one
hundred percent (100%) of the issued and outstanding Equity in Genesis Energy.
TRF may, from time to time, temporarily hold unproved Mineral Interests to be
transferred and conveyed to Borrower in due course. Schedule 8.13 attached
hereto accurately reflects (a) the jurisdiction of incorporation or organization
of each Credit Party, (b) each jurisdiction in which each Credit Party is
qualified to transact business as a foreign corporation, foreign partnership or
46
foreign limited liability company, (c) the authorized, issued and outstanding
Equity of each Credit Party, and (d) all outstanding warrants, options,
subscription rights, convertible securities or other rights to purchase Equity
of each Credit Party.
Section 8.14 Environmental Matters. Except for matters disclosed on
Schedule 9.10 attached hereto, no operation conducted by any Credit Party and no
real or personal property now or previously owned or leased by any Credit Party
(including, without limitation, any Credit Party's Mineral Interests) and no
operations conducted thereon, and to any Credit Party's knowledge, no operations
of any prior owner, lessee or operator of any such properties, is or has been in
violation of any Applicable Environmental Law other than violations which
neither individually nor in the aggregate will have a Material Adverse Effect.
Except for matters disclosed on Schedule 9.10 attached hereto, no Credit Party,
nor any such property nor operation is the subject of any existing, pending or,
to any Credit Party's knowledge, threatened Environmental Complaint which could,
individually or in the aggregate, have a Material Adverse Effect. All notices,
permits, licenses, and similar authorizations, required to be obtained or filed
in connection with the ownership of each tract of real property or operations of
any Credit Party thereon and each item of personal property owned, leased or
operated by any Credit Party, including, without limitation, notices, licenses,
permits and authorizations required in connection with any past or present
treatment, storage, disposal, or release of Hazardous Substances into the
environment, have been duly obtained or filed except to the extent the failure
to obtain or file such notices, licenses, permits and authorizations would not
have a Material Adverse Effect. All Hazardous Substances, generated at each
tract of real property and by each item of personal property owned, leased or
operated by any Credit Party have been transported, treated, and disposed of
only by carriers or facilities maintaining valid permits under RCRA (as
hereinafter defined) and all other Applicable Environmental Laws for the conduct
of such activities except in such cases where the failure to obtain such permits
would not, individually or in the aggregate, have a Material Adverse Effect.
Except for matters disclosed on Schedule 9.10 attached hereto, there have been
no Hazardous Discharges which were not in compliance with Applicable
Environmental Laws other than Hazardous Discharge which would not, individually
or in the aggregate, have a Material Adverse Effect. Except for matters
disclosed on Schedule 9.10 attached hereto, no Credit Party has any contingent
liability in connection with any Hazardous Discharge which could reasonably be
expected to have a Material Adverse Effect. As used in this Section 8.14, the
term "RCRA" shall mean the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Recovery Act of
1976, as amended by the Solid Waste Disposal Act of 1980, and the Hazardous and
Solid Waste Amendments of 1984, as the same may be further amended and in effect
from time to time.
Section 8.15 Burdensome Obligations. No Credit Party, nor any of the
properties of any Credit Party, is subject to any Law or any pending or
threatened change of Law or subject to any restriction under its articles (or
certificate) of incorporation, bylaws, regulations, partnership agreement or
comparable charter documents or under any agreement or instrument to which any
Credit Party or by which any Credit Party or any of its properties may be
subject or bound, which is so unusual or burdensome as to be likely in the
foreseeable future to have a Material Adverse Effect. Without limiting the
foregoing, no Credit Party is a party to or bound by any agreement (other than
the Loan Papers) or subject to any order of any Governmental Authority which
prohibits or restricts in any way the right of such Credit Party or any
Restricted Subsidiary of any Credit Party to make Distributions.
47
Section 8.16 Fiscal Year. Each of Parent's and Borrower's Fiscal Year is
January 1 through December 31.
Section 8.17 No Default. Neither a Default nor an Event of Default has
occurred or will exist after giving effect to the transactions contemplated by
this Agreement, the other Loan Papers, or the Closing Transactions.
Section 8.18 Government Regulation. No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act (as any of the preceding acts have been
amended), the Investment Company Act of 1940 or any other Law which regulates
the incurring by such Credit Party of Debt, including, but not limited to Laws
relating to common contract carriers or the sale of electricity, gas, steam,
water or other public utility services.
Section 8.19 Insider. No Credit Party is, and no Person having "control"
(as that term is defined in 12 U.S.C. section 375(b) or regulations promulgated
thereunder) of any Credit Party is an "executive officer," "director" or
"shareholder" of any Bank or any bank holding company of which any Bank is a
Subsidiary or of any Subsidiary of such bank holding company.
Section 8.20 Gas Balancing Agreements and Advance Payment Contracts. On the
date of this Agreement, (a) there is no Material Gas Imbalance, and (b) the
aggregate amount of all Advance Payments received by any Credit Party under
Advance Payment Contracts (excluding the advance payment of carbon dioxide
pursuant to the Permitted Genesis VPP Transactions) which have not been
satisfied by delivery of production does not exceed $2,000,000.
Section 8.21 Bond Documents. Borrower (or Former Borrower) has provided to
Administrative Agent a true and correct copy of each of the Bond Documents,
including all amendments and modifications thereto (whether characterized as an
amendment, modification, waiver, consent or similar document). No material
rights or obligations of any party to any of the Bond Documents have been waived
and no party to any of the Bond Documents is in default of its obligations or in
breach of any representations or warranties made thereunder. Each of the Bond
Documents is a valid, binding and enforceable obligation of Borrower and each
other party thereto in accordance with its terms and is in full force and
effect. As used in this Agreement, the term "Obligations" shall include, without
limitation, any and all obligations, indebtedness and liabilities owed by
Borrower or any other Credit Party to Bond Purchaser (whether directly or as
assignee of Bond Issuer) under the Bond Documents, which obligations,
indebtedness and liabilities shall be secured by Liens on all property described
as collateral security for the Obligations in accordance with and pursuant to
the Mortgages and the other Loan Papers. Each representation and warranty made
by Borrower and each other party in the Bond Documents will be true and correct
on the date of each Borrowing or issuance of a Letter of Credit. Borrower hereby
acknowledges, agrees and confirms that it has assumed (by operation of law or
otherwise) all debt, liabilities and obligations, and agreed to perform, as sole
and primary obligor, all obligations, of Former Borrower under the Bond
Documents.
48
ARTICLE IX
AFFIRMATIVE COVENANTS
---------------------
Parent and Borrower jointly and severally covenant and agree that, so
long as any Bank has any commitment to lend or participate in Letter of Credit
Exposure hereunder or any amount payable under any Note remains unpaid or any
Letter of Credit remains outstanding:
Section 9.1 Information. Parent will deliver, or cause to be delivered, to
each Bank:
(a) as soon as available and in any event within ninety (90) days (or
such shorter time as required to be filed with the SEC) after the end of
each Fiscal Year, consolidated balance sheets of Parent as of the end of
such Fiscal Year and the related consolidated statements of income and
statements of cash flow for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all reported by
Parent in accordance with GAAP and audited by a firm of independent public
accountants of nationally recognized standing and acceptable to
Administrative Agent; to the extent Parent's Form of 10-K filed with the
SEC for each Fiscal Year contains all information required by this Section
9.1(a), Parent may satisfy its obligations under this Section 9.1(a) for
each Fiscal Year by delivering to Banks a copy of such Form 10-K for such
Fiscal Year within one (1) Domestic Business Day of filing same with the
SEC;
(b) as soon as available and in any event within sixty (60) days (or
such shorter time as required by the SEC) after the end of each of the
first three (3) Fiscal Quarters of each Fiscal Year, consolidated balance
sheets of Parent as of the end of such Fiscal Quarter and the related
consolidated statements of income and statements of cash flow for such
quarter and for the portion of Parent's Fiscal Year ended at the end of
such Fiscal Quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of
Parent's previous Fiscal Year; to the extent Parent's Form 10-Q filed with
the SEC for each Fiscal Quarter contains all information required by this
Section 9.1(b), Parent may satisfy its obligations under this Section
9.1(b) for each Fiscal Quarter by delivering to Banks a copy of such Form
10-Q for such Fiscal Quarter within one (1) Domestic Business Day of filing
same with the SEC. All financial statements delivered pursuant to this
Section 9.1(b) shall be certified as to fairness of presentation, GAAP and
consistency by a Financial Officer of Parent;
(c) simultaneously with the delivery of each set of financial
statements referred to in Section 9.1(a) and Section 9.1(b) a certificate
of the principal executive and Financial Officer of Parent in the form of
Exhibit J attached hereto, (i) setting forth in reasonable detail the
calculations required to establish whether Parent was in compliance with
the requirements of Article XI on the date of such financial statements,
(ii) stating whether there exists on the date of such certificate any
Default and, if any Default then exists, setting forth the details thereof
and the action which Parent or Borrower is taking or proposes to take with
respect thereto, (iii) stating whether or not such financial statements
fairly reflect in all material respects the results of operations and
financial condition of Parent as of the date of the delivery of such
financial statements and for the period covered thereby, (iv) setting forth
(A) whether as of such date there is a Material Gas Imbalance and, if so,
setting forth the amount of net gas imbalances under Gas Balancing
Agreements to which any Credit Party is a party or by which any Mineral
49
Interests owned by any Credit Party is bound, and (B) the aggregate amount
of all Advance Payments received under Advance Payment Contracts to which
any Credit Party is a party or by which any Mineral Interests owned by any
Credit Party is bound which have not been satisfied by delivery of
production, if any, (v) setting forth a summary of the Hedge Transactions
to which any Credit Party is a party on such date, and (vi) setting forth
the other information described in Exhibit J attached hereto;
(d) promptly upon the mailing thereof to the stockholders of any
Credit Party generally, copies of all financial statements, reports and
proxy statements so mailed;
(e) without limiting Borrower's obligations under Section 9.1(a) and
Section 9.1(b), promptly upon the filing thereof, copies of all final
registration statements, post effective amendments thereto and annual,
quarterly or special reports which any Credit Party shall have filed with
the SEC;
(f) promptly upon receipt of same, any notice or other information
received by any Credit Party indicating (i) any potential, actual or
alleged non-compliance with or violation of the requirements of any
Applicable Environmental Law which could result in liability to any Credit
Party for fines, clean up or any other remediation obligations or any other
liability in excess of $1,000,000 in the aggregate; (ii) any threatened
Hazardous Discharge which Hazardous Discharge would impose on any Credit
Party a duty to report to a Governmental Authority or to pay cleanup costs
or to take remedial action under any Applicable Environmental Law which
could result in liability to any Credit Party for fines, clean up and other
remediation obligations or any other liability in excess of $1,000,000 in
the aggregate; or (iii) the existence of any Lien arising under any
Applicable Environmental Law securing any obligation to pay fines, clean up
or other remediation costs or any other liability in excess of $1,000,000
in the aggregate. Without limiting the foregoing, each Credit Party shall
provide to Banks promptly upon receipt of same by any Credit Party copies
of all environmental consultants or engineers reports received by any
Credit Party which would render the representation and warranty contained
in Section 8.14 untrue or inaccurate in any respect;
(g) in the event any notification is provided to any Bank or
Administrative Agent pursuant to Section 9.1(f) hereof or Administrative
Agent or any Bank otherwise learns of any event or condition under which
any such notice would be required, then, upon request of Required Banks,
Borrower shall within thirty (30) days of such request, cause to be
furnished to Administrative Agent and each Bank a report by an
environmental consulting firm acceptable to Administrative Agent and
Required Banks, stating that a review of such event, condition or
circumstance has been undertaken (the scope of which shall be acceptable to
Administrative Agent and Required Banks) and detailing the findings,
conclusions and recommendations of such consultant. Borrower shall bear all
expenses and costs associated with such review and updates thereof;
(h) immediately upon any Authorized Officer of any Credit Party
becoming aware of the occurrence of any Default, a certificate of an
Authorized Officer of Borrower setting forth the details thereof and the
action which Borrower is taking or proposes to take with respect thereto;
50
(i) no later than February 28 and August 31 of each year, commencing
February 28, 2005, reports of production volumes, revenue, expenses and
product prices for all Borrowing Base Properties with a Recognized Value of
$500,000 or more for the periods of six (6) months ending the preceding
December 31 and June 30, respectively. Such reports shall be prepared on an
accrual basis and shall be reported on a field by field basis;
(j) promptly notify Banks of any Material Adverse Change;
(k) promptly notify Banks of any material litigation involving any
Credit Party; and
(l) from time to time such additional information regarding the
financial position or business of any Credit Party as Administrative Agent,
at the request of any Bank, may reasonably request.
Section 9.2 Business of Credit Parties. The sole business of Parent will
continue to be (a) the issuance of equity and debt securities not prohibited
pursuant to the provisions of this Agreement, (b) the ownership of one hundred
percent (100%) of the issued and outstanding Equity of Operating and DG&M, and
(c) activities reasonably related to the businesses of Parent described in the
foregoing clauses (a) and (b), including, without limitation, activities
necessary to comply with the reporting requirements of the Exchange Act, and
with rules and regulations of applicable securities exchanges or which are
otherwise incident to being a publicly traded company. The sole business of
Operating will continue to be the ownership of one hundred percent (100%) of the
issued and outstanding Equity of Marine, Borrower and TRF, and activities
reasonably related thereto. The sole business of Borrower will continue to be
the acquisition, exploration, development and operation of offshore Mineral
Interests, the production and marketing of Hydrocarbons therefrom, and
activities reasonably related thereto. The sole business of Marine will continue
to be marine oil field services. DG&M will remain a holding company owning one
hundred percent (100%) of the issued and outstanding Equity in Genesis Energy.
TRF may, from time to time, temporarily hold unproved Mineral Interests to be
transferred and conveyed to Borrower in due course.
Section 9.3 Maintenance of Existence. Parent and Borrower shall, and shall
cause each other Credit Party to, at all times (a) maintain its corporate,
partnership or limited liability company existence in its state of incorporation
or organization, and (b) maintain its good standing and qualification to
transact business in all jurisdictions where the failure to maintain good
standing or qualification to transact business could have a Material Adverse
Effect; provided, that, TRF may dissolve at any time.
Section 9.4 Title Data. In addition to the title information required by
Section 6.1(c) hereof, Borrower shall, upon the request of Required Banks, cause
to be delivered to Administrative Agent such title opinions and other
information regarding title to Mineral Interests owned by any Credit Party as
are appropriate to determine the status thereof; provided, however, that, Banks
may not require the Credit Parties to furnish title opinions (except pursuant to
Section 6.1(c)) unless (a) an Event of Default shall have occurred and be
continuing, or (b) Required Banks have reason to believe that there is a defect
in or encumbrance upon any such Credit Party's title to such Mineral Interests
that is not a Permitted Encumbrance.
51
Section 9.5 Right of Inspection. Parent and Borrower will permit, and will
cause each other Credit Party to permit, any officer, employee or agent of
Administrative Agent or of any Bank to visit and inspect any of the assets of
any Credit Party, examine each Credit Party's books of record and accounts, take
copies and extracts therefrom, and discuss the affairs, finances and accounts of
each Credit Party with such Credit Party's officers, accountants and auditors,
all at such reasonable times and as often as Administrative Agent or any Bank
may desire, all at the expense of Borrower.
Section 9.6 Maintenance of Insurance. Parent and Borrower will, and will
cause each other Credit Party to, at all times maintain or cause to be
maintained insurance covering such risks as are customarily carried by
businesses similarly situated, including, without limitation, the following: (a)
workmen's compensation insurance; (b) employer's liability insurance; (c)
comprehensive general public liability and property damage insurance; (d)
insurance against (other than losses or damage to property owned by any Credit
Party which is self insured) losses customarily insured against as a result of
damage by fire, lightning, hail, tornado, explosion and other similar risk; and
(e) comprehensive automobile liability insurance. All loss payable clauses or
provisions in all policies of insurance maintained by any Credit Party pursuant
to this Section 9.6 shall be endorsed in favor of and made payable to
Administrative Agent for the ratable benefit of Banks, as their interests may
appear. Administrative Agent shall have the right, for the ratable benefit of
Banks, to collect, and Parent and Borrower hereby assign to Administrative Agent
for the ratable benefit of Banks (and hereby agrees to cause each other Credit
Party to assign), any and all monies that may become payable under any such
policies of insurance by reason of damage, loss or destruction of any of
property which stands as security for the Obligations or any part thereof, and
Administrative Agent may, at its election, either apply for the ratable benefit
of Banks all or any part of the sums so collected toward payment of the
Obligations, whether or not such Obligations are then due and payable, in such
manner as Administrative Agent may elect or release same to the applicable
Credit Party.
Section 9.7 Payment of Taxes and Claims. Parent and Borrower will, and will
cause each other Credit Party to, pay (a) all Taxes imposed upon it or any of
its assets or with respect to any of its franchises, business, income or profits
before any material penalty or interest accrues thereon, and (b) all material
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by Law have or
might become a Lien (other than a Permitted Encumbrance) on any of its assets;
provided, however, no payment of Taxes or claims shall be required if (i) the
amount, applicability or validity thereof is currently being contested in good
faith by appropriate action promptly initiated and diligently conducted in
accordance with good business practices and no material part of the property or
assets of Parent or Borrower, and no part of the assets of any Restricted
Subsidiary which would be material to Parent or Borrower, is subject to any
pending levy or execution, (ii) Parent, Borrower, and any Restricted Subsidiary,
as and to the extent required in accordance with GAAP, shall have set aside on
their books reserves (segregated to the extent required by GAAP) deemed by them
to be adequate with respect thereto, and (iii) Parent and Borrower have notified
Administrative Agent of such circumstances, in detail satisfactory to
Administrative Agent.
Section 9.8 Compliance with Laws and Documents. Parent and Borrower will,
and will cause each other Credit Party to, comply with (a) all Laws, their
respective certificates (or articles) of incorporation, bylaws, regulations and
52
similar organizational documents and all Material Agreements to which any Credit
Party is a party, if a violation, alone or when combined with all other such
violations, could have a Material Adverse Effect, and (b) all Bond Documents to
which any Credit Party is a party.
Section 9.9 Operation of Properties and Equipment.
(a) Parent and Borrower will, and will cause each other Credit Party
to, maintain, develop and operate its Mineral Interests in a good and
workmanlike manner, and observe and comply with all of the terms and
provisions, express or implied, of all oil and gas leases relating to such
Mineral Interests so long as such Mineral Interests are capable of
producing Hydrocarbons and accompanying elements in paying quantities,
except where such failure to comply would not have a Material Adverse
Effect.
(b) Parent and Borrower will, and will cause each other Credit Party
to, comply in all respects with all contracts and agreements applicable to
or relating to its Mineral Interest or the production and sale of
Hydrocarbons and accompanying elements therefrom, except to the extent a
failure to so comply would not have a Material Adverse Effect.
(c) Parent and Borrower will, and will cause each other Credit Party
to, at all times maintain, preserve and keep all operating equipment used
with respect to its Mineral Interests in proper repair, working order and
condition, and make all necessary or appropriate repairs, renewals,
replacements, additions and improvements thereto so that the efficiency of
such operating equipment shall at all times be properly preserved and
maintained, except where such failure to comply would not have a Material
Adverse Effect; provided, further that, no item of operating equipment need
be so repaired, renewed, replaced, added to or improved, if Borrower shall
in good faith determine that such action is not necessary or desirable for
the continued efficient and profitable operation of the business of such
Credit Party.
Section 9.10 Environmental Law Compliance. Except to the extent a failure
to comply would not have a Material Adverse Effect, Parent and Borrower will,
and will cause each other Credit Party to, comply with all Applicable
Environmental Laws, including, without limitation, (a) all licensing,
permitting, notification and similar requirements of Applicable Environmental
Laws, and (b) all provisions of all Applicable Environmental Laws regarding
storage, discharge, release, transportation, treatment and disposal of Hazardous
Substances. Parent and Borrower will, and will cause each other Credit Party to,
promptly pay and discharge when due all legal debts, claims, liabilities and
obligations with respect to any clean-up or remediation measures necessary to
comply with Applicable Environmental Laws.
Section 9.11 ERISA Reporting Requirements. Parent and Borrower shall
furnish, or cause to be furnished, to Administrative Agent:
(a) promptly and in any event (i) within thirty (30) days after
Parent, Borrower or any ERISA Affiliate receives notice from any regulatory
agency of the commencement of an audit, investigation or similar proceeding
with respect to a Plan, and (ii) within ten (10) days after Parent,
Borrower or any ERISA Affiliate contacts the Internal Revenue Service for
the purpose of participation in a closing agreement or any voluntary
53
resolution program with respect to a Plan which could have a Material
Adverse Effect or knows or has reason to know that any event with respect
to any Plan of Parent, Borrower or any ERISA Affiliate has occurred that is
reasonably believed by Parent or Borrower to potentially have a Material
Adverse Effect, a written notice describing such event and describing what
action is being taken or is proposed to be taken with respect thereto,
together with a copy of any notice of such event that is given to the PBGC;
(b) promptly and in any event within thirty (30) days after the
receipt by Borrower of a request therefor by a Bank, copies of any annual
and other report (including Schedule B thereto) with respect to a Plan
filed by Parent, Borrower or any ERISA Affiliate with the United States
Department of Labor, the Internal Revenue Service or the PBGC;
(c) notification within thirty (30) days of the effective date thereof
of any material increases in the benefits, or material change in the
funding method, of any existing Plan which is not a multiemployer plan (as
defined in section 4001(a)(3) of ERISA), or the establishment of any
material new Plans, or the commencement of contributions to any Plan to
which Parent, Borrower or any ERISA Affiliate was not previously
contributing; and
(d) promptly after receipt of written notice of commencement thereof,
notice of all (i) claims made by participants or beneficiaries with respect
to any Plan, and (ii) actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting Parent, Borrower or any
ERISA Affiliate with respect to any Plan, except those which, in the
aggregate, if adversely determined could not have a Material Adverse
Effect.
Section 9.12 Additional Documents. Parent and Borrower will, and will cause
each other Credit Party to, cure promptly any defects in the creation and
issuance of each Note, and the execution and delivery of this Agreement and the
other Loan Papers and, at Borrower's expense, Parent and Borrower shall promptly
and duly execute and deliver to each Bank, and cause each other Credit Party to
promptly and duly execute and deliver to each Bank, upon reasonable request, all
such other and further documents, agreements and instruments in compliance with
or accomplishment of the covenants and agreements of the Credit Parties in this
Agreement and the other Loan Papers as may be reasonably necessary or
appropriate in connection therewith.
Section 9.13 Environmental Review. Parent and Borrower shall deliver to
Administrative Agent prior to the completion by any Credit Party of any material
acquisition of Mineral Interests or related assets, other than an acquisition of
additional interests in Mineral Interests in which a Credit Party previously
held an interest, a report or reports obtained by Parent or Borrower in the
course of such acquisition, which report or reports shall set forth the results
of a Phase I environmental review of such Mineral Interests and related assets.
Additionally, if requested by Administrative Agent or Required Banks in writing
in connection with any such material acquisition, Parent or Borrower shall
deliver to Administrative Agent, within forty-five (45) days of Administrative
Agent's or Required Banks' written request, a report or reports related to any
such material acquisition which shall be in form, scope and detail acceptable to
Administrative Agent from environmental engineering firms acceptable to
Administrative Agent, and which shall set forth the results of a Phase I
54
environmental review of the Mineral Interests and related assets the subject of
such material acquisition. All of the reports delivered to Administrative Agent
pursuant to this Section 9.13 shall not reflect the existence of facts or
circumstances which would constitute a material violation of any Applicable
Environmental Law or which are likely to result in a material liability to any
Credit Party.
ARTICLE X
NEGATIVE COVENANTS
------------------
Parent and Borrower jointly and severally agree that, so long as any Bank
has any commitment to lend or participate in Letter of Credit Exposure hereunder
or any amount payable under any Note remains unpaid or any Letter of Credit
remains outstanding:
Section 10.1 Incurrence of Debt. Parent and Borrower will not, nor will
Parent and/or Borrower permit any other Credit Party to, incur, become or remain
liable for any Debt; provided, that (a) Borrower may incur, become or remain
liable for (i) the Obligations, (ii) without duplication, Debt evidenced by the
Bond Loan Agreement, (iii) Permitted Subordinate Debt, (iv) Debt described in
clause (f) of the definition thereof in connection with any Permitted Genesis
VPP Transaction, and (v) other unsecured Debt in an aggregate amount outstanding
at any time not to exceed $10,000,000, (b) Parent may assume and remain liable
for Permitted Subordinate Debt, and (c) any Restricted Subsidiary may incur,
become and remain liable for Permitted Subordinate Debt as a guarantor;
provided, that (i) such Guarantees of Permitted Subordinate Debt shall be
subordinated to the Obligations pursuant to subordination provisions approved by
Required Banks, such approval to not be unreasonably withheld, and (ii) prior to
the execution and delivery by any Restricted Subsidiary of any Guaranty of
Permitted Subordinate Debt, such Restricted Subsidiary shall have executed and
delivered to Administrative Agent for the ratable benefit of Banks a Facility
Guaranty, and all the Equity of such Restricted Subsidiary owned by any Credit
Party shall have been pledged to Administrative Agent pursuant to a Parent
Pledge Agreement or a Subsidiary Pledge Agreement.
Section 10.2 Restricted Payments. Parent and Borrower will not, nor will
Parent and/or Borrower permit any other Credit Party to, directly or indirectly,
declare or pay, or incur any liability to declare or pay, any Restricted
Payment; provided, that (a) any Subsidiary of Parent may make Distributions to
Borrower, any Credit Party may make Distributions to any other Credit Party that
has provided a Facility Guaranty, and all of the Equity of which owned by Parent
or any Indirect Subsidiary which is a Restricted Subsidiary (as applicable) has
been pledged to Administrative Agent pursuant to a Parent Pledge Agreement or a
Subsidiary Pledge Agreement (as applicable), (c) so long as no Default or
Borrowing Base Deficiency exists on the date any such Distribution is declared
or paid and no Default or Event of Default would result therefrom, in addition
to Distributions permitted under the preceding clauses (a) and (b), Borrower may
make Restricted Payments up to $5,000,000 in the aggregate in any Fiscal Year,
and (d) Borrower may make payments under and pursuant to the Bond Loan Agreement
and the Bond Note in accordance with the terms thereof.
Section 10.3 Negative Pledge. Parent and Borrower will not, nor will Parent
and/or Borrower permit any other Credit Party to, create, assume or suffer to
exist any Lien on any of their respective assets, other than Permitted
Encumbrances. Parent and Borrower will not, nor will Parent and/or Borrower
permit any other Credit Party to, enter into or become bound by any agreement
55
(other than this Agreement) that prohibits or otherwise restricts the right of
Parent, Borrower or any other Credit Party to create, assume or suffer to exist
any Lien on any of their respective assets in favor of Administrative Agent for
the ratable benefit of Banks.
Section 10.4 Consolidations and Mergers. Parent and Borrower will not, nor
will Parent and/or Borrower permit any other Credit Party to, consolidate or
merge with or into any other Person; provided, that, so long as no Default or
Event of Default exists or will result, any Restricted Subsidiary may merge or
consolidate with any other Person so long as such Restricted Subsidiary is the
surviving Person and a wholly owned direct or indirect Subsidiary of Parent.
Section 10.5 Asset Dispositions. Parent and Borrower will not, nor will
Parent and/or Borrower permit any other Credit Party to, sell, lease, transfer,
abandon or otherwise dispose of any asset other than (a) the sale in the
ordinary course of business of Hydrocarbons produced from Borrower's Mineral
Interests, (b) the sale, lease, transfer, abandonment, exchange or other
disposition of other assets, provided, that the aggregate value (which, in the
case of assets consisting of Mineral Interests, shall be the Recognized Value of
such Mineral Interests and in the case of any exchange, shall be the net value
or net Recognized Value realized or resulting from such exchange) of all assets
sold, leased, transferred or disposed of pursuant to this clause (b) in any
period between Scheduled Redeterminations shall not exceed five percent (5%) of
the Borrowing Base then in effect (for purposes of this clause (b) the Closing
Date will be deemed to be a Scheduled Redetermination), (c) the sale, lease,
transfer, abandonment or disposition of Unproved Reserves, and (d) the sale of a
volumetric production payment of carbon dioxide pursuant to the express terms of
the Genesis Transaction Documents. In no event will Parent, Borrower or any
other Credit Party sell, transfer or dispose of any Equity in any Restricted
Subsidiary nor will any Credit Party (other than Parent) issue or sell any
Equity or any option, warrant or other right to acquire such Equity or security
convertible into such Equity to any Person other than the Credit Party which is
the direct parent of such issuer on the Closing Date.
Section 10.6 Amendments to Organizational and Other Documents. Parent and
Borrower will not, nor will Parent and/or Borrower permit any other Credit Party
to, enter into or permit any modification or amendment of, or waive any material
right or obligation of any Person under (a) its certificate or articles of
incorporation, bylaws, partnership agreement, regulations or other
organizational documents other than amendments, modifications and waivers which
will not, individually or in the aggregate, have a Material Adverse Effect, (b)
any Bond Document, and/or (c) any Genesis Transaction Document; provided, that,
with respect to clause (c), such modifications or amendments may be made without
the consent of Required Banks if such modifications or amendments (i)
individually or in the aggregate, are not materially adverse to the rights of
Administrative Agent or Banks, and (ii) individually or in the aggregate, do not
materially decrease the economic benefit that Borrower would have otherwise
received pursuant to such documents.
Section 10.7 Use of Proceeds. The proceeds of Borrowings will not be used
for any purpose other than (a) working capital, (b) to finance the acquisition,
exploration and development of Mineral Interests, (c) for general corporate
purposes, (d) to refinance the obligations outstanding under the Existing Credit
Agreement, and (e) with respect to any Borrowings made or deemed made hereunder
56
through advances to Borrower pursuant to the Bond Documents, solely for the
purposes set forth in the Bond Documents. None of such proceeds (including,
without limitation, proceeds of Letters of Credit issued hereunder) will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, and none of such proceeds
will be used in violation of applicable Law (including, without limitation, the
Margin Regulations). Letters of Credit will be issued hereunder only for the
purpose of securing bids, tenders, bonds, contracts and other obligations
entered into in the ordinary course of Borrower's business. Without limiting the
foregoing, no Letters of Credit will be issued hereunder for the purpose of or
providing credit enhancement with respect to any Debt or equity security of any
Credit Party or to secure any Credit Party's obligations with respect to Hedge
Transactions other than Hedge Transactions with a Bank or an Affiliate of such
Bank.
Section 10.8 Investments. Parent and Borrower will not, nor will Parent
and/or Borrower permit any other Credit Party to, directly or indirectly, make
or have outstanding any Investment other than Permitted Investments.
Section 10.9 Transactions with Affiliates. Parent and Borrower will not,
nor will Parent and/or Borrower permit any of their Subsidiaries to, engage in
any transaction with an Affiliate unless such transaction is as favorable to
such party as could be obtained in an arm's length transaction with an
unaffiliated Person in accordance with prevailing industry customs and
practices.
Section 10.10 ERISA. Except in such instances where an omission or failure
would not have a Material Adverse Effect, Parent and Borrower will not, nor will
Parent and/or Borrower permit any other Credit Party to (a) take any action or
fail to take any action which would result in a violation of ERISA, the Code or
other Laws applicable to the Plans maintained or contributed to by it or any
ERISA Affiliate, or (b) modify the term of, or the funding obligations or
contribution requirements under any existing Plan, establish a new Plan, or
become obligated or incur any liability under a Plan that is not maintained or
contributed to by Parent, Borrower or any ERISA Affiliate as of the Closing
Date.
Section 10.11 Hedge Transactions.
(a) Parent and Borrower will not, nor will Parent and/or Borrower
permit any other Credit Party to, hedge (which hedges shall not have a term
of greater four (4) years) more than the following percentages of its
"forecasted production from Proved Mineral Interests" (as defined below)
during any applicable calendar year (a "measurement period"), as measured
from the current date (a "measurement date"):
Calendar Year Hedged Percentage Limitation
-------------------- ---------------------
(relative to measurement date) Oil Gas
Current Year 85% 85%
First Subsequent Year 70% 70%
Second Subsequent Year 55% 55%
Third Subsequent Year 40% 40%
57
provided, that, if any measurement date occurs in the final two Fiscal
Quarters of any measurement period, for the purpose of determining the
appropriate percentage limitation from the table above, the limitations of
the current year shall apply to both the remaining portion of that current
year and the entire subsequent year, and the limitations of the first
subsequent year shall apply to the second subsequent year (as an example
only, and for the avoidance of doubt, for any measurement date occurring
during the first two Fiscal Quarters of 2005, an Oil and Gas Hedge
Transaction for 2006 would have a 70% limitation; provided, however, for
any measurement date occurring during the last two Fiscal Quarters of 2005,
an Oil and Gas Hedge Transaction for 2006 would have an 85% limitation);
provided, further, that, Borrower may enter into Hedge Transactions
consisting solely of a floor price (i.e. floor, put or option) so long as
the amount of Hydrocarbons which are the subject of any such Hedge
Transaction in existence at any such time do not exceed one-hundred percent
(100%) of Borrower's anticipated production from Proved Mineral Interests
during the term of any such existing Hedge Transaction; and
(b) Borrower will not permit its (i) production of oil during any
Fiscal Quarter to be less than the aggregate amount of oil which is the
subject of Oil and Gas Hedge Transactions during such Fiscal Quarter, or
(ii) production of gas during any Fiscal Quarter to be less than the
aggregate amount of gas which is the subject of Oil and Gas Hedge
Transactions during such Fiscal Quarter.
As used in Section 10.11(a) above, "forecasted production from Proved
Mineral Interests" shall mean the forecasted production for oil and gas, each
taken individually, for the applicable calendar year as reflected in the most
recent Reserve Report delivered to Administrative Agent pursuant to Section 5.1
hereof, after giving effect to any pro forma adjustments for the consummation of
any "material acquisitions or dispositions" between the effective date of such
Reserve Report and the measurement date. "Material acquisitions or dispositions"
means any acquisition or disposition of any Borrowing Base Property with a
Recognized Value in excess of $10,000,000, or any cumulative total of all
immaterial acquisitions or dispositions which in the aggregate have a Recognized
Value in excess of $10,000,000.
Section 10.12 Fiscal Year. Parent and Borrower will not, nor will Parent
and/or Borrower permit any other Credit Party to, change its Fiscal Year.
Section 10.13 Change in Business. Parent and Borrower will not, nor will
Parent and/or Borrower permit any other Credit Party to, engage in any business
other than the businesses engaged in by such parties on the date hereof as
described in Section 8.13 hereof.
Section 10.14 Intentionally Deleted.
Section 10.15 Obligations of Unrestricted Subsidiaries. Except in
connection with (a) Permitted Genesis VPP Transactions, and (b) additional
transactions between Genesis and Borrower which (i) are in the ordinary course
of business of Borrower and Genesis, (ii) are on fair and reasonable terms and
at prices which are fully disclosed to Administrative Agent and are no less
favorable to Borrower (economically or otherwise) than would be obtained in a
comparable arm's length transaction with a Person not an Affiliate, and (iii)
58
otherwise comply with the terms of this Agreement, Parent and Borrower will not,
nor will Parent and/or Borrower permit any other Credit Party to, incur any
liability, Debt or obligation to any Unrestricted Subsidiary of any nature, or
have any liability (whether by operation of law or otherwise) for any liability,
Debt or obligation of any Unrestricted Subsidiary.
Section 10.16 Borrowings Related to Bond Offering. Borrower will not
request or receive any Borrowing hereunder, the proceeds of which are to be used
to fund advances under the Bonds, except in accordance and in compliance with
the terms of the Bond Documents. Borrower agrees that each Request for
Borrowing, the proceeds of which are to be used to fund advances under the
Bonds, will include, in addition to the information described in Section 3.2
hereof, a certification from an Authorized Officer as to the purpose and
utilization of the proceeds of such Borrowing. Additionally, notwithstanding
anything to the contrary contained in the Loan Papers or Bond Documents, each
payment of principal and interest received by Bond Purchaser on the Bonds shall
be deemed to be and considered as, without duplication, a payment of principal
and interest on the Revolving Loan, and any borrowing by Borrower under the Bond
Loan Agreement or on any Bond Note shall also be deemed to be and considered as,
without duplication, a Borrowing of a Revolving Loan hereunder (the outstanding
principal of which shall be and be deemed to be included in the Outstanding
Credit for all purposes hereunder).
Section 10.17 Speculative Hedge Transactions. Parent and Borrower will not,
nor will Parent and/or Borrower permit any other Credit Party to, enter into any
commodity, interest rate, currency or other swap, option, collar or other
derivative transaction pursuant to which Parent, Borrower or such other Credit
Party speculates on the movement of commodity prices, securities prices,
interest rates, financial markets, currency markets or other items; provided,
that, nothing contained in this Section 10.17 shall prohibit Borrower from
entering into Hedge Transactions permitted by Section 10.11.
ARTICLE XI
FINANCIAL COVENANTS
-------------------
Parent and Borrower agree that so long as any Bank has any commitment to
lend or participate in Letter of Credit Exposure hereunder or any amount payable
under any Note remains unpaid or any Letter of Credit remains outstanding:
Section 11.1 Current Ratio of Borrower. Parent will not permit its ratio of
Consolidated Current Assets to its Consolidated Current Liabilities as of the
end of any Fiscal Quarter to be less than 1.0 to 1.0.
Section 11.2 Minimum Consolidated Tangible Net Worth. Parent will not
permit its Consolidated Tangible Net Worth to be less than the Required
Consolidated Tangible Net Worth on any Quarterly Date.
Section 11.3 Consolidated EBITDA to Consolidated Net Interest Expense.
Parent will not permit its ratio of Consolidated EBITDA to Consolidated Net
Interest Expense to be less than 2.50 to 1.0 for any period of four (4)
consecutive Fiscal Quarters.
59
ARTICLE XII
DEFAULTS
-----------
Section 12.1 Events of Default. If one or more of the following events
(collectively "Events of Default" and individually an "Event of Default") shall
have occurred and be continuing:
(a) Borrower shall fail to pay when due any principal on any Note;
(b) Borrower shall fail to pay when due accrued interest on any Note
or any fees or any other amount payable hereunder and such failure shall
continue for a period of three (3) days following the due date;
(c) Parent or Borrower shall fail to observe or perform any covenant
or agreement contained in Section 5.4, Section 9.3, Article X or Article XI
of this Agreement;
(d) any Credit Party shall fail to observe or perform any covenant or
agreement contained in this Agreement or the other Loan Papers (other than
those referenced in Section 12.1(a), Section 12.1(b) and Section 12.1(c))
and such failure continues for a period of thirty (30) days after the
earlier of (i) the date any Authorized Officer of any Credit Party acquires
knowledge of such failure, or (ii) written notice of such failure has been
given to any Credit Party by Administrative Agent or any Bank;
(e) any representation, warranty, certification or statement made or
deemed to have been made by any Credit Party in any certificate, financial
statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when made;
(f) any Credit Party shall fail to make any payment when due on any
Debt of such Person in a principal amount equal to or greater than
$500,000, or any other event or condition shall occur which (i) results in
the acceleration of the maturity of any such Debt, or (ii) entitles the
holder of such Debt to accelerate the maturity thereof;
(g) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar
Law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to
the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate, partnership
or limited liability company action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced against
any Credit Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar Law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of sixty (60)
60
days; or an order for relief shall be entered against any Credit Party
under the federal bankruptcy Laws as now or hereafter in effect;
(i) one (1) or more final judgments or orders for the payment of money
aggregating in excess of $500,000 shall be rendered against any Credit
Party and such judgment or order shall continue unsatisfied and unstayed
for thirty (30) days;
(j) (i) any event occurs with respect to any Plan or Plans pursuant to
which any Credit Party and/or any ERISA Affiliate incur a liability due and
owing at the time of such event, without existing funding therefor, for
benefit payments under such Plan or Plans in excess of $500,000; or (ii)
any Credit Party, any ERISA Affiliate, or any other "party-in-interest" or
"disqualified person," as such terms are defined in section 3(14) of ERISA
and section 4975(e)(2) of the Code, shall engage in transactions which in
the aggregate results in a direct or indirect liability to any Credit Party
or any ERISA Affiliate in excess of $500,000 under section 409 or 502 of
ERISA or section 4975 of the Code which either (A) results in a Lien on any
Credit Party's assets which is not a Permitted Encumbrance, or (B)
continues unsatisfied for a period of thirty (30) days after any Authorized
Officer of any Credit Party first acquires knowledge of such liability;
(k) a Change of Control shall occur;
(l) this Agreement or any other Loan Paper shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Credit
Party, or any Credit Party shall deny that it has any further liability or
obligation under any of the Loan Papers, or any Lien created by the Loan
Papers shall for any reason (other than the release thereof in accordance
with the Loan Papers) cease to be a valid, first priority, perfected Lien
upon any of the Proved Mineral Interests purported to be covered thereby;
or
(m) any Credit Party or Bond Issuer shall fail to observe or perform
any covenant or agreement contained in any Bond Document after any
applicable cure period;
then, and in every such event, Administrative Agent shall without presentment,
notice or demand (unless expressly provided for herein) of any kind (including,
without limitation, notice of intention to accelerate and acceleration), all of
which are hereby waived, (a) if requested by Required Banks, terminate the
Commitments and they shall thereupon terminate, and (b) if requested by Required
Banks, take such other actions as may be permitted by the Loan Papers including,
declaring the Notes (together with accrued interest thereon) to be, and the
Notes shall thereupon become, immediately due and payable; provided that, in the
case of any of the Events of Default specified in Section 12.1(g) or Section
12.1(h), without any notice to any Credit Party or any other act by
Administrative Agent or Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable.
61
ARTICLE XIII
AGENTS
------------
Section 13.1 Appointment; Nature of Relationship. Bank One, NA is hereby
appointed by each of the Banks as its contractual representative and
Administrative Agent hereunder and under each other Loan Paper, and each Bank
irrevocably authorizes Administrative Agent to act as the contractual
representative of such Bank with the rights and duties expressly set forth
herein and in the other Loan Papers. Administrative Agent agrees to act as such
contractual representative and Administrative Agent upon the express conditions
contained in this Article XIII. Notwithstanding the use of the defined term
"Administrative Agent," it is expressly understood and agreed that
Administrative Agent shall not have any fiduciary responsibilities to any Bank
by reason of this Agreement or any other Loan Paper and that Administrative
Agent is merely acting as the contractual representative of the Banks with only
those duties as are expressly set forth in this Agreement and the other Loan
Papers. In its capacity as the Banks' contractual representative, Administrative
Agent (i) does not hereby assume any fiduciary duties to any of the Banks, (ii)
is a "representative" of the Banks within the meaning of the term "secured
party" as defined in the Illinois Uniform Commercial Code, and (iii) is acting
as an independent contractor, the rights and duties of which are limited to
those expressly set forth in this Agreement and the other Loan Papers. Each of
the Banks hereby agrees to assert no claim against Administrative Agent on any
theory of liability for breach of fiduciary duty, any and all of which claims
each Bank hereby waives.
Section 13.2 Powers. Administrative Agent shall have and may exercise such
powers under the Loan Papers as are specifically delegated to Administrative
Agent by the terms of each thereof, together with such powers as are reasonably
incidental thereto. Administrative Agent shall have no implied duties to the
Banks, or any obligation to the Banks to take any action thereunder except any
action specifically provided by the Loan Papers to be taken by Administrative
Agent.
Section 13.3 General Immunity. Neither Administrative Agent nor any of its
directors, officers, agents or employees shall be liable to Parent, Borrower or
any Bank for any action taken or omitted to be taken by it or them hereunder or
under any other Loan Paper or in connection herewith or therewith except to the
extent such action or inaction is determined in a final non-appealable judgment
by a court of competent jurisdiction to have arisen from the gross negligence or
willful misconduct of such Person.
Section 13.4 No Responsibility for Loans, Recitals, etc. Neither
Administrative Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into, or verify
(a) any statement, warranty or representation made in connection with any Loan
Paper or any Borrowing hereunder; (b) the performance or observance of any of
the covenants or agreements of any obligor under any Loan Paper, including,
without limitation, any agreement by an obligor to furnish information directly
to each Bank; (c) the satisfaction of any condition specified in Article VII,
except receipt of items required to be delivered solely to Administrative Agent;
(d) the existence or possible existence of any Default or Event of Default; (e)
the validity, enforceability, effectiveness, sufficiency or genuineness of any
Loan Paper or any other instrument or writing furnished in connection therewith;
(f) the value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of Parent, Borrower or any
62
guarantor of any of the Obligations or of any of Parent's, Borrower's or any
such guarantor's respective Subsidiaries. Administrative Agent shall have no
duty to disclose to the Banks information that is not required to be furnished
by Parent or Borrower to Administrative Agent at such time, but is voluntarily
furnished by Parent or Borrower to Bank One (either in its capacity as
Administrative Agent or in its individual capacity).
Section 13.5 Action on Instructions of Banks. Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Paper in accordance with written instructions signed by
the Required Banks, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks. The Banks hereby
acknowledge that Administrative Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Loan Paper unless it shall be requested in writing
to do so by Required Banks. Administrative Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan Paper
unless it shall first be indemnified to its satisfaction by the Banks pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
Section 13.6 Employment of Agents and Counsel. Administrative Agent may
execute any of its duties as Administrative Agent hereunder and under any other
Loan Paper by or through employees, agents, and attorneys-in-fact and shall not
be answerable to the Banks, except as to money or securities received by it or
its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Administrative Agent
shall be entitled to advice of counsel concerning the contractual arrangement
between Administrative Agent and the Banks and all matters pertaining to
Administrative Agent's duties hereunder and under any other Loan Paper.
Section 13.7 Reliance on Documents; Counsel. Administrative Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper Person or Persons, and, in respect
to legal matters, upon the opinion of counsel selected by Administrative Agent,
which counsel may be employees of Administrative Agent.
Section 13.8 Administrative Agent's Reimbursement and Indemnification.
Banks agree to reimburse and indemnify Administrative Agent ratably in
proportion to their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to such
termination) (i) for any amounts not reimbursed by Parent or Borrower for which
Administrative Agent is entitled to reimbursement by Parent or Borrower under
the Loan Papers, (ii) for any other expenses incurred by Administrative Agent on
behalf of the Banks, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Papers (including, without
limitation, for any expenses incurred by Administrative Agent in connection with
any dispute between Administrative Agent and any Bank or between two or more of
the Banks) and (iii) for any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against Administrative Agent in any way relating to or arising out of the Loan
Papers or any other document delivered in connection therewith or the
63
transactions contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against Administrative Agent in connection with
any dispute between Administrative Agent and any Bank or between two or more of
the Banks), or the enforcement of any of the terms of the Loan Papers or of any
such other documents; provided that no Bank shall be liable for any of the
foregoing to the extent any of the foregoing is found in a final non-appealable
judgment by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of Administrative Agent. The obligations of the
Banks under this Section 13.8 shall survive payment of the Obligations and
termination of this Agreement.
Section 13.9 Notice of Default. Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless Administrative Agent has received written notice from a Bank,
Parent or Borrower referring to this Agreement describing such Default or Event
of Default and stating that such notice is a "notice of default". In the event
that Administrative Agent receives such a notice, Administrative Agent shall
give prompt notice thereof to the Banks.
Section 13.10 Rights as a Bank. In the event Administrative Agent is a
Bank, Administrative Agent shall have the same rights and powers hereunder and
under any other Loan Paper with respect to its Commitment and its Revolving
Loans as any Bank and may exercise the same as though it were not Administrative
Agent, and the term "Bank" or "Banks" shall, at any time when Administrative
Agent is a Bank, unless the context otherwise indicates, include in its
individual capacity. Administrative Agent and its Affiliates may accept deposits
from, lend money to, and generally engage in any kind of trust, debt, equity or
other transaction, in addition to those contemplated by this Agreement or any
other Loan Paper, with Parent, Borrower or any of their Subsidiaries in which
Parent, Borrower or such Subsidiary is not restricted hereby from engaging with
any other Person.
Section 13.11 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon Administrative Agent, Sole Lead
Arranger, Book Manager or any other Agent or Bank and based on the financial
statements prepared by Parent and/or Borrower and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Papers. Each Bank also
acknowledges that it will, independently and without reliance upon
Administrative Agent, Sole Lead Arranger, Book Manager or any other Agent or
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Loan Papers.
Section 13.12 Successor Administrative Agent. Administrative Agent may
resign at any time by giving written notice thereof to Banks and Borrower, such
resignation to be effective upon the appointment of a successor Administrative
Agent or, if no successor Administrative Agent has been appointed, forty-five
(45) days after the retiring Administrative Agent gives notice of its intention
to resign. Administrative Agent may be removed at any time with or without cause
by written notice received by Administrative Agent from Required Banks, such
removal to be effective on the date specified by Required Banks. Upon any such
resignation or removal, Required Banks shall have the right to appoint, on
64
behalf of Parent, Borrower and the Banks, a successor Administrative Agent,
which shall be approved by Parent and Borrower, such approval not to be
unreasonably withheld; provided, that, Parent and Borrower shall not have the
right to approve any successor Administrative Agent appointed during the
continuance of any Default. If no successor Administrative Agent shall have been
so appointed by Required Banks within thirty (30) days after the resigning
Administrative Agent's giving notice of its intention to resign, then the
resigning Administrative Agent may appoint, on behalf of Parent, Borrower and
Banks, a successor Administrative Agent which shall be approved by Parent and
Borrower, such approval not to be unreasonably withheld; provided, that, Parent
and Borrower shall not have the right to approve any successor Administrative
Agent appointed during the continuance of any Default. If Administrative Agent
has resigned or been removed and no successor Administrative Agent has been
appointed, Banks may perform all the duties of Administrative Agent hereunder
and Borrower shall make all payments in respect of the Obligations to the
applicable Bank and for all other purposes Parent and Borrower shall deal
directly with the Banks. No successor Administrative Agent shall be deemed to be
appointed hereunder until such successor Administrative Agent has accepted the
appointment. Any such successor Administrative Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning or removed Administrative Agent. Upon the effectiveness of the
resignation or removal of Administrative Agent, the resigning or removed
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the Loan Papers. After the effectiveness of the resignation
or removal of an Administrative Agent, the provisions of this Article XIII shall
continue in effect for the benefit of such Administrative Agent in respect of
any actions taken or omitted to be taken by it while it was acting as
Administrative Agent hereunder and under the other Loan Papers. In the event
that there is a successor to Administrative Agent by merger, or Administrative
Agent assigns its duties and obligations to an Affiliate pursuant to this
Section 13.12, then the term "Prime Rate" as used in this Agreement shall mean
the prime rate, base rate or other analogous rate of the new Administrative
Agent.
Section 13.13 Delegation to Affiliates. Parent, Borrower and Banks agree
that Administrative Agent may delegate any of its duties under this Agreement to
any of its Affiliates. Any such Affiliate (and such Affiliate's directors,
officers, agents and employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification, waiver
and other protective provisions to which Administrative Agent is entitled under
Article XIII and Article XIV.
Section 13.14 Execution of Collateral Documents. Without limiting the
powers and authority of Administrative Agent described herein, the Banks hereby
empower and authorize Administrative Agent to execute and deliver to Parent and
Borrower (as applicable) on their behalf the Mortgages, the Amendments to
Mortgages, the Parent Pledge Agreements, the Subsidiary Pledge Agreements and
all related financing statements and any other financing statements, agreements,
documents or instruments as shall be necessary or appropriate to effect the
purposes of the foregoing instruments.
Section 13.15 Collateral Releases. Banks hereby empower and authorize
Administrative Agent to execute and deliver to Parent and Borrower (as
65
applicable) on their behalf any agreements, documents or instruments as shall be
necessary or appropriate to effect any releases of collateral which shall be
permitted by the terms hereof or of any other Loan Paper or which shall
otherwise have been approved by Required Banks (or, if required by the terms of
Section 15.5, all of the Banks) in writing.
Section 13.16 Agents. None of the Banks identified in this Agreement as a
"Documentation Agent" and/or a "Syndication Agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Banks as such. Without limiting the foregoing, none of
such Documentation Agents or Syndication Agents shall have or be deemed to have
a fiduciary relationship with any Bank. Each Bank hereby makes the same
acknowledgments with respect to such Documentation Agents and Syndication Agents
as it makes with respect to Administrative Agent in Section 13.11.
Section 13.17 Bond Documents. Without limiting the power and authority of
Administrative Agent described herein, Banks hereby:
(a) appoint Administrative Agent, as Bond Purchaser, as its
contractual representative under the Bond Documents and irrevocably
authorize Administrative Agent to act as the contractual representative of
each Bank under the Bond Documents with the rights and duties expressly set
forth therein, and to hold the Bonds on behalf of the Banks, it being
expressly understood and agreed, however, that Administrative Agent shall
not have any fiduciary responsibilities to any Bank by reason of the Bond
Documents;
(b) empower and authorize Administrative Agent to execute and deliver
the Bond Documents to which it is a party; and
(c) agree that all references in this Article XIII to "Loan Papers,"
shall be deemed to include, without limitation, the Bond Documents.
ARTICLE XIV
CHANGE IN CIRCUMSTANCES
-----------------------
Section 14.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof
by any Governmental Authority, central bank, or comparable agency charged
with the interpretation or administration thereof, or compliance by any
Bank (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such Governmental
Authority, central bank, or comparable agency:
(i) shall subject such Bank (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, its Note, or its obligation to make Eurodollar
Loans, or change the basis of taxation of any amounts payable to
such Bank (or its Applicable Lending Office) under this Agreement
or its Note in respect of any Eurodollar Loans (other than taxes
imposed on the overall net income of such Bank or such Applicable
Lending Office);
66
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, compulsory loan, or similar
requirement (other than the Reserve Requirement utilized in the
determination of the Adjusted Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits with or
other liabilities or commitments of, such Bank (or its Applicable
Lending Office), including the Commitment of such Bank hereunder;
or
(iii) shall impose on such Bank (or its Applicable Lending
Office) or on the London interbank market any other condition
affecting this Agreement or its Note or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Bank
(or its Applicable Lending Office) of making, Converting into, Continuing,
or maintaining any Eurodollar Loans or to reduce any sum received or
receivable by such Bank (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Loans, then the
Borrower shall pay to such Bank on demand such amount or amounts as will
compensate such Bank for such increased cost or reduction. If any Bank
requests compensation by Borrower under this Section 14.1(a), the Borrower
may, by notice to such Bank (with a copy to Administrative Agent), suspend
the obligation of such Bank to make or Continue Eurodollar Loans or to
Convert all or part of the Base Rate Loan owing to such Bank into
Eurodollar Loans, until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of Section 14.4 shall
be applicable); provided, that such suspension shall not affect the right
of such Bank to receive the compensation so requested.
(b) If, after the date hereof, any Bank shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any Governmental Authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having the force of
law) of any such Governmental Authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of such Bank or any corporation controlling such Bank as a
consequence of such Bank's obligations hereunder to a level below that
which such Bank or such corporation could have achieved but for such
adoption, change, request, or directive (taking into consideration its
policies with respect to capital adequacy), then, from time to time upon
demand, Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such reduction.
(c) Each Bank shall promptly notify Borrower and Administrative Agent
of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section 14.1
and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Bank, be otherwise
disadvantageous to it. Any Bank claiming compensation under this Section
14.1 shall furnish to Borrower and Administrative Agent a statement setting
forth the additional amount or amounts to be paid to it hereunder which
shall be conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and attribution methods.
67
Section 14.2 Limitation on Type of Loans. If on or prior to the first day
of any Interest Period for any Eurodollar Loan:
(a) Administrative Agent determines (which determination shall be
conclusive) 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) Required Banks determine (which determination shall be conclusive)
and notify Administrative Agent that the Adjusted Eurodollar Rate will not
adequately and fairly reflect the cost to Banks of funding Eurodollar Loans
for such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof specifying
the relevant Type of Revolving Loans and the relevant amounts or periods, and so
long as such condition remains in effect, Banks shall be under no obligation to
make additional Revolving Loans of such Type, Continue Revolving Loans of such
Type, or to Convert Revolving Loans of any other Type into Revolving Loans of
such Type, and Borrower shall, on the last day(s) of the then current Interest
Period(s) for the outstanding Revolving Loans of the affected Type, either
prepay such Revolving Loans or Convert such Revolving Loans into another Type of
Revolving Loan in accordance with the terms of this Agreement.
Section 14.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to make, maintain, or fund Eurodollar Loans hereunder, then such
Bank shall promptly notify Borrower thereof and such Bank's obligation to make
or Continue Eurodollar Loans and to Convert other Types of Revolving Loans into
Eurodollar Loans shall be suspended until such time as such Bank may again make,
maintain, and fund Eurodollar Loans (in which case the provisions of Section
14.4 shall be applicable).
Section 14.4 Treatment of Affected Loans. If the obligation of any Bank to
make particular Eurodollar Loans or to Continue Revolving Loans, or to Convert
Revolving Loans of another Type into Revolving Loans of a particular Type shall
be suspended pursuant to Section 14.1 or Section 14.3 hereof (Revolving Loans of
such Type being herein called "Affected Loans" and such Type being herein called
the "Affected Type"), such Bank's Affected Loans shall be automatically
Converted into the Base Rate Loan on the last day(s) of the then current
Interest Period(s) for Affected Loans (or, in the case of a Conversion required
by Section 14.3 hereof, on such earlier date as such Bank may specify to
Borrower with a copy to Administrative Agent) and, unless and until such Bank
gives notice as provided below that the circumstances specified in Section 14.1
or Section 14.3 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Bank's Affected Loans shall be applied instead to the
Base Rate Loan; and
(b) all Revolving Loans that would otherwise be made or Continued by
such Bank as Revolving Loans of the Affected Type shall be made or
Continued instead as part of the Base Rate Loan, and all Revolving Loans of
68
such Bank that would otherwise be Converted into Revolving Loans of the
Affected Type shall be Converted instead into (or shall remain) as part of
the Base Rate Loan.
If such Bank gives notice to Borrower (with a copy to Administrative Agent) that
the circumstances specified in Section 14.1 or Section 14.3 hereof that gave
rise to the Conversion of such Bank's Affected Loans pursuant to this Section
14.4 no longer exist (which such Bank agrees to do promptly upon such
circumstances ceasing to exist) at a time when Revolving Loans of the Affected
Type made by other Banks are outstanding, such Bank's portion of the Base Rate
Loan shall be automatically Converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding Revolving Loans of the
Affected Type, to the extent necessary so that, after giving effect thereto, all
Revolving Loans held by Banks holding Revolving Loans of the Affected Type and
by such Bank are held pro rata (as to principal amounts, Types and Interest
Periods) in accordance with their respective Commitments.
Section 14.5 Compensation. Upon the request of any Bank, Borrower shall pay
to such Bank such amount or amounts as shall be sufficient (in the reasonable
opinion of such Bank) to compensate it for any loss, cost, or expense (including
loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the
Revolving Loan) on a date other than the last day of the Interest Period
for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article VII
to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan
on the date for such Borrowing, Conversion, Continuation, or prepayment
specified in the relevant Request for Borrowing, Notice of Continuation or
Conversion, or other notice of Borrowing, prepayment, Continuation, or
Conversion under this Agreement.
Section 14.6 Taxes.
(a) Any and all payments by Borrower to or for the account of any Bank
or Administrative Agent hereunder or under any other Loan Paper shall be
made free and clear of and without deduction for any and all present or
future Taxes, duties, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of each
Bank and Administrative Agent, Taxes imposed on its income, and franchise
Taxes imposed on it, by the jurisdiction under the Laws of which such Bank
(or its Applicable Lending Office) or Administrative Agent (as the case may
be) is organized or any political subdivision thereof (all such
non-excluded Taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to in this Section
14.6 as "Non-Excluded Taxes"). If Borrower shall be required by Law to
deduct any Non-Excluded Taxes from or in respect of any sum payable under
this Agreement or any other Loan Paper to any Bank or Administrative Agent,
(i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 14.6) such Bank or Administrative Agent receives
an amount equal to the sum it would have received had no such deductions
been made, (ii) Borrower shall make such deductions, (iii) Borrower shall
69
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Law, and (iv) Borrower shall
furnish to Administrative Agent, at its address set forth on Schedule 2.1
hereto, the original or a certified copy of a receipt evidencing payment
thereof.
(b) In addition, Borrower agrees to pay any and all present or future
stamp or documentary Taxes and any other excise or property Taxes or
charges or similar levies which arise from any payment made under this
Agreement or any other Loan Paper or from the execution or delivery of, or
otherwise with respect to, this Agreement or any other Loan Paper
(hereinafter referred to as "Other Taxes").
(c) Borrower agrees to indemnify each Bank and Administrative Agent
for the full amount of Taxes and Other Taxes (including, without
limitation, any Non-Excluded Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section 14.6) paid by such
Bank or Administrative Agent (as the case may be) and any liability
(including penalties, interest, and expenses) arising therefrom or with
respect thereto.
(d) Each Bank organized under the Laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of
this Agreement in the case of each Bank listed on Schedule 2.1 hereto and
on or prior to the date on which it becomes a Bank in the case of each
other Bank, and from time to time thereafter if requested in writing by
Borrower or Administrative Agent (but only so long as such Bank remains
lawfully able to do so), shall provide Borrower and Administrative Agent,
at the time or times prescribed by applicable Law, with such properly
completed and executed documentation prescribed by applicable Law (or
reasonably requested by Borrower) certifying that such Bank is entitled to
benefits under an income tax treaty to which the United States is a party
which reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States, and certifying that such Bank is entitled to an exemption from or a
reduced rate of tax on payments pursuant to this Agreement or any of the
other Loan Papers.
(e) For any period with respect to which a Bank has failed to provide
Borrower and Administrative Agent with the appropriate form pursuant to
Section 14.6(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Bank shall not be entitled to
indemnification under Section 14.6(a) or Section 14.6(b) with respect to
Non-Excluded Taxes imposed by the United States; provided, however, that
should a Bank, which is otherwise exempt from or subject to a reduced rate
of withholding Tax, become subject to Non-Excluded Taxes because of its
failure to deliver a form required hereunder, Borrower shall take such
steps as such Bank shall reasonably request to assist such Bank to recover
such Non-Excluded Taxes.
(f) If Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 14.6, then such Bank will
agree to use reasonable efforts to change the jurisdiction of its
Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of such
Bank, is not otherwise disadvantageous to such Bank.
70
(g) Within thirty (30) days after the date of any payment of
Non-Excluded Taxes, Borrower shall furnish to Administrative Agent the
original or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 14.6 shall survive the termination of the Commitments and the
payment in full of the Notes.
Section 14.7 Discretion of Banks as to Manner of Funding. Notwithstanding
any provisions of this Agreement to the contrary, each Bank shall be entitled to
fund and maintain its funding of all or any part of its Commitment in any manner
it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if such Bank had
actually funded and maintained each Eurodollar Loan during the Interest Period
for such Eurodollar Loan through the purchase of deposits having a maturity
corresponding to the last day of such Interest Period and bearing an interest
rate equal to the Adjusted Eurodollar Rate for such Interest Period.
ARTICLE XV
MISCELLANEOUS
-------------
Section 15.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telecopy or similar
writing) and shall be given, if to Administrative Agent or any Bank, at its
address or telecopier number set forth on Schedule 2.1 hereto, and if given to
Parent or Borrower, at its address or telecopy number set forth on the signature
pages hereof (or in either case, at such other address or telecopy number as
such party may hereafter specify for the purpose by notice to the other parties
hereto). Each such notice, request or other communication shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 15.1 and the appropriate answerback is received or
receipt is otherwise confirmed, (b) if given by mail, three (3) Domestic
Business Days after deposit in the mails with first class postage prepaid,
addressed as aforesaid, or (c) if given by any other means, when delivered at
the address specified in this Section 15.1; provided that notices to
Administrative Agent under Article III or Article IV shall not be effective
until received.
Section 15.2 No Waivers. No failure or delay by Administrative Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note or
other Loan Paper shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by Law or in any of the other Loan Papers.
Section 15.3 Expenses; Indemnification.
(a) Parent and Borrower jointly and severally agree to pay on demand
all reasonable costs and expenses of each Agent (other than any
Documentation Agent or Syndication Agent) in connection with the
syndication, preparation, execution, delivery, modification, and amendment
of this Agreement, the other Loan Papers, and the other documents to be
71
delivered hereunder, including, without limitation, the reasonable fees and
expenses of counsel for Administrative Agent with respect thereto and with
respect to advising Administrative Agent as to its rights and
responsibilities under the Loan Papers. Parent and Borrower further jointly
and severally agree to pay on demand all costs and expenses of
Administrative Agent and Banks, if any (including, without limitation,
reasonable attorneys' fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings, or otherwise)
of the Loan Papers and the other documents to be delivered hereunder.
(b) PARENT AND BORROWER JOINTLY AND SEVERALLY AGREE TO INDEMNIFY AND
HOLD HARMLESS EACH AGENT AND EACH BANK AND EACH OF THEIR AFFILIATES AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ADVISORS
(EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS,
DAMAGES, LOSSES, LIABILITIES, COSTS, AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' FEES) THAT MAY BE INCURRED BY OR ASSERTED
OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN
CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN
CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION
OF DEFENSE IN CONNECTION THEREWITH) THE LOAN PAPERS, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE
PROCEEDS OF THE REVOLVING LOAN (INCLUDING ANY OF THE FOREGOING ARISING FROM
THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM,
DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. IN THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING
TO WHICH THE INDEMNITY IN THIS SECTION 15.3 APPLIES, SUCH INDEMNITY SHALL
BE EFFECTIVE WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS
BROUGHT BY CREDIT PARTIES, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN
INDEMNIFIED PARTY OR ANY OTHER PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE
A PARTY THERETO AND WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE
CONSUMMATED. PARENT AND BORROWER JOINTLY AND SEVERALLY AGREE NOT TO ASSERT
ANY CLAIM AGAINST ANY AGENT, ANY BANK, ANY OF THEIR AFFILIATES, OR ANY OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS, AND
ADVISERS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL,
OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN
PAPERS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR
PROPOSED USE OF THE PROCEEDS OF THE REVOLVING LOAN.
(c) Without prejudice to the survival of any other agreement of Parent
or Borrower hereunder, the agreements and obligations of Parent and
72
Borrower contained in this Section 15.3 shall survive the payment in full
of the Revolving Loan and all other amounts payable under this Agreement.
Section 15.4 Right of Set-off; Adjustments.
(a) Upon the occurrence and during the continuance of any Event of
Default, each Bank (and each of its Affiliates) is hereby authorized at any
time and from time to time, to the fullest extent permitted by Law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by such Bank (or any of its Affiliates) to or for the credit or the
account of any Credit Party against any and all of the Obligations,
irrespective of whether such Bank shall have made any demand under this
Agreement or Note held by such and although such obligations may be
unmatured. Each Bank agrees promptly to notify the affected Credit Party
after any such set-off and application made by such Bank; provided,
however, that the failure to give such notice shall not affect the validity
of such set-off and application. The rights of each Bank under this Section
15.4 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Bank may have.
(b) If any Bank (a "benefitted Bank") shall at any time receive any
payment of all or part of the amounts owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any
such payment to or collateral received by any other Bank, if any, in
respect of such other Bank's amounts owing to it, or interest thereon, such
benefitted Bank shall purchase for cash from the other Banks a
participating interest in such portion of each such other Bank's amounts
owing to it, or shall provide such other Banks with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause
such benefitted Bank to share the excess payment or benefits of such
collateral or proceeds ratably with each other Bank; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such benefitted Bank, such purchase shall be rescinded, and
the purchase price and benefits returned, to the extent of such recovery,
but without interest. Borrower agrees that any Bank so purchasing a
participation from a Bank pursuant to this Section 15.4 may, to the fullest
extent permitted by Law, exercise all of its rights of payment (including
the right of set-off) with respect to such participation as fully as if
such Person were the direct creditor of Borrower in the amount of such
participation.
Section 15.5 Amendments and Waivers. Any provision of this Agreement, the
Notes or any other Loan Paper may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Parent, Borrower and Required
Banks (and, if the rights or duties of any Agent are affected thereby, by such
Agent); provided that no such amendment or waiver shall, unless signed by all
Banks, (a) increase the Commitment of any Bank, (b) reduce the principal of or
rate of interest on any Revolving Loan or any fees or other amounts payable
hereunder or for termination of any Commitment, (c) change the percentage of the
Total Commitment, or the number of Banks which shall be required for Banks or
any of them to take any action under this Section 15.5 or any other provision of
this Agreement, (d) extend the due date for, or forgive any principal, interest,
fees or reimbursement obligations due hereunder, (e) release any material
guarantor or other material party liable for all or any part of the Obligations
or release any material part of the collateral for the Obligations or any part
73
thereof other than releases required pursuant to sales of collateral which are
expressly permitted by Section 10.5 hereof, or (f) amend or modify any of the
provisions of Article V hereof or the definitions of any terms defined therein.
Section 15.6 Survival. All representations, warranties and covenants made
by any Credit Party herein or in any certificate or other instrument delivered
by it or in its behalf under the Loan Papers shall be considered to have been
relied upon by Banks and shall survive the delivery to Banks of such Loan Papers
or the extension of the Revolving Loan (or any part thereof), regardless of any
investigation made by or on behalf of Banks. The indemnity provided in Section
15.3(b) herein shall survive the repayment of all credit advances hereunder
and/or the discharge or release of any Lien granted hereunder or in any other
Loan Paper, contract or agreement between Borrower or any other Credit Party and
any Agent or any Bank.
Section 15.7 Limitation on Interest. Regardless of any provision contained
in the Loan Papers, Banks shall never be entitled to receive, collect, or apply,
as interest on the Revolving Loan, any amount in excess of the Maximum Lawful
Rate, and in the event any Bank ever receives, collects or applies as interest
any such excess, such amount which would be deemed excessive interest shall be
deemed a partial prepayment of principal and treated hereunder as such; and if
the Revolving Loan is paid in full, any remaining excess shall promptly be paid
to Borrower. In determining whether or not the interest paid or payable under
any specific contingency exceeds the Maximum Lawful Rate, Parent, Borrower and
Banks shall, to the extent permitted under applicable Law, (a) characterize any
non-principal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof and (c) amortize, prorate,
allocate and spread, in equal parts, the total amount of the interest throughout
the entire contemplated term of the Notes, so that the interest rate is the
Maximum Lawful Rate throughout the entire term of the Notes; provided, however,
that if the unpaid principal balance thereof is paid and performed in full prior
to the end of the full contemplated term thereof, and if the interest received
for the actual period of existence thereof exceeds the Maximum Lawful Rate,
Banks shall refund to Borrower the amount of such excess and, in such event,
Banks shall not be subject to any penalties provided by any Laws for contracting
for, charging, taking, reserving or receiving interest in excess of the Maximum
Lawful Rate.
Section 15.8 Invalid Provisions. If any provision of the Loan Papers is
held to be illegal, invalid, or unenforceable under present or future Laws
effective during the term thereof, such provision shall be fully severable, the
Loan Papers shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of the Loan Papers a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid and enforceable.
Section 15.9 Waiver of Consumer Credit Laws. Pursuant to Chapter 346 of the
Texas Finance Code, as amended, Parent and Borrower agree that such Chapter 346
shall not govern or in any manner apply to the Revolving Loan.
74
Section 15.10 Assignments and Participations.
(a) Successors and Assigns. The terms and provisions of the Loan
Papers shall be binding upon and inure to the benefit of Parent, Borrower
and Banks and their respective successors and assigns permitted hereby,
except that (i) neither Parent nor Borrower shall have the right to assign
its rights or obligations under the Loan Papers without the prior written
consent of each Bank, (ii) any assignment by any Bank must be made in
compliance with Section 15.10(c), and (iii) any transfer by participation
must be made in compliance with Section 15.10(b). Any attempted assignment
or transfer by any party not made in compliance with this Section 15.10(a)
shall be null and void, unless such attempted assignment or transfer is
treated as a participation in accordance with Section 15.10(b). The parties
to this Agreement acknowledge that clause (ii) of this Section 15.10(a)
relates only to absolute assignments and this Section 15.10(a) does not
prohibit assignments creating security interests, including, without
limitation, (x) any pledge or assignment by any Bank of all or any portion
of its rights under this Agreement and any Note to a Federal Reserve Bank
or (y) in the case of a Bank which is a Fund, any pledge or assignment of
all or any portion of its rights under this Agreement and any Note to its
trustee in support of its obligations to its trustee; provided, however,
that no such pledge or assignment creating a security interest shall
release the transferor Bank from its obligations hereunder unless and until
the parties thereto have complied with the provisions of Section 15.10(c).
Administrative Agent may treat the Person which made any Revolving Loan or
which holds any Note as the owner thereof for all purposes hereof unless
and until such Person complies with Section 15.10(c); provided, however,
that Administrative Agent may in its discretion (but shall not be required
to) follow instructions from the Person which made any Revolving Loan or
which holds any Note to direct payments relating to such Revolving Loan or
Note to another Person. Any assignee of the rights to any Revolving Loan or
any Note agrees by acceptance of such assignment to be bound by all the
terms and provisions of the Loan Papers. Any request, authority or consent
of any Person, who at the time of making such request or giving such
authority or consent is the owner of the rights to any Revolving Loan
(whether or not a Note has been issued in evidence thereof), shall be
conclusive and binding on any subsequent holder or assignee of the rights
to such Revolving Loan.
(b) Participations.
(i) Any Bank may at any time sell to one or more banks or other
entities ("Participants") participating interests in any ------------
Revolving Loan owing to such Bank, any Note held by such Bank, any
Commitment of such Bank or any other interest of such Bank under the
Loan Papers. In the event of any such sale by a Bank of participating
interests to a Participant, such Bank's obligations under the Loan
Papers shall remain unchanged, such Bank shall remain solely
responsible to the other parties hereto for the performance of such
obligations, such Bank shall remain the owner of its Revolving Loans
and the holder of any Note issued to it in evidence thereof for all
purposes under the Loan Papers, all amounts payable by Borrower under
this Agreement shall be determined as if such Bank had not sold such
participating interests, and Parent, Borrower and Administrative Agent
shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under the Loan
Papers.
75
(ii) Each Bank shall retain the sole right to approve, without
the consent of any Participant, any amendment, modification or waiver
of any provision of the Loan Papers other than any amendment,
modification or waiver with respect to any Revolving Loan or
Commitment in which such Participant has an interest which would
require consent of all of the Banks pursuant to the terms of Section
15.5 or of any other Loan Paper.
(iii) Parent and Borrower agree that each Participant shall be
deemed to have the right of setoff provided in Section 15.4 in respect
of its participating interest in amounts owing under the Loan Papers
to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under the Loan Papers; provided, that
each Bank shall retain the right of setoff provided in Section 15.4
with respect to the amount of participating interests sold to each
Participant. Banks agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section
15.4, agrees to share with each Bank, any amount received pursuant to
the exercise of its right of setoff, such amounts to be shared in
accordance with Section 15.4 as if each Participant were a Bank.
Parent and Borrower further agree that each Participant shall be
entitled to the yield protection provisions contained in Article XIV
to the same extent as if it were a Bank and had acquired its interest
by assignment pursuant to Section 15.10(c); provided, that (A) a
Participant shall not be entitled to receive any greater payment under
Article XIV than the Bank who sold the participating interest to such
Participant would have received had it retained such interest for its
own account, unless the sale of such interest to such Participant is
made with the prior written consent of Parent and Borrower, and (B)
any Participant not incorporated under the laws of the United States
of America or any State thereof agrees to comply with the provisions
of Section 14.6 to the same extent as if it were a Bank.
(c) Assignments.
(i) Any Bank may at any time assign to one or more banks or other
entities ("Purchasers") all or any part of its rights and obligations
under the Loan Papers. The parties to such assignment shall execute
and deliver an Assignment and Acceptance Agreement (herein so called)
which shall be substantially in the form of Exhibit K or in such other
form as may be agreed to by the parties thereto. Each such assignment
with respect to a Purchaser which is not a Bank or an Affiliate of a
Bank or an Approved Fund shall either be in an amount equal to the
entire applicable Commitment and Revolving Loans of the assigning Bank
or (unless each of Parent, Borrower and Administrative Agent otherwise
consents) be in an aggregate amount not less than $5,000,000. The
amount of the assignment shall be based on the Commitment or
outstanding Revolving Loans (if the Commitment has been terminated)
subject to the assignment, determined as of the date of such
assignment or as of the "Effective Date," if the "Effective Date" is
specified in the Assignment and Acceptance Agreement.
(ii) The consent of Parent and Borrower shall be required prior
to an assignment becoming effective unless Purchaser is a Bank, an
Affiliate of a Bank or an Approved Fund, provided that neither the
consent of Parent nor Borrower shall be required if a Default has
occurred and is continuing. The consent of Administrative Agent shall
76
be required prior to an assignment becoming effective unless the
Purchaser is a Bank, an Affiliate of a Bank or an Approved Fund. The
consent of Letter of Credit Issuer shall be required prior to an
assignment of a Commitment becoming effective unless Purchaser is a
Bank, an Affiliate of a Bank or an Approved Fund. Any consent required
under this Section 15.10(c)(ii) shall not be unreasonably withheld or
delayed.
(iii) Upon (A) delivery to Administrative Agent of an Assignment
and Acceptance Agreement, together with any consents required by
Section 15.10(c)(i) and (ii), and (B) payment of a $3,500 fee to
Administrative Agent for processing such assignment (unless such fee
is waived by Administrative Agent), such assignment shall become
effective on the effective date specified in such Assignment and
Acceptance Agreement. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Bank party to
this Agreement and any other Loan Paper executed by or on behalf of
Banks and shall have all the rights and obligations of a Bank under
the Loan Papers, to the same extent as if it were an original party
thereto, and the transferor Bank shall be released with respect to the
Commitment and Revolving Loans assigned to such Purchaser without any
further consent or action by Parent, Borrower, Banks or Administrative
Agent. In the case of an assignment covering all of the assigning
Bank's rights and obligations under this Agreement, such Bank shall
cease to be a Bank hereunder but shall continue to be entitled to the
benefits of, and subject to, those provisions of this Agreement and
the other Loan Papers which survive payment of the Obligations and
termination of the applicable agreement. Any assignment or transfer by
a Bank of rights or obligations under this Agreement that does not
comply with this Section 15.10(c) shall be treated for purposes of
this Agreement as a sale by such Bank of a participation in such
rights and obligations in accordance with Section 15.10(b). Upon the
consummation of any assignment to a Purchaser pursuant to this Section
15.10(c), the transferor Bank, Administrative Agent and Borrower shall
make appropriate arrangements so that new Notes or, as appropriate,
replacement Notes are issued to such transferor Bank and new Notes or,
as appropriate, replacement Notes, are issued to such Purchaser, in
each case in principal amounts reflecting their respective
Commitments, as adjusted pursuant to such assignment.
(iv) Administrative Agent, acting solely for this purpose as an
agent of Borrower, shall maintain at one of its offices in Chicago,
Illinois or Dallas, Texas a copy of each Assignment and Acceptance
Agreement delivered to it and a register for the recordation of the
names and addresses of the Banks, and the Commitments of, and
principal amounts of the Revolving Loans owing to, each Bank pursuant
to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and Borrower, Administrative Agent
and Banks may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Bank hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by Parent, Borrower and any Bank, at
any reasonable time and from time to time upon reasonable prior
notice.
(d) Dissemination of Information. Parent and Borrower authorize each
Bank to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Papers by operation of law (each a
77
"Transferee") and any prospective Transferee any and all information in
such Bank's possession concerning the creditworthiness of Parent, Borrower
and their Subsidiaries, including, without limitation, any information
contained in any financial reports; provided, that, each Transferee and
prospective Transferee agrees to be bound by Section 15.17 of this
Agreement.
(e) Tax Treatment. If any interest in any Loan Paper is transferred to
any Transferee which is not incorporated under the laws of the United
States or any State thereof, the transferor Bank shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 14.6(d).
(f) Procedures for Commitment Increases and Addition of New Banks.
This Agreement permits certain increases of a Bank's Commitment and the
admission of new Banks providing new Commitments, none of which requires
any consent or approvals from the other Banks. Any amendment hereto for
such a Commitment Increase or addition shall be in the form attached hereto
as Exhibit M and shall only require the written signatures of
Administrative Agent, Borrower and the Bank(s) being added or increasing
their Commitment. On the effective date of any such Commitment Increase,
Administrative Agent, Borrower and applicable Banks shall make appropriate
arrangements so that new Notes or, as appropriate, replacement Notes are
issued to the applicable Banks, in each case in principal amounts
reflecting their respective Commitments, after giving effect to such
Commitment Increase. In addition, within a reasonable period of time after
the effective date of any Commitment Increase, Administrative Agent shall,
and is hereby authorized and directed to, revise Schedule 2.1 to reflect
such Commitment Increase and shall distribute such revised Schedule 2.1 to
each of the Banks and Borrower, whereupon such revised Schedule 2.1 shall
replace the old Schedule 2.1 and become part of this Agreement. On the
first Domestic Business Day immediately following any such Commitment
Increase, all outstanding Base Rate Loans shall be reallocated among the
Banks (including any newly added Bank(s)) in accordance with the Banks'
respective revised pro rata shares of such outstanding Base Rate Loans.
Eurodollar Loans shall not be reallocated among the Banks prior to the
expiration of the applicable Interest Periods in effect at the time of any
such Commitment Increase.
Section 15.11 TEXAS LAW. THIS AGREEMENT, EACH NOTE AND THE OTHER LOAN
PAPERS HAVE BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND
THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE LAWS OF
ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR THE OBLIGATIONS IS
LOCATED NECESSARILY GOVERN (A) THE PERFECTION AND PRIORITY OF THE LIENS IN FAVOR
OF ADMINISTRATIVE AGENT AND BANKS WITH RESPECT TO SUCH PROPERTY, AND (B) THE
EXERCISE OF ANY REMEDIES (INCLUDING FORECLOSURE) WITH RESPECT TO SUCH PROPERTY.
Section 15.12 Consent to Jurisdiction; Waiver of Immunities.
(a) Parent and Borrower hereby irrevocably submit to the jurisdiction
of any Texas State or Federal court sitting in the Northern District of
Texas over any action or proceeding arising out of or relating to this
78
Agreement or any other Loan Papers, and Parent and Borrower hereby
irrevocably agree that all claims in respect of such action or proceeding
may be heard and determined in such Texas State or Federal court. As an
alternative, Parent and Borrower irrevocably consent to the service of any
and all process in any such action or proceeding by the mailing (which
shall be by registered mail) of copies of such process to such Person at
its address specified in Section 15.1. Parent and Borrower agree that a
final judgment on any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by Law.
(b) Nothing in this Section 15.12 shall affect any right of Banks to
serve legal process in any other manner permitted by Law or affect the
right of any Bank to bring any action or proceeding against any Credit
Party or their properties in the courts of any other jurisdictions.
(c) To the extent that Parent or Borrower has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to
itself or its property, such Person hereby irrevocably waives such immunity
in respect of its obligations under this Agreement and the other Loan
Papers.
Section 15.13 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Subject to the terms and conditions herein set forth (including, without
limitation, the execution and delivery of the Certificate of Effectiveness),
this Agreement shall become effective when Administrative Agent shall have
received counterparts hereof signed by all of the parties hereto or, in the case
of any Bank as to which an executed counterpart shall not have been received,
Administrative Agent shall have received telegraphic or other written
confirmation from such Bank of execution of a counterpart hereof by such Bank.
Section 15.14 No Third Party Beneficiaries. Except for the provisions
hereof inuring to the benefit of Agents not a party to this Agreement, it is
expressly intended that there shall be no third party beneficiaries of the
covenants, agreements, representations or warranties herein contained other than
third party beneficiaries permitted pursuant to Section 15.10.
Section 15.15 COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS, AGENTS AND THE
CREDIT PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANKS, AGENTS, AND THE CREDIT
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG BANKS, AGENTS, AND THE
CREDIT PARTIES.
Section 15.16 WAIVER OF JURY TRIAL. PARENT, BORROWER, ADMINISTRATIVE AGENT
AND BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
PAPERS AND FOR ANY COUNTERCLAIM THEREIN.
79
Section 15.17 Confidentiality. Administrative Agent and each Bank (each, a
"Lending Party") agrees to keep confidential any information furnished or made
available to it by any Credit Party pursuant to this Agreement that is marked
confidential; provided, that nothing herein shall prevent any Lending Party from
disclosing such information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent, or advisor of any
Lending Party or any Affiliate of any Lending Party, (b) to any other Person if
reasonably incidental to the administration of the credit facility provided
herein, (c) as required by any Law, rule or regulation, (d) upon the order of
any court or administrative agency, (e) upon the request or demand of any
regulatory agency or authority, (f) that is or becomes available to the public
or that is or becomes available to any Lending Party other than as a result of a
disclosure by any Lending Party prohibited by this Agreement, (g) in connection
with any litigation to which such Lending Party or any of its affiliates may be
a party, (h) to the extent necessary in connection with the exercise of any
remedy under this Agreement or any other Loan Paper, and (i) subject to
provisions substantially similar to those contained in this Section 15.17, to
any actual or proposed participant or assignee. Notwithstanding anything herein
to the contrary, confidential information shall not include, and each party to
any of the Loan Papers and their respective Affiliates (and the respective
partners, directors, officers, employees, advisors, representatives and other
agents of each of the foregoing and their Affiliates) may disclose to any and
all Persons, without limitation of any kind (i) any information with respect to
the U.S. federal and state income tax treatment of the transactions contemplated
hereby and any facts that may be relevant to understanding such tax treatment,
which facts shall not include for this purpose the names of the parties or any
other Person named herein, or information that would permit identification of
the parties or such other Persons, or any pricing terms or other nonpublic
business or financial information that is unrelated to such tax treatment or
facts, and (ii) all materials of any kind (including opinions or other tax
analyses) relating to such tax treatment or facts that are provided to any of
the Persons referred to above, and it is hereby confirmed that each of the
Persons referred to above has been authorized to make such disclosures since the
commencement of discussions regarding the transactions contemplated hereby.
Section 15.18 USA Patriot Act Notification. The following notification is
provided to Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31
U.S.C. Section 5318:
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help
the government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify, and record
information that identifies each person or entity that opens an account,
including any deposit account, treasury management account, loan, other
extension of credit, or other financial services product. What this means for
Parent and Borrower: when either Parent or Borrower opens an account,
Administrative Agent and Banks will ask for Parent's or Borrower's name, tax
identification number, business address, and other information (as applicable)
that will allow Administrative Agent and Banks to identify Parent or Borrower
(as applicable). Administrative Agent and Banks may also ask to see Parent's or
Borrower's legal organizational documents or other identifying documents.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective Authorized Officers on the day and year first
above written.
[signature pages to follow]
80
SIGNATURE PAGE TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES INC., AS PARENT GUARANTOR,
DENBURY ONSHORE, LLC, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
BORROWER:
- --------
DENBURY ONSHORE, LLC,
a Delaware limited liability company
By: /s/ Phil Rykhoek
-----------------------------------------------------------------------
Phil Rykhoek,
Senior Vice President and Chief Financial Officer
Address for Notice:
5100 Tennyson Parkway
Suite 3000
Plano, Texas 75024
Fax No. (972) 673-2150
PARENT:
- ------
DENBURY RESOURCES INC.,
a Delaware corporation
By: /s/ Phil Rykhoek
-----------------------------------------------------------------------
Phil Rykhoek,
Senior Vice President and Chief Financial Officer
Address for Notice:
5100 Tennyson Parkway
Suite 3000
Plano, Texas 75024
Fax No. (972) 673-2150
SIGNATURE PAGE TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES INC., AS PARENT GUARANTOR,
DENBURY ONSHORE, LLC, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
ADMINISTRATIVE AGENT:
- --------------------
BANK ONE, NA,
as Administrative Agent
By: /s/ J. Scott Fowler
--------------------------------------------
J. Scott Fowler,
Director, Capital Markets
BANKS:
- -----
BANK ONE, NA
By: /s/ J. Scott Fowler
--------------------------------------------
J. Scott Fowler,
Director, Capital Markets
SIGNATURE PAGE TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES INC., AS PARENT GUARANTOR,
DENBURY ONSHORE, LLC, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
SYNDICATION AGENT:
- -----------------
CALYON NEW YORK BRANCH, successor by consolidation to Credit Lyonnais New York
Branch, as Syndication Agent
By: /s/ Philippe Soustra
--------------------------------------------
Name: Philippe Soustra
Title: Executive Vice President
BANKS:
- -----
CALYON NEW YORK BRANCH, successor by
consolidation to Credit Lyonnais New York Branch
By: /s/ Attila Coach
--------------------------------------------
Name: Attila Coach
Title: Managing Director
SIGNATURE PAGE TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES INC., AS PARENT GUARANTOR,
DENBURY ONSHORE, LLC, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
SYNDICATION AGENT:
- -----------------
FORTIS CAPITAL CORP.,
as Syndication Agent
By: /s/ David Montgomery
--------------------------------------------
Name: David Montgomery
Title: Senior Vice President
By: /s/ Darrell W. Holley
Name: --------------------------------------------
Darrell W. Holley
Title: Managing Director
BANKS:
- -----
FORTIS CAPITAL CORP.
By: /s/ David Montgomery
--------------------------------------------
Name: David Montgomery
Title: Senior Vice President
By: /s/ Darrell W. Holley
--------------------------------------------
Name: Darrell W. Holley
Title: Managing Director
SIGNATURE PAGE TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES INC., AS PARENT GUARANTOR,
DENBURY ONSHORE, LLC, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
DOCUMENTATION AGENT:
- -------------------
UNION BANK OF CALIFORNIA, N.A.,
as Documentation Agent
By: /s/ Scott Myatt
--------------------------------------------
Name: Scott Myatt
Title: Assistant Vice President
By: /s/ Ali Ahmed
--------------------------------------------
Name: Ali Ahmed
Title: Vice President
BANKS:
- -----
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Scott Myatt
--------------------------------------------
Name: Scott Myatt
Title: Assistant Vice President
By: /s/ Ali Ahmed
--------------------------------------------
Name: Ali Ahmed
Title: Vice President
SIGNATURE PAGE TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES INC., AS PARENT GUARANTOR,
DENBURY ONSHORE, LLC, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
DOCUMENTATION AGENT:
- -------------------
COMERICA BANK,
as Documentation Agent
By: /s/ Michele L. Jones
--------------------------------------------
Name: Michele L. Jones
Title: Vice President
BANKS:
- -----
COMERICA BANK
By: /s/ Michele L. Jones
--------------------------------------------
Name: Michele L. Jones
Title: Vice President
SIGNATURE PAGE TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES INC., AS PARENT GUARANTOR,
DENBURY ONSHORE, LLC, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
BANKS:
- -----
BANK OF AMERICA, N.A.
By: /s/ Jeffrey M. Rathkamp
--------------------------------------------
Name: Jeffrey M. Rathkamp
Title: Director
SIGNATURE PAGE TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES INC., AS PARENT GUARANTOR,
DENBURY ONSHORE, LLC, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
BANKS:
- -----
WELLS FARGO BANK, N.A.
By: /s/ M. Jarrod Bourgeois
--------------------------------------------
Name: M. Jarrod Bourgeois
Title: Relationship Manager
SIGNATURE PAGE TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES INC., AS PARENT GUARANTOR,
DENBURY ONSHORE, LLC, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
BANKS:
- -----
BANK OF SCOTLAND
By: /s/ Amena Nabi
--------------------------------------------
Name: Amena Nabi
Title: Assistant Vice President
SIGNATURE PAGE TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES INC., AS PARENT GUARANTOR,
DENBURY ONSHORE, LLC, AS BORROWER,
BANK ONE, NA, AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
BANKS:
- -----
COMPASS BANK
By: /s/ Dorothy Marchand
--------------------------------------------
Name: Dorothy Marchand
Title: Senior Vice President