EXECUTION COPY
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EXHIBIT 10.1
$500,000,000
TERM LOAN AGREEMENT
AMONG
WILLIAMS PRODUCTION HOLDINGS LLC,
WILLIAMS PRODUCTION RMT COMPANY,
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
LEHMAN BROTHERS INC. AND
BANC OF AMERICA SECURITIES LLC,
AS JOINT LEAD ARRANGERS,
CITICORP USA, INC. AND
JPMORGAN CHASE BANK,
AS CO-SYNDICATION AGENTS,
BANK OF AMERICA, N.A.,
AS DOCUMENTATION AGENT,
AND
LEHMAN COMMERCIAL PAPER INC.,
AS ADMINISTRATIVE AGENT
DATED AS OF MAY 30, 2003
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS............................................................................... 1
1.1 Defined Terms................................................................................. 1
1.2 Other Definitional Provisions................................................................. 20
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS................................................. 21
2.1 Term Loan Commitments......................................................................... 21
2.2 Procedure for Term Loan Borrowing............................................................. 21
2.3 Repayment of Term Loans....................................................................... 21
2.4 Repayment of Term Loans; Evidence of Debt..................................................... 22
2.5 Fees, etc..................................................................................... 23
2.6 Optional Prepayments.......................................................................... 23
2.7 Mandatory Prepayments......................................................................... 23
2.8 Conversion and Continuation Options........................................................... 24
2.9 Minimum Amounts and Maximum Number of Eurodollar Tranches..................................... 24
2.10 Interest Rates and Payment Dates.............................................................. 25
2.11 Computation of Interest and Fees.............................................................. 25
2.12 Inability to Determine Interest Rate.......................................................... 25
2.13 Pro Rata Treatment and Payments............................................................... 26
2.14 Requirements of Law........................................................................... 27
2.15 Taxes......................................................................................... 28
2.17 Illegality.................................................................................... 31
2.18 Change of Lending Office...................................................................... 31
2.19 Replacement of Lenders under Certain Circumstances............................................ 31
SECTION 3. REPRESENTATIONS AND WARRANTIES............................................................ 32
3.1 Financial Condition........................................................................... 32
3.2 No Change..................................................................................... 32
3.3 Corporate Existence; Compliance with Law...................................................... 33
3.4 Corporate Power; Authorization; Enforceable Obligations....................................... 33
3.5 No Legal Bar.................................................................................. 33
3.6 No Material Litigation........................................................................ 33
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.7 No Default.................................................................................... 34
3.8 Ownership of Property; Liens.................................................................. 34
3.9 Intellectual Property......................................................................... 34
3.10 Taxes......................................................................................... 34
3.11 Federal Regulations........................................................................... 34
3.12 Labor Matters................................................................................. 34
3.13 ERISA......................................................................................... 35
3.14 Investment Company Act; Other Regulations..................................................... 35
3.15 Subsidiaries.................................................................................. 35
3.16 Use of Proceeds............................................................................... 35
3.17 Environmental Matters......................................................................... 35
3.18 Accuracy of Information, etc.................................................................. 37
3.19 Security Documents............................................................................ 37
3.20 Solvency...................................................................................... 38
3.21 Hydrocarbon Interests......................................................................... 38
3.22 Permits....................................................................................... 38
3.23 Lease Payments................................................................................ 38
3.24 Public Utility Holding Company Act............................................................ 39
SECTION 4. CONDITIONS PRECEDENT...................................................................... 39
4.1 Conditions to the Term Loan................................................................... 39
SECTION 5. AFFIRMATIVE COVENANTS..................................................................... 42
5.1 Financial Statements.......................................................................... 42
5.2 Certificates; Other Information............................................................... 43
5.3 Payment of Obligations........................................................................ 44
5.4 Conduct of Business and Maintenance of Existence, etc......................................... 44
5.5 Maintenance of Property; Insurance............................................................ 45
5.6 Inspection of Property; Books and Records; Discussions........................................ 45
5.7 Notices....................................................................................... 46
5.8 Environmental Laws............................................................................ 46
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.9 Additional Collateral, etc.................................................................... 46
5.10 Further Assurances............................................................................ 47
5.11 Capital Expenditure........................................................................... 48
SECTION 6. NEGATIVE COVENANTS........................................................................ 48
6.1 Financial Condition Covenants................................................................. 48
6.2 Limitation on Indebtedness.................................................................... 48
6.3 Limitation on Liens........................................................................... 49
6.4 Limitation on Fundamental Changes............................................................. 52
6.5 Limitation on Disposition of Property......................................................... 52
6.6 Limitation on Restricted Payments............................................................. 54
6.7 Limitation on Investments..................................................................... 55
6.8 Limitation on Optional Payments and Modifications of Indebtedness............................. 56
6.9 Limitation on Transactions with Affiliates.................................................... 56
6.10 Limitation on Sales and Leasebacks............................................................ 56
6.11 Limitation on Changes in Fiscal Periods....................................................... 56
6.12 Limitation on Negative Pledge Clauses......................................................... 56
6.13 Limitation on Restrictions on Subsidiary Distributions, etc................................... 57
6.14 Business Activities........................................................................... 57
6.15 Holdings Negative Pledge; Limitation on Assets................................................ 57
6.16 Minimum Borrower Liquidity.................................................................... 58
SECTION 7. EVENTS OF DEFAULT......................................................................... 58
7.2 Certain Cure Rights........................................................................... 61
SECTION 8. THE AGENTS................................................................................ 62
8.1 Appointment................................................................................... 62
8.2 Delegation of Duties.......................................................................... 62
8.3 Exculpatory Provisions........................................................................ 62
8.4 Reliance by Agents............................................................................ 63
8.5 Notice of Default............................................................................. 63
8.6 Non-Reliance on Agents and Other Lenders...................................................... 63
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TABLE OF CONTENTS
(CONTINUED)
PAGE
8.7 Indemnification............................................................................... 64
8.8 Agent in Its Individual Capacity.............................................................. 64
8.9 Successor Administrative Agent................................................................ 65
8.10 Authorization to Release Liens and Guarantees................................................. 65
8.11 The Arrangers; the Co-Syndication Agents; the Documentation Agent............................. 65
SECTION 9. MISCELLANEOUS............................................................................. 65
9.1 Amendments and Waivers........................................................................ 65
9.2 Notices....................................................................................... 67
9.3 No Waiver; Cumulative Remedies................................................................ 68
9.4 Survival of Representations and Warranties.................................................... 68
9.5 Payment of Expenses........................................................................... 69
9.6 Successors and Assigns; Participations and Assignments........................................ 70
9.7 Adjustments; Set off.......................................................................... 73
9.8 Counterparts.................................................................................. 74
9.9 Severability.................................................................................. 74
9.10 Integration................................................................................... 74
9.11 GOVERNING LAW................................................................................. 74
9.12 Submission to Jurisdiction; Waivers........................................................... 74
9.13 Acknowledgments............................................................................... 75
9.14 Confidentiality............................................................................... 75
9.15 Release of Collateral and Guarantee Obligations............................................... 76
9.16 Delivery of Lender Addenda.................................................................... 76
9.17 WAIVERS OF JURY TRIAL......................................................................... 76
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TERM LOAN AGREEMENT, dated as of May 30, 2003, among WILLIAMS
PRODUCTION HOLDINGS LLC, a Delaware limited liability company ("Holdings"),
WILLIAMS PRODUCTION RMT COMPANY, a Delaware corporation (the "Borrower"), the
several banks and other financial institutions or entities from time to time
parties to this Agreement as lenders (the "Lenders"), LEHMAN BROTHERS INC.
("LBI") and BANC OF AMERICA SECURITIES LLC, as joint advisors, joint lead
arrangers and joint book runners (together in such capacities, the "Arrangers"),
CITICORP USA, INC. and JPMORGAN CHASE BANK, as co-syndication agents (together
in such capacities, the "Co-Syndication Agents"), BANK OF AMERICA, N.A., as
documentation agent (in such capacity, the "Documentation Agent"), and LEHMAN
COMMERCIAL PAPER INC. ("LCPI"), as administrative agent (in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Lenders are willing to make a term loan available
to the Borrower upon and subject to the terms and conditions hereinafter set
forth; and
WHEREAS, the Borrower intends to refinance the Existing Credit
Agreement (as defined below) with proceeds from the term loan hereunder;
NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms
listed in this Section 1.1 shall have the respective meanings set forth in this
Section 1.1.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agents": the collective reference to the Co-Syndication
Agents, the Documentation Agent and the Administrative Agent.
"Agreement": this Term Loan Agreement, as amended,
supplemented or otherwise modified from time to time.
"Applicable Margin": (a) with respect to Base Rate Loans, a
rate per annum equal to 2.75%, and (b) with respect to Eurodollar Loans, a rate
per annum equal to 3.75%.
"Approved Engineer": any independent engineer recognized in
the U.S. oil and gas loan syndication market and reasonably satisfactory to the
Administrative Agent.
"Arrangers": as defined in the preamble hereto.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by clause
(a), (b), (c), (d), (e), (f), (i), (j), (k), (l) or (m) of Section 6.5) which
yields gross proceeds to Holdings, the Borrower or any of the Borrower's
Subsidiaries in excess of $500,000.
"Assignee": as defined in Section 9.6(c).
"Assignor": as defined in Section 9.6(c).
"Barrett Trust": the trust created pursuant to the Trust
Agreement dated as of November 1, 1997 by and among Barrett Resources
Corporation, a Delaware corporation, in its capacity as the initial Manager,
Delaware Trust Capital Management, Inc., a Delaware banking corporation in its
capacity as Special Trustee and the Holders signatory thereto (as amended,
supplemented or otherwise modified from time to time).
"Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the prime
lending rate as set forth on the British Banking Association Telerate Page 5 (or
such other comparable page as may, in the opinion of the Administrative Agent,
replace such page for the purpose of displaying such rate), as in effect from
time to time. Any change in the Base Rate due to a change in the Prime Rate
actually available or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change in the Prime Rate or
the Federal Funds Effective Rate, respectively. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually
available.
"Base Rate Loans": Term Loans for which the applicable rate of
interest is based upon the Base Rate.
"Benefited Lender": as defined in Section 9.7.
"Bison Entities": means, collectively, Bison Royalty LLC, PPH
and Rulison Production Company LLC.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrower": as defined in the preamble hereto.
"Borrowing Notice": with respect to any request for borrowing
of Term Loans hereunder, a notice from the Borrower, substantially in the form
of, and containing the information prescribed by, Exhibit I, delivered to the
Administrative Agent.
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"Business Day": (a) for all purposes other than as covered by
clause (b) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close and
(b) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (a) and which is also a day for trading by and
between banks in Dollar deposits in the interbank eurodollar market.
"Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person for the acquisition or
leasing (pursuant to a capital lease) of fixed or capital assets, the drilling
of wells or additions to equipment (including replacements, capitalized repairs
and improvements during such period) which are required to be capitalized under
GAAP on a balance sheet of such Person.
"Capital Lease Obligations": with respect to any Person, the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP;
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of one year or less from the date of acquisition
issued by any Lender or by any commercial bank organized under the laws of the
United States of America or any state thereof having combined capital and
surplus of not less than $100,000,000; (c) commercial paper of an issuer rated
at least A-2 by S&P or P-2 by Moody's, or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within 270 days from the date of acquisition; (d) short-term tax exempt
securities including municipal notes, commercial paper, auction rate floaters,
and floating rate notes rated either "P-1" by Moody's or "A-1" by S&P and
maturing within 270 days from the date of acquisition; (e) repurchase
obligations of any Lender or of any commercial bank satisfying the requirements
of clause (b) of this definition, having a term of not more than 30 days with
respect to securities issued or fully guaranteed or insured by the United States
government; (f) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (g) securities with maturities of one year or less from
the date of acquisition backed by standby
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letters of credit issued by any Lender or any commercial bank satisfying the
requirements of clause (b) of this definition; and (h) shares of money market
mutual or similar funds which invest primarily in assets satisfying the
requirements of clauses (a) through (g) of this definition.
"Change of Control": the occurrence of any of the following
events: (i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become, or obtain rights (whether by means or warrants, options or
otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of more than 50% of the
outstanding common stock of Parent; (ii) the board of directors of Parent shall
cease to consist of a majority of Continuing Directors; (iii) Parent shall cease
to own and control, of record and beneficially, directly, 100% of each class of
outstanding Capital Stock of Holdings free and clear of all Liens; or (iv)
Holdings shall cease to own and control, of record and beneficially, directly,
100% of each class of outstanding Capital Stock of the Borrower (other than the
Class B Common Stock of the Borrower issued to the Administrative Agent) free
and clear of all Liens (except Liens created by the Guarantee and Collateral
Agreement).
"Closing Date": the date on which the conditions precedent set
forth in Section 4.1 shall have been satisfied, which date shall be not later
than June 15, 2003.
"Code": the United States Internal Revenue Code of 1986, as
amended from time to time.
"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document; provided that the Collateral shall not include in any event (i) the
Properties set forth on Schedules 6.5(f)(i) and 6.5(i), (ii) the Capital Stock
of the Bison Entities, (iii) any Property of a Bison Entity other than an Oil
and Gas Property of such Bison Entity, and (iv) any Oil and Gas Property with a
fair market value of less than $2,000,000 (so long as the aggregate fair market
value of the Properties excluded by the Borrower and any other Grantor from
inclusion in the Collateral as a result of such threshold at any time does not
exceed $10,000,000 in the aggregate) and (v) any other Property excluded from
the Collateral pursuant to the terms of the Guarantee and Collateral Agreement.
"Collateral Account": as defined in the Guarantee and the
Collateral Agreement.
"Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer, substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential
Information Memorandum dated May 2003 and furnished to the initial Lenders in
connection with the syndication of the Facility.
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"Consolidated EBITDA": of any Person for any period,
Consolidated Net Income of such Person and its Subsidiaries for such period
plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) consolidated interest expense calculated in accordance with
GAAP of such Person and its Subsidiaries, amortization or write-off of debt
discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness (including, in the case of the Borrower,
the Term Loans), (c) depreciation, depletion and amortization expense, (d)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary, unusual or non-recurring expenses or
losses, (f) regardless of whether such amount is reflected as a charge in the
statement of such Consolidated Net Income but only to the extent that such
amount is not reflected in Consolidated Net Income, cash received by such Person
in respect of hedge agreements entered into by Parent or its Affiliates hedging
the oil or gas production of the Borrower, (g) non-cash corporate overhead
allocated to the Borrower in amounts consistent with past practice which are not
reimbursed by the Borrower pursuant to Section 6.6, (h) any other non-cash
charges and (i) any impairment of goodwill or property asset carrying value, and
minus, to the extent included in the statement of such Consolidated Net Income
for such period, the sum of (w) interest income (except (I) to the extent
deducted in determining Consolidated Interest Expense and (II) interest accrued
in respect of investments made with the proceeds of the cash collateral
contemplated by Section 6.17), (x) any extraordinary, unusual or non-recurring
income or gains, (y) to the extent that such amount is not reflected in
Consolidated Net Income, cash payments by such Person in respect of hedge
agreements entered into by Parent or its Affiliates hedging the oil or gas
production of the Borrower and (z) any other non-cash income, all as determined
on a consolidated basis; provided that for such relevant fiscal quarter period
prior to the fiscal quarter ended September 30, 2003, the applicable
"Consolidated EBITDA" shall be as set forth on Schedule 1.1(d).
"Consolidated Interest Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA of the Borrower and its Subsidiaries for such
period to (b) Consolidated Interest Expense of the Borrower and its Subsidiaries
for such period.
"Consolidated Interest Expense": of any Person for any period,
total cash interest expense (including that attributable to Capital Lease
Obligations) of such Person and its Subsidiaries for such period with respect to
all outstanding Indebtedness of such Person and its Subsidiaries (including,
without limitation, all commissions, discounts and other fees and charges owed
by such Person with respect to letters of credit and bankers' acceptance
financing and net costs of such Person under Hedge Agreements in respect of
interest rates to the extent such net costs are allocable to such period in
accordance with GAAP, and excluding all fees and expenses incurred in connection
with this Agreement); provided that for the fiscal quarters ending September 30,
2003, December 31, 2003 and March 31, 2004, "Consolidated Interest Expense" for
the relevant period shall be deemed to equal Consolidated Interest Expense for
such fiscal quarter (and each fiscal quarter commencing on or after July 1,
2003) multiplied by 4, 2 and 4/3, respectively.
"Consolidated Net Income": of any Person for any period, the
consolidated net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP; provided
that in calculating Consolidated Net
5
Income of the Borrower and its consolidated Subsidiaries for any period, there
shall be excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary of the Borrower or is merged into or consolidated
with the Borrower or any of its Subsidiaries (excluding, however, any merger or
consolidation of a Subsidiary with and into the Borrower or another Subsidiary),
and (b) the income (or deficit) of any Person (other than a Subsidiary of the
Borrower) in which the Borrower or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of dividends or similar distributions
and (c) the undistributed earnings of any Subsidiary of the Borrower to the
extent that the declaration or payment of dividends or similar distributions by
such Subsidiary is not at the time permitted by the terms of any Contractual
Obligation (other than under any Loan Document) or Requirement of Law applicable
to such Subsidiary.
"Continuing Directors": as to any Person, the directors of
such Person on the Closing Date, after giving effect to the transactions
contemplated hereby, and each other director, if, in each case, such other
director's nomination for election to the board of directors of such Person is
recommended by at least 66-2/3% of the then Continuing Directors or such other
director receives the vote of each of the shareholders of such Person on the
Closing Date in his or her election by the shareholders of such Person.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Default": any of the events specified in Section 7.1, whether
or not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Derivatives Counterparty": as defined in Section 6.6.
"Disposition": with respect to any Property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Disqualified Stock": any Capital Stock or other ownership or
profit interest of any Loan Party that any Loan Party is or, upon the passage of
time or the occurrence of any event, may become obligated to redeem, purchase,
retire, defease or otherwise make any payment in respect of in consideration
other than Capital Stock (other than Disqualified Stock) prior to the date one
year and one day after the Maturity Date.
"Dollars" and "$": lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States of
America.
"Eligible Assignee": (i) a Lender; (ii) an Affiliate of a
Lender; (iii) a Related Fund (iv) a commercial bank organized under the laws of
the United States, or any State thereof; (v) a savings and loan association or
savings bank organized under the laws of the United States, or any State
thereof; (vi) a commercial bank organized under the laws of any other country
that is a member of the Organization for Economic Cooperation and Development or
has concluded
6
special lending arrangements with the International Monetary Fund associated
with its General Arrangements to Borrow, or a political subdivision of any such
country, so long as such bank is acting through a branch or agency located in
the country in which it is organized or another country that is described in
this clause (vi); (vii) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership, trust or other entity)
that is engaged in making, purchasing or otherwise investing in commercial loans
in the ordinary course of its business and (viii) the central bank of any
country that is a member of the Organization for Economic Cooperation and
Development; provided that neither the Borrower nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee.
"Engineering Report": a report prepared by the Borrower (in
which case, such report shall be reviewed or audited by an Approved Engineer in
a manner consistent with past practices) or an Approved Engineer as of December
31 of each year for purposes of compliance with Section 5.2(d) and, if the
Borrower has so elected, as of any other date and, in each case, subject to
reasonable review by the Administrative Agent showing the net present value
(using a 10.0% discount rate and with prices adjusted to reflect a ten year
future market price strip (and, assuming for all periods subsequent to year ten,
the price determined for year ten) reasonably determined by the Borrower and
reasonably satisfactory to the Administrative Agent) of the projected future net
revenues attributable to the Proved Reserves.
"Environmental Laws": any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees, or other legally
enforceable requirements (including, without limitation, common law) of the
United States, or any state, local, municipal or other governmental authority,
regulating, relating to or imposing liability or standards of conduct concerning
protection of the environment or of human health, as has been, is now, or may at
any time hereafter be, in effect.
"Environmental Permits": any and all permits, licenses,
approvals, registrations, and other authorizations required under any
Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day, the
aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on Page 3750 of the Telerate screen
as of 11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate" for
purposes of this definition
7
shall be determined by reference to such other comparable publicly available
service for displaying eurodollar rates as may be selected by the Administrative
Agent.
"Eurodollar Loans": Term Loans for which the applicable rate
of interest is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
---------------------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans the then current Interest Periods with respect to all of which begin on
the same date and end on the same later date.
"Event of Default": any of the events specified in Section
7.1, provided that any requirement for the giving of notice, the lapse of time,
or both, has been satisfied.
"Excluded Foreign Subsidiaries": any Foreign Subsidiary in
respect of which either (a) the pledge of greater than 65% of the Capital Stock
of such Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of
the Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Borrower.
"Existing Credit Agreement": the Credit Agreement, dated as of
July 31, 2002, among Parent, Holdings, the Borrower, the several lenders from
time to time party thereto, LBI, as Lead Arranger and Book Manager, LCPI, as
Syndication Agent, and LCPI, as Administrative Agent, as the same may be
amended, supplemented or otherwise modified from time to time.
"Facility": the Term Loan Commitments and the Term Loans made
thereunder.
"Federal Funds Effective Rate": for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is
not a Domestic Subsidiary.
"Funding Office": the office specified from time to time by
the Administrative Agent as its funding office by notice to the Borrower and the
Lenders.
"GAAP": generally accepted accounting principles in the United
States of America in effect on the date hereof, with respect to determinations
under Section 6.1, and otherwise in effect from time to time.
8
"Gas Gathering Systems": the gas plant and those certain gas
gathering systems consisting of all equipment, assets, rights-of-way, surface
leases, contracts and related assets more particularly described on schedule
1.1(b) attached hereto.
"GE Equipment": the Equipment (as defined in the UCC)
purchased or constructed with the proceeds of the GE Loan.
"GE Loan": the loan made to the Borrower by General Electric
Capital Corporation pursuant to the Interim Loan and Security Agreement, dated
as of June 16, 2002, in an aggregate principal amount not to exceed $17,000,000.
"Governing Documents": collectively, as to any Person, the
articles or certificate of incorporation and bylaws, any shareholders agreement,
certificate of formation, limited liability company agreement, partnership
agreement or other formation or constituent documents of such Person.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of government.
"Grantor": as defined in the Guarantee and Collateral
Agreement.
"Guarantee and Collateral Agreement": the Guarantee and
Collateral Agreement to be executed and delivered by Holdings, the Borrower and
each Subsidiary Guarantor, substantially in the form of Exhibit A, as the same
may be amended, supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit), if to
induce the creation of such obligation of such other Person the guaranteeing
person has issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations (the "primary obligations") of any other third
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
Property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase Property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (x) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (y) the maximum amount for which such guaranteeing person
may be liable pursuant
9
to the terms of the instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"Guarantors": the collective reference to Holdings and the
Subsidiary Guarantors.
"Hedge Agreements": (a) all interest rate swaps, caps or
collar agreements or similar arrangements entered into by the Borrower or any of
its Subsidiaries providing for protection against fluctuations in interest rates
or currency exchange rates or the exchange of nominal interest obligations,
either generally or under specific contingencies and (b) all hedging agreements
entered into by the Borrower or any of its Subsidiaries in connection with the
hedging of commodity prices, including basis (transportation) hedges.
"Holdings": as defined in the preamble hereto.
"Holdings Subordinated Guaranty": the Amended and Restated
Subordinated Guaranty, dated as of October 31, 2002, by Holdings in favor of the
Financial Institutions (as defined therein).
"Hydrocarbons": oil, gas, casing head gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons, all products refined,
separated, settled and dehydrated therefrom and all products refined therefrom,
including, without limitation, kerosene, liquefied petroleum gas, refined
lubricating oils, diesel fuel, drip gasoline, natural gasoline, helium, sulfur
and all other minerals.
"Hydrocarbon Interests": all rights, titles, interests and
estates now owned or hereafter acquired by the Borrower or any of its
Subsidiaries in any and all oil, gas and other liquid or gaseous hydrocarbon
properties and interests, including without limitation, mineral fee or lease
interests, production sharing agreements, concession agreements, license
agreements, service agreements, risk service agreements or similar Hydrocarbon
interests granted by an appropriate Governmental Authority, farmout, overriding
royalty and royalty interests, net profit interests, oil payments, production
payment interests and similar interests in Hydrocarbons, including any reserved
or residual interests of whatever nature.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of Property or
services (other than (I) trade payables and (II) customary obligations under Oil
and Gas Agreements, in each case, incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes, bonds
(other than obligations in respect of surety, performance and guarantee bonds
issued for the account of such Person in the ordinary course of business),
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
Property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such
10
Property), (e) all Capital Lease Obligations of such Person, (f) all obligations
of such Person, contingent or otherwise, as an account party or applicant under
acceptance, letter of credit or similar facilities, (g) all Guarantee
Obligations of such Person in respect of obligations of the kind referred to in
clauses (a) through (f) above, (h) all obligations of the kind referred to in
clauses (a) through (g) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured by) any
Lien on Property (including, without limitation, accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become liable
for the payment of such obligation and (i) for the purposes of Section 7.1(e)
only, all obligations of such Person in respect of Hedge Agreements.
"Indemnified Liabilities": as defined in Section 9.5.
"Indemnitee": as defined in Section 9.5.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents, patent
licenses, trademarks, trademark licenses, technology, know-how and processes,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the
last day of each March, June, September and December to occur while such Term
Loan is outstanding and the final maturity date of such Term Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or shorter, the last
day of such Interest Period, (c) as to any Eurodollar Loan having an Interest
Period longer than three months, each day that is three months, or a whole
multiple thereof, after the first day of such Interest Period and the last day
of such Interest Period and (d) as to any Term Loan, the date of any repayment
or prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
11
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend
beyond the date final payment is due on the Term Loans, shall
end on the such due date, as applicable; and
(3) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period.
"Investments": as defined in Section 6.7.
"Lehman Entity": any of LCPI or any of its affiliates
(including Syndicated Loan Funding Trust).
"Lender Addendum": with respect to any initial Lender, a
Lender Addendum, substantially in the form of Exhibit H, to be executed and
delivered by such Lender on the Closing Date as provided in Section 9.17.
"Lenders": as defined in the preamble hereto.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing).
"Loan Documents": this Agreement, the Security Documents, the
Term Notes, and all documents, instruments, agreements, certificates and notices
at any time executed and/or delivered to the Administrative Agent, any of the
other Agents, the Arrangers or any Lender in connection herewith or therewith.
"Loan Parties": Holdings, the Borrower and each Subsidiary of
the Borrower that is a party to a Loan Document.
"Loans": the collective reference to the Term Loans and any
other loan made by any Lender pursuant to this Agreement.
"Material Adverse Effect": a material adverse effect on or
affecting in a material and adverse manner (a) the business, assets, property,
condition (financial or otherwise) or prospects of Holdings, the Borrower and
the Borrower's Subsidiaries taken as a whole, or (b) the validity or
enforceability of this Agreement, the Guarantee and Collateral Agreement, the
Mortgages or the other Security Documents, or the Term Notes or the rights or
remedies of the Agents or the Lenders hereunder or thereunder.
12
"Material Environmental Amount": an amount or amounts payable
by the Borrower and/or any of its Subsidiaries, in the aggregate in excess of
$10,000,000 in any one year for: costs to (i) comply with any requirement or
interpretation of Environmental Law imposed after the Closing Date that
constitutes a material change; or (ii) respond to, remove or remediate a release
to the environment of Materials of Environmental Concern; provided, however,
such amount excludes ordinary and customary costs for obtaining, complying with
and maintaining Environmental Permits, and for plugging and abandonment and site
restoration upon cessation of production. Such amount includes compensatory
damages, (including, without limitation, damages to natural resources), punitive
damages, fines, and penalties pursuant to any Environmental Law.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactivity, and any other substances of any kind, whether or
not any such substance is defined as hazardous or toxic under any Environmental
Law, that is regulated pursuant to or reasonably could give rise to liability
under any Environmental Law.
"Maturity Date: May 30, 2007.
"Moody's": Moody's Investors Service, Inc. and its successors.
"Mortgaged Properties": the real properties and leasehold
estates listed on Schedule 1.1(a), as to which the Administrative Agent for the
benefit of the Secured Parties shall be granted a Lien pursuant to the
Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by
any Loan Party in favor of, or for the benefit of, the Administrative Agent for
the benefit of the Secured Parties, substantially in the form of Exhibit D (with
such changes thereto as shall be advisable under the law of the jurisdiction in
which such mortgage or deed of trust is to be recorded), as the same may be
amended, supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or
any Recovery Event, the proceeds thereof in the form of cash and cash
equivalents (including any such proceeds received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such Asset
Sale or Recovery Event, net of attorneys' fees, accountants' fees, investment
banking fees, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted hereunder on any asset which is the
subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a
Security Document) and other customary fees and expenses actually incurred in
connection therewith and net of taxes paid or reasonably estimated to be payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and (b) in connection with any
issuance or sale of equity securities or debt securities or instruments or the
incurrence of loans, the cash proceeds received
13
from such issuance or incurrence, net of attorneys' fees, investment banking
fees, accountants' fees, underwriting discounts and commissions and other
customary fees and expenses actually incurred in connection therewith.
"New Notes": as defined in Section 6.2(i).
"Non-Excluded Taxes": as defined in Section 2.15(a).
"Non-U.S. Lender": as defined in Section 2.15(d).
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans, and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender or any
Qualified Counterparty, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, this Agreement, any other Loan Document, any
Specified Hedge Agreement or any other document made, delivered or given in
connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise; provided, that (i) obligations of the
Borrower or any Subsidiary under any Specified Hedge Agreement shall be secured
and guaranteed pursuant to the Security Documents only to the extent that, and
for so long as, the other Obligations are so secured and guaranteed and (ii) any
release of Collateral or Guarantors effected in the manner permitted by this
Agreement shall not require the consent of holders of obligations under
Specified Hedge Agreements.
"Oil and Gas Agreements": operating agreements, processing
agreements, farm-out and farm-in agreements, development agreements, area of
mutual interest agreements, contracts for the gathering and/or transportation of
oil and natural gas, unitization agreements, pooling arrangements, joint bidding
agreements, joint venture agreements, participation agreements, surface use
agreements, service contracts, tax credit agreements, leases and subleases of
Oil and Gas Properties or other similar customary agreements, transactions,
properties, interests or arrangements, howsoever designated, in each case made
or entered into in the ordinary course of business as conducted by the Borrower
and its Subsidiaries.
"Oil and Gas Business": (a) the acquisition, exploration,
exploitation, development, operation, management and disposition of interests in
Hydrocarbon Interests and Hydrocarbons; (b) gathering, marketing, treating,
processing, storage, selling and transporting of any production from such
interests or Hydrocarbon Interests, including, without limitation, the marketing
of Hydrocarbons obtained from unrelated Persons; (c) any business relating to or
arising from exploration for or development, production, treatment, processing,
storage, transportation or marketing of oil, gas and other minerals and products
produced in association therewith; and (d) any activity that is ancillary or
necessary or desirable to facilitate the activities described in clauses (a)
through (c) of this definition.
14
"Oil and Gas Properties": (a) Hydrocarbon Interests; (b) the
Property now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all
presently existing or future unitization, pooling agreements and declarations of
pooled units and the units created thereby (including, without limitation, all
units created under orders, regulations and rules of any Governmental Authority)
which may affect all or any portion of the Hydrocarbon Interests; (d) all
operating agreements, contracts and other agreements which relate to any of the
Hydrocarbon Interests or the production, sale, purchase, exchange or processing
of Hydrocarbons from or attributable to such Hydrocarbon Interest; (e) all
Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon Interests, the lands covered thereby and all oil in tanks and
all rents, issues, profits, proceeds, products, revenues and other income from
or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Property in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests, Property, Gas Gathering System, rights,
titles, interests and estates described or referred to above, including, without
limitation, any and all Property, now owned or hereinafter acquired and situated
upon, used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing and (g) to the extent not
included in the foregoing, any and all other oil or gas property described in
Section 4.09(y) of the RMT Senior Notes Indenture.
"Other Taxes": any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Parent": The Williams Companies, Inc., a Delaware
corporation.
"Parent Event of Default": the occurrence of any of the
following: (i) Parent shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Parent shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced against Parent
any case, proceeding or other action of a nature referred to in clause (i) above
that (A) results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
60 days; or (iii) there shall be commenced against Parent any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against
15
all or any substantial part of its assets that results in the entry of an order
for any such relief that shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or (iv) Parent
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) Parent shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; or (vi) Parent
shall default in making any payment of any principal of or interest on any
Indebtedness of Parent the outstanding principal amount of which exceeds
$150,000,000 on the scheduled or original due date with respect thereto.
"Participant": as defined in Section 9.6(b).
"Payment Office": the office specified from time to time by
the Administrative Agent as its payment office by notice to the Borrower and the
Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Cure Security": an equity security of Holdings that
is not Disqualified Stock and upon which all dividends or distributions are
payable and paid in additional shares of such equity security.
"Permitted Liens": the collective reference to (i) in the case
of Collateral other than Pledged Stock, Liens permitted by Section 6.3 and (ii)
in the case of Collateral consisting of Pledged Stock, non-consensual Liens
permitted by Section 6.3 to the extent arising by operation of law.
"Permits": the collective reference to (i) Environmental
Permits, and (ii) any and all other franchises, licenses, leases, permits,
approvals, notifications, certifications, registrations, authorizations,
exemptions, qualifications, easements, rights of way, Liens and other rights,
privileges and approvals required under any Requirement of Law.
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan": at a particular time, any employee benefit plan that
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pledged Notes": as defined in the Guarantee and Collateral
Agreement
"Pledged Stock": as defined in the Guarantee and Collateral
Agreement.
"PPH": Piceance Production Holdings LLC, a Delaware limited
liability company.
"Pro Forma Balance Sheet": as defined in Section 3.1(a).
16
"Projections": as defined in Section 5.2(e).
"Property": any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock and Hydrocarbon
Interests.
"Proved Reserves" those recoverable Hydrocarbons which have
been estimated with reasonable certainty, as demonstrated by geological and
engineering data, to be economically recoverable from the Borrower's Oil and Gas
Properties by existing operating methods under existing economic conditions.
"PV-10 Value": at the particular time in question, the net
present value (determined in accordance with the definition of Engineering
Report) of the projected future net revenues attributable to the Proved Reserves
included in the Borrower's Oil and Gas Properties, as set forth in the
Engineering Report most recently provided by the Borrower pursuant to Section
5.2(d).
"Qualified Counterparty": with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge
Agreement was entered into, was a Lender or an affiliate of a Lender.
"Real Estate": all real property held or used by the Borrower
or its Subsidiaries, which the Borrower or the relevant Subsidiary owns in fee
or in which it holds a leasehold interest as a tenant.
"Recovery Event": any settlement of or payment in respect of
any property or casualty insurance claim or any condemnation proceeding relating
to any asset of Holdings, the Borrower or any of the Borrower's Subsidiaries.
"Register": as defined in Section 9.6(d).
"Regulation U": Regulation U of the Board as in effect from
time to time.
"Reinvestment Deferred Amount": with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received by Holdings, the
Borrower or any of Borrower's Subsidiaries in connection therewith that are not
applied to prepay the Term Loans pursuant to Section 2.7(b) as a result of the
delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in
respect of which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a
Responsible Officer stating that no Default or Event of Default has occurred and
is continuing and that the Borrower (directly or indirectly through a
Subsidiary) intends and expects to use all or a specified portion of the Net
Cash Proceeds of an Asset Sale or Recovery Event to make capital expenditures
useful in its business or otherwise acquire assets useful in its business.
17
"Reinvestment Prepayment Amount": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any
amount expended prior to the relevant Reinvestment Prepayment Date to make
capital expenditures useful in its business or otherwise acquire assets useful
in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any
Reinvestment Event, the earlier of (a) the date occurring twelve months after
such Reinvestment Event and (b) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to undertake to, make capital
expenditures useful in the Borrower's business or otherwise acquire assets
useful in the Borrower's business with all or any portion of the relevant
Reinvestment Deferred Amount.
"Related Fund": with respect to any Lender, any fund that (x)
invests as a regular part of its business in commercial loans and (y) is managed
or advised by the same investment advisor as such Lender, by such Lender or an
Affiliate of such Lender.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events described in Section 4043(c)(3) of
ERISA and other than those events as to which the thirty day notice period is
waived under subsections .22, .24 (solely with respect to partial termination of
a Plan), .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. Section 4043.
"Required Lenders": at any time, the holders of more than 50%
of (a) until the Closing Date, the Term Loan Commitments and (b) thereafter, the
sum of the aggregate unpaid principal amount of the Term Loans then outstanding.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
"Reserve Report": means a report setting forth the Proved
Reserves by reserve category attributable to the Hydrocarbon Interests
constituting Proved Reserves owned directly by the Borrower or any Subsidiary
thereof, a projection of the rate of production and net operating income with
respect thereto, as of a specified date, and such other information as is
customarily obtained from and provided in such reports, satisfactory in form and
substance to the Administrative Agent. All Reserve Reports prepared after the
Closing Date and required by this Agreement or any of the other Loan documents
shall be prepared, reviewed or audited in a manner consistent with the past
practices of the Borrower by an Approved Engineer.
"Responsible Officer": the chief executive officer, president,
senior vice president, chief financial officer, treasurer or controller of the
Borrower, but in any event, with respect to financial matters, the chief
financial officer, treasurer or controller of the Borrower.
"Restricted Payments": as defined in Section 6.6.
18
"RMT Senior Notes": the $150,000,000 7.55% Senior Notes due
2007 of the Borrower issued pursuant to the Indenture, dated as of February 1,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Senior Note Indenture"), between the Borrower and Bankers Trust Company, as
Trustee.
"SEC": the Securities and Exchange Commission (or successors
thereto or an analogous Governmental Authority).
"Secured Parties": as defined in the Guarantee and Collateral
Agreement.
"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the Mortgages and all other security
documents hereafter delivered to the Administrative Agent granting a Lien on any
Property of any Person to secure the obligations and liabilities of any Loan
Party under any Loan Document.
"Single Employer Plan": any Plan that is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent": with respect to any Person, as of any date of
determination, (a) the amount of the "present fair saleable value" of the assets
of such Person will, as of such date, exceed the amount of all "liabilities of
such Person, contingent or otherwise", as of such date, as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair saleable value
of the assets of such Person will, as of such date, be greater than the amount
that will be required to pay the liability of such Person on its debts as such
debts become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature. For
purposes of this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
"Specified Hedge Agreement": any Hedge Agreement described in
clause (a) of such definition entered into by the Borrower or any Subsidiary and
any Qualified Counterparty.
"S&P": Standard & Poor's Rating Services and its successors.
"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
19
"Subsidiary Guarantor": each Subsidiary of the Borrower.
"Term Loan": as defined in Section 2.1.
"Term Loan Commitment": as to any Lender, the obligation of
such Lender, if any, to make a Term Loan to the Borrower hereunder in a
principal amount not to exceed the amount set forth under the heading "Term Loan
Commitment" opposite such Lender's name on Schedule 1 to the Lender Addendum
delivered by such Lender, or, as the case may be, in the Assignment and
Acceptance pursuant to which such Lender became a party hereto, as the same may
be changed from time to time pursuant to the terms hereof. The original
aggregate amount of the Term Loan Commitments is $500,000,000.
"Term Loan Percentage": as to any Lender at any time, the
percentage which such Lender's Term Loan Commitment then constitutes of the
aggregate Term Loan Commitments (or, at any time after the Closing Date, the
percentage which the aggregate principal amount of such Lender's Term Loans then
outstanding constitutes of the aggregate principal amount of the Term Loans then
outstanding).
"Term Note": as defined in Section 2.4(e).
"Total Senior Secured Debt": at any time, an amount equal to
the sum of the aggregate principal amount of Indebtedness outstanding at such
time under this Agreement.
"Transferee": as defined in Section 9.14.
"Type": as to any Term Loan, its nature as a Base Rate Loan or
a Eurodollar Loan.
"UCC": the Uniform Commercial Code as in effect from time to
time in the State of New York.
"U.S. Lender": each Lender (or Transferee), each Issuing
Lender and each Agent that is a United States person as defined in section
7701(a)(30) of the Code.
"Wholly Owned Subsidiary": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other Wholly
Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.
(a) As used herein and in the other Loan Documents, and
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to Holdings, the Borrower and its Subsidiaries not
defined in Section 1.1 and accounting terms
20
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(b) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(d) All calculations of financial ratios set forth in
Section 6.1 shall be calculated to the same number of decimal places as the
relevant ratios are expressed in and shall be rounded upward if the number in
the decimal place immediately following the last calculated decimal place is
five or greater. For example, if the relevant ratio is to be calculated to the
hundredth decimal place and the calculation of the ratio is 5.126, the ratio
will be rounded up to 5.13.
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and
conditions hereof, the Lenders severally agree to make term loans (each, a "Term
Loan") to the Borrower on the Closing Date in an amount for each Lender not to
exceed the amount of the Term Loan Commitment of such Lender. The Term Loans may
from time to time be Eurodollar Loans or Base Rate Loans, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
2.2 and 2.8.
2.2 Procedure for Term Loan Borrowing. The Borrower shall
deliver to the Administrative Agent a Borrowing Notice (which Borrowing Notice
must be received by the Administrative Agent prior to 10:00 A.M., New York City
time, one Business Day prior to the anticipated Closing Date) requesting that
the Lenders make the Term Loans on the Closing Date. The Term Loans made on the
Closing Date shall initially be Base Rate Loans, and no Term Loan may be
converted into or continued as a Eurodollar Loan prior to the date which is 5
Business Days after the Closing Date or such shorter period as may be reasonably
acceptable to the Administrative Agent. Upon receipt of such Borrowing Notice
the Administrative Agent shall promptly notify each Lender thereof. Not later
than 12:00 Noon, New York City time, on the Closing Date each Lender shall make
available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the Term Loan or Term Loans to be made by
such Lender. The Administrative Agent shall make available to the Borrower the
aggregate of the amounts made available to the Administrative Agent by the
Lenders, in like funds as received by the Administrative Agent.
2.3 Repayment of Term Loans. The Term Loan of each Lender
shall mature in 16 consecutive quarterly installments, commencing on September
30, 2003, each of which shall be in an amount equal to such Lender's Term Loan
Percentage multiplied by the percentage set forth below opposite such
installment of the aggregate principal amount of Term Loans made on the Closing
Date:
21
Installment Percentage
----------- ----------
September 30, 2003 0.25%
December 31, 2003 0.25%
March 31, 2004 0.25%
June 30, 2004 0.25%
September 30, 2004 0.25%
December 31, 2004 0.25%
March 31, 2005 0.25%
June 30, 2005 0.25%
September 30, 2005 0.25%
December 31, 2005 0.25%
March 31, 2006 0.25%
June 30, 2006 0.25%
September 30, 2006 0.25%
December 31, 2006 0.25%
March 31, 2007 0.25%
May 30, 2007 96.25%
2.4 Repayment of Term Loans; Evidence of Debt. The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of the appropriate Lender the principal amount of each Term Loan of
such Lender in installments according to the schedule set forth in Section 2.3
(or on such earlier date on which the Term Loans become due and payable pursuant
to Section 7.1); provided that the Borrower shall repay the unpaid principal
amount of the Term Loans on the Maturity Date. The Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Term Loans from
time to time outstanding from the date hereof until payment in full thereof at
the rates per annum, and on the dates, set forth in Section 2.10.
(a) Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing indebtedness of the Borrower to
such Lender resulting from each Term Loan of such Lender from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time under this Agreement.
(b) The Administrative Agent, on behalf of the Borrower,
shall maintain the Register pursuant to Section 9.6(d), and a subaccount therein
for each Lender, in which shall be recorded (i) the amount of each Term Loan
made hereunder and any Term Note evidencing such Term Loan, the Type of such
Term Loan and each Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(c) The entries made in the Register and the accounts of
each Lender maintained pursuant to Section 2.4(b) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation
22
of the Borrower to repay (with applicable interest) the Term Loans made to the
Borrower by such Lender in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will promptly execute and
deliver to such Lender a promissory note of the Borrower evidencing any Term
Loans of such Lender, substantially in the forms of Exhibit G (a "Term Note"),
with appropriate insertions as to date and principal amount; provided, that
delivery of Term Notes shall not be a condition precedent to the occurrence of
the Closing Date or the making of the Term Loans on the Closing Date.
2.5 Fees, etc. The Borrower agrees to pay to the
Arrangers and the Agents the fees in the amounts and on the dates previously
agreed to in writing by the Borrower, the Arrangers and the Agents.
2.6 Optional Prepayments. The Borrower may at any time
and from time to time prepay the Term Loans, in whole or in part, without
premium or penalty (except as otherwise provided herein), upon irrevocable
notice delivered to the Administrative Agent at least three Business Days prior
thereto in the case of Eurodollar Loans and at least one Business Day prior
thereto in the case of Base Rate Loans, which notice shall specify the date and
amount of such prepayment, and whether such prepayment is of Eurodollar Loans or
Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day other
than the last day of the Interest Period applicable thereto, the Borrower shall
also pay any amounts owing pursuant to Section 2.16. Upon receipt of any such
notice the Administrative Agent shall promptly notify each Lender thereof. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to such
date on the amount prepaid. Partial prepayments of Term Loans shall be in an
aggregate principal amount of $1,000,000 or a whole multiple thereof.
2.7 Mandatory Prepayments. If any Capital Stock shall
be issued (excluding any Capital Stock issued to Parent or any of its
Affiliates), or Indebtedness incurred, by Holdings, the Borrower or any of
Borrower's Subsidiaries (excluding any Indebtedness incurred in accordance with
Section 6.2(a) to (h), (i) (to the extent set forth therein), and (j) and (k)),
then on the date of such issuance or incurrence, the Term Loans shall be
prepaid, by an amount equal to the amount of the Net Cash Proceeds of such
issuance or incurrence. The provisions of this Section do not constitute a
consent to the issuance of any equity securities by any entity whose equity
securities are pledged pursuant to the Guarantee and Collateral Agreement, or a
consent to the incurrence of any Indebtedness by Holdings, the Borrower or any
of the Borrower's Subsidiaries.
(a) If on any date Holdings, the Borrower or any of
Borrower's Subsidiaries shall receive Net Cash Proceeds from any Asset Sale or
Recovery Event then, unless a Reinvestment Notice shall be delivered in respect
thereof, on the date of receipt by Holdings, the Borrower or any of the
Borrower's Subsidiaries of such Net Cash Proceeds, the Term Loans shall be
prepaid by an amount equal to the amount of such Net Cash Proceeds; provided
that such prepayment of the Term Loans need not be made pursuant to this Section
2.7(b) until the Borrower or any of its Subsidiaries shall have received at
least $10,000,000 in Net Cash Proceeds in the aggregate from Asset Sales or
Recovery Events, at which time, such $10,000,000
23
in Net Cash Proceeds from any Asset Sales or Recovery Events and all further Net
Cash Proceeds from any Asset Sales or Recovery Events received prior to
application, shall be promptly applied to the prepayment of the Term Loans as
set forth in this Section 2.7(b) and after giving effect to such prepayment the
foregoing $10,000,000 basket shall be reinstated; and provided, further, that,
notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of Asset
Sales and Recovery Events that may be excluded from the foregoing requirement
pursuant to a Reinvestment Notice shall not exceed $50,000,000 in any fiscal
year of the Borrower and (ii) on each Reinvestment Prepayment Date the Term
Loans shall be prepaid by an amount equal to the Reinvestment Prepayment Amount
with respect to the relevant Reinvestment Event. The provisions of this Section
do not constitute a consent to the consummation of any Disposition not permitted
by Section 6.5.
2.8 Conversion and Continuation Options. The Borrower
may elect from time to time to convert Eurodollar Loans to Base Rate Loans by
giving the Administrative Agent at least two Business Days' prior irrevocable
notice of such election, provided that any such conversion of Eurodollar Loans
may be made only on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert Base Rate Loans to Eurodollar
Loans by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election (which notice shall specify the length of
the initial Interest Period therefor), provided that no Base Rate Loan may be
converted into a Eurodollar Loan (i) when any Event of Default has occurred and
is continuing and the Administrative Agent has, or the Required Lenders have,
determined in its or their sole discretion not to permit such conversions or
(ii) after the date that is one month prior to the final scheduled termination
or maturity date of the Facility. Upon receipt of any such notice the
Administrative Agent shall promptly notify each Lender thereof.
(a) The Borrower may elect to continue any Eurodollar
Loan as such upon the expiration of the then current Interest Period with
respect thereto by giving irrevocable notice to the Administrative Agent, in
accordance with the applicable provisions of the term "Interest Period" set
forth in Section 1.1, of the length of the next Interest Period to be applicable
to such Term Loans, provided that no Eurodollar Loan may be continued as such
(i) when any Event of Default has occurred and is continuing and the
Administrative Agent has, or the Required Lenders have, determined in its or
their sole discretion not to permit such continuations or (ii) after the date
that is one month prior to the final scheduled termination or maturity date of
the Facility, and provided, further, that if the Borrower shall fail to give any
required notice as described above in this paragraph or if such continuation is
not permitted pursuant to the preceding proviso, such Term Loans shall be
converted automatically to Base Rate Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
2.9 Minimum Amounts and Maximum Number of Eurodollar
Tranches. Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of Eurodollar
Loans and all selections of Interest Periods shall be in such amounts and be
made pursuant to such elections so that, (a) after giving effect thereto, the
aggregate principal amount of the Eurodollar Loans comprising each Eurodollar
Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess
thereof and (b) no more than ten Eurodollar Tranches shall be outstanding at any
one time.
24
2.10 Interest Rates and Payment Dates. Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(a) Each Base Rate Loan shall bear interest for each day
on which it is outstanding at a rate per annum equal to the Base Rate in effect
for such day plus the Applicable Margin.
(b) (i) If all or a portion of the principal amount of
any Term Loan shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), all Obligations (whether or not overdue) (to the
extent legally permitted) shall bear interest at a rate per annum that is equal
to the rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section plus 2% and (ii) if all or a portion of any interest
payable on any Term Loan or any fee or other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to Base Rate Loans plus 2%, in each case, with respect to
clauses (i) and (ii) above, from the date of such non payment until such amount
is paid in full (after as well as before judgment).
(c) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
Section shall be payable from time to time on demand.
2.11 Computation of Interest and Fees. Interest, fees,
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate
Loans on which interest is calculated on the basis of the Prime Rate, the
interest thereon shall be calculated on the basis of a 365- (or 366-, as the
case may be) day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Borrower and the Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a Term
Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.
(a) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
2.10(a).
2.12 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting
25
the relevant market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice
from the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Term Loans during such Interest Period, the
Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Term Loans that were
to have been converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar
Loans shall be converted, on the last day of the then current Interest Period
with respect thereto, to Base Rate Loans. Until such notice has been withdrawn
by the Administrative Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrower have the right to convert Term Loans
to Eurodollar Loans.
2.13 Pro Rata Treatment and Payments. Each borrowing
by the Borrower from the Lenders hereunder shall be made pro rata according to
the respective Term Loan Percentages of the Lenders. Each payment (other than
prepayments) in respect of principal or interest in respect of the Term Loans
and each payment in respect of fees payable hereunder shall be applied to the
amounts of such obligations owing to the Lenders pro rata according to the
respective amounts then due and owing to the Lenders.
(a) Each payment (including each prepayment) of the Term
Loans shall be allocated among the Lenders holding such Term Loans pro rata
based on the principal amount of such Term Loans held by such Lenders, and shall
be applied to the installments of such Term Loans pro rata based on the
remaining outstanding principal amount of such installments. Amounts prepaid on
account of the Term Loans may not be reborrowed.
(b) The application of any payment of Term Loans
(including optional and mandatory prepayments) shall be made, first, to Base
Rate Loans and, second, to Eurodollar Loans. Each payment of the Term Loans
shall be accompanied by accrued interest to the date of such payment on the
amount paid.
(c) All payments (including prepayments) to be made by
the Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Payment Office, in Dollars and in
immediately available funds. Any payment made by the Borrower after 12:00 Noon,
New York City time, on any Business Day shall be deemed to have been on the next
following Business Day. The Administrative Agent shall distribute such payments
to the Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to
26
extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Business Day. In the case of any
extension of any payment of principal pursuant to the preceding two sentences,
interest thereon shall be payable at the then applicable rate during such
extension.
(d) Unless the Administrative Agent shall have been
notified in writing by any Lender prior to the Closing Date that such Lender
will not make the amount that would constitute its share of such borrowing
available to the Administrative Agent, the Administrative Agent may assume that
such Lender is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Closing Date, such Lender shall
pay to the Administrative Agent, on demand, such amount with interest thereon at
a rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
after such Closing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans, on demand, from the Borrower.
(e) Unless the Administrative Agent shall have been
notified in writing by the Borrower prior to the date of any payment due to be
made by the Borrower hereunder that the Borrower will not make such payment to
the Administrative Agent, the Administrative Agent may assume that the Borrower
is making such payment, and the Administrative Agent may, but shall not be
required to, in reliance upon such assumption, make available to the Lenders
their respective pro rata shares of a corresponding amount. If such payment is
not made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
2.14 Requirements of Law. If the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
or compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any
kind whatsoever with respect to this
Agreement or any Eurodollar Loan made by it,
or change the basis of taxation of payments
to such Lender in respect thereof (except
for Non-Excluded Taxes covered by Section
2.15 and changes in the rate of tax on the
overall net income of such Lender);
27
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or
similar requirement against assets held by,
deposits or other liabilities in or for the
account of, advances, loans or other
extensions of credit by, or any other
acquisition of funds by, any office of such
Lender that is not otherwise included in the
determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender, within 30 days of written demand therefor, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this Section, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.
(b) If any Lender shall have determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under to a level below that which
such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, after submission by such
Lender to the Borrower (with a copy to the Administrative Agent) of a written
request therefor, the Borrower shall pay to such Lender within 30 days of such
written demand therefor, such additional amount or amounts as will compensate
such Lender or such corporation for such reduction.
(c) A certificate describing in reasonable detail the
basis for any additional amounts payable pursuant to this Section submitted by
any Lender to the Borrower (with a copy to the Administrative Agent) shall be
conclusive in the absence of manifest error. The Borrower shall not be obligated
to make any payment to any Lender under this Section which is attributable to
any period of time occurring more than 180 days prior to the date of any
certificate delivered pursuant to the preceding sentence. The obligations of the
Borrower pursuant to this Section shall survive the termination of this
Agreement and the payment of the Term Loans and all other amounts payable
hereunder.
2.15 Taxes. All payments made by the Borrower or any
other Loan Party under this Agreement and the other Loan Documents shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on any Agent or
28
any Lender as a result of a present or former connection between such Agent or
such Lender and the jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from such Agent's or such Lender's having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document). If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") or any Other Taxes are required to be withheld from any
amounts payable to any Agent or any Lender hereunder, the amounts so payable to
such Agent or such Lender shall be increased to the extent necessary to yield to
such Agent or such Lender (after payment of all Non-Excluded Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement; provided, however, that the Borrower or
any other Loan Party shall not be required to increase any such amounts payable
to any Lender with respect to any Non-Excluded Taxes (i) that are attributable
to such Lender's failure to comply with the requirements of paragraph (d) or (e)
of this Section or (ii) that are United States withholding taxes imposed on
amounts payable to such Lender at the time such Lender becomes a party to this
Agreement, except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph (a).
(a) In addition, the Borrower and each other Loan Party
shall pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.
(b) Whenever any Non-Excluded Taxes or Other Taxes are
payable by the Borrower or any other Loan Party, as promptly as possible
thereafter the Borrower or such other Loan Party shall send to the
Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower or any other Loan Party showing payment thereof. If the Borrower or
such other Loan Party fails to pay any Non-Excluded Taxes or Other Taxes when
due to the appropriate taxing authority or fails to remit to the Administrative
Agent the required receipts or other required documentary evidence, the Borrower
and each other Loan Party shall indemnify the Agents and the Lenders for the
full amount of Non-Excluded Taxes or Other Taxes and any incremental taxes,
interest or penalties that may become payable by any Agent or any Lender as a
result of any such failure. The agreements in this Section 2.15 shall survive
the termination of this Agreement and the payment of the Term Loans and all
other amounts payable hereunder.
(c) (i) Each Lender (or Transferee) and each
administrative agent that is not a person (as defined in section 7701(a)(30) of
the Code (a "Non-U.S. Lender") shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from which
the related participation shall have been purchased) two copies of either U.S.
Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a
Non-U.S. Lender entitled to exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest" a Form W-8BEN, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related
29
participation). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at
any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver.
(ii) Each U.S. Lender shall deliver to the Borrower
and the Administrative Agent (or, in the case of a Participant, to the Lender
from which the related participation shall have been purchased) two copies of
U.S. Internal Revenue Service Form W-9, or any subsequent versions thereof or
successors thereto, properly completed and duly executed by such U.S. Lender
certifying that such Lender is entitled to an exemption from United States
backup withholding tax on all payments by the Borrower under this Agreement and
the other Loan Documents. Such forms shall be delivered by each U.S. Lender on
or before the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation). In addition, each U.S. Lender shall deliver such forms promptly
upon the obsolescence or invalidity of any form previously delivered by such
U.S. Lender. Each U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Solely for purposes of
this Section 2.15(d), a U.S. Lender shall not include a Lender (or Transferee),
or Issuing Lender or Agent, as the case may be, that is treated as an exempt
recipient based on the indicators described in Treasury Regulation section
1.6049-4(c)(1)(ii).
(d) A Lender that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided that such
Lender is legally entitled to complete, execute and deliver such documentation
and in such Lender's reasonable judgment such completion, execution or
submission would not materially prejudice the legal position of such Lender.
2.16 If any payment of principal, or conversion, of any
Eurodollar Loan made to the Borrower is made other than on the last day of an
Interest Period relating to such Eurodollar Loan, as a result of a payment made
pursuant to Section 2.6 or 2.7 or acceleration of the maturity of such
Eurodollar Loan pursuant to Section 7.1 or for any other reason or any
conversion pursuant to Section 2.8, the Borrower shall, upon demand of any
Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses which it may
reasonably incur as a result of any such payment, purchase or conversion,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain such Eurodollar Loan.
30
2.17 Illegality. Notwithstanding any other provision
herein, if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be suspended until such Lender notifies the Administrative Agent and
the Borrower that the circumstances giving rise to such suspension no longer
exist and (b) such Lender's Term Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to Base Rate Loans on the respective last
days of the then current Interest Periods with respect to such Term Loans or
within such earlier period as required by law. If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 2.16.
2.18 Change of Lending Office. Each Lender agrees that,
upon the occurrence of any event giving rise to the operation of Section 2.14,
2.15(a) or 2.17 with respect to such Lender, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Term Loans affected by
such event with the object of avoiding the consequences of such event; provided,
that such designation is made on terms that, in the sole judgment of such
Lender, cause such Lender and its lending office(s) to suffer no economic, legal
or regulatory disadvantage, and provided, further, that nothing in this Section
shall affect or postpone any of the obligations of any Borrower or the rights of
any Lender pursuant to Section 2.14, 2.15(a) or 2.17.
2.19 Replacement of Lenders under Certain Circumstances.
The Borrower shall be permitted to replace any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 2.14 or 2.15 or gives a
notice of illegality pursuant to Section 2.17 or (b) defaults in its obligation
to make Term Loans hereunder, with a replacement financial institution; provided
that (i) such replacement does not conflict with any Requirement of Law, (ii) no
Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action under Section 2.18 so as to eliminate the continued need for payment
of amounts owing pursuant to Section 2.14 or 2.15 or to eliminate the illegality
referred to in such notice of illegality given pursuant to Section 2.17, (iv)
the replacement financial institution shall purchase, at par, all Term Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Borrower shall be liable to such replaced Lender under
Section 2.16 (as though Section 2.16 were applicable) if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 9.6 (provided that the
Borrower shall be obligated to pay the registration and processing fee referred
to therein), (viii) the Borrower shall pay all additional amounts (if any)
required pursuant to Section 2.14 or 2.15, as the case may be, in respect of any
period prior to the date on which such replacement shall be consummated, and
(ix) any such replacement shall not be deemed to be a waiver of any rights that
the Borrower, the Administrative Agent or any other Lender shall have against
the replaced Lender.
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SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Arrangers, the Agents and the Lenders to enter
into this Agreement and to make the Term Loans, Holdings and the Borrower hereby
jointly and severally represent and warrant to each Arranger, each Agent and
each Lender that:
3.1 Financial Condition. The unaudited pro forma
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at March 31, 2003 (the "Pro Forma Balance Sheet"), copies of which have
heretofore been furnished to each Lender, has been prepared giving effect (as if
such events had occurred on such date) to (i) the Term Loans to be made on the
Closing Date and the use of proceeds thereof and (ii) the payment of fees and
expenses in connection with the foregoing. The Pro Forma Balance Sheet has been
prepared based on the best information available to the Borrower as of the date
of delivery thereof, and presents fairly on a pro forma basis the estimated
financial position of Borrower and its consolidated Subsidiaries as at March 31,
2003, assuming that the events specified in the preceding sentence had actually
occurred at such date.
(a) The audited consolidated balance sheet of the
Borrower and its Subsidiaries as at December 31, 2002, and the related
consolidated statements of income and of cash flows for the fiscal year ended on
such date, and the audited consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 2001, and the related consolidated statements of
income and of cash flows for the period from May 4, 2001 to December 31, 2001,
each reported on by and accompanied by an unqualified report from Ernst & Young
LLP, present fairly the consolidated financial condition of the Borrower and its
Subsidiaries as at such date, and the consolidated results of its operations and
its consolidated cash flows for the respective periods then ended. The unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as at March 31,
2003, and the related unaudited consolidated statements of income and cash flows
for the 3-month period ended on such date, present fairly the consolidated
financial condition of the Borrower and its Subsidiaries as at such date, and
the consolidated results of its operations and its consolidated cash flows for
the respective period then ended (subject to normal year-end audit adjustments).
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein and the absence of footnotes in unaudited
statements). Except for the Holdings Subordinated Guaranty and intercompany
Indebtedness eliminated in a consolidation of Holdings and its Subsidiaries,
Holdings, the Borrower and Borrower's Subsidiaries do not have any material
Guarantee Obligations, contingent liabilities and liabilities for taxes, or any
long term leases or unusual forward or long term commitments, including, without
limitation, any interest rate or foreign currency swap or exchange transaction
or other obligation in respect of derivatives, that are not reflected in the
most recent financial statements referred to in this paragraph or the footnotes
thereto. Except as disclosed on Schedule 3.1, during the period from December
31, 2002 to and including the date hereof there has been no Disposition by the
Borrower and its Subsidiaries of any material part of its business or Property.
3.2 No Change. Since December 31, 2002, there has been no
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
32
3.3 Corporate Existence; Compliance with Law. Each of
Holdings, the Borrower and the Borrower's Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate or equivalent power and authority to own and
operate its Property, to lease the Property it operates as lessee and to conduct
the business in which it is currently engaged, (c) is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of Property or the conduct of its
business requires such qualification and (d) is in compliance with all
Requirements of Law, except in the case of clauses (c) and (d), to the extent
that the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable
Obligations. Each Loan Party has the corporate or equivalent power and authority
to make, deliver and perform the Loan Documents to which it is a party and, in
the case of the Borrower, to borrow hereunder. Each Loan Party has taken all
necessary corporate or other action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of the
Borrower, to authorize the borrowings on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or the execution, delivery,
performance, validity or enforceability of this Agreement or any of the other
Loan Documents, except (i) consents, authorizations, filings and notices
described in Schedule 3.4, which consents, authorizations, filings and notices
have been obtained or made and are in full force and effect and (ii) the filings
referred to in Section 3.19. This Agreement has been, and each other Loan
Document to which any Loan Party is a party will be, duly executed and delivered
on behalf of each Loan Party that is a party thereto. This Agreement
constitutes, and each other Loan Document upon execution will constitute, a
legal, valid and binding obligation of each Loan Party that is a party thereto,
enforceable against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. The execution, delivery and performance
of this Agreement and the other Loan Documents, the borrowings hereunder and the
use of the proceeds thereof will not violate any Requirement of Law or any
Contractual Obligation of Holdings, the Borrower or any of their respective
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation (other than the Liens
created by the Security Documents). No Requirement of Law or Contractual
Obligation applicable to Holdings, the Borrower or any of the Borrower's
Subsidiaries could reasonably be expected to have a Material Adverse Effect.
3.6 No Material Litigation. Except as set forth on
Schedule 3.6 (any such litigation set forth therein could not, in the judgment
of the Borrower, reasonably be expected to have a Material Adverse Effect), no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of Holdings or the
Borrower, threatened by or against Holdings, the Borrower or any of the
Borrower's Subsidiaries
33
or against any of their respective properties or revenues (a) with respect to
any of the Loan Documents or any of the transactions contemplated hereby or
thereby, or (b) that could reasonably be expected to have a Material Adverse
Effect.
3.7 No Default. Neither Holdings, the Borrower nor any of
the Borrower's Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect that could reasonably be expected to have
a Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
3.8 Ownership of Property; Liens. Each of Holdings, the
Borrower and the Borrower's Subsidiaries has a valid interest in all its
Property, and none of such Property is subject to any Lien other than Permitted
Liens and imperfections in title that do not in the aggregate materially detract
from the value or use of such Property in the business of Borrower and its
Subsidiaries.
3.9 Intellectual Property. Each of Holdings, the Borrower
and the Borrower's Subsidiaries owns, or is licensed to use, all Intellectual
Property necessary for the conduct of its business as currently conducted. No
material claim has been asserted and is pending by any Person challenging or
questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does Holdings or the Borrower
know of any valid basis for any such claim. The use of Intellectual Property by
Holdings, the Borrower and the Borrower's Subsidiaries does not infringe on the
rights of any Person in any material respect.
3.10 Taxes. Each of Holdings, the Borrower and each of
their respective Subsidiaries has filed or caused to be filed all Federal, state
and other material tax returns that are required to be filed and has paid all
taxes shown to be due and payable on said returns or on any assessments made
against it or any of its Property and all other material taxes, fees or other
charges imposed on it or any of its Property by any Governmental Authority
(other than any the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of Holdings, the Borrower
or their respective Subsidiaries, as the case may be); and no tax Lien has been
filed that is not a Permitted Lien, and, to the knowledge of Holdings and the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.
3.11 Federal Regulations. No part of the proceeds of any
Term Loans will be used for "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U as now
and from time to time hereafter in effect or for any purpose that violates the
provisions of the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U 1 referred to in Regulation U.
3.12 Labor Matters. There are no strikes or other labor
disputes against Holdings, the Borrower or any of the Borrower's Subsidiaries
pending or, to the knowledge of Holdings or the Borrower, threatened that
(individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect. Hours worked by and payment made to employees of
Holdings, the Borrower and the Borrower's Subsidiaries have not been in
violation of the Fair
34
Labor Standards Act or any other applicable Requirement of Law dealing with such
matters that (individually or in the aggregate) could reasonably be expected to
have a Material Adverse Effect. All payments due from Holdings, the Borrower or
any of the Borrower's Subsidiaries on account of employee health and welfare
insurance that (individually or in the aggregate) could reasonably be expected
to have a Material Adverse Effect if not paid have been paid or accrued as a
liability on the books of Holdings, the Borrower or the relevant Subsidiary.
3.13 ERISA. Except as set forth on Schedule 3.13, neither
a Reportable Event nor an "accumulated funding deficiency" (within the meaning
of Section 412 of the Code or Section 302 of ERISA) has occurred during the five
year period prior to the date on which this representation is made with respect
to any Plan. Each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code. No termination of a Single Employer Plan has
occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period. Except as set forth on Section 3.13, the present value of all
accrued benefits under each Single Employer Plan (based on those assumptions
used to fund such Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made, exceed the value of the assets of
such Plan allocable to such accrued benefits by a material amount. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could reasonably be
expected to result in a material liability under ERISA, and neither the Borrower
nor any Commonly Controlled Entity would become subject to any material
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
3.14 Investment Company Act; Other Regulations. No Loan
Party is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
3.15 Subsidiaries. The Subsidiaries listed on Schedule
3.15 constitute all the Subsidiaries of Holdings at the date hereof. Schedule
3.15 sets forth as of the Closing Date the name and jurisdiction of
incorporation of each Subsidiary of Holdings and, as to each Subsidiary, the
percentage of each class of Capital Stock owned by each Loan Party.
(a) There are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock
options granted to employees or directors and directors' qualifying shares) of
any nature relating to any Capital Stock of Holdings, the Borrower or any of the
Borrower's Subsidiaries.
3.16 Use of Proceeds. The proceeds of the Term Loans shall
be used (i) to repay in part loans outstanding under, and other amounts due in
respect of, the Existing Credit Agreement, and to pay related fees and expenses,
and (ii) for general corporate purposes.
3.17 Environmental Matters. Except as set forth on
Schedule 3.17 (provided, however, that any such matters set forth therein could
not, in the judgment of the Borrower,
35
reasonably be expected to have a Material Adverse Effect) and other than
exceptions to any of the following that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect:
(a) Holdings, the Borrower and the Borrower's
Subsidiaries: (i) are, and within the period of all applicable statutes of
limitation have been, in compliance with all applicable Environmental Laws; (ii)
hold all Environmental Permits (each of which is in full force and effect)
required for any of their current operations or for any property owned, leased,
or otherwise operated by any of them; (iii) are, and within the period of all
applicable statutes of limitation have been, in compliance with all of their
Environmental Permits; and (iv) reasonably believe that: each of their
Environmental Permits will be timely renewed and complied with; any additional
Environmental Permits that may be required of any of them will be timely
obtained and complied with; and compliance with any Environmental Law that is or
is expected to become applicable to any of them will be timely attained and
maintained.
(b) Materials of Environmental Concern are not present
at, on, under, in, or about any real property now or formerly owned, leased or
operated by Holdings, the Borrower or any of the Borrower's Subsidiaries, or at
any other location (including, without limitation, any location to which
Materials of Environmental Concern have been sent for re-use or recycling or for
treatment, storage, or disposal) which could reasonably be expected to (i) give
rise to liability of Holdings, the Borrower or any of the Borrower's
Subsidiaries under any applicable Environmental Law or otherwise result in costs
to Holdings, the Borrower or any of the Borrower's Subsidiaries, or (ii)
interfere with Holdings', the Borrower's or any of the Borrower's Subsidiaries'
continued operations, or (iii) impair the fair saleable value of any real
property owned or leased by Holdings, the Borrower or any of the Borrower's
Subsidiaries.
(c) There is no judicial, administrative, or arbitral
proceeding (including any notice of violation or alleged violation) under or
relating to any Environmental Law to which Holdings, the Borrower or any of the
Borrower's Subsidiaries is, or to the knowledge of Holdings or the Borrower will
be, named as a party that is pending or, to the knowledge of Holdings or the
Borrower, threatened.
(d) None of Holdings, the Borrower or any of the
Borrower's Subsidiaries has received any written request for information, or
been notified that it is a potentially responsible party under or relating to
the federal Comprehensive Environmental Response, Compensation, and Liability
Act or any similar Environmental Law.
(e) None of Holdings, the Borrower or any of the
Borrower's Subsidiaries has entered into or agreed to any consent decree, order,
or settlement or other agreement, or is subject to any judgment, decree, or
order or other agreement, in any judicial, administrative, arbitral, or other
forum for dispute resolution, relating to compliance with or liability under any
Environmental Law.
(f) None of Holdings, the Borrower or any of the
Borrower's Subsidiaries has assumed or retained, by contract or operation of
law, any liabilities of any kind, fixed or contingent, known or unknown, under
any Environmental Law.
36
3.18 Accuracy of Information, etc. No statement or
information contained in this Agreement, any other Loan Document, the
Confidential Information Memorandum or any other document, certificate or
statement (other than projections and the financial statements of the Borrower
for fiscal years 1998, 1999 and 2000 and the first 7 months of fiscal year 2001)
furnished to the Arrangers, the Administrative Agent, any other Agent or the
Lenders or any of them, by or on behalf of any Loan Party for use in connection
with the transactions contemplated by this Agreement or the other Loan
Documents, contained as of the date such statement, information, document or
certificate was so furnished (or, in the case of the Confidential Information
Memorandum, as of the date of this Agreement) and taken as a whole, any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained herein or therein not misleading. The
projections and pro forma financial information contained in the materials
referenced above are based upon good faith estimates and assumptions believed by
management of Holdings and the Borrower to be reasonable at the time made, it
being recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. There is no fact known
to any Loan Party that could reasonably be expected to have a Material Adverse
Effect that has not been expressly disclosed herein, in the other Loan
Documents, in the Confidential Information Memorandum or in any other documents,
certificates and statements furnished to the Arrangers, the Administrative
Agent, any other Agent and the Lenders for use in connection with the
transactions contemplated hereby and by the other Loan Documents.
3.19 Security Documents. The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Secured Parties, a legal, valid and enforceable security interest
in the Collateral described therein and proceeds thereof. In the case of the
Pledged Stock described in the Guarantee and Collateral Agreement, when any
stock certificates representing such Pledged Stock are delivered to the
Administrative Agent, and in the case of the other Collateral described in the
Guarantee and Collateral Agreement, when financing statements in appropriate
form are filed in the offices specified on Schedule 3.19(a)-1 (which financing
statements have been duly completed and executed, delivered to and authorized to
be filed by the Administrative Agent) and such other filings as are specified on
Schedule 3 to the Guarantee and Collateral Agreement have been completed, the
Guarantee and Collateral Agreement shall constitute (to the extent perfection
can be accomplished by filings of UCC financing statements or the delivery and
possession of Pledged Stock or Pledged Notes) a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as defined
in the Guarantee and Collateral Agreement), in each case prior and superior in
right to any other Person (except, in the case of Collateral other than Pledged
Stock, Permitted Liens). Schedule 3.19(a)-2 lists each UCC Financing Statement
that (i) names any Loan Party as debtor and (ii) will remain on file after the
Closing Date. Schedule 3.19(a)-3 lists each UCC Financing Statement that (i)
names any Loan Party as debtor and (ii) will be terminated on or prior to the
Closing Date; and on or prior to the Closing Date, the Borrower will have
delivered to the Administrative Agent, or caused to be filed, duly completed UCC
termination statements, authorized or authenticated by the relevant secured
party, in respect of each UCC Financing Statement listed in Schedule 3.19(a)-3.
37
(a) Upon the due execution and recordation thereof, each
of the Mortgages will be effective to create in favor of the Administrative
Agent, for the benefit of the Secured Parties, a legal, valid, binding and
enforceable Lien on, and security interest in, the Mortgaged Properties
described, and as defined, therein and proceeds and products thereof, and when
the Mortgages are filed in the offices specified on Schedule 3.19(b), each such
Mortgage shall constitute a fully perfected first-priority Lien on, and security
interest in, all of the Mortgaged Properties and the proceeds and products
thereof, as security for the Obligations, in each case prior and superior in
right to any Liens of any other Person other than Permitted Liens.
3.20 Solvency. The Loan Parties are, taken as a whole, and
after giving effect to the incurrence of all Indebtedness and obligations being
incurred in connection herewith will be, and will continue to be, Solvent.
3.21 Hydrocarbon Interests. As of the Closing Date,
Schedule 3.21 sets forth a list of all of the Hydrocarbon Interests consisting
of oil and gas leaseholds, mineral interests, royalty and overriding royalty
interests in which the Borrower or any of its Subsidiaries has an interest.
3.22 Permits. Except as set forth in Section 3.17
(provided, however, that any such matters set forth therein could not, in the
judgment of the Borrower, reasonably be expected to have a Material Adverse
Effect) and other than exceptions to any of the following that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect: (i) each of Holdings, the Borrower and the Borrower's
Subsidiaries has obtained and holds all Permits required in respect of all Real
Estate and for any other property otherwise operated by or on behalf of, or for
the benefit of, such Person and for the operation of each of its businesses as
presently conducted, (ii) all such Permits are in full force and effect, and
each of Holdings, the Borrower and the Borrower's Subsidiaries has performed and
observed all requirements of such Permits, (iii) no event has occurred which
allows or results in, or after notice or lapse of time would allow or result in,
revocation or termination by the issuer thereof or in any other impairment of
the rights of the holder of any such Permit, (iv) no such Permits contain any
restrictions, either individually or in the aggregate, that are materially
burdensome to Holdings, the Borrower or any of the Borrower's Subsidiaries, or
to the operation of any of its businesses or any property owned, leased or
otherwise operated by such Person, (v) each of Holdings, the Borrower and the
Borrower's Subsidiaries reasonably believes that the Permits necessary for the
operation of its Oil and Gas Business, taken as a whole, will be renewed and
complied with and that any additional permits necessary for the operation of its
Oil and Gas Business, taken as a whole, will be obtained and complied with.
(a) Except as set forth on Schedule 3.22(b) and except
for filings and recordings required for the perfection of Liens, no consent or
authorization of, filing with, Permit from, or other act by or in respect of,
any Governmental Authority is required in connection with the execution,
delivery, performance, validity or enforceability of, or enforcement of remedies
(including, without limitation, foreclosure on the Collateral) pursuant to, this
Agreement and the other Loan Documents.
3.23 Lease Payments. Each of Holdings, the Borrower and
the Borrower's Subsidiaries has paid all royalties and payments required to be
made by it under leases of Oil and
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Gas Properties (except for properties abandoned in the ordinary course of
business or with respect to which the failure to pay such royalties and other
payments could not reasonably be expected to have a Material Adverse Effect)
where any of the Collateral is or may be located from time to time (other than
any the amount or validity of which are currently being contested in good faith
by appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of Holdings, the Borrower or such
Subsidiary, as the case may be); to the knowledge of Holdings or the Borrower,
no claim is being asserted with respect to any such payments that, individually
or in the aggregate, could be reasonably expected to have a Material Adverse
Effect.
3.24 Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company," or a "Subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "Subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to the Term Loan. The agreement of each
Lender to make the Term Loan requested to be made by it hereunder is subject to
the satisfaction, prior to or concurrently with the making of such Term Loan on
the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly authorized officer
of Holdings and the Borrower, (ii) the Guarantee and Collateral Agreement,
executed and delivered by a duly authorized officer of Holdings, the Borrower
and each Subsidiary Guarantor, and (iii) a Lender Addendum executed and
delivered by each Lender and accepted by the Borrower.
(b) Pro Forma Balance Sheet; Financial Statements. The
Lenders shall have received (i) the Pro Forma Balance Sheet, (ii) audited
consolidated financial statements of the Borrower and its Subsidiaries for the
1998, 1999, 2000 and 2002 fiscal years, (iii) audited consolidated financial
statements of the Borrower and its Subsidiaries for the period from August 1,
2001 to December 31, 2001, (iv) unaudited consolidated financial statements of
the Borrower and its Subsidiaries for the period from January 1, 2001 to July
31, 2001 (without footnotes) and (v) unaudited interim consolidated financial
statements of the Borrower and its Subsidiaries for the fiscal quarter of the
Borrower ended March 31, 2003; and such financial statements shall not, in the
reasonable judgment of the Lenders, reflect any material adverse change in the
consolidated financial condition of the Borrower and its Subsidiaries, as
reflected in the financial statements or projections contained in the
Confidential Information Memorandum.
(c) Approvals. All governmental and third party approvals
(including landlords' and other consents) necessary or, in the reasonable
judgment of the Administrative Agent, advisable in connection with the
continuing operations of Holdings, the Borrower and the Borrower's Subsidiaries
and the transactions contemplated hereby shall have been obtained and be in full
force and effect.
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(d) Related Agreements. The Administrative Agent shall
have received (in a form reasonably satisfactory to the Administrative Agent),
true and correct copies, certified as to authenticity by the Borrower, of such
documents or instruments as may be reasonably requested by the Administrative
Agent, including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which Parent or any Loan Party may be a
party that is requested by the Administrative Agent.
(e) Termination of Existing Credit Agreement. The
Administrative Agent shall have received evidence reasonably satisfactory to the
Administrative Agent that the Existing Credit Agreement shall be simultaneously
terminated, all amounts thereunder shall be simultaneously paid in full and
arrangements reasonably satisfactory to the Administrative Agent shall have been
made for the termination of Liens and security interests granted in connection
therewith.
(f) Fees. The Administrative Agent and the other Agents
shall have received all fees required to be paid, and all expenses for which
invoices have been presented (including reasonable fees, disbursements and other
charges of Weil, Gotshal & Manges LLP and LeBoeuf Lamb, Greene & MacRae, L.L.P.,
counsel to the Administrative Agent), on or before the Closing Date. All such
amounts will be paid with proceeds of Term Loans made on the Closing Date and
will be reflected in the funding instructions given by the Borrower to the
Administrative Agent on or before the Closing Date.
(g) Business Plan. The Lenders shall have received
satisfactory business projections for fiscal years 2003 - 2007.
(h) Solvency Certification. The Lenders shall have
received a Solvency Certificate, substantially in the form of Exhibit J, from
the treasurer or controller of Holdings and the Borrower, which shall document
the solvency of Holdings, the Borrower and the Borrower's Subsidiaries
considered as a whole after giving effect to the transactions contemplated
hereby.
(i) Lien Searches. The Administrative Agent shall have
received the results of a recent lien search in each of the jurisdictions in
which Uniform Commercial Code financing statements or other filings or
recordations have been or should be made to evidence or perfect security
interests in all assets of the Loan Parties, and such search shall reveal no
liens on any of the assets of the Loan Party, except for Liens permitted by
Section 6.3.
(j) Reserve Reports. The Administrative Agent shall have
received a Reserve Report dated as of December 31, 2002, covering the
Hydrocarbon Interests of the Borrower and its Subsidiaries, in form and
substance satisfactory to the Administrative Agent.
(k) Closing Certificate. The Administrative Agent shall
have received a certificate of each Loan Party, dated the Closing Date,
substantially in the form of Exhibit C, with appropriate insertions and
attachments.
(l) Legal Opinions. The Administrative Agent shall have
received the following executed legal opinions:
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(i) the legal opinion of Gibson, Dunn & Crutcher
LLP, counsel to Holdings, the Borrower and
the Borrower's Subsidiaries, substantially
in the form of Exhibit F-1;
(ii) the legal opinion of Davis Graham & Stubbs
LLP, counsel to the Borrower, substantially
in the form of Exhibit F-2; and
(iii) such other legal opinions of local counsel
as are requested by the Administrative Agent
in form and substance reasonably
satisfactory to the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(m) Pledged Stock; Stock Powers; Acknowledgment and
Consent; Pledged Notes. The Administrative Agent shall have received (i) the
certificates representing the shares of Capital Stock pledged pursuant to the
Guarantee and Collateral Agreement, together with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the
pledgor thereof, (ii) an Acknowledgment and Consent, substantially in the form
of Annex II to the Guarantee and Collateral Agreement, duly executed by any
issuer of Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement that is not itself a party to the Guarantee and Collateral Agreement
and (iii) each promissory note pledged pursuant to the Guarantee and Collateral
Agreement endorsed (without recourse) in blank (or accompanied by an executed
transfer form in blank satisfactory to the Administrative Agent) by the pledgor
thereof.
(n) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create in
favor of the Administrative Agent, for the benefit of the Secured Parties, a
perfected Lien on the Collateral described therein, prior and superior in right
to any other Person (other than with respect to Liens expressly permitted by
Section 6.3 and Liens subject to releases delivered at Closing), shall have been
filed, registered or recorded or shall have been delivered to the Administrative
Agent be in proper form for filing, registration or recordation.
(o) Oil and Gas Mortgages. The Lenders shall have
received, in form satisfactory for filing, Mortgages on each of the Borrower's
Oil and Gas Properties, other than those set forth on Schedules 6.5(f)(i) or
6.5(i) or any Oil and Gas Property with a fair market value as of the Closing
Date of less than $2,000,000 (so long as the aggregate fair market value of the
Properties excluded by the Borrower from inclusion in the Collateral as a result
of such threshold at any time does not exceed $10,000,000 in the aggregate).
(p) Insurance. The Administrative Agent shall have
received insurance certificates satisfying the requirements of Section 5.3 of
the Guarantee and Collateral Agreement.
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(q) Minimum Rating. The Facility shall have been assigned
a senior secured credit rating of not less than B3 from Moody's and B+ from S&P,
which ratings shall remain in effect on the Closing Date.
(r) Environmental. The Lenders shall be reasonably
satisfied with the environmental affairs of the Borrower and its Subsidiaries.
(s) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant to the Loan
Documents shall be true and correct on and as of the Closing Date.
(t) No Default. No Default or Event of Default shall have
occurred and be continuing on the Closing Date or after giving effect to the
Term Loans requested to be made on the Closing Date.
SECTION 5. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree
that, so long as any Term Loan or other amount is owing to any Lender, any
Arranger or any Agent hereunder, each of Holdings and the Borrower shall and
shall cause each of the Borrower's Subsidiaries to:
5.1 Financial Statements. Furnish to the Administrative
Agent for the benefit of each Lender:
(a) as soon as available, but in any event within 105
days after the end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such year and the related audited consolidated statements of
income and of cash flows for such year, setting forth in each case in
comparative form the figures as of the end of and for the previous year,
reported on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Ernst & Young LLP or
other independent certified public accountants of nationally recognized
standing;
(b) as soon as available, but in any event not later than
60 days after the end of each of the first three quarterly periods of each
fiscal year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income and of cash flows for such
quarter and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures as of the end of and
for the corresponding period in the previous year, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal year
end audit adjustments and the absence of footnotes); and
all such financial statements to be prepared in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein) and to present fairly the financial condition of the Borrower
and its Subsidiaries as of the dates thereof and the results of operations for
the periods covered thereby.
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5.2 Certificates; Other Information. Furnish to the
Administrative Agent:
(a) concurrently with the delivery of the financial
statements referred to in Section 5.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating that
in making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial
statements pursuant to Section 5.1, (i) a certificate of a Responsible Officer
stating that such Responsible Officer has obtained no knowledge of any Default
or Event of Default except as specified in such certificate and (ii) in the case
of quarterly or annual financial statements, (x) a Compliance Certificate
containing all information and calculations necessary for determining compliance
by the Borrower with Section 6.1 as of the last day of the fiscal quarter or
fiscal year of the Borrower, as the case may be, and (y) to the extent not
previously disclosed to the Administrative Agent in writing, a listing of any
county and state, where any Loan Party has an Oil and Gas Property required to
be pledged to the Lenders pursuant to Section 5.9;
(c) concurrently with any Compliance Certificate
delivered pursuant to paragraph (b) above, (i) a production statement that
identifies the most recent information available relating to net revenue
interests of Hydrocarbons sold by the Borrower and its Subsidiaries and (ii) a
statement of revenues and expenses attributable to the Hydrocarbon Interests of
the Borrower and its Subsidiaries for such fiscal quarter ended;
(d) concurrently with the delivery of any financial
statements pursuant to Section 5.1(a), and such other time as the Borrower may,
in its sole discretion elect, an Engineering Report;
(e) as soon as available, and in any event no later than
45 days after the end of each fiscal year of the Borrower, a detailed
consolidated budget for the following fiscal year (including a projected
consolidated balance sheet of the Borrower and the Borrower's Subsidiaries as of
the end of the following fiscal year, and the related consolidated statements of
projected cash flow, projected changes in financial position and projected
income), and, as soon as available, significant revisions, if any, by the
Borrower for any material changes to such budget and projections with respect to
such fiscal year (collectively, the "Projections"), which Projections shall in
each case be accompanied by a certificate of a Responsible Officer stating that
such Projections are based on reasonable estimates, information and assumptions
and that such Responsible Officer has no reason to believe that such Projections
are incorrect or misleading in any material respect;
(f) within 60 days after the end of each fiscal quarter
of the Borrower (or in the case of the fourth fiscal quarter of each year,
within 105 days after the end of such fiscal quarter), a narrative discussion
and analysis of the financial condition and results of operations of the
Borrower and the Borrower's Subsidiaries for such fiscal quarter and for the
period from the beginning of the then current fiscal year to the end of such
fiscal quarter, as compared to the portion of the Projections covering such
periods and to the comparable periods of the previous year;
43
(g) no later than 10 Business Days prior to the
effectiveness thereof, copies of substantially final drafts of any proposed
amendment, supplement, waiver or other modification with respect the Governing
Documents of Holdings, the Borrower or any of the Borrower's Subsidiaries that
could reasonably be expected to have a Material Adverse Effect;
(h) to the extent not previously provided, within five
days after the same are sent, copies of all financial statements and reports
that Holdings, the Borrower or any of the Borrower's Subsidiaries sends to the
holders of any class of its public debt securities or public equity securities
and, within five days after the same are filed, copies of all financial
statements and reports that Holdings, the Borrower or any of the Borrower's
Subsidiaries may make to, or file with, the SEC;
(i) promptly and in any event within 10 days of a
Responsible Officer obtaining knowledge thereof: (i) notice of any development,
event, or condition that, individually or in the aggregate with other
developments, events or conditions, could reasonably be expected to result in
the payment by Holdings, the Borrower or any of the Borrower's Subsidiaries, in
the aggregate, of a Material Environmental Amount; and (ii) any notice that any
Governmental Authority may condition approval of, or any application for, an
Environmental Permit or any other Permit held by Holdings, the Borrower or any
of the Borrower's Subsidiaries on terms and conditions that could reasonably be
expected to have a Material Adverse Effect;
(j) promptly upon receipt thereof, copies of all title
opinions produced in the ordinary course of business or delivered to or received
by the Borrower or its Subsidiaries covering any Oil and Gas Properties acquired
by the Borrower or its Subsidiaries after the Closing Date; and
(k) promptly, such additional financial and other
information as the Administrative Agent may from time to time reasonably
request.
5.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except (i) where the
failure to pay, discharge or otherwise satisfy such obligations, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, or (ii) where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of Holdings, the
Borrower or Borrower's Subsidiaries, as the case may be.
5.4 Conduct of Business and Maintenance of Existence,
etc. (a) (i) Preserve, renew and keep in full force and effect its corporate or
other existence and (ii) take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business, except, in each case, as otherwise permitted by Section 6.4 and
except, in the case of clause (ii) above, to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (b)
comply with all Contractual Obligations and Requirements of Law, except to the
extent that failure to comply therewith could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.
44
5.5 Maintenance of Property; Insurance. Keep all of
its Property and systems useful and necessary in its business in good working
order and condition, ordinary wear and tear and casualty and condemnation
excepted, subject to Dispositions permitted under Section 6.5 and maintain with
financially sound and reputable insurance companies insurance on all its
Property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business.
(a) Maintain all rights of way, easements, grants,
privileges, licenses, certificates, and permits necessary for the use of any
Real Estate the failure of which to maintain could reasonably be expected to
result in a Material Adverse Effect and will not, without the prior written
consent of the Administrative Agent, consent to any public or private
restriction as to the use of any Real Estate that could reasonably be expected
to interfere materially with the use or operation of a material portion of the
Real Estate by the Borrower or any of its Subsidiaries.
(b) (i) Comply with the terms of each lease in respect of
Oil and Gas Properties so as to not permit any material uncured default on its
part to exist in respect of such lease and renew the terms of such leases on
commercially reasonable terms, except such defaults and expiration of leases
that could not be reasonably expected to have a Material Adverse Effect and (ii)
in accordance with prudent industry practices, perform or cause to be performed
each and every material act required by each and all of the leases in respect of
its material Oil and Gas Properties and all other material agreements and
material contracts constituting or affecting its material Oil and Gas
Properties, do all things necessary to keep unimpaired its rights thereunder and
prevent any forfeiture thereof or default thereunder, and operate or cause to be
operated such Oil and Gas Properties in a diligent, careful and efficient manner
in material compliance with all applicable Requirements of Law, in each case,
except to the extent the failure to so act could not reasonably be expected to
have a Material Adverse Effect.
(c) Preserve and protect the Lien status of each
respective Mortgage and, if any Lien (other than unrecorded Liens permitted
under Section 6.3 that arise by operation of law and other Liens permitted under
Section 6.3(b)(i), (ii), (v), (vi), (x), (xi), (xii), (xiii), (xiv), (xv) and
(xvi)) is asserted against any material Mortgaged Property, promptly and at its
expense, give the Administrative Agent a detailed written notice of such Lien
and pay the underlying claim in full or take such other action so as to cause it
to be released or bonded over in a manner satisfactory to the Administrative
Agent.
5.6 Inspection of Property; Books and Records;
Discussions. (a) Keep proper books of records and account in which full, true
and correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and activities
and (b) permit representatives of any Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records upon
reasonably prior written notice, at any reasonable time, at such Lender's
expense (so long as no Event of Default shall have occurred and be continuing)
and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of Holdings, the
Borrower and Borrower's Subsidiaries with officers and employees of Holdings,
the Borrower and Borrower's Subsidiaries and, so long as (i) accompanied by a
Responsible Officer and (ii) no
45
more often than annually unless an Event of Default shall have occurred and be
continuing, with its independent certified public accountants.
5.7 Notices. Promptly after a Responsible Officer has
knowledge, give notice to the Administrative Agent for the benefit of each
Lender:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any
Contractual Obligation of Holdings, the Borrower or any of Borrower's
Subsidiaries or (ii) litigation, investigation or proceeding which may exist at
any time between Holdings, the Borrower or any of Borrower's Subsidiaries and
any Governmental Authority, that in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a Material
Adverse Effect;
(c) any litigation or proceeding affecting Holdings, the
Borrower or any of Borrower's Subsidiaries in which the amount involved is
$10,000,000 or more and not covered by insurance or in which injunctive or
similar relief is sought which, if granted, could reasonably be expected to
cause a Material Adverse Effect;
(d) the following events, as soon as possible and in any
event within 30 days after a Responsible Officer knows thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan; and
(e) any development or event that has had or could
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action Holdings, the Borrower or the relevant Subsidiary
proposes to take with respect thereto.
5.8 Environmental Laws. Comply in all material
respects with, and use commercially reasonable best efforts to cause compliance
in all material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws, and obtain, comply with and maintain, in each
case in all material respects, and use commercially reasonable best efforts to
cause all tenants and subtenants, if any, to obtain, comply with and maintain,
in each case in all material respects, the Environmental Permits that are
material and necessary for the continued operation of its Oil and Gas Business.
(a) Conduct and complete all investigations, studies,
sampling and testing associated with response, removal or remediation actions
required under Environmental Laws.
5.9 Additional Collateral, etc. With respect to any
Property having a value of at least $2,000,000 individually (so long as the
aggregate fair market value of the Properties
46
excluded by the Borrower from inclusion in the Collateral as a result of such
threshold at any time does not exceed $10,000,000 in the aggregate) acquired
after the Closing Date by any Grantor (other than (x) Property acquired by an
Excluded Foreign Subsidiary, (y) Property (other than any Oil and Gas Property)
acquired by any Bison Entities, and (z) any other Property excluded from the
Collateral pursuant to the terms of the Guarantee and Collateral Agreement) as
to which the Administrative Agent, for the benefit of the Secured Parties, does
not have a perfected Lien, promptly (i) execute and deliver to the
Administrative Agent Mortgages, such amendments to the Guarantee and Collateral
Agreement or such other documents as the Administrative Agent deems necessary or
advisable to grant to the Administrative Agent, for the benefit of the Secured
Parties, a security interest (subject to Permitted Liens) in such Property and
(ii) take all actions necessary or advisable to grant to the Administrative
Agent, for the benefit of the Secured Parties, a perfected first priority
security interest in such Property, including without limitation, the filing of
Mortgages or Uniform Commercial Code financing statements in such jurisdictions
as may be required by the Guarantee and Collateral Agreement or by law or as may
be requested by the Administrative Agent.
(a) With respect to any new Subsidiary (other than an
Excluded Foreign Subsidiary) created or acquired after the Closing Date (which,
for the purposes of this paragraph, shall include any existing Subsidiary that
ceases to be an Excluded Foreign Subsidiary), by Holdings, the Borrower or any
of Borrower's Subsidiaries, cause such new Subsidiary (A) to become a party to
the Guarantee and Collateral Agreement and (B) to take such actions necessary or
advisable to grant to the Administrative Agent for the benefit of the Secured
Parties a security interest (subject to Permitted Liens) in the Collateral
described in the Guarantee and Collateral Agreement with respect to such new
Subsidiary, including, without limitation, the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Collateral Agreement or by law or as may be requested by the Administrative
Agent.
(b) Use commercially reasonable efforts to deliver to the
Administrative Agent, for the benefit of the Lenders, as soon as commercially
practicable, the certificates representing the shares of Class B Common Stock of
the Borrower (or substitute certificates with the same rights) issued to the
Original Lenders (as defined in the Existing Credit Agreement), together with a
stock power for each such certificate executed by a duly authorized officer of
such Original Lender.
5.10 Further Assurances. From time to time execute and
deliver, or cause to be executed and delivered, such additional instruments,
certificates or documents, and take such actions, as the Administrative Agent
may reasonably request for the purposes of implementing or effectuating the
provisions of this Agreement and the other Loan Documents, or of more fully
perfecting or renewing the rights of the Administrative Agent and the Lenders
with respect to the Collateral (or with respect to any additions thereto or
replacements or proceeds thereof or with respect to any other property or assets
hereafter acquired by Holdings, the Borrower or any Subsidiary which may be
deemed to be part of the Collateral) pursuant hereto or thereto. Upon the
exercise by the Administrative Agent or any Lender of any power, right,
privilege or remedy pursuant to this Agreement or the other Loan Documents which
requires any consent, approval, recording, qualification or authorization of any
Governmental Authority, Holdings and the Borrower will execute and deliver, or
will cause the execution and delivery of, all applications,
47
certifications, instruments and other documents and papers that the
Administrative Agent or such Lender may be required to obtain from Holdings, the
Borrower or any of the Borrower's Subsidiaries for such governmental consent,
approval, recording, qualification or authorization.
5.11 Capital Expenditure. The Capital Expenditures of the
Borrower and its Subsidiaries shall be at least $40,000,000 in each fiscal year
beginning on or after January 1, 2004, (excluding any Capital Expenditures made
with the proceeds of any Reinvestment Deferred Amount).
SECTION 6. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree
that, so long as any Term Loan or other amount is owing to any Lender, any
Arranger or any Agent hereunder, each of Holdings and the Borrower shall not,
and shall not permit any of the Borrower's Subsidiaries to, directly or
indirectly:
6.1 Financial Condition Covenants.
(a) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters of the Borrower ending September 30, 2003 and each fiscal quarter
thereafter to be less than 3.00 to 1.00.
(b) PV-10 Value to Total Senior Secured Debt Ratio.
Permit the ratio of PV-10 Value to Total Senior Secured Debt as of September 30,
2003 and as of each March 31 and September 30 thereafter to be less than 1.75 to
1.00.
6.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness of the Borrower to any Subsidiary and of
any Wholly Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
(c) Indebtedness outstanding on the date hereof and
listed on Schedule 6.2(c) and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount thereof or any
shortening of the maturity of any principal amount thereof);
(d) Guarantee Obligations made in the ordinary course of
business by the Borrower or any of its Subsidiaries of obligations of the
Borrower or any Subsidiary Guarantor;
(e) Guarantee Obligations of the Borrower or any
Subsidiary Guarantor in respect of any other Indebtedness permitted under this
Section 6.2;
(f) Indebtedness of Holdings pursuant to the Holdings
Subordinated Guaranty;
48
(g) Indebtedness in respect of acceptances, letters of
credit or similar instruments in the ordinary course of the Borrower's
exploration and production activities in an aggregate face or principal amount
not to exceed $30,000,000;
(h) Indebtedness of any Loan Party to Parent or its
Affiliates (other than the Loan Parties) that has been subordinated to such Loan
Party's Obligations on terms reasonably satisfactory to the Administrative
Agent;
(i) senior unsecured notes and senior unsecured
subordinated notes (collectively, the "New Notes") issued by the Borrower or
Holdings containing covenants, events of default and other terms customary for
such transactions or otherwise less restrictive to Holdings and its Subsidiaries
than those set forth in this Agreement or otherwise reasonably satisfactory to
the Administrative Agent; provided that (x) the interest rate applicable thereto
does not exceed the then applicable market interest rate and the maturity date
therefor is no earlier than the date one year and one day after the Maturity
Date, (y) no Default or Event of Default exists at the time of the issuance of
such notes or would result therefrom and (z) the requirements of Section 2.7(a)
are complied with in connection therewith for the Net Cash Proceeds of any
Indebtedness permitted by this Section 6.2(i) in excess of $150,000,000;
(j) Indebtedness in respect of any standby letters of
credit that may be delivered in connection with Section 6.17; and
(k) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $50,000,000 at any one time outstanding.
6.3 Limitation on Liens. Create, incur, assume or suffer
to exist any Lien upon any of its Property, whether now owned or hereafter
acquired, except for (a) with respect to Holdings, Liens granted pursuant to the
Loan Documents and (b) with respect to the Borrower and its Subsidiaries only,
the following Liens:
(i) Lessors' royalties, overriding royalties,
reversionary interests and similar burdens;
(ii) Any required third-party consents to
assignment of leases and contracts and
preferential purchase rights;
(iii) 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 and for which
adequate reserves are maintained in
accordance with GAAP;
(iv) all rights to consent by, required notices
to, filings with, or other actions by
Governmental Authorities in connection with
the sale or conveyance of the assets if the
same is customarily obtained subsequent to
such sale or conveyance;
49
(v) Rights of reassignment upon the surrender or
expiration of any lease;
(vi) easements, rights-of-way, servitudes,
permits, surface leases and other rights
with respect to surface operations on, over
or in respect of any of the Oil and Gas
Properties or any restriction on access
thereto and that do not materially interfere
with the operation of the affected Oil and
Gas Property;
(vii) Materialman's, mechanics', repairman's,
employees', contractors', operators or other
similar Liens or charges arising in the
ordinary course of business incidental to
construction, maintenance or operation of
the assets of the Borrower or the Borrower's
Subsidiaries, (i) if they have not been
filed pursuant to law and the time for
filing has expired, (ii) if filed, they have
not yet become due and payable or payment is
being withheld as provided by law or (iii)
if their validity is being contested in good
faith by appropriate action;
(viii) pledges or deposits in connection with
workers' compensation, unemployment
insurance and other social security
legislation;
(ix) Liens, pledges or deposits by or on behalf
of the Borrower or any of the Borrower's
Subsidiaries to secure the performance of
bids, trade contracts (other than for
borrowed money), leases, statutory
obligations, surety and appeal bonds,
performance bonds and other obligations of a
like nature incurred in the ordinary course
of business;
(x) Liens in existence on the date hereof listed
on Schedule 6.3(b)(x), securing Indebtedness
permitted by Section 6.2(c), including
extensions, renewals and replacements of
such Liens granted in connection with any
refinancing, refunding, renewal or extension
of any such Indebtedness, provided that no
such Lien is spread to cover any additional
Property after the Closing Date and that the
amount of Indebtedness secured thereby is
not increased;
(xi) any interest or title of a lessor under any
lease entered into by the Borrower or any of
the Borrower's Subsidiaries in the ordinary
course of its business and covering only the
assets so leased;
(xii) Liens arising out of all presently existing
and future division and transfer orders,
advance payment agreements, processing
contracts, gas processing plant agreements,
operating agreements, gas balancing or
deferred production agreements, pooling,
unitization or communitization agreements,
pipeline, gathering or transportation
agreements, platform agreements, drilling
contracts,
50
injection or repressuring agreements,
cycling agreements, construction agreements,
salt water or other disposal agreements,
leases or rental agreements, farm-out and
farm-in agreements, exploration and
development agreements, and any and all
other contracts or agreements covering,
arising out, used or useful in connection
with or pertaining to the exploration,
development, operation, production, sale,
use, purchase, exchange, storage,
separation, dehydration, treatment,
compression, gathering, transportation,
processing, improvement, marketing,
disposal, or handling of any Hydrocarbon
Interest of the Borrower or any Subsidiary
thereof; provided that such agreements are
entered into in the ordinary course of
business and contain terms customary for
such agreements in the industry; and
provided further that no Liens described in
this paragraph (xii) shall be granted or
created in connection with the incurrence of
Indebtedness;
(xiii) Rights reserved to or vested in any
Governmental Authority to control or
regulate any of the Oil and Gas Properties
in any manner and all Requirements of Law of
general applicability in that area;
(xiv) Liens arising out of operating agreements,
unitization and pooling agreements and
production sales contracts securing amounts
not yet due or, if due, being contested in
good faith in the ordinary course of
business;
(xv) Gas imbalances that obligate the Borrower to
provide and make up free of charge, and that
other third parties are entitled to take
without paying for, under applicable
contracts, as a result of any imbalances in
production or sales from the assets at any
wells, in any pipelines, at any gas plant or
in storage;
(xvi) defects, irregularities and deficiencies in
the title to any rights of way or any
Hydrocarbon Interest of the Borrower or any
Subsidiary thereof which in the aggregate do
not materially impair the use of such rights
of way or any Hydrocarbon Interest for the
purposes for which such rights of way and
any other Hydrocarbon Interest are held by
such Person, and defects, irregularities and
deficiencies in title to any Hydrocarbon
Interest of the Borrower or any of its
Subsidiaries, which defects, irregularities
or deficiencies have been cured by
possession under applicable statutes of
limitations;
(xvii) Liens on the GE Equipment to secure the GE
Loan;
(xviii) Liens granted pursuant to the Loan Documents
to secure the Obligations (including
Specified Hedge Agreements);
51
(xix) purchase money security interests and Liens
in respect of Capital Lease Obligations
permitted by Section 6.2(c) or Section
6.2(k);
(xx) Liens granted in cash collateral to support
the issuance of letters of credit permitted
pursuant to Section 6.2;
(xxi) normal and customary depositary Liens in
favor of banks or other depositary
institutions incurred in the ordinary course
of business; and
(xxii) Liens securing other Indebtedness of the
Borrower and its Subsidiaries; provided, the
aggregate amount of the Indebtedness,
secured by Liens permitted pursuant to this
clause (xxiii) shall not exceed $50,000,000
at any one time outstanding less the amount
of Indebtedness secured pursuant to clause
(xix) of this Section 6.3.
6.4 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or Dispose of all or substantially
all of its Property or business, except that:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any Subsidiary Guarantor
(provided that (i) the Subsidiary Guarantor shall be the continuing or surviving
corporation or (ii) simultaneously with such transaction, the continuing or
surviving corporation shall become a Subsidiary Guarantor and the Borrower shall
comply with Section 5.10 in connection therewith);
(b) any Subsidiary of the Borrower may Dispose of any or
all of its assets (upon voluntary liquidation or otherwise) to the Borrower or
any Subsidiary Guarantor; and
(c) the Borrower or any Subsidiary may Dispose of the
Capital Stock or other Property or business of a Subsidiary of Borrower in a
transaction permitted under Section 6.5.
6.5 Limitation on Disposition of Property. Dispose of any
of its Property (including, without limitation, receivables and leasehold
interests), whether now owned or hereafter acquired, or, in the case of any
Subsidiary of Holdings, issue or sell any shares of such Subsidiary's Capital
Stock to any Person, except:
(a) the Disposition of obsolete, surplus or worn out
property in the ordinary course of business;
(b) the Disposition of Hydrocarbons or other inventory in
the ordinary course of business;
(c) Dispositions permitted by Section 6.4(b);
52
(d) the sale or issuance of (i) any Capital Stock of a
Subsidiary of the Borrower (other than Disqualified Stock) to the Borrower or
any Subsidiary Guarantor or (ii) the Borrower's Capital Stock (other than
Disqualified Stock) to Holdings;
(e) any trade or exchange of Oil and Gas Properties or
Capital Stock in any corporation or royalty trust in the Oil and Gas Business
owned by the Borrower or any of its Subsidiaries for Oil and Gas Properties
owned or held by another Person if the fair market value of such Oil and Gas
Properties or Capital Stock traded or exchanged by the Borrower or any such
Subsidiary (including any cash or Cash Equivalents (excluding cash exchanged
with respect to the reimbursement of drilling costs or revenues received by the
parties thereto), not to exceed 15% of the such fair market value, to be
delivered to the Borrower or such Subsidiary) is reasonably equivalent to the
fair market value of the Oil and Gas Properties (together with any cash or Cash
Equivalents (excluding cash exchanged with respect to the reimbursement of
drilling costs or revenues received by the parties thereto), not to exceed 15%
of such fair market value) to be received by the Borrower or such Subsidiary;
provided that, such fair market value shall, if at such time the ratio of PV-10
Value to Total Senior Secured Debt is less than 2.25 to 1.00 and such fair
market value is equal to or greater than $25,000,000 be as determined in good
faith by the Board of Directors of the Borrower as evidenced by a Board
resolution delivered to the Administrative Agent; provided further that the
Borrower and its Subsidiaries shall execute and deliver Mortgages to the
Administrative Agent on any Oil and Gas Properties received by the Borrower or
its Subsidiaries to the extent required by Section 5.9 (provided, however, that
notwithstanding anything in this Section 6.5(e) to the contrary, Holdings, the
Borrower and the Borrower's Subsidiaries may not trade or exchange Oil and Gas
Properties or Capital Stock in any corporation or royalty trust in the Oil and
Gas Business owned by the Borrower or any of its Subsidiaries for Oil and Gas
Properties owned or held by another Person in an amount exceeding $50,000,000
per fiscal year;
(f) (i) Dispositions described in detail on Schedule
6.5(f)(i) required in connection with operating contracts, joint venture
agreements and lease agreements existing on the date hereof and (ii)
Dispositions of Property acquired after the Closing Date required in connection
with operating contracts, joint venture agreements and lease arrangements
entered into after the date hereof in the ordinary course of business and on
arm's-length terms (which Disposition is with the other party to such
agreement), the aggregate value of which shall not exceed $25,000,000 per fiscal
year;
(g) the Disposition of assets having a fair market value
not to exceed $50,000,000 per fiscal year; provided that not less than 85% of
the proceeds of any such Disposition are solely in the form of cash and the Loan
Parties party to such Disposition comply with the provisions of Section 2.7(b);
(h) any Recovery Event, provided, that the requirements
of Section 2.7(b) are complied with in connection therewith;
(i) the Dispositions described on Schedule 6.5(i);
(j) (i) Dispositions by a Loan Party to a Grantor and
(ii) Dispositions by a Loan Party that is not a Grantor to another Loan Party;
53
(k) so long as no Default or Event of Default shall have
occurred and be continuing prior to or after giving effect to such Disposition
(without giving effect in any fiscal quarter of the Borrower or at any time to
any Cure Amount provided for in Section 7.2 and the Borrower is in compliance
with Section 6.1 without giving effect to Section 7.2), the Disposition of Hedge
Agreements or other contracts by a Loan Party to the Parent or one of its
Affiliates to the extent permitted by Section 6.9;
(l) Dispositions consummated in the ordinary course of
business on an arm's-length basis pursuant to Oil and Gas Agreements; and
(m) Dispositions described on Schedule 6.5(m).
6.6 Limitation on Restricted Payments. Declare or pay any
dividend (other than in common stock of the Borrower) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of, any
Capital Stock of Holdings, the Borrower or any of the Borrower's Subsidiaries,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of Holdings, the Borrower or any of the Borrower's Subsidiaries, or
enter into any derivatives or other transaction with any financial institution,
commodities or stock exchange or clearinghouse (a "Derivatives Counterparty")
obligating Holdings, the Borrower or any of the Borrower's Subsidiaries to make
payments to such Derivatives Counterparty as a result of any change in market
value of any such Capital Stock (collectively, "Restricted Payments"), except
that:
(a) any Subsidiary may make Restricted Payments to the
Borrower or any Subsidiary Guarantor;
(b) the Borrower may pay dividends to Holdings to permit
Holdings to (i) pay corporate overhead expenses incurred in the ordinary course
of business not to exceed $2,000,000 in any fiscal year; (ii) pay dividends to
the Parent to pay the corporate overhead and administration expenses allocated
(in a manner consistent with past practices) to the Borrower and its
Subsidiaries, and (iii) pay any taxes which are due and payable by Holdings and
the Borrower as part of a consolidated group;
(c) any Loan Party may make Dispositions permitted in
Section 6.5(l); and
(d) so long as (i) no Default or Event of Default shall
have occurred and be continuing prior to or after giving effect to such dividend
(without giving effect in any fiscal quarter of the Borrower or at any time to
any Cure Amount provided for in Section 7.2 and the Borrower is in compliance
with Section 6.1 without giving effect to Section 7.2), including compliance on
a pro forma basis with Section 6.16, and (ii) five Business Days prior to making
such dividend, the Borrower delivers to the Administrative Agent a Compliance
Certificate containing all information and calculations necessary for
determining compliance by the Borrower with Section 6.1(b) as of the date of
such Compliance Certificate, based on the PV-10 Value and the Total Senior
Secured Debt as of the date of such Compliance Certificate and the Engineering
Report most recently delivered to the Administrative Agent, then the Borrower
may pay dividends to Holdings and the Parent.
54
6.7 Limitation on Investments. Make any advance, loan,
extension of credit (by way of guaranty or otherwise) or capital contribution
to, or purchase any Capital Stock, bonds, notes, debentures or other debt
securities of, or all or substantially all of the assets of an unrelated Person
or a division of an unrelated Person, or make any other investment in, any other
Person (all of the foregoing, "Investments"), except:
(a) extensions of trade credit in the ordinary course of
business;
(b) Investments in Cash Equivalents;
(c) Investments arising in connection with the incurrence
of Indebtedness permitted by Section 6.2(b) and (c);
(d) loans and advances to employees of Holdings, the
Borrower or any Subsidiaries of the Borrower in the ordinary course of business
(including, without limitation, for travel, entertainment and relocation
expenses) in an aggregate amount for Holdings, the Borrower and Subsidiaries of
the Borrower not to exceed $1,000,000 at any one time outstanding;
(e) Investments (other than those relating to the
incurrence of Indebtedness permitted by Section 6.7(c)) by Holdings, the
Borrower or any of Borrower's Subsidiaries in the Borrower or any Person that,
prior to such Investment, is a Subsidiary Guarantor;
(f) Investments arising in connection with the Holdings
Subordinated Guaranty;
(g) Investments pursuant to Oil and Gas Agreements;
(h) the acquisition of the beneficial interests in the
Barrett Trust not already held by the Borrower, so long as after giving effect
to such acquisition all beneficial interests of the Barrett Trust are held by
the Borrower for aggregate consideration not to exceed $3,000,000;
(i) loans by a Grantor to the Parent or any of its
Subsidiaries so long as (i) no Parent Event of Default has occurred and is
continuing; (ii) no Default or Event of Default shall have occurred and be
continuing prior and after giving effect thereto without giving effect in any
fiscal quarter of the Borrower or at any time to any Cure Amount provided for in
Section 7.2 and the Borrower is in compliance with Section 6.1 without giving
effect to Section 7.2; and (iii) any such loans are represented by a note, which
shall be pledged to the Administrative Agent for the benefit of the Lenders
pursuant to Section 5.9;
(j) Investments made in connection with the acquisition
of (i) the Capital Stock of any Person, so long as (x) after giving effect to
such acquisition, such Person becomes a Subsidiary Guarantor, (y) the Borrower
complies with Section 5.9 and (z) such Person is engaged in the Oil and Gas
Business; and (ii) all or substantially all of the assets of an unrelated Person
or a division of an unrelated Person, in each case engaged in the Oil and Gas
Business; provided the aggregate amount of such Investments pursuant to this
Section 6.7(j) shall not exceed $100,000,000 during the term of this Agreement;
and
55
(k) other Investments in any fiscal year not to exceed
$25,000,000.
6.8 Limitation on Optional Payments and Modifications of
Indebtedness. (i) Make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of, or otherwise voluntarily or optionally
defease, any New Notes, or segregate funds for any such payment, prepayment,
repurchase, redemption or defeasance, or enter into any derivative or other
transaction with any Derivatives Counterparty obligating Holdings, the Borrower
or any of the Borrower's Subsidiaries to make payments to such Derivatives
Counterparty as a result of any change in market value of such New Notes, (ii)
amend or permit the amendment of its Governing Documents in any manner
determined by the Administrative Agent to be materially adverse to the Lenders
or (iii) amend, modify or otherwise change, or consent or agree to any
amendment, modification, waiver or other change to, any of the terms (including,
without limitation, the subordination terms) of any RMT Senior Notes or New
Notes (other than any such amendment, modification, waiver or other change that
would not adversely affect the interests of the Lenders in any material
respect).
6.9 Limitation on Transactions with Affiliates. Except
for the Holdings Subordinated Guaranty, enter into any transaction, relating to
any purchase, sale, lease or exchange of Property, the rendering of any service
or the payment of any management, advisory or similar fees, with any Affiliate
(other than the Borrower or any other Grantor) unless such transaction is (a)
not prohibited by this Agreement and (b) in the ordinary course of business of
Holdings, Borrower or such Subsidiary, as the case may be, upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's-length transaction with
a Person that is not an Affiliate; provided that if (i) such transaction (or
series of transactions) is a Disposition of Property the fair market value of
which is greater than $25,000,000 and (ii) at the time of such transaction, the
ratio of the PV-10 Value to Total Senior Secured Debt is less than 2.25 to 1.00,
then Holdings, the Borrower or any of the Borrower's Subsidiaries shall not
enter into such transaction unless the Board of Directors of the Borrower has
approved such transaction, as evidenced by a resolution of such Board of
Directors delivered to the Administrative Agent.
6.10 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by Holdings, the Borrower
or any of the Borrower's Subsidiaries of Property which has been or is to be
sold or transferred by Holdings, the Borrower or such Subsidiary to such Person
or to any other Person to whom funds have been or are to be advanced by such
Person on the security of such Property or rental obligations of Holdings, the
Borrower or such Subsidiary.
6.11 Limitation on Changes in Fiscal Periods. Permit the
fiscal year of Holdings, the Borrower or any of the Borrower's Subsidiaries to
end on a day other than December 31 or change Holdings', the Borrower's or any
of the Borrower's Subsidiaries' method of determining fiscal quarters, in each
case, without the prior written consent of the Administrative Agent. The Lenders
hereby authorize the Agents to enter into such amendments to effect such
modifications, if any, in accordance with the provisions of this Section.
56
6.12 Limitation on Negative Pledge Clauses. Enter into or
suffer to exist or become effective any agreement that prohibits or limits the
ability of Holdings, the Borrower or any of the Borrower's Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its Property or
revenues, whether now owned or hereafter acquired, to secure the Obligations or,
in the case of any guarantor, its obligations under the Guarantee and Collateral
Agreement, other than (a) this Agreement and the other Loan Documents, (b) any
agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby), (c) any agreements in
effect on the date of this Agreement, (d) customary provisions in Oil and Gas
Agreements in respect of Collateral the fair market value of which does not
exceed $10,000,000 in the aggregate, and (e) customary anti-assignment
provisions in any contract entered into from and after the date of this
Agreement.
6.13 Limitation on Restrictions on Subsidiary
Distributions, etc. Enter into or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of the Borrower or any of
the Borrower's Subsidiaries to (a) make Restricted Payments in respect of any
Capital Stock of such Subsidiary held by, or pay any Indebtedness or other
obligation owed to Holdings, the Borrower or any other Subsidiary or (b) make
loans or advances to Holdings, the Borrower or any other Subsidiary except for
such encumbrances or restrictions existing under or by reason of (i) any
restrictions existing under the Loan Documents, (ii) any restrictions with
respect to a Subsidiary imposed pursuant to an agreement that has been entered
into in connection with the Disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary, (iii) encumbrances and restrictions
on any Subsidiary that is not a material Subsidiary, (iv) those encumbrances and
restrictions existing on the Closing Date, and (v) other customary encumbrances
and restrictions now or hereafter existing of a Borrower or any Subsidiary
thereof entered into in the ordinary course of business that are not more
restrictive in any material respect than the encumbrances and restrictions with
respect to a Borrower or its Subsidiaries existing on the Closing Date.
6.14 Business Activities. In the case of the Borrower and
its Subsidiaries, engage in any business activity other than the Oil and Gas
Business. In the case of Holdings, notwithstanding anything to the contrary in
this Agreement or any other Loan Document, (a) conduct, transact or otherwise
engage in, or commit to conduct, transact or otherwise engage in, any business
or operations other than those incidental to its ownership of the Capital Stock
of the Borrower, (b) incur, create, assume or suffer to exist any Indebtedness
or other liabilities or financial obligations, except (i) nonconsensual
obligations imposed by operation of law, (ii) pursuant to the Loan Documents to
which it is a party and (iii) obligations with respect to its Capital Stock,
(iv) the Holdings Subordinated Guaranty, (v) intercompany Indebtedness permitted
hereunder, (vi) liabilities in respect of Hedge Agreements temporarily held by
Holdings prior to transfer to an Affiliate, or (c) own, lease, manage or
otherwise operate any properties or assets (including cash (other than cash
received in connection with dividends made by the Borrower in accordance with
Section 6.6 and intercompany loans permitted under Section 6.2 and cash received
from Parent or any Affiliate for transmittal to the Borrower and its
Subsidiaries) and Cash Equivalents) other than the ownership of shares of
Capital Stock of the Borrower and Hedge Agreements temporarily held prior to
transfer to an Affiliate.
57
6.15 Holdings Negative Pledge; Limitation on Assets.
Solely with respect to Holdings, (a) create, incur, assume or suffer to exist
any Lien upon any of its Property or revenues, whether now owned or hereafter
acquired, to secure any Indebtedness of Holdings, except for (X) Liens granted
pursuant to the Loan Documents, (Y) non-consensual Liens imposed by operation of
law and (Z) Liens permitted by Section 6.3(b)(iii) or (b) hold any Property
other than (i) all of the Capital Stock of the Borrower, and (ii) temporary
ownership of assets being conveyed by the Borrower to the Parent, or the Parent
to the Borrower, in accordance with the terms of this Agreement.
6.16 Minimum Borrower Liquidity. Permit the sum of (a)
cash and Cash Equivalents held by the Borrower in the Collateral Account plus
(b) an irrevocable standby letter of credit naming the Administrative Agent as
beneficiary issued by a financial institution reasonably acceptable to the
Administrative Agent, to be less than $20,000,000, multiplied by a fraction, the
numerator of which is the aggregate unpaid principal amount of Term Loans at the
time of determination, and the denominator of which is $500,000,000.
SECTION 7. EVENTS OF DEFAULT
7.1 If any of the following events shall occur and be
continuing:
(a) The Borrower shall fail to pay any principal of any
Loan when due in accordance with the terms hereof; or the Borrower shall fail to
pay any interest on any Loan; or any Loan Party shall fail to pay any other
amount payable hereunder or under any other Loan Document, within five days
after any such interest or other amount becomes due in accordance with the terms
hereof;
(b) Any representation or warranty made or deemed made by
any Loan Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made;
(c) (i) Any Loan Party shall default in the observance or
performance of any agreement contained in Section 5.2(k), clause (i) of Section
5.4(a) (with respect to Holdings and the Borrower only), Section 5.7(a), Section
6 or Section 5 of the Guarantee and Collateral Agreement, or (ii) an "Event of
Default" under and as defined in any material Mortgage shall have occurred and
be continuing;
(d) Any Loan Party shall default in the observance or
performance of any other covenant or agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c) of
this Section), and such default shall continue unremedied for a period of 30
days following the first to occur of (i) a Responsible Officer obtaining
knowledge of such default and (ii) the Administrative Agent delivering written
notice of such default to the Borrower;
(e) Holdings, the Borrower or any of the Borrower's
Subsidiaries shall (i) default in making any payment of any principal of any
Indebtedness (including, without limitation, any Guarantee Obligation, but
excluding the Term Loans) on the scheduled or
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original due date with respect thereto; or (ii) default in making any payment of
any interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or (in the case of any such Indebtedness
constituting a Guarantee Obligation) to become payable; provided that a default,
event or condition described in clause (i), (ii) or (iii) of this paragraph (e)
shall not at any time constitute an Event of Default unless, at such time, one
or more defaults, events or conditions of the type described in clauses (i),
(ii) and (iii) of this paragraph (e) shall have occurred and be continuing with
respect to Indebtedness the outstanding principal amount of which exceeds in the
aggregate $25,000,000;
(f) (i) Holdings, the Borrower or any of the Borrower's
Subsidiaries shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Holdings, the Borrower or any of the
Borrower's Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Holdings, the Borrower or
any of the Borrower's Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above that (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against Holdings, the Borrower or any of the Borrower's Subsidiaries
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any
such relief that shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) Holdings, the
Borrower or any of the Borrower's Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Holdings,
the Borrower or any of the Borrower's Subsidiaries shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due;
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of
59
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan, (vi) the Borrower, any of the Borrower's Subsidiaries or any
Commonly Controlled Entity shall be required to make during any fiscal year of
the Borrower payments pursuant to any employee welfare benefit plan (as defined
in Section 3(1) of ERISA) that provides benefits to retired employees (or their
dependents) that, in the aggregate, exceed the amount set forth on Schedule
7(g)(i) with respect to such fiscal year, (vii) the Borrower, any of the
Borrower's Subsidiaries or any Commonly Controlled Entity shall be required to
make during any fiscal year of the Borrower contributions to any defined benefit
pension plan subject to Title IV of ERISA (including any Multiemployer Plan)
that, in the aggregate, exceed the amount set forth on Schedule 7(g)(ii) with
respect to such fiscal year or; and in each case in clauses (i) through (vii)
above, such event or condition, together with all other such events or
conditions, if any, could, in the sole judgment of the Required Lenders,
reasonably be expected to have a Material Adverse Effect;
(h) One or more judgments or decrees shall be entered
against Holdings, the Borrower or any of the Borrower's Subsidiaries involving
for Holdings, the Borrower and the Borrower's Subsidiaries taken as a whole a
liability (not paid or fully covered by insurance as to which the relevant
insurance company has acknowledged coverage) of $25,000,000 or more, and all
such judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 30 days from the entry thereof;
(i) Any of the Security Documents shall cease, for any
reason (other than pursuant to the terms thereof), to be in full force and
effect, or any Loan Party or any Affiliate of any Loan Party shall so assert, or
any Lien created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby;
(j) The guarantees contained in (i) Section 2 of the
Guarantee and Collateral Agreement shall cease, for any reason (other than
pursuant to the terms thereof), to be in full force and effect, any Loan Party
shall so assert;
(k) Any Loan Party or any Affiliate of any Loan Party
shall assert that any provision of any Loan Document is not in full force and
effect; or
(l) Any Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to any Loan Party,
automatically the Term Loans hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement and the other Loan Documents shall
immediately become due and payable, and (B) if such event is any other Event of
Default, with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower, declare the Term Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents to be due and payable forthwith, whereupon the same shall immediately
become due and payable. Upon the occurrence and during the continuation of an
Event of Default, the Administrative Agent and the
60
Lenders shall be entitled to exercise any and all remedies available under the
Security Documents, including, without limitation, the Guarantee and Collateral
Agreement and the Mortgages, or otherwise available under applicable law or
otherwise.
7.2 Certain Cure Rights.
(a) Financial Condition Covenants. Notwithstanding
anything to the contrary contained in Section 7.1, in the event that the
Borrower fails to comply with the requirements of Sections 6.1(a) or (b) (each,
a "Financial Condition Covenant"), (i) with respect to Section 6.1(a), until the
expiration of the 10th Business Day (the "Section 6.1(a) Cure Period Date")
subsequent to the date the certificate calculating such Financial Condition
Covenant is required to be delivered pursuant to Section 5.2(b), Holdings shall
have the right to issue to the Parent or an Affiliate Permitted Cure Securities
for cash or otherwise receive cash contributions to the capital of Holdings, and
to contribute such cash to the capital of the Borrower or (ii) with respect to
Section 6.1(b), the Borrower shall have the right to prepay the Term Loans in an
amount necessary to comply with Section 6.1(b), which prepayment shall be in no
more than three substantially equal monthly installments, the first such payment
to be due within 30 days after the date the certificate calculating such
Financial Condition Covenant is required to be delivered pursuant to Section
5.2(b) and the remaining payments due on the numerically corresponding day of
each of the subsequent two months (or, if a subsequent month does not contain a
numerically corresponding day or such corresponding day is not a Business Day,
such payment will be due on the immediately preceding Business Day) or such
earlier dates as are reasonably satisfactory to the Administrative Agent (each
such three monthly dates or earlier dates approved by the Administrative Agent,
the "Section 6.1(b) Cure Period Dates")(clauses (i) and (ii) collectively, the
"Cure Right"). Upon the receipt by the Borrower of such cash for purposes of
Section 6.1(a) (the "Cure Amount") or upon such prepayment of the Term Loans for
purposes of Section 6.1(b) (the amount of such payment or prepayment being the
"Prepayment Amount"), pursuant to the exercise by the Borrower of such Cure
Right, such Financial Condition Covenant shall be recalculated giving effect to
the following pro forma adjustments:
(A) with respect to Section 6.1(a), Consolidated
EBITDA shall be increased, solely for the
purpose of measuring the Financial Condition
Covenant in Section 6.1(a) and not for any
other purpose under this Agreement, by an
amount equal to the Cure Amount;
(B) with respect to Section 6.1(b), Total Senior
Secured Debt shall be decreased by an amount
equal to the Prepayment Amount; and
(C) if, after giving effect to the foregoing
recalculations, the Borrower shall then be
in compliance with the requirements of all
Financial Condition Covenants, the Borrower
shall be deemed to have satisfied the
requirements of the Financial Condition
Covenants as of the relevant date of
determination with the same effect as though
there had been no failure to comply
therewith at such date, and the applicable
breach or default of the Financial Condition
Covenants which had occurred shall be deemed
cured for all
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purposes of this Agreement. Prior to the
Section 6.1(a) Cure Period Date in the case
of Section 6.1(a), and prior to any of the
Section 6.1(b) Cure Period Dates in the case
of Section 6.1(b), notwithstanding anything
to the contrary contained in Section 7.1, no
Default or Event of Default shall be deemed
to have occurred as a result of any failure
of the Borrower to comply with such
respective Sections. If, after giving effect
to the foregoing calculations or otherwise,
the Borrower is not in compliance with
Section 6.1(a) on the Section 6.1(a) Cure
Period Date or with Section 6.1(b) on the
third Section 6.1(b) Cure Period Date or
there is a failure to make any of the three
required prepayments on the dates specified
above or other dates approved by the
Administrative Agent, an Event of Default
shall be in existence as of such date.
(b) Limitations on Exercise of Cure Right, etc.
Notwithstanding anything herein to the contrary, (i) in no event shall the
Borrower be entitled to exercise the Cure Right with respect to Section 6.1(a)
in more than two consecutive fiscal quarters and (ii) in any six fiscal quarter
period, there must be a period of at least two consecutive fiscal quarters
during which the Borrower has not exercised its Cure Right with respect to
Section 6.1(a). To the extent a fiscal quarter ended for which the Financial
Condition Covenants are initially recalculated as a result of a Cure Right is
included in the calculation of a Financial Condition Covenant in a subsequent
fiscal period, the Cure Amount shall be included in the amount of Consolidated
EBITDA for such initial fiscal period.
SECTION 8. THE AGENTS
8.1 Appointment. Each Lender hereby irrevocably
designates and appoints the Agents as the agents of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
each Agent, in such capacity, to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to such Agent by the
terms of this Agreement and the other Loan Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.
8.2 Delegation of Duties. Each Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys in fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Agent shall be responsible
for the negligence or misconduct of any agents or attorneys-in fact selected by
it with reasonable care.
8.3 Exculpatory Provisions. Neither any Agent nor any of
its officers, directors, employees, agents, attorneys in fact or affiliates
shall be (i) liable for any action
62
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except to the extent
that any of the foregoing are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from its or such Person's own
gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made
by Parent or any Loan Party or any officer thereof contained in this Agreement
or any other Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agents under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Loan Party to
perform its obligations hereunder or thereunder. The Agents shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
8.4 Reliance by Agents. Each Agent shall be entitled to
rely, and shall be fully protected in relying, upon any instrument, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Loan Parties), independent accountants and
other experts selected by such Agent. The Agents may deem and treat the payee of
any Term Note as the owner thereof for all purposes unless such Term Note shall
have been transferred in accordance with Section 9.6 and all actions required by
such Section in connection with such transfer shall have been taken. Each Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders (or, if so specified by this Agreement,
all Lenders or any other instructing group of Lenders specified by this
Agreement) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Loan Documents in accordance
with a request of the Required Lenders (or, if so specified by this Agreement,
all Lenders or any other instructing group of Lenders specified by this
Agreement), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the Term
Loans.
8.5 Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent shall have received notice from a Lender, Holdings
or the 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
the Administrative Agent shall receive such a notice, the Administrative Agent
shall give notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders or any other instructing group of Lenders specified by
this Agreement); provided that unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or
63
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
8.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither any of the Agents nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
any Agent hereafter taken, including any review of the affairs of a Loan Party
or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender. Each Lender represents to
the Agents that it has, independently and without reliance upon any Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates and made its own decision to make its Term
Loans hereunder and enter into this Agreement. Each Lender also represents that
it will, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of such Agent or any of its
officers, directors, employees, agents, attorneys in fact or affiliates.
8.7 Indemnification. The Lenders agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by Holdings or the
Borrower and without limiting the obligation of Holdings or the Borrower to do
so), ratably according to their respective Term Loan Percentages in effect on
the date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Term Loan Commitments
shall have terminated and the Term Loans shall have been paid in full, ratably
in accordance with such Term Loan Percentages immediately prior to such date),
for, and to save each Agent harmless from and against, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever that may at any time
(including, without limitation, at any time following the payment of the Term
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Term Loan Commitments, this Agreement, any of
the other Loan Documents or any documents contemplated by or referred to herein
or therein or the transactions contemplated hereby or thereby or any action
taken or omitted by such Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements that are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from such Agent's
gross negligence or willful misconduct. The agreements in this Section shall
survive the payment of the Term Loans and all other amounts payable hereunder.
64
8.8 Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent.
With respect to its Term Loans made or renewed by it, each Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
8.9 Successor Administrative Agent. The Administrative
Agent may resign as Administrative Agent upon 30 days' notice to the Lenders and
the Borrower. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 7.1(a) or
Section 7.1(f) with respect to the Borrower shall have occurred and be
continuing) be subject to approval by the Borrower (which approval shall not be
unreasonably withheld or delayed), whereupon such successor agent shall succeed
to the rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Term Loans. If no successor
agent has accepted appointment as Administrative Agent by the date that is 30
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. Any of the Co-Syndication
Agents may, at any time, by notice to the Lenders and the Administrative Agent,
resign as Co-Syndication Agent hereunder, whereupon the duties, rights,
obligations and responsibilities of such Co-Syndication Agent hereunder shall
automatically be assumed by, and inure to the benefit of, the remaining
Co-Syndication Agent, or if none, the Administrative Agent, without any further
act by any Co-Syndication Agent, the Administrative Agent or any Lender. After
any retiring Agent's resignation as Agent, the provisions of this Section 8
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Loan Documents.
8.10 Authorization to Release Liens and Guarantees. The
Administrative Agent is hereby irrevocably authorized by each of the Lenders to
effect any release of Liens or guarantee obligations contemplated by Section
9.15.
8.11 The Arrangers; the Co-Syndication Agents; the
Documentation Agent. Neither the Arrangers, the Co-Syndication Agents nor the
Documentation Agent, in their respective capacities as such, shall have any
duties or responsibilities, and shall incur no liability, under this Agreement
and the other Loan Documents.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement or any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except
65
in accordance with the provisions of this Section 9.1. The Required Lenders and
each Loan Party party to the relevant Loan Document may, or (with the written
consent of the Required Lenders) the Administrative Agent and each Loan Party
party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents (including amendments and restatements hereof or thereof) for the
purpose of adding any provisions to this Agreement or the other Loan Documents
or changing in any manner the rights of the Lenders or of the Loan Parties
hereunder or thereunder or (b) waive, on such terms and conditions as may be
specified in the instrument of waiver, any of the requirements of this Agreement
or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall:
(i) forgive the principal amount or extend the
final scheduled date of maturity of any Term
Loan, extend the scheduled date of any
amortization payment in respect of any Term
Loan, reduce the stated rate of any interest
or fee payable hereunder or extend the
scheduled date of any payment thereof,
increase the amount or extend the expiration
date of any Term Loan Commitment of any
Lender, or require additional consents to be
obtained with respect to the sale or any
assignment or participations of any
interests of the Lenders hereunder, in each
case without the consent of each Lender
directly affected thereby;
(ii) amend, modify or waive any provision of this
Section or reduce any percentage specified
in the definition of Required Lenders, or
consent to the assignment or transfer by the
Borrower of any of its rights and
obligations under this Agreement and the
other Loan Documents, release all or
substantially all of the Collateral or
release all or substantially all of the
Subsidiary Guarantors from their guarantee
obligations under the Guarantee and
Collateral Agreement, or amend the
definition of Interest Period so as to allow
intervals of greater than six months, in
each case without the consent of all
Lenders;
(iii) amend, modify or waive any provision of
Section 8, or any other provision of this
Agreement affecting the rights and
obligations of any Agent, without the
consent of any Agent directly affected
thereby; or
(iv) amend, modify or waive any provision of
Section 2.18 without the consent of each
Lender directly affected thereby.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Agents and all future holders of the Term Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and
66
not continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon. Any such
waiver, amendment, supplement or modification shall be effected by a written
instrument signed by the parties required to sign pursuant to the foregoing
provisions of this Section; provided, that delivery of an executed signature
page of any such instrument by facsimile transmission shall be effective as
delivery of a manually executed counterpart thereof.
For the avoidance of doubt, this Agreement and any other Loan
Document may be amended (or amended and restated) with the written consent of
the Required Lenders, the Administrative Agent and each Loan Party to each
relevant Loan Document (x) to add one or more additional credit facilities to
this Agreement and to permit the extensions of credit from time to time
outstanding thereunder and the accrued interest and fees in respect thereof
(collectively, the "Additional Extensions of Credit") to share ratably in the
benefits of this Agreement and the other Loan Documents with the Term Loans and
the accrued interest and fees in respect thereof and (y) to include
appropriately the Lenders holding such credit facilities in any determination of
the Required Lenders; provided, however, that no such amendment shall permit the
Additional Extensions of Credit to share ratably with or with preference to the
Term Loans in the application of mandatory prepayments without the consent of
the Required Lenders.
9.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail (registered or certified), postage prepaid, or, in the
case of telecopy notice, when received, addressed (a) in the case of Holdings,
the Borrower and the Agents, as follows and (b) in the case of the Lenders, as
set forth in an administrative questionnaire delivered to the Administrative
Agent or on Schedule I to the Lender Addendum to which such Lender is a party
or, in the case of a Lender which becomes a party to this Agreement pursuant to
an Assignment and Acceptance, in such Assignment and Acceptance or (c) in the
case of any party, to such other address as such party may hereafter notify to
the other parties hereto:
Holdings or the Borrower: Williams Production Holdings LLC
One Williams Center
Suite 4100
Tulsa, Oklahoma 74172
Attention: Jim Kimble;
Treasury Compliance Group
Telecopy: (918) 573-2065
Telephone: (918) 573-7159
with a copy to:
67
Williams Production RMT Company
One Williams Center
Suite 4100
Tulsa, Oklahoma 74172
Attention: Assistant General Counsel -
Corporate
Telecopy: (918) 573-4503
Telephone: (918) 573-2613
The Administrative Agent: Lehman Commercial Paper Inc.
745 Seventh Avenue
New York, New York 10019
Attention: Francis Chang
Telecopy: (212) 526-0242
Telephone: (212) 526-5390
with a copy to:
Attention: Michelle Rosolinsky
Telecopy: (212) 526-6590
Telephone: (212) 526-4979
The Arrangers: Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Attention: Francis Chang
Telecopy: (212) 526-0242
Telephone: (212) 526-5390
Banc of America Securities LLC
100 North Tryon Street
NC1-007-06-07
Charlotte, North Carolina 28255
Attention: Kelly Warnement/Anabel
Morris/Diana Himes
Telecopy: (704) 388-0648
Telephone: (704) 388-8943/(704) 387-
1939/(704) 387-9951
provided that any notice, request or demand to or upon the Agent or any Lender
shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of any Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any
68
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
9.4 Survival of Representations and Warranties. All
representations and warranties made herein, in the other Loan Documents and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Term Loans and other extensions of credit hereunder.
9.5 Payment of Expenses. The Borrower agrees (a) to pay
or reimburse the Agents and the Arrangers for all their reasonable out of pocket
costs and expenses incurred in connection with the syndication of the Facilities
(other than fees payable to syndicate members) and the development, preparation
and execution of, or preservation of any rights under, and any amendment,
supplement or modification to, this Agreement and the other Loan Documents and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements
and other charges of Weil, Gotshal & Manges LLP and LeBoeuf, Lamb, Greene &
MacRae, LLP and the charges of Intralinks, (b) to pay or reimburse each Lender,
the Arrangers, and the Agents for all their costs and expenses incurred in
connection with the enforcement of any rights under this Agreement, the other
Loan Documents and any other documents prepared in connection herewith or
therewith, including, without limitation, the fees and disbursements of outside
counsel to each Lender and of counsel to each of the Arrangers and the
Administrative Agent, (c) to pay, indemnify, or reimburse each Lender Arranger,
and the Agents for, and hold each Lender, Arranger, and the Agents harmless
from, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) to pay, indemnify or
reimburse each Lender, each Arranger, each Agent, their respective affiliates,
and their respective officers, directors, trustees, employees, advisors, agents
and controlling persons (each, an "Indemnitee") for, and hold each Indemnitee
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including, without limitation, any of
the foregoing relating to the use of proceeds of the Term Loans or the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of any Loan Party any of the Properties and the fees and
disbursements and other charges of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against the Borrower hereunder (all the
foregoing in this clause (d), collectively, the "Indemnified Liabilities"),
provided, that the Borrower shall have no obligation hereunder to any Indemnitee
with respect to Indemnified Liabilities to the extent such Indemnified
Liabilities are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnitee.
69
No Indemnitee shall be liable for any damages arising from the use by
unauthorized persons of Information or other materials sent through electronic,
telecommunications or other information transmission systems that are
intercepted by such persons or for any special, indirect, consequential or
punitive damages in connection with the Facilities. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries so to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee. All amounts due under this Section
shall be payable not later than 30 days after written demand therefor.
Statements payable by the Borrower pursuant to this Section shall be submitted
to the Borrower in accordance with Section 9.2, or to such other Person or
address as may be hereafter designated by the Borrower in a notice to the
Administrative Agent. The agreements in this Section shall survive repayment of
the Term Loans and all other amounts payable hereunder.
9.6 Successors and Assigns; Participations and
Assignments. This Agreement shall be binding upon and inure to the benefit
of Holdings, the Borrower, the Lenders, the Agents, all future holders of the
Term Loans and their respective successors and assigns, except that the Borrower
may not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Agents and each Lender.
(a) Any Lender may, without the consent of the Borrower,
in accordance with applicable law, at any time sell to one or more banks,
financial institutions or other entities (each, a "Participant") participating
interests in any Term Loan owing to such Lender, any Term Loan Commitment of
such Lender or any other interest of such Lender hereunder and under the other
Loan Documents. In the event of any such sale by a Lender of a participating
interest to a Participant, such Lender's obligations under this Agreement to the
other parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Term Loan for all purposes under this Agreement and the other
Loan Documents, and the Borrower and the Agents shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would require the consent of all Lenders pursuant to Section
9.1. The Borrower agrees that if amounts outstanding under this Agreement and
the Term Loans are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 9.7(a) as fully as if such Participant
were a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.14, 2.15 and 2.16 with respect to its
participation in the Term Loan Commitments and the Term Loans outstanding from
time to
70
time as if such Participant were a Lender; provided that, in the case of Section
2.15, such Participant shall have complied with the requirements of said
Section, and provided, further, that no Participant shall be entitled to receive
any greater amount pursuant to any such Section than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred. In addition, each transferor Lender selling a participation to a
Participant under this Section 9.6(b): (i) shall keep a register, meeting the
requirements of Treasury Regulation section 5f.103-1(c), of each such
Participant, specifying such Participant's entitlement to payments of principal
and interest with respect to such participation, and (ii) shall collect from
each such Participant the appropriate forms, certificates and statements
described in Section 2.15 (and updated as required by Section 2.15) as if such
Participant were a Lender under Section 2.15.
(b) Any Lender (an "Assignor") may, in accordance with
applicable law and upon written notice to the Administrative Agent, at any time
and from time to time assign to any Lender or any affiliate or Related Fund
thereof or, with the consent of the Administrative Agent and the Borrower
(which, in each case, shall not be unreasonably withheld or delayed) (provided
that (x) no such consent need be obtained by a Lehman Entity for assignments to
Eligible Assignees and (y) the consent of the Borrower need not be obtained if
any Default or Event of Default shall have occurred and be continuing), to an
additional bank, financial institution or other entity (an "Assignee") all or
any part of its rights and obligations under this Agreement pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit E, executed by
such Assignee and such Assignor (and, where the consent of the Administrative
Agent is required pursuant to the foregoing provisions, by the Administrative
Agent) and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that no such assignment to an Assignee
(other than any Lender or any affiliate or Related Fund thereof) shall be in an
aggregate principal amount of less than $1,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower and the Administrative Agent. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance in the Register, (x) the
Assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with Term Commitments and Term Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such Assignor shall cease to be a party hereto, except as
to Section 2.14, 2.15 and 9.5 in respect of the period prior to such effective
date). For purposes of the minimum assignment amounts set forth in this
paragraph, multiple assignments by two or more Related Funds shall be
aggregated.
(c) The Administrative Agent shall, on behalf of the
Borrower, maintain at its address referred to in Section 9.2 a copy of each
Assignment and Acceptance delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Lenders and the Term Loan
Commitment of, and principal amount of the Term Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, each Agent and the Lenders shall treat each
Person whose name is recorded in the Register as the owner of the Term Loans and
any Term Notes evidencing such Term Loans recorded therein for all purposes of
this Agreement. Any assignment of any Term
71
Loan, whether or not evidenced by a Term Note, shall be effective only upon
appropriate entries with respect thereto being made in the Register (and each
Term Note shall expressly so provide). Any assignment or transfer of all or part
of a Term Loan evidenced by a Term Note shall be registered on the Register only
upon surrender for registration of assignment or transfer of the Term Note
evidencing such Term Loan, accompanied by a duly executed Assignment and
Acceptance; thereupon one or more new Term Notes in the same aggregate principal
amount shall be issued to the designated Assignee, and the old Term Notes shall
be returned by the Administrative Agent to the Borrower marked "canceled". The
Register shall be available for inspection by the Borrower or any Lender (with
respect to any entry relating to such Lender's Term Loans) at any reasonable
time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an Assignor and an Assignee (and, in any case where the consent of
any other Person is required by Section 9.6(c), by each such other Person)
together with payment to the Administrative Agent of a registration and
processing fee of $3,500 (treating multiple, simultaneous assignments by or to
two or more Related Funds as a single assignment) (except that no such
registration and processing fee shall be payable (y) in connection with an
assignment by or to a Lehman Entity or (z) in the case of an Assignee which is
already a Lender or is an affiliate or Related Fund of a Lender or a Person
under common management with a Lender), the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Borrower. On
or prior to such effective date, the Borrower, at its own expense, upon request,
shall execute and deliver to the Administrative Agent (in exchange for Term
Notes, of the assigning Lender) a new applicable Term Note to the order of such
Assignee and its registered assigns in an amount equal to the applicable Term
Loans, as the case may be, assumed or acquired by it pursuant to such Assignment
and Acceptance and, if the Assignor has retained Term Loans, as the case may be,
upon request, a new Term Note, as the case may be, to the order of the Assignor
and its registered assigns in an amount equal to the applicable Term Loans
retained by it hereunder. Such new Term Note or Term Notes shall be dated the
Closing Date and shall otherwise be in the form of the Term Note or Term Notes
replaced thereby.
(e) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Term
Loans and Term Notes relate only to absolute assignments and that such
provisions do not prohibit assignments creating security interests in Term Loans
and Term Notes, including, without limitation, any pledge or assignment by a
Lender of any Term Loan or Term Note to any Federal Reserve Bank in accordance
with applicable law.
(f) Notwithstanding anything to the contrary contained
herein, any Lender (a "Granting Lender") may grant to a special purpose funding
vehicle (an "SPC"), identified as such in writing from time to time by the
Granting Lender to the Administrative Agent and the Borrower, the option to
provide to the Borrower all or any part of any Term Loan that such Granting
Lender would otherwise be obligated to make to the Borrower pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Term Loan and (ii) if an SPC elects not to exercise such option
or otherwise fails to provide all or any part of such Term Loan, the Granting
Lender shall be obligated to make such Term
72
Loan pursuant to the terms hereof. The making of a Term Loan by an SPC hereunder
shall utilize the Term Loan Commitment of the Granting Lender to the same
extent, and as if, such Term Loan were made by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other indebtedness of any SPC, it will
not institute against, or join any other person in instituting against, such SPC
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any state thereof. In
addition, notwithstanding anything to the contrary in this Section 9.6(g), any
SPC may (A) with notice to, but without the prior written consent of, the
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Term Loans to the
Granting Lender, or with the prior written consent of the Borrower and the
Administrative Agent (which consent shall not be unreasonably withheld) to any
financial institutions providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Term Loans, and (B)
disclose on a confidential basis any non-public information relating to its Term
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC; provided that
non-public information with respect to the Parent, the Borrower or any of their
respective Subsidiaries may be disclosed only with the Borrower's prior written
consent which will not be unreasonably withheld. This paragraph (g) may not be
amended without the written consent of any SPC with Term Loans outstanding at
the time of such proposed amendment.
9.7 Adjustments; Set off. Except to the extent that
this Agreement provides for payments to be allocated to a particular Lender or
to the Lenders under a particular Facility, if any Lender (a "Benefited Lender")
shall at any time receive any payment of all or part of the Obligations owing to
it, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set off, pursuant to events or proceedings of the nature
referred to in Section 7.1(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Obligations, such Benefited Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Obligations, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefited
Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefited Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(a) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right upon the election of the
Required Lenders following the occurrence and during the continuance of an Event
of Default, without prior notice to Holdings or the Borrower, any such notice
being expressly waived by Holdings and the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in
73
any currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of the Borrower. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such setoff and application made by such Lender, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
9.8 Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this
Agreement or of a Lender Addendum by facsimile transmission shall be effective
as delivery of a manually executed counterpart hereof. A set of the copies of
this Agreement signed by all the parties shall be lodged with the Borrower and
the Administrative Agent.
9.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.10 Integration. This Agreement and the other Loan
Documents represent the entire agreement of Holdings, the Borrower, the Agents,
the Arranger and the Lenders with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties
by the Arranger, any Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 Submission to Jurisdiction; Waivers. Each of Holdings
and the Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal
action or proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar
74
form of mail), postage prepaid, to Holdings or the Borrower, as the case may be
at its address set forth in Section 9.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or consequential
damages.
9.13 Acknowledgments. Each of Holdings and the Borrower
hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Arranger, any Agent nor any Lender has
any fiduciary relationship with or duty to Holdings or the Borrower arising out
of or in connection with this Agreement or any of the other Loan Documents, and
the relationship between the Arranger, the Agents and the Lenders, on one hand,
and Holdings and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other
Loan Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Arranger, the Agents and the Lenders or among Holdings, the
Borrower and the Lenders.
9.14 Confidentiality. Each of the Agents and the Lenders
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent any Agent or any Lender
from disclosing any such information (a) to the Arranger, any Agent, any other
Lender or any affiliate of any thereof, (b) to any Participant or Assignee
(each, a "Transferee") or prospective Transferee that agrees to comply with the
provisions of this Section or substantially equivalent provisions, (c) to any of
its employees, directors, agents, attorneys, accountants and other professional
advisors, (d) to any financial institution or any Eligible Assignee that is a
direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty agrees to
be bound by the provisions of this Section), (e) upon the request or demand of
any Governmental Authority having jurisdiction over it, (f) in response to any
order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (g) in connection with any
litigation or similar proceeding, (h) that has been publicly disclosed other
than in breach of this Section, (i) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender or (j) in
connection with the exercise of any remedy hereunder or under any other Loan
Document. Notwithstanding anything herein to the contrary, any party subject to
confidentiality obligation hereunder or under
75
any other related document (and any employee, representative or other agent of
such party) may disclose to any and all persons, without limitation of any kind,
such party's U.S. federal income tax treatment and tax structure of the
transactions contemplated by this Agreement relating to such party and all
materials of any kind (including opinions or other tax analyses) that are
provided to it relating to such tax treatment and tax structure. However, no
such party shall disclose any information relating to such tax treatment or tax
structure to the extent nondisclosure is reasonably necessary in order to comply
with applicable securities laws. Subject to the foregoing, nothing herein shall
release any Lender from any other confidentiality agreement previously executed
with any Borrower.
9.15 Release of Collateral and Guarantee Obligations.
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, upon request of the Borrower in connection with any Disposition of
Property permitted by the Loan Documents, the Administrative Agent shall
(without notice to, or vote or consent of, any Lender, or any affiliate of any
Lender that is a party to any Specified Hedge Agreement) take such actions as
shall be required to release its security interest in any Collateral being
Disposed of in such Disposition, and to release any guarantee obligations under
any Loan Document of any Person being Disposed of in such Disposition, to the
extent necessary to permit consummation of such Disposition in accordance with
the Loan Documents.
(a) Notwithstanding anything to the contrary contained
herein or any other Loan Document, when all Obligations (other than obligations
in respect of any Specified Hedge Agreement) have been paid in full, all Term
Loan Commitments have terminated or expired, upon request of the Borrower, the
Administrative Agent shall (without notice to, or vote or consent of, any
Lender, or any affiliate of any Lender that is a party to any Specified Hedge
Agreement) take such actions as shall be required to release its security
interest in all Collateral, and to release all guarantee obligations under any
Loan Document, whether or not on the date of such release there may be
outstanding Obligations in respect of Specified Hedge Agreements. Any such
release of guarantee obligations shall be deemed subject to the provision that
such guarantee obligations shall be reinstated if after such release any portion
of any payment in respect of the Obligations guaranteed thereby shall be
rescinded or must otherwise be restored or returned upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payment had not been made.
(b) Notwithstanding anything in this Agreement or the
other Loan Documents to the contrary, the Administrative Agent shall be
authorized to release the Mortgages and Liens on the Oil and Gas Properties
permitted to be sold, exchanged or traded under Section 6.5 of this Agreement
without any further action by the Lenders.
9.16 Delivery of Lender Addenda. Each initial Lender shall
become a party to this Agreement by delivering to the Administrative Agent a
Lender Addendum duly executed by such Lender, the Borrower and the
Administrative Agent.
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9.17 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE
AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
William Production Holdings LLC
By: /s/ James G. Ivey
----------------------------
Name: James G. Ivey
Title: Treasurer
WILLIAMS PRODUCTION RMT COMPANY
By: /s/ James G. Ivey
----------------------------
Name: James G. Ivey
Title: Treasurer
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
By: /s/ Francis Chang
----------------------------
Name: Francis Chang
Title: Authorized Signatory
[Signature Page to Term Loan Agreement]
SCHEDULES:
1.1(a) Mortgaged Property
1.1(b) Gas Gathering Systems
1.1(c) Historical Hedging Addbacks
1.1(d) Consolidated EBITDA
3.1 Pre-Closing Dispositions
3.4 Consents, Authorizations, Filings and Notices
3.6 Material Litigation
3.13 Reportable Events
3.15 Subsidiaries
3.17 Environmental
3.19(a)-1 UCC Filing Jurisdictions
3.19(a)-2 UCC Financing Statements to Remain on File
3.19(a)-3 UCC Financing Statements to be Terminated
3.19(b) Mortgage Filing Jurisdictions
3.21 Hydrocarbon Interests
3.22(b) Consents
6.2(c) Existing Indebtedness
6.3(b)(x) Existing Liens
6.5(f)(i) Dispositions
6.5(i) Certain Dispositions
6.5(m) Specified Dispositions
7(g)(i) Required Payments to Employee Welfare Benefit Plans
7(g)(ii) Required Payments to Multiemployer Plans
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of Gibson, Dunn & Crutcher LLP
F-2 Form of Legal Opinion of Davis, Graham & Stubbs LLP
G Form of Term Note
H Form of Lender Addendum
I Form of Borrowing Notice
J Form of Solvency Certificate