EXHIBIT 10.1
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 19, 2004
among
ENCORE ACQUISITION COMPANY,
as the Borrower,
ENCORE OPERATING, L.P.
as a Guarantor,
BANK OF AMERICA, N.A.,
as Administrative Agent and L/C Issuer,
FORTIS CAPITAL CORP. and WACHOVIA BANK, N.A.,
as Co-Syndication Agents,
BNP PARIBAS and CITIBANK, N.A.,
as Co-Documentation Agents,
and
The Other Lenders Party Hereto
BANC OF AMERICA SECURITIES LLC,
as
Sole Lead Arranger and Sole Book Manager
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TABLE OF CONTENTS
Section Page
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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS...................................................................... 1
1.01 Defined Terms.................................................................................. 1
1.02 Other Interpretive Provisions.................................................................. 26
1.03 Accounting Terms............................................................................... 27
1.04 Rounding....................................................................................... 27
1.05 Times of Day................................................................................... 28
1.06 Letter of Credit Amounts....................................................................... 28
1.07 Petroleum Terms................................................................................ 28
ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS................................................................ 28
2.01 Loans.......................................................................................... 28
2.02 Borrowings, Conversions and Continuations of Loans............................................. 28
2.03 Letters of Credit.............................................................................. 30
2.04 Prepayments.................................................................................... 38
2.05 Termination or Reduction of Commitments........................................................ 40
2.06 Repayment of Loans............................................................................. 40
2.07 Interest....................................................................................... 40
2.08 Fees........................................................................................... 41
2.09 Computation of Interest and Fees............................................................... 41
2.10 Evidence of Debt............................................................................... 41
2.11 Payments Generally; Administrative Agent's Clawback............................................ 42
2.12 Sharing of Payments by Lenders................................................................. 44
2.13 Borrowing Base................................................................................. 44
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY.............................................................. 46
3.01 Taxes.......................................................................................... 46
3.02 Illegality..................................................................................... 49
3.03 Inability to Determine Rates................................................................... 49
3.04 Increased Costs; Reserves on Eurodollar Rate Loans............................................. 49
3.05 Compensation for Losses........................................................................ 51
3.06 Mitigation Obligations; Replacement of Lenders................................................. 52
3.07 Survival....................................................................................... 52
ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS............................................................ 52
4.01 Conditions of Initial Credit Extension......................................................... 52
4.02 Conditions to all Credit Extensions............................................................ 55
ARTICLE V. REPRESENTATIONS AND WARRANTIES........................................................................ 56
5.01 Existence and Power of Each Borrower-Related Party............................................. 56
5.02 Credit Party and Governmental Authorization; Contravention..................................... 56
5.03 Binding Effect................................................................................. 57
5.04 Financial Information.......................................................................... 57
5.05 Litigation..................................................................................... 57
5.06 ERISA Compliance............................................................................... 58
5.07 Taxes and Filing of Tax Returns................................................................ 58
5.08 Ownership of Properties Generally.............................................................. 59
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5.09 Mineral Interests.............................................................................. 59
5.10 Licenses, Permits, Etc......................................................................... 60
5.11 Compliance with Law............................................................................ 60
5.12 Full Disclosure................................................................................ 60
5.13 Organizational Structure; Nature of Business................................................... 60
5.14 Environmental Matters.......................................................................... 60
5.15 Burdensome Obligations......................................................................... 61
5.16 Fiscal Year.................................................................................... 61
5.17 No Default..................................................................................... 61
5.18 Government Regulation.......................................................................... 62
5.19 Insider........................................................................................ 62
5.20 Gas Balancing Agreements and Advance Payment Contracts......................................... 62
5.21 Insurance...................................................................................... 62
5.22 Subsidiaries; Equity Interests................................................................. 62
ARTICLE VI. AFFIRMATIVE COVENANTS................................................................................ 62
6.01 Information.................................................................................... 62
6.02 Business of Borrower-Related Parties........................................................... 65
6.03 Maintenance of Existence....................................................................... 65
6.04 Title Data..................................................................................... 65
6.05 Books and Records; Right of Inspection......................................................... 65
6.06 Maintenance of Insurance....................................................................... 66
6.07 Payment of Taxes and Claims.................................................................... 66
6.08 Compliance with Laws and Documents............................................................. 66
6.09 Operation of Properties and Equipment.......................................................... 66
6.10 Environmental Law Compliance................................................................... 67
6.11 ERISA Reporting Requirements................................................................... 67
6.12 Additional Documents........................................................................... 68
6.13 Environmental Review........................................................................... 68
6.14 Security....................................................................................... 69
6.15 Title Opinions................................................................................. 70
6.16 Guarantees..................................................................................... 70
ARTICLE VII. NEGATIVE COVENANTS.................................................................................. 70
7.01 Incurrence of Debt............................................................................. 70
7.02 Restricted Payments............................................................................ 70
7.03 Negative Pledge................................................................................ 71
7.04 Consolidations and Mergers..................................................................... 71
7.05 Dispositions................................................................................... 71
7.06 Amendments to Organizational Documents; Other Material Agreements.............................. 72
7.07 Use of Proceeds................................................................................ 72
7.08 Investments.................................................................................... 73
7.09 Transactions with Affiliates................................................................... 74
7.10 Hedge Transactions............................................................................. 74
7.11 Fiscal Year.................................................................................... 74
7.12 Change in Business............................................................................. 74
7.13 Financial Covenants............................................................................ 74
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7.14 Burdensome Agreements.......................................................................... 74
7.15 Designation of Unrestricted Subsidiaries....................................................... 75
ARTICLE VIII. DEFAULTS........................................................................................... 77
8.01 Events of Default.............................................................................. 77
8.02 Remedies Upon Event of Default................................................................. 78
8.03 Application of Funds........................................................................... 79
ARTICLE IX. ADMINISTRATIVE AGENT................................................................................. 80
9.01 Appointment and Authority...................................................................... 80
9.02 Rights as a Lender............................................................................. 80
9.03 Exculpatory Provisions......................................................................... 80
9.04 Reliance by Administrative Agent............................................................... 81
9.05 Delegation of Duties........................................................................... 81
9.06 Resignation of Administrative Agent............................................................ 82
9.07 Non-Reliance on Administrative Agent and Other Lenders......................................... 83
9.08 No Other Duties, Etc........................................................................... 83
9.09 Administrative Agent May File Proofs of Claim.................................................. 83
9.10 Collateral and Guaranty Matters................................................................ 84
ARTICLE X. MISCELLANEOUS......................................................................................... 84
10.01 Amendments, Etc................................................................................ 84
10.02 Notices; Effectiveness; Electronic Communication............................................... 85
10.03 No Waiver; Cumulative Remedies................................................................. 87
10.04 Expenses; Indemnity; Damage Waiver............................................................. 87
10.05 Payments Set Aside............................................................................. 89
10.06 Successors and Assigns......................................................................... 89
10.07 Treatment of Certain Information; Confidentiality.............................................. 93
10.08 Right of Setoff................................................................................ 93
10.09 Interest Rate Limitation....................................................................... 94
10.10 Counterparts; Integration; Effectiveness....................................................... 94
10.11 Survival of Representations and Warranties..................................................... 94
10.12 Severability................................................................................... 94
10.13 Replacement of Lenders......................................................................... 95
10.14 Governing Law; Jurisdiction; Etc............................................................... 95
10.15 Waiver of Jury Trial........................................................................... 96
10.16 USA PATRIOT Act Notice......................................................................... 96
10.17 Time of the Essence............................................................................ 97
10.18 Special Provisions............................................................................. 97
10.19 ENTIRE AGREEMENT............................................................................... 98
SIGNATURES................................................................................................S-1
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SCHEDULES
2.01 Commitments and Applicable Percentages
5.05 Litigation
5.13 Organizational Structure; Nature of Business
5.14 Environmental Matters
5.22 Subsidiaries; Other Equity Investments
10.02 Administrative Agent's Office; Certain Addresses for Notices
EXHIBITS
FORM OF
A Loan Notice
B Note
C Compliance Certificate
D Assignment and Assumption
E Guaranty
F Pledge Agreement
G Letter of Credit Application
H Opinion
I Certificate of Ownership Interests
J Lender Addendum
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AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement") is entered into
as of August 19, 2004, among ENCORE ACQUISITION COMPANY, a Delaware corporation
(the "Borrower"), ENCORE OPERATING, L.P., a Texas limited partnership
("Operating"), each lender from time to time party hereto (collectively, the
"Lenders" and individually, a "Lender"), BANK OF AMERICA, N.A., as
Administrative Agent and L/C Issuer, Fortis Capital Corp. and Wachovia Bank,
N.A., as Co-Syndication Agents, and BNP Paribas and Citibank, N.A., as
Co-Documentation Agents.
The Borrower and Operating have requested that the Lenders provide a
revolving credit facility, and the Lenders are willing to do so on the terms and
conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 DEFINED TERMS. As used in this Agreement, the following terms shall
have the meanings set forth below:
"Addendum" means an instrument, substantially in the form of Exhibit J, by
which a Lender becomes a party to this Agreement as of the Closing Date.
"Administrative Agent" means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.
"Administrative Agent's Office" means the Administrative Agent's address
and, as appropriate, account as set forth on Schedule 10.02, or such other
address or account as the Administrative Agent may from time to time notify to
the Borrower and the Lenders.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Advance Payment Contract" means any contract whereby any Credit Party
either (a) receives or becomes entitled to receive (either directly or
indirectly) any payment (an "Advance Payment") to be applied toward payment of
the purchase price of Hydrocarbons produced or to be produced from Mineral
Interests owned by any Credit Party and which Advance Payment is paid or to be
paid in advance of actual delivery of such production to or for the account of
the purchaser regardless of such production, or (b) grants an option or right of
refusal to the purchaser to take delivery of such production in lieu of payment,
and, in either of the foregoing instances, the Advance Payment is, or is to be,
applied as payment in full for such production when sold and delivered or is, or
is to be, applied as payment for a portion only of the purchase price thereof or
of a percentage or share of such production; provided that inclusion of the
standard "take or pay" provision in any gas sales or purchase contract or any
other similar
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contract shall not, in and of itself, constitute such contract as an Advance
Payment Contract for the purposes hereof.
"Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agents" means, collectively, Administrative Agent, Fortis Capital Corp.
and Wachovia Bank, N.A., as Co-Syndication Agents, and BNP Paribas and
Citibank, N.A., as Co-Documentation Agents.
"Aggregate Commitments" means the Commitments of all the Lenders.
"Agreement" means this Amended and Restated Credit Agreement.
"Applicable Percentage" means with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender's Commitment at such time. If the commitment of each
Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02 or if the Aggregate
Commitments have expired, then the Applicable Percentage of each Lender shall be
determined based on the Applicable Percentage of such Lender most recently in
effect, giving effect to any subsequent assignments. The initial Applicable
Percentage of each Lender is set forth opposite the name of such Lender on
Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto, as applicable.
"Applicable Margin" means, on any date, with respect to each Loan, an
amount determined by reference to the ratio of Total Outstandings to the
Borrowing Base on such date in accordance with the table below:
RATIO OF TOTAL OUTSTANDINGS APPLICABLE MARGIN FOR APPLICABLE MARGIN FOR BASE
TO BORROWING BASE EURODOLLAR RATE LOANS RATE LOANS
< .40 to 1 1.000% 0.000%
> or = .40 to 1 < .75 to 1 1.250% 0.000%
> or = .75 to 1 < .90 to 1 1.500% 0.250%
> or = .90 to 1 1.750% 0.500%
"Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Afiliate of an
entity that administers or manages a Lender.
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"Approved Petroleum Engineer" means Miller and Lents or any other
reputable firm of independent petroleum engineers as shall be selected by the
Borrower and approved by Required Lenders, such approval not to be unreasonably
withheld.
"Arranger" means Banc of America Securities LLC, in its capacity as sole
lead arranger and sole book manager.
"Asset Disposition" means the sale, assignment, transfer, exchange or
other disposition by any Credit Party of (i) any Borrowing Base Property or (ii)
all or substantially all of its right, title and interest in any Restricted
Subsidiary owning any Borrowing Base Property.
"Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an Eligible Assignee (with the consent of any party whose
consent is required by Section 10.06(b), and accepted by the Administrative
Agent, in substantially the form of Exhibit D or any other form approved by the
Administrative Agent.
"Availability" means, as of any date, the remainder of (a) the Borrowing
Base in effect on such date, minus (b) the Total Outstandings on such date.
"Availability Period" means the period from and including the Closing Date
to the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.05, and (c) the date of termination
of the commitment of each Lender to make Loans and of the obligation of the L/C
Issuer to make L/C Credit Extensions pursuant to Section 8.02.
"Bank of America" means Bank of America, N.A. and its successors.
"Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest
in effect for such day as publicly announced from time to time by Bank of
America as its "prime rate." The "prime rate" is a rate set by Bank of America
based upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"Borrower" has the meaning specified in the introductory paragraph hereto.
"Borrower-Related Parties" means, collectively, the Borrower, each
Restricted Subsidiary of the Borrower and each Unrestricted Subsidiary of the
Borrower, and "Borrower-Related Party" means any one of the foregoing.
"Borrowing" means a borrowing consisting of simultaneous Loans of the same
Type and, in the case of Eurodollar Rate Loans, having the same Interest Period
made by each of the Lenders pursuant to Section 2.01.
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"Borrowing Base" means the loan value attributable to certain of the
Credit Parties' Mineral Interests as determined in accordance with Section 2.13
hereof.
"Borrowing Base Deficiency" means, as of any date, the amount, if any, by
which the Total Outstandings on such date exceed the Borrowing Base in effect on
such date; provided, that, for purposes of determining the existence and amount
of any Borrowing Base Deficiency, L/C Obligations will not be deemed to be
outstanding to the extent they are secured by cash in the manner contemplated by
Section 2.03(g).
"Borrowing Base Properties" means all Mineral Interests evaluated by the
Lenders for purposes of establishing the Borrowing Base. The Borrowing Base
Properties on the Closing Date constitute all of the Mineral Interests described
in the Initial Reserve Report.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent's Office is located and, if
such day relates to any Eurodollar Rate Loan, means any such day on which
dealings in Dollar deposits are conducted by and between banks in the London
interbank eurodollar market.
"Cash Collateral" means cash or deposit account balances.
"Cash Collateralize" has the meaning specified in Section 2.03(g).
"Certificate of Ownership Interests" means a means a certificate
substantially in the form of Exhibit I.
"Change in Law" means the occurrence, after the date of this Agreement, of
any of the following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or treaty or
in the administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.
"Change of Control" means the occurrence of any of the following whether
voluntarily or involuntarily, including by operation of law:
(a) except as permitted by Section 7.04 and/or Section 7.05 Operating or
any other Credit Party (other than the Borrower) shall cease to be a wholly
owned Subsidiary of the Borrower;
(b) any "person" or "group" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")), other than
one or more Designated Stockholders, is or becomes the "beneficial owner" (as
defined in Rules 13d 3 and 13d 5 under the Exchange Act), except that for
purposes of this clause (b) such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of the voting
stock of the Borrower; provided, however, that the Designated Stockholders
beneficially own (as defined in Rules 13d 3 and 13d 5 under the Exchange Act),
directly or indirectly, in the aggregate a lesser percentage of the total voting
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power of the voting stock of the Borrower than such other person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of the Borrower (for
the purposes of this clause (b), such other person shall be deemed to
beneficially own any voting stock of a Person (the "specified person") held by
any other Person (the "parent entity"), if such other person is the beneficial
owner (as defined above in this clause (b)), directly or indirectly, of more
than 35% of the voting power of the voting stock of such parent entity and the
Designated Stockholders beneficially own (as defined in Rules 13d 3 and 13d 5
under the Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the voting stock of such parent entity and do
not have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of such parent
entity); or
(c) during any period of two consecutive years, individuals who, at the
beginning of such period, constituted the board of directors of the Borrower
(together with (A) any new directors whose election by such board of directors
of the Borrower or whose nomination for election by the shareholders of the
Borrower was approved by a vote of the majority of the directors of the Borrower
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved and (B)
any representative of a Designated Stockholder) cease for any reason to
constitute a majority of the board of directors of the Borrower then in office.
"Closing Date" means the first date all the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 10.01.
"Code" means the Internal Revenue Code of 1986.
"Commitment" means, as to each Lender, its obligation to (a) make Loans to
the Borrower pursuant to Section 2.01, and (b) purchase participations in L/C
Obligations, in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Lender's name on Schedule 2.01 or in
the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.
"Commitment Fee Percentage" means, on any date, the percentage determined
pursuant to the table below based on the ratio of the Total Outstandings on such
date to the Borrowing Base in effect on such date:
RATIO OF TOTAL OUTSTANDINGS TO
BORROWING BASE COMMITMENT FEE PERCENTAGE
< .40 to 1 0.250%
> or = .40 to 1 < .75 to 1 0.375%
> or = .75 to 1 < .90 to 1 0.375%
> or = .90 to 1 0.500%
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"Compliance Certificate" means a certificate substantially in the form of
Exhibit C.
"Consolidated Current Assets" means, "at any time," the sum of (a) the
current assets of the Borrower and its Consolidated Restricted Subsidiaries at
such time, plus (b) the Availability at such time.
"Consolidated Current Liabilities" means, at any time, the current
liabilities of the Borrower and its Consolidated Restricted Subsidiaries at such
time, but, in the case of the Borrower, excluding current maturities of Long
Term Debt of the Borrower and its Consolidated Restricted Subsidiaries
outstanding at such time.
"Consolidated EBITDA" means, for any period, the Consolidated Net Income
of the Borrower and its Consolidated Restricted Subsidiaries for such period,
plus each of the following determined for the Borrower and its Consolidated
Restricted Subsidiaries on a consolidated basis for such period: (a) any
provision for (or less any benefit from) income or franchise Taxes included in
determining Consolidated Net Income; (b) Consolidated Net Interest Expense
deducted in determining Consolidated Net Income; (c) depreciation, depletion and
amortization expense deducted in determining Consolidated Net Income; (d) other
non-cash charges deducted in determining Consolidated Net Income to the extent
not already included in clauses (b) and (c) of this definition, and (e) any
unrealized non-cash gains or losses or charges in respect of any Hedge
Transactions resulting from the requirements of FAS 133 to the extent not
already included in clause (d) of this definition.
"Consolidated Net Income" means, for any period, the net income (or loss)
of the Borrower and its Consolidated Restricted Subsidiaries for such period
determined in accordance with GAAP, but excluding: (a) the income of any other
Person (other than the Borrower's Consolidated Restricted Subsidiaries) in which
the Borrower or any of its Consolidated Restricted Subsidiaries has an ownership
interest, unless received by the Borrower or any of its Consolidated Restricted
Subsidiaries in a cash dividend, cash interest payment or other cash
distribution; (b) any after-tax gains attributable to asset dispositions; (c) to
the extent not included in clauses (a) and (b) above, any after-tax (i)
extraordinary gains (net of extraordinary losses), or (ii) non-cash nonrecurring
gains; (d) non-cash or nonrecurring charges; and (e) any unrealized non-cash
gains or losses or charges in respect of any Hedge Transactions resulting from
the requirements of FAS 133.
"Consolidated Net Interest Expense" means, the Borrower and its
Consolidated Restricted Subsidiaries for any period, the remainder of the
following for the Borrower and its Consolidated Restricted Subsidiaries for such
period: (a) interest expense, minus (b) interest income.
"Consolidated Restricted Subsidiary" or "Consolidated Restricted
Subsidiaries" means any Subsidiary or other entity, the accounts of which would
be consolidated with those of the Borrower in its consolidated financial
statements, excluding each Unrestricted Subsidiary.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise
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voting power, by contract or otherwise. "Controlling" and "Controlled" have
meanings correlative thereto.
"Credit Extension" means each of the following: (a) a Borrowing and (b) an
L/C Credit Extension.
"Credit Parties" means, collectively, the Borrower, Operating and each
other Restricted Subsidiary of the Borrower and "Credit Party" means any one of
the foregoing.
"Debt" means, for any Person at any time, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all other indebtedness (including capitalized lease obligations, other than
usual and customary oil and gas leases) of such Person on which interest charges
are customarily paid or accrued, (d) all Guarantees by such Person, (e) the
unfunded or unreimbursed portion of all letters of credit issued for the account
of such Person, (f) any amount owed by such Person representing the deferred
purchase price of property or services other than accounts payable incurred in
the ordinary course of business and in accordance with customary trade terms and
which have not been outstanding for more than ninety (90) days past the invoice
date, (g) all obligations of such Person secured by a Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is non-recourse to the
credit of that Person (the amount of such obligation being deemed to be the
lesser of the liquidation value of such property or asset and the amount of the
obligation so secured), and (h) all liability of such Person as a general
partner of a partnership for obligations of such partnership of the nature
described in (a) through (h) preceding.
"Debtor Relief Laws" means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
"Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.
"Default Rate" means (a) when used with respect to Obligations other than
Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Margin, if any, applicable to Base Rate Loans plus (iii) 2% per
annum; provided, however, that with respect to a Eurodollar Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any
Applicable Margin) otherwise applicable to such Loan plus 2% per annum, and (b)
when used with respect to Letter of Credit Fees, a rate equal to the Applicable
Margin plus 2% per annum.
"Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Loans, participations in L/C Obligations required to be funded by
it hereunder within one Business Day of the date required to be funded by it
hereunder, (b) has otherwise failed to pay over to the Administrative Agent or
any other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith
7
dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy
or insolvency proceeding.
"Designated Stockholders" means (a) I. Jon Brumley, (b) Jon S. Brumley,
(c) Warbug Pincus Equity Partners L.P., (d) trusts, the sole beneficiaries and
trustees of which are the individuals listed in clauses (a) and (b) above or
their immediate family members, (e) corporations, partnerships and other
entities (i) of which the individuals listed in clauses (a) and (b) above or
their immediate family members are the beneficial owners of all capital stock
and other equity or voting interests, and (ii) that are controlled by such
individuals and their immediate family members, and (f) any Affiliates as of the
Closing Date or successors of any of the entities listed in clauses (c) and (d)
above.
"Distribution" by any Person, means (a) with respect to any stock issued
by such Person or any partnership, joint venture, limited liability company,
membership or other interest of such Person, the retirement, redemption,
purchase, or other acquisition for value of any such stock or partnership, joint
venture, limited liability company, membership or other interest, (b) the
declaration or payment of any dividend or other distribution on or with respect
to any stock, partnership, joint venture, limited liability company, membership
or other interest of any Person, and (c) any other payment by such Person with
respect to such stock, partnership, joint venture, limited liability company,
membership or other interest of such Person.
"Dollar" and "$" mean lawful money of the United States.
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c)
an Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) the Administrative Agent and the L/C Issuer, and (ii) unless an
Event of Default has occurred and is continuing, the Borrower (each such
approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, "Eligible Assignee" shall not include the
Borrower or any of the Borrower's Affiliates or Subsidiaries.
"Environmental Complaint" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, proceeding, judgment, letter
or other communication from any federal, state or municipal authority or any
other party against any Borrower-Related Party involving (a) a Hazardous
Discharge from, onto or about any real property owned, leased or operated at any
time by any Borrower-Related Party, (b) a Hazardous Discharge caused, in whole
or in part, by any Borrower-Related Party or by any Person acting on behalf of
or at the instruction of any Borrower-Related Party, or (c) any violation of any
Environmental Law by any Borrower-Related Party.
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
8
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Borrower-Related Party or
any of their respective Subsidiaries directly or indirectly resulting from or
based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Substance, (c) exposure to any Hazardous Substance, (d) the release or
threatened release of any Hazardous Substance into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"Equity Interests" means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with any Borrower-Related Party within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the
Code for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by any Borrower-Related Party or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by any Borrower-Related
Party or any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to
terminate, the treatment of a Plan amendment as a termination under Sections
4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
Borrower-Related Party or any ERISA Affiliate.
"Eurodollar Rate" means for any Interest Period with respect to a
Eurodollar Rate Loan:
(a) the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate that appears on the page of
the Telerate screen (or any successor thereto) that displays an average
British Bankers Association Interest
9
Settlement Rate for deposits in Dollars (for delivery on the first day of
such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, or
(b) if the rate referenced in the preceding clause (a) does not
appear on such page or service or such page or service shall not be
available, the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate on such other page or other
service that displays an average British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first day of
such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, or
(c) if the rates referenced in the preceding clauses (a) and (b) are
not available, the rate per annum determined by the Administrative Agent
as the rate of interest at which deposits in Dollars for delivery on the
first day of such Interest Period in same day funds in the approximate
amount of the Eurodollar Rate Loan being made, continued or converted by
Bank of America and with a term equivalent to such Interest Period would
be offered by Bank of America's London Branch to major banks in the London
interbank eurodollar market at their request at approximately 4:00 p.m.
(London time) two Business Days prior to the first day of such Interest
Period.
"Eurodollar Rate Loan" means a Loan that bears interest at a rate based on
the Eurodollar Rate.
"Event of Default" has the meaning specified in Section 8.01.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the L/C Issuer or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) taxes imposed on or
measured by its overall net income (however denominated), and franchise taxes
imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable Lending Office is located, (b) any branch
profits taxes imposed by the United States or any similar tax imposed by any
other jurisdiction in which the Borrower is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 10.13), any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new Lending Office) or is attributable to such Foreign Lender's
failure or inability (other than as a result of a Change in Law) to comply with
Section 3.01(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new Lending Office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 3.01(a).
"Existing Credit Agreement" means that certain Credit Agreement dated as
of June 25, 2002, entered into by and among the Borrower, Operating, Fleet
National Bank, as administrative agent, and the financial institutions a party
thereto.
10
"Existing Letters of Credit" means all Letters of Credit (as defined in
the Existing Credit Agreement) issued and outstanding under the Existing Credit
Agreement.
"Exiting Lenders" shall have the meaning set forth in Section
4.01(a)(xix).
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.
"Fee Letter" means the letter agreement, dated July 20, 2004, among the
Borrower, the Administrative Agent and the Arranger.
"First Tier Restricted Subsidiary" has the meaning specified in the
definition of Pledge Agreement.
"Fiscal Quarter" means the three (3) month periods ending on March 31,
June 30, September 30 and December 31 of each Fiscal Year.
"Fiscal Year" means a twelve (12) month period ending December 31.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes.
For purposes of this definition, the United States, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"FRB" means the Board of Governors of the Federal Reserve System of the
United States.
"Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
"Gas Balancing Agreement" means any agreement or arrangement whereby any
Credit Party, or any other party having an interest in any Hydrocarbons to be
produced from Mineral
11
Interests in which any Credit Party owns an interest, has a right to take more
than its proportionate share of production therefrom
"Governmental Authority" means the government of the United States or any
other nation, or of any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).
"Granting Lender" has the meaning specified in Section 10.06(h).
"Guarantee" means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Debt or other obligation payable or performable by another
Person (the "primary obligor") in any manner, whether directly or indirectly,
and including any obligation of such Person, direct or indirect, (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt or
other obligation, (ii) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Debt or other obligation
of the payment or performance of such Debt or other obligation, (iii) to
maintain working capital, equity capital or any other financial statement
condition or liquidity or level of income or cash flow of the primary obligor so
as to enable the primary obligor to pay such Debt or other obligation, or (iv)
entered into for the purpose of assuring in any other manner the obligee in
respect of such Debt or other obligation of the payment or performance thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), or (b) any Lien on any assets of such Person securing any Debt or other
obligation of any other Person, whether or not such Debt or other obligation is
assumed by such Person (or any right, contingent or otherwise, of any holder of
such Debt to obtain any such Lien) (the amount of such Debt or other obligation
being deemed to be the lesser of the liquidation value of such property or asset
and the amount of the Debt or other obligation so secured). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term "Guarantee" as a verb has a
corresponding meaning.
"Guarantors" means, collectively, Operating and all Restricted
Subsidiaries of the Borrower.
"Guaranty" means the Guaranty made by the Guarantors in favor of the
Administrative Agent and the Lenders, substantially in the form of Exhibit E.
"Hazardous Discharge" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Substance from or onto any real property
owned, leased or operated at any time by any Borrower-Related Party or any real
property owned, leased or operated by any other party.
12
"Hazardous Substance" means any pollutant, toxic substance, hazardous
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or infectious pursuant to any Environmental Law or which is
otherwise regulated by any Environmental Law or is required to be investigated
and/or remediated by or pursuant to any Environmental Law.
"Hedge Transaction" means any commodity, interest rate, currency or other
swap, option, collar, futures contract or other contract pursuant to which a
Person hedges risks related to commodity prices, interest rates, currency
exchange rates, securities prices or financial market conditions. Hedge
Transactions expressly includes Oil and Gas Hedge Transactions.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasolines, natural
gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons
produced or to be produced in conjunction therewith, and all products,
by-products and all other substances derived therefrom or the processing
thereof, and all other minerals and substances, including, but not limited to,
sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon
dioxide, helium, and any and all other minerals, ores, or substances of value,
and the products and proceeds therefrom, including, without limitation, all gas
resulting from the in-situ combustion of coal or lignite.
"Immaterial Title Deficiencies" means, with respect to Borrowing Base
Properties, defects or clouds on title, discrepancies in reported net revenue
and working interest ownership percentage and other Liens, defects,
discrepancies and similar matters which do not, individually or in the
aggregate, affect Borrowing Base Properties with a Recognized Value greater than
two percent (2%) of the Recognized Value of all such Borrowing Base Properties.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning specified in Section 10.04(b).
"Initial Reserve Report" means the internal engineering and economic
analysis of such Borrowing Base Properties prepared as of March 31, 2004 by the
Borrower's in-house staff.
"Interest Payment Date" means, (a) as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and the
Maturity Date; provided, however, that if any Interest Period for a Eurodollar
Rate Loan exceeds three months, the respective dates that fall every three
months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each
March, June, September and December and the Maturity Date.
"Interest Period" means, as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate Loan and ending on the date one, two, three or
six months thereafter, as selected by the Borrower in its Loan Notice or such
other period that is twelve months or less requested by the Borrower and
consented to by all the Lenders; provided that:
(i) any Interest Period that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
unless such
13
Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day;
(ii) 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; and
(iii) no Interest Period shall extend beyond the Maturity Date.
"Investment" means, as to any Person, any direct or indirect acquisition
or investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person and any arrangement pursuant to which the investor
Guarantees Debt of such other Person, or (c) the purchase or other acquisition
(in one transaction or a series of transactions) of assets of another Person
that constitute a business unit. For purposes of Section 7.08, the amount of any
Restricted Investments outstanding under Section 7.08(i) or (j) shall be the
amount actually invested (without adjustment for subsequent increases or
decreases in the value of such Restricted Investment) reduced by the cash
proceeds received upon the sale, liquidation, repayment or disposition of all or
any part of any such Restricted Investments (less all costs thereof) and other
cash received in respect of all or any part of any such Restricted Investments,
whether as income or as a return of capital, in an aggregate amount up to but
not in excess of the amount of all Restricted Investments permitted to be
outstanding pursuant to the applicable subsection. For purposes of the
definition of "Unrestricted Subsidiary" and the definition of "Restricted
Investment": (x) "Investment" shall include the portion (proportionate to the
Borrower's Equity Interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of the Borrower at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Borrower shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (i) the Borrower's
"Investment" in such Subsidiary at the time of such redesignation less (ii) the
portion (proportionate to the Borrower's Equity Interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (y) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the board of directors of
the Borrower.
"ISP" means, with respect to any Letter of Credit, the "International
Standby Practices 1998" published by the Institute of International Banking Law
& Practice (or such later version thereof as may be in effect at the time of
issuance).
"Issuer Documents" means with respect to any Letter of Credit, the Letter
of Credit Application, and any other document, agreement and instrument entered
into by the L/C Issuer and the Borrower (or any Restricted Subsidiary) or in
favor the L/C Issuer and relating to any such Letter of Credit.
14
"L/C Advance" means, with respect to each Lender, such Lender's funding of
its participation in any L/C Borrowing in accordance with its Applicable
Percentage.
"L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Borrowing.
"L/C Credit Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the increase of the
amount thereof.
"L/C Issuer" means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.
"L/C Obligations" means, as at any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings. For all purposes of this
Agreement, if on any date of determination a Letter of Credit has expired by its
terms but any amount may still be drawn thereunder by reason of the operation of
Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be "outstanding"
in the amount so remaining available to be drawn.
"Laws" means, collectively, all international, foreign, Federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
"Lender" has the meaning specified in the introductory paragraph hereto.
"Lending Office" means, as to any Lender, the office or offices of such
Lender described as such in such Lender's Administrative Questionnaire, or such
other office or offices as a Lender may from time to time notify the Borrower
and the Administrative Agent.
"Letter of Credit" means any letter of credit issued hereunder. A Letter
of Credit may be a commercial letter of credit or a standby letter of credit.
"Letter of Credit Application" means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the L/C Issuer (the form of letter of credit application customarily used by
Administrative Agent on the date hereof is attached hereto as Exhibit G);
provided, that, and notwithstanding anything to the contrary contained herein,
in the event of any conflict between any of the terms and provisions of this
Agreement and the terms and provisions of any Letter of Credit Application
executed and delivered by the Borrower, the terms and provisions of this
Agreement shall control.
"Letter of Credit Expiration Date" means the day that is seven days prior
to the Maturity Date then in effect (or, if such day is not a Business Day, the
next preceding Business Day).
15
"Letter of Credit Fee" means, with respect to any Letter of Credit issued
hereunder, a fee in an amount equal to a percentage of the average daily
aggregate amount of L/C Obligations during the Fiscal Quarter (or portion
thereof) ending on the date such payment is due (calculated on a per annum basis
based on such average daily aggregate L/C Obligations) determined by reference
to the ratio of Total Outstandings to the Borrowing Base in effect on the date
such Letter of Credit is issued in accordance with the table below:
RATIO OF TOTAL
OUTSTANDINGS TO PER ANNUM LETTER OF
BORROWING BASE CREDIT FEE
< .40 to 1 1.000%
> or = .40 to 1 < .75 to 1 1.250%
> or = .75 to 1 < .90 to 1 1.500%
> or = .90 to 1 1.750%
Such fee shall be payable in accordance with the terms of Section 2.03(i).
"Letter of Credit Sublimit" means, at any time, an amount equal to 15% of
the Borrowing Base then in effect. The Letter of Credit Sublimit is part of, and
not in addition to, the Aggregate Commitments.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).
"Limited Recourse Equity Pledge" means the pledge of Equity Interests in
any Unrestricted Subsidiary to secure Non-Recourse Debt of such Unrestricted
Subsidiary pursuant to an agreement that expressly states that the pledgee shall
have no recourse to the pledgor or any of its assets or revenues under any
circumstance other than recourse to the Equity Interests of the Unrestricted
Subsidiary that are described in such pledge.
"Loan" has the meaning specified in Section 2.01.
"Loan Documents" means this Agreement, each Note, each Issuer Document,
the Fee Letter, the Pledge Agreement, the Guaranty, and all other certificates,
documents or instruments delivered in connection with this Agreement, as the
foregoing may be amended from time to time.
"Loan Notice" means a notice of (a) a Borrowing, (b) a conversion of Loans
from one Type to the other, or (c) a continuation of Eurodollar Rate Loans,
pursuant to Section 2.02(a), which, if in writing, shall be substantially in the
form of Exhibit A.
16
"Long Term Debt" means Debt which matures more than one year from the date
it is incurred, or which can be extended at the option of the obligor(s) to a
date more than one year from the date it is incurred.
"Margin Regulations" means Regulations T, U and X of the FRB, as in effect
from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U of the FRB,
as in effect from time to time.
"Material Adverse Change" means any circumstance or event that has had a
Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a) the
assets, properties, financial condition or business operations of any
Borrower-Related Party, (b) the right or ability of any Credit Party to fully,
completely and timely perform its obligations under the Loan Documents, (c) the
validity or enforceability of any Loan Document against any Credit Party (to the
extent a party thereto), or (d) the validity, perfection or priority of any Lien
on any of the assets intended to be created under or pursuant to any Loan
Document to secure the Obligations.
"Material Agreement" means any material written or oral agreement,
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
thirty (30) days or less without liability for further payment other than
nominal penalty.
"Material Gas Imbalance" means, with respect to all Gas Balancing
Agreements to which any Credit Party is a party or by which any Mineral Interest
owned by any Credit Party is bound, a net gas imbalance liability to any Credit
Party in excess of $1,000,000.
"Maturity Date" means August 19, 2009.
"Maximum Rate" shall have the meaning set forth in Section 10.09.
"Mineral Interests" means rights, estates, titles, and interests in and to
oil and gas leases and any oil and gas interests, royalty and overriding royalty
interest, production payment, net profits interests, oil and gas fee interests,
and other rights therein, including, without limitation, any reversionary or
carried interests relating to the foregoing, together with rights, titles, and
interests created by or arising under the terms of any unitization,
communitization, and pooling agreements or arrangements, and all properties,
rights and interests covered thereby, whether arising by contract, by order, or
by operation of Laws, which now or hereafter include all or any part of the
foregoing.
"Monthly Date" means the last day of each calendar month.
"Mortgage Required Reserve Value" means Proved Mineral Interests that have
a Recognized Value of not less than eighty-percent (80%) of the Recognized Value
of all Proved Mineral Interests held by the Credit Parties.
17
"Mortgages" means all mortgages, deeds of trust, security agreements,
pledge agreements and similar documents, instruments and agreements creating,
evidencing, perfecting or otherwise establishing the Liens required by Section
6.14 hereof in the Proved Mineral Interests of any Credit Party as may
heretofore or may hereafter be granted or assigned to Administrative Agent to
secure payment of the Obligations or any part thereof. All Mortgages shall be in
form and substance satisfactory to Administrative Agent in its sole discretion.
"Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which any Borrower-Related Party or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.
"Net Cash Proceeds" means the remainder of (a) the gross cash proceeds
received by any Credit Party from any Asset Disposition less (b) commissions,
legal, accounting and other professional fees and expenses, and other usual and
customary transaction costs, including, without limitation, indemnification and
other post-closing obligations and reserves related to any such Asset
Disposition, in each case only to the extent paid or payable by a Credit Party
in cash and related to such Asset Disposition.
"Non-Recourse Debt" means Debt of a Subsidiary: (a) as to which neither
the Borrower nor any Restricted Subsidiary (i) provides credit support of any
kind, including any Guarantee, undertaking, agreement or instrument that would
constitute Debt or any Lien on any of its assets or revenues, other than a
Limited Recourse Equity Pledge, (ii) is directly or indirectly liable as a
partner, guarantor or otherwise or (iii) is the lender; (b) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit upon notice,
lapse of time or both any holder of Debt of the Borrower or any Restricted
Subsidiary to declare a default on such Debt or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (c) as to which the
lenders of such Debt, or if represented by a trustee, such trustee, have been
notified in writing that such lenders will not have any recourse to the
Borrower, any Restricted Subsidiary or any assets of any of them, other than a
Limited Recourse Equity Pledge.
"Note" means a promissory note made by the Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit B.
"Obligations" means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Credit Party arising under any Loan Document or
otherwise with respect to any Loan or Letter of Credit, or arising under any
Hedge Transactions entered into by a Credit Party with any Lender or any
Affiliate of any Lender, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against any Credit Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.
"Oil and Gas Hedge Transaction" means a Hedge Transaction pursuant to
which any Person hedges the price to be received by it for future production of
Hydrocarbons.
18
"Operating" means Encore Operating, L.P., a Texas limited partnership.
"Organization Document" means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
"Original Issuance" has the meaning set forth in the definition of
Permitted Subordinate Debt.
"Other Taxes" means 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 under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
"Outstanding Amount" means (i) with respect to Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Loans occurring on such date; and
(ii) with respect to any L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements by the
Borrower of Unreimbursed Amounts.
"Participant" has the meaning specified in Section 10.06(d)
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any
Borrower-Related Party or any ERISA Affiliate or to which any Borrower-Related
Party or any ERISA Affiliate contributes or has an obligation to contribute, or
in the case of a multiple employer or other plan described in Section 4064(a) of
ERISA, has made contributions at any time during the immediately preceding five
plan years.
"Permitted Cash Equivalent Investments" means (a) readily marketable
direct obligations of the United States (or investments in mutual funds or
similar funds which invest solely in such obligations), (b) fully insured time
deposits and certificates of deposit with maturities of one year or less of any
commercial bank operating in the United States having capital and surplus in
excess of $500,000,000, and (c) commercial paper of a domestic issuer if at the
time of purchase such paper is rated in one of the two highest ratings
categories of Standard and Poor's Corporation or Moody's Investors Service.
19
"Permitted Encumbrances" means with respect to any asset:
(a) Liens (if any) securing the Obligations (including, without
limitation, indebtedness, liabilities and obligations pursuant to any Hedge
Transaction entered into by a Credit Party with any Lender or any Affiliate of
any Lender);
(b) minor defects in title which do not secure the payment of money
and otherwise have no material adverse effect on the value or the operation of
the subject property, and for the purposes of this Agreement, a minor defect in
title shall include, but not be limited to, easements, zoning restrictions,
rights-of-way, servitudes, permits, surface leases and other similar rights in
respect of surface operations, and easements for pipelines, streets, alleys,
highways, telephone lines, power lines, railways and other easements and
rights-of-way, on, over or in respect of any of the properties of any Credit
Party that are customarily granted in the oil and gas industry;
(c) (i) contractual or statutory Liens securing obligations for
labor, services, materials and supplies furnished to Mineral Interests, or (ii)
Liens on pipeline or pipeline facilities which arise out of operation of law, or
(iii) Liens arising in the ordinary course of business under operating
agreements, joint venture agreements, partnership agreements, oil and gas
leases, farm-out agreements, division orders, contracts for the sale, purchase,
transportation, processing or exchange of oil, gas or other hydrocarbons,
unitization and pooling declarations and agreements, area of mutual interest
agreements, development agreements, joint ownership arrangements and other
agreements which are customary in the oil and gas business, provided that, in
the case of any Lien described in the foregoing clause (i), (ii) or (iii), such
Lien secures obligations that are not Debt and are not delinquent (except to the
extent permitted by Section 6.07), and such Lien has no material adverse effect
on the value or operation of the property encumbered thereby;
(d) contractual or statutory mechanic's, materialmen's,
warehouseman's, journeyman's and carrier's Liens and other similar Liens arising
in the ordinary course of business which are not delinquent (except to the
extent permitted by Section 6.07);
(e) Liens for Taxes or assessments not yet due or not yet
delinquent, or, if delinquent, that are not required to be paid subject to
satisfaction of the conditions set forth in Section 6.07;
(f) lease burdens payable to third parties which are deducted in the
calculation of discounted present value in the Reserve Report including, without
limitation, any royalty, overriding royalty, net profits interest, production
payment, carried interest or reversionary working interest; and
(g) Liens encumbering assets securing Debt incurred to finance the
purchase of such assets (including Liens in respect of capital leases),
provided, that (i) the principal amount of the Debt secured by a purchased asset
shall not exceed one hundred percent (100%) of the purchase price of such asset,
(ii) such Liens shall not extend to or encumber any other asset of any Credit
Party, (iii) such Liens shall attach to such purchased asset substantially
20
simultaneously with the purchase of such asset, and (iv) the Debt secured by
such Liens is permitted by Section 7.01(d);
(h) Liens securing Hedge Transactions, including, without
limitation, pledges of cash or cash equivalents, provided, that, (i) such Hedge
Transactions comply with Section 7.10 to the extent applicable, and (ii) the
aggregate amount of cash or cash equivalents pledged (or the fair market value
of other, non-cash collateral pledged) shall not, at any time, exceed ten
percent (10%) of the Borrowing Base then in effect; and
(i) to extent and only to the extent that such Liens secure Debt
permitted under Section 7.01(d), (i) any Lien existing on any property of a
Person at the time such Person is merged or consolidated with or into the
Borrower or a Subsidiary or becomes a Subsidiary (and not incurred in
anticipation of or in connection with such transaction), and (ii) any Lien
existing on any property at the time of the acquisition thereof (and not
incurred in anticipation of or in connection with such transaction); provided
that such Liens are not extended to other property of the Borrower or the
Restricted Subsidiaries (other than all improvements, additions and accessions
thereto and products and proceeds thereof);
(j) Liens securing any Special Mandatory Redemption Escrow Account;
and
(k) rights of first refusal, purchase options and similar rights
granted pursuant to joint operating agreements, joint ownership agreements,
stockholders agreements, organic documents and other similar agreements and
documents that have been disclosed to the Administrative Agent in writing;
(l) Liens incurred in the ordinary course of business on cash or
securities pledged in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and contracts (other than
for Debt) entered into in the ordinary course of business (including lessee and
operator obligations under statute, governmental regulations or instruments
related to the ownership, exploration and production of oil, gas and minerals on
state, federal or foreign lands or waters) or to secure obligations on surety or
appeal bonds;
(m) pre-judgment Liens and judgment Liens in existence less than 15
days after the entry thereof or with respect to which execution has been stayed
or the payment of which is covered in full (subject to a customary deductible)
by insurance;
(n) Liens resulting from the deposit of funds or evidences of Debt
in trust for the purpose of defeasing Debt of the Borrower or any of its
Subsidiaries to the extent any such defeasance is not prohibited by this
Agreement; customary Liens for the fees, costs and expenses of trustees and
escrow agents pursuant to the indenture, escrow agreement or other similar
agreement establishing such trust or escrow arrangement; and Liens pursuant to
merger agreements, stock purchase agreements, asset sale agreements and similar
agreements (i) limiting the transfer of properties and assets pending
consummation of the subject transaction and (ii) in respect of earnest money
deposits, good faith deposits, purchase price adjustment escrows and similar
deposits and escrow arrangements made or established thereunder;
21
(o) rights reserved to or vested in any municipality or
governmental, statutory or public authority by the terms of any right, power,
franchise, grant, license or permit, or by any provision of law, to terminate
such right, power, franchise, grant, license or permit or to purchase, condemn,
expropriate or recapture or to designate a purchaser of any of the property of
such Person; rights reserved to or vested in any municipality or governmental,
statutory or public authority to control or regulate any property of such
Person, or to use such property in a manner which does not materially impair the
use of such property for the purposes for which it is held by such Person; any
obligation or duties affecting the property of such Person to any municipality
or governmental, statutory or public authority with respect to any franchise,
grant, license or permit;
(p) Limited Recourse Equity Pledges; and
(q) to the extent not included in clauses (a) through (p) above,
Permitted Encumbrances under and as defined in the Mortgages.
"Permitted Refinancing" means any Debt of the Borrower, and Debt
constituting Guarantees thereof by Restricted Subsidiaries, issued in exchange
for, or the net proceeds of which are used solely to extend, refinance, renew,
replace (whether or not contemporaneously), defease or refund, other Debt of the
Borrower, in whole or in part, from time to time; provided that:
(i) the principal amount of such Permitted Refinancing (or if such
Permitted Refinancing is issued at a discount, the initial issuance price of
such Permitted Refinancing) does not exceed the principal amount of the Debt so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of any premiums paid and reasonable expenses incurred in connection therewith);
and
(ii) such Permitted Refinancing otherwise meets the criteria of
subsections (1), (2) and (3) of item (c) of the definition of Permitted
Subordinate Debt.
"Permitted Subordinate Debt" means, collectively, (a) Debt of the
Borrower, and Debt constituting Guarantees thereof by Restricted Subsidiaries,
resulting from the issue of the Borrower's 8.375% Senior Subordinated Notes Due
2012 in an aggregate outstanding principal balance of $150,000,000 (the
"Original Issuance"), (b) Debt of the Borrower, and Debt constituting Guarantees
thereof by Restricted Subsidiaries, resulting from the issuance of the
Borrower's 6.25% Senior Subordinated Notes Due 2014 in an outstanding principal
balance of $150,000,000, (c) Debt of the Borrower, and Debt constituting
Guarantees thereof by Restricted Subsidiaries, resulting from the issue of the
Borrower's senior subordinated unsecured notes, which (1) is fully subordinated
to the Obligations to the same extent set forth in the Original Issuance, unless
otherwise approved by Required Lenders, (2) is not subject to negative covenants
or events of default (or other provisions which have the same effect as negative
covenants or events of default) which, taken as a whole, are materially more
restrictive on the Borrower than those set forth in the Original Issuance,
unless otherwise approved by Required Lenders, and (3) does not have a maturity
date prior to the maturity date relative to the Original Issuance, and any
Permitted Refinancing of any Debt incurred under this clause (c), provided that
the aggregate principal amount of any Debt at any time outstanding under this
clause (c) plus all Permitted Refinancings thereof pursuant to the following
clause (d) (or, if such Debt is issued
22
at a discount, the initial issuance price thereof) shall not exceed $150,000,000
in the aggregate (plus, in the case of such Permitted Refinancing, the amount of
any premiums paid and reasonable expenses incurred in connection with any such
Permitted Refinancing), and (d) any Permitted Refinancing of items (a), (b) and
(c).
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by any Borrower-Related Party or, with
respect to any such plan that is subject to Section 412 of the Code or Title IV
of ERISA, any ERISA Affiliate.
"Pledge Agreement" means a pledge agreement substantially in the form of
Exhibit F attached hereto to be executed by (i) the Borrower, pursuant to which
the Borrower shall pledge to Administrative Agent, for the ratable benefit of
the Lenders, all of the issued and outstanding Equity Interests owned by the
Borrower of each existing or hereafter created or acquired Restricted Subsidiary
of the Borrower, and (ii) each existing and future Restricted Subsidiary of the
Borrower (any such Restricted Subsidiary is referred to herein as a "First Tier
Restricted Subsidiary"), pursuant to which such First Tier Restricted Subsidiary
shall pledge to Administrative Agent, for the ratable benefit of the Lenders,
all of the issued and outstanding Equity Interests owned by such First Tier
Restricted Subsidiary of each existing or hereafter created Restricted
Subsidiary of such First Tier Restricted Subsidiary to secure the Obligations.
"Proved Mineral Interests" means, collectively, Proved Producing Mineral
Interests, Proved Non-producing Mineral Interests, and Proved Undeveloped
Mineral Interests.
"Proved Non-producing Mineral Interests" means all Mineral Interests which
constitute proved developed non-producing reserves.
"Proved Producing Mineral Interests" means all Mineral Interests which
constitute proved developed producing reserves.
"Proved Undeveloped Mineral Interests" means all Mineral Interests which
constitute proved undeveloped reserves.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Recovery Act of
1976, as amended by the Solid Waste Disposal Act of 1980, and the Hazardous and
Solid Waste Amendments of 1984 as amended from time to time.
"Recognized Value" means, with respect to Mineral Interests, the
discounted present value of the estimated net cash flow to be realized from the
production of Hydrocarbons from such Mineral Interests as determined by the
Administrative Agent for purposes of determining the portion of the Borrowing
Base which it attributes to such Mineral Interests in accordance with Section
2.13 hereof.
"Redetermination" means (i) any Scheduled Redetermination, (ii) any
Special Redetermination, or (iii) any redetermination pursuant to Sections
2.13(d) or (e).
23
"Redetermination Date" means (a) with respect to any Scheduled
Redetermination, each June 1 and December 1, commencing June 1, 2005, (b) with
respect to any Special Redetermination, the first day of the first month which
is not less than twenty (20) Business Days following the date of a request for a
Special Redetermination, and (c) with respect to any redetermination pursuant to
Section 2.13(d), the date upon which any Credit Party completes any Asset
Disposition.
"Register" has the meaning specified in Section 10.06(c).
"Related Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person's Affiliates.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
"Request for Credit Extension" means (a) with respect to a Borrowing,
conversion or continuation of Loans, a Loan Notice and (b) with respect to an
L/C Credit Extension, a Letter of Credit Application.
"Required Lenders" means, as of any date of determination, at least two
Lenders having more than 50% of the Aggregate Commitments or, if the commitment
of each Lender to make Loans and the obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to Section 8.02, at least two
Lenders holding in the aggregate more than 50% of the Total Outstandings (with
the aggregate amount of each Lender's risk participation and funded
participation in L/C Obligations being deemed "held" by such Lender for purposes
of this definition); provided that the Commitment of, and the portion of the
Total Outstandings held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Required Lenders.
"Reserve Report" means an unsuperseded engineering analysis of the Mineral
Interests owned by the Credit Parties, in form and substance reasonably
acceptable to Required Lenders, prepared in accordance with customary and
prudent practices in the petroleum engineering industry and Financial Accounting
Standards Board Statement 69. Each Reserve Report required to be delivered
pursuant to Section 2.13(a) shall be prepared by the Approved Petroleum
Engineer. Each other Reserve Report shall be prepared by the Borrower's in-house
staff. Notwithstanding the foregoing, in connection with any Special
Redetermination requested by the Borrower, the Reserve Report shall be in form
and scope mutually acceptable to the Borrower and Required Lenders. Until
superseded, the Initial Reserve Report shall be considered a Reserve Report.
"Responsible Officer" means the chief executive officer, president, chief
financial officer, treasurer or assistant treasurer of a Credit Party. Any
document delivered hereunder that is signed by a Responsible Officer of a Credit
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Credit Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Credit Party.
24
"Restricted Investment" means Investments in Unrestricted Subsidiaries
(including any Investment in any Subsidiary at the time of its designation as an
Unrestricted Subsidiary) and Investments in Equity Interests in Persons not
otherwise permitted under clauses (a) through (h) of Section 7.08, in either
case who are principally engaged in the businesses specified in Section 6.02;
provided that (i) the Borrower shall comply with Section 6.13 and Section 7.15,
if applicable, (ii) no Default exists or will result therefrom, (iii) no
Borrowing Base Deficiency exists, and (iv) the representations and warranties
set forth in Article V will be true and correct in all material respects after
giving effect thereto.
"Restricted Payment" means, with respect to any Person, (a) any
Distribution by such Person (other than Distributions by one Credit Party to
another Credit Party and Distributions consisting of common or preferred Equity
Interests of the Borrower), (b) except as otherwise approved by Required
Lenders, the retirement, redemption or payment by the Borrower or any other
Credit Party of any part of the principal of the Permitted Subordinate Debt at
any time prior to the termination of all Commitments and the payment and
performance in full of the Obligations, and (c) the optional retirement,
redemption or prepayment prior to scheduled maturity by such Person or any
Affiliates of such Person of any other Debt of such Person (other than the
Obligations and intercompany Debt between Credit Parties).
"Restricted Subsidiary" means any Subsidiary that is not an Unrestricted
Subsidiary.
"Scheduled Redetermination" means any Redetermination of the Borrowing
Base pursuant to Section 2.13(b).
"Solvent" means, with respect to any Person on a particular date, the
condition that, on such date (a) the fair value of the property of such Person
is greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the liability of such Person on its debts as they become absolute and
matured, and (c) such Person is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business.
"Special Mandatory Redemption" means the mandatory redemption of any
Permitted Subordinate Debt issued after the date of this Agreement due to the
termination or abandonment of an acquisition, provided that such redemption is
capable of being fully funded by and is funded by funds in the Special Mandatory
Redemption Escrow Account funded with the proceeds of such Permitted Subordinate
Debt.
"Special Mandatory Redemption Escrow Account" means an escrow account
containing proceeds of any Permitted Subordinate Debt issued after the date of
this Agreement, which may be used to fund a Special Mandatory Redemption.
"Special Redetermination" means any Redetermination of the Borrowing Base
pursuant to Section 2.13(c).
"SPC" has the meaning specified in Section 10.06(h).
25
"Subsidiary" of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
the Borrower.
"Taxes" means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.
"Title Required Reserve Value" means Proved Mineral Interests that have a
Recognized Value of not less than seventy-five percent (75%) of the Recognized
Value of all Proved Mineral Interests held by the Credit Parties.
"Total Outstandings" means the aggregate Outstanding Amount of all Loans
and all L/C Obligations.
"Type" means, with respect to a Loan, its character as a Base Rate Loan or
a Eurodollar Rate Loan.
"Unfunded Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"United States" and "U.S." mean the United States of America.
"Unreimbursed Amount" has the meaning specified in Section 2.03(c)(i).
"Unrestricted Subsidiary" means (i) any Subsidiary that has been
designated as an Unrestricted Subsidiary by the Borrower in accordance with
Section 7.15, and (ii) each Subsidiary of any such Unrestricted Subsidiary.
1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:
(a) The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include," "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The word "will" shall be construed to have
the same meaning and effect as the word "shall." Unless the context requires
otherwise, (i) any definition of or reference to any agreement, instrument or
other document (including any Organization Document) shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or
26
modifications set forth herein or in any other Loan Document), (ii) any
reference herein to any Person shall be construed to include such Person's
successors and assigns, (iii) the words "herein," "hereof" and "hereunder," and
words of similar import when used in any Loan Document, shall be construed to
refer to such Loan Document in its entirety and not to any particular provision
thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, the Loan Document in which such references appear,
(v) any reference to any law shall include all statutory and regulatory
provisions consolidating, amending replacing or interpreting such law and any
reference to any law or regulation shall, unless otherwise specified, refer to
such law or regulation as amended, modified or supplemented from time to time,
and (vi) the words "asset" and "property" shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.
(b) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including;" the words "to" and
"until" each mean "to but excluding;" and the word "through" means "to and
including."
(c) Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Loan Document.
1.03 ACCOUNTING TERMS.
(a) Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the financial statements for the Fiscal
Year ended December 31, 2003, except as otherwise specifically prescribed
herein.
(b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith
to amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall provide to the Administrative Agent and the Lenders financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change in GAAP.
1.04 ROUNDING. Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such
27
ratio is expressed herein and rounding the result up or down to the nearest
number (with a rounding-up if there is no nearest number).
1.05 TIMES OF DAY. Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).
1.06 LETTER OF CREDIT AMOUNTS. Unless otherwise specified, all references
herein to the amount of a Letter of Credit at any time shall be deemed to mean
the maximum face amount of such Letter of Credit after giving effect to all
increases thereof contemplated by such Letter of Credit or the Issuer Documents
related thereto, whether or not such maximum face amount is in effect at such
time.
1.07 PETROLEUM TERMS. As used herein, the terms "proved reserves," "proved
developed reserves," "proved developed producing reserves," "proved developed
non-producing reserves," and "proved undeveloped reserves" have the meaning
given such terms from time to time and at the time in question by the Society of
Petroleum Engineers of the American Institute of Mining Engineers.
ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01 LOANS. Subject to the terms and conditions set forth herein, each
Lender severally agrees to make loans (each such loan, a "Loan") to the Borrower
from time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender's Commitment; provided, however, that after giving effect to any
Borrowing, (a) the Total Outstandings shall not exceed the lesser of (i) the
Aggregate Commitments or (ii) the Borrowing Base then in effect, and (b) the
aggregate Outstanding Amount of the Loans of any Lender, plus such Lender's
Applicable Percentage of the Outstanding Amount of all L/C Obligations shall not
exceed such Lender's Commitment. Within the foregoing limits, and subject to the
other terms and conditions hereof, the Borrower may borrow under this Section
2.01, prepay under Section 2.04, and reborrow under this Section 2.01. Loans may
be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.
2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.
(a) Each Borrowing, each conversion of Loans from one Type to the other,
and each continuation of Eurodollar Rate Loans shall be made upon the Borrower's
irrevocable notice to the Administrative Agent, which may be given by telephone.
Each such notice must be received by the Administrative Agent not later than
11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing
of, conversion to or continuation of Eurodollar Rate Loans or of any conversion
of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of
any Borrowing of Base Rate Loans; provided, however, that if the Borrower wishes
to request Eurodollar Rate Loans having an Interest Period other than one, two,
three or six months in duration as provided in the definition of "Interest
Period," the applicable notice must be received by the Administrative Agent not
later than 11:00 a.m. four Business Days prior to the requested date of such
Borrowing, conversion or continuation, whereupon the Administrative Agent shall
28
give prompt notice to the Lenders of such request and determine whether the
requested Interest Period is acceptable to all of them. Not later than 11:00
a.m., three Business Days before the requested date of such Borrowing,
conversion or continuation, the Administrative Agent shall notify the Borrower
(which notice may be by telephone) whether or not the requested Interest Period
has been consented to by all the Lenders. Each telephonic notice by the Borrower
pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the
Administrative Agent of a written Loan Notice, appropriately completed and
signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion
to or continuation of Eurodollar Rate Loans shall be in a principal amount of
$1,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as
provided in Section 2.03(c), each Borrowing of or conversion to Base Rate Loans
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof. Each Loan Notice (whether telephonic or written) shall specify
(i) whether the Borrower is requesting a Borrowing, a conversion of Loans from
one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the principal amount of Loans to be
borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to
which existing Loans are to be converted, and (v) if applicable, the duration of
the Interest Period with respect thereto. If the Borrower fails to specify a
Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Loans shall be made
as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans. If the Borrower
requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans
in any such Loan Notice, but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month.
(b) Following receipt of a Loan Notice, the Administrative Agent shall
promptly notify each Lender of the amount of its Applicable Percentage of the
applicable Loans, and if no timely notice of a conversion or continuation is
provided by the Borrower, the Administrative Agent shall notify each Lender of
the details of any automatic conversion to Base Rate Loans described in the
preceding subsection. In the case of a Borrowing, each Lender shall make the
amount of its Loan available to the Administrative Agent in immediately
available funds at the Administrative Agent's Office not later than 1:00 p.m. on
the Business Day specified in the applicable Loan Notice. Upon satisfaction of
the applicable conditions set forth in Section 4.02 (and, if such Borrowing is
the initial Credit Extension, Section 4.01), the Administrative Agent shall make
all funds so received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (ii) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower; provided,
however, that if, on the date the Loan Notice with respect to such Borrowing is
given by the Borrower, there are L/C Borrowings outstanding, then the proceeds
of such Borrowing, first, shall be applied to the payment in full of any such
L/C Borrowings, and second, shall be made available to the Borrower as provided
above.
(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan. During the existence of a Default, no Loans may be
requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Required Lenders.
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(d) The Administrative Agent shall promptly notify the Borrower and the
Lenders of the interest rate applicable to any Interest Period for Eurodollar
Rate Loans upon determination of such interest rate. At any time that Base Rate
Loans are outstanding, the Administrative Agent shall notify the Borrower and
the Lenders of any change in Bank of America's prime rate used in determining
the Base Rate promptly following the public announcement of such change.
(e) After giving effect to all Borrowings, all conversions of Loans from
one Type to the other, and all continuations of Loans as the same Type, there
shall not be more than ten Interest Periods in effect with respect to Loans.
2.03 LETTERS OF CREDIT.
(a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, (A) the
L/C Issuer agrees, in reliance upon the agreements of the Lenders set
forth in this Section 2.03, (1) from time to time on any Business Day
during the period from the Closing Date until the Letter of Credit
Expiration Date, to issue Letters of Credit for the account of the
Borrower or its Restricted Subsidiaries, and to amend or extend Letters of
Credit previously issued by it, in accordance with subsection (b) below,
and (2) to honor drawings under the Letters of Credit; and (B) the Lenders
severally agree to participate in Letters of Credit issued for the account
of the Borrower or its Restricted Subsidiaries and any drawings
thereunder; provided that after giving effect to any L/C Credit Extension
with respect to any Letter of Credit, (1) the Total Outstandings shall not
exceed the lesser of (x) the Aggregate Commitments or (y) the Borrowing
Base then in effect, (2) the aggregate Outstanding Amount of the Loans of
any Lender, plus such Lender's Applicable Percentage of the Outstanding
Amount of all L/C Obligations shall not exceed such Lender's Commitment,
and (3) the Outstanding Amount of the L/C Obligations shall not exceed the
Letter of Credit Sublimit. Each request by the Borrower for the issuance
or amendment of a Letter of Credit shall be deemed to be a representation
by the Borrower that the L/C Credit Extension so requested complies with
the conditions set forth in the proviso to the preceding sentence. Within
the foregoing limits, and subject to the terms and conditions hereof, the
Borrower's ability to obtain Letters of Credit shall be fully revolving,
and accordingly the Borrower may, during the foregoing period, obtain
Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed.
(ii) The L/C Issuer shall not issue any Letter of Credit, if:
(A) subject to Section 2.03(b)(iii), the expiry date of such
requested Letter of Credit would occur more than twelve months after the
date of issuance or last extension, unless the Required Lenders have
approved such expiry date; or
(B) the expiry date of such requested Letter of Credit would occur
after the Letter of Credit Expiration Date, unless all the Lenders have
approved such expiry date.
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(iii) The L/C Issuer shall not be under any obligation to issue any Letter
of Credit if:
(A) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer
from issuing such Letter of Credit, or any Law applicable to the L/C
Issuer or any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over the L/C Issuer
shall prohibit, or request that the L/C Issuer refrain from, the issuance
of letters of credit generally or such Letter of Credit in particular or
shall impose upon the L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the L/C Issuer is
not otherwise compensated hereunder) not in effect on the Closing Date, or
shall impose upon the L/C Issuer any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which the L/C Issuer in
good faith deems material to it;
(B) the issuance of such Letter of Credit would violate one or more
policies of the L/C Issuer;
(C) except as otherwise agreed by the Administrative Agent and the
L/C Issuer, such Letter of Credit is in an initial face amount less than
$100,000, in the case of a commercial Letter of Credit, or $500,000, in
the case of a standby Letter of Credit;
(D) such Letter of Credit is to be denominated in a currency other
than Dollars; or
(E) a default of any Lender's obligations to fund under Section
2.03(c) exists or any Lender is at such time a Defaulting Lender
hereunder, unless the L/C Issuer has entered into satisfactory
arrangements with the Borrower or such Lender to eliminate the L/C
Issuer's risk with respect to such Lender.
(iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer
would not be permitted at such time to issue such Letter of Credit in its
amended form under the terms hereof.
(v) The L/C Issuer shall be under no obligation to amend any Letter of
Credit if (A) the L/C Issuer would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.
(vi) The L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and the
L/C Issuer shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken or omissions
suffered by the L/C Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and Issuer Documents pertaining to such Letters of
Credit as fully as if the term "Administrative
31
Agent" as used in Article IX included the L/C Issuer with respect to such acts
or omissions, and (B) as additionally provided herein with respect to the L/C
Issuer.
(b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Extension Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case
may be, upon the request of the Borrower delivered to the L/C Issuer (with
a copy to the Administrative Agent) in the form of a Letter of Credit
Application, appropriately completed and signed by a Responsible Officer
of the Borrower. Such Letter of Credit Application must be received by the
L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least
two Business Days (or such later date and time as the Administrative Agent
and the L/C Issuer may agree in a particular instance in their sole
discretion) prior to the proposed issuance date or date of amendment, as
the case may be. In the case of a request for an initial issuance of a
Letter of Credit, such Letter of Credit Application shall specify in form
and detail satisfactory to the L/C Issuer: (A) the proposed issuance date
of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address of
the beneficiary thereof; (E) the documents to be presented by such
beneficiary in case of any drawing thereunder; (F) the full text of any
certificate to be presented by such beneficiary in case of any drawing
thereunder; and (G) such other matters as the L/C Issuer may require. In
the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B)
the proposed date of amendment thereof (which shall be a Business Day);
(C) the nature of the proposed amendment; and (D) such other matters as
the L/C Issuer may require. Additionally, the Borrower shall furnish to
the L/C Issuer and the Administrative Agent such other documents and
information pertaining to such requested Letter of Credit issuance or
amendment, including any Issuer Documents, as the L/C Issuer or the
Administrative Agent may reasonably require.
(ii) Promptly after receipt of any Letter of Credit Application, the
L/C Issuer will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has received a copy of such Letter
of Credit Application from the Borrower and, if not, the L/C Issuer will
provide the Administrative Agent with a copy thereof. Unless the L/C
Issuer has received written notice from any Lender, the Administrative
Agent or any Credit Party, at least one Business Day prior to the
requested date of issuance or amendment of the applicable Letter of
Credit, that one or more applicable conditions contained in Article IV
shall not then be satisfied, then, subject to the terms and conditions
hereof, the L/C Issuer shall, on the requested date, issue a Letter of
Credit for the account of the Borrower (or the applicable Restricted
Subsidiary) or enter into the applicable amendment, as the case may be, in
each case in accordance with the L/C Issuer's usual and customary business
practices. Immediately upon the issuance of each Letter of Credit, each
Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the L/C Issuer a risk participation in such
Letter of Credit in an amount equal to the product of such Lender's
Applicable Percentage times the amount of such Letter of Credit.
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(iii) If the Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion,
agree to issue a Letter of Credit that has automatic extension provisions
(each, an "Auto-Extension Letter of Credit"); provided that any such
Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any
such extension at least once in each twelve-month period (commencing with
the date of issuance of such Letter of Credit) by giving prior notice to
the beneficiary thereof not later than a day (the "Non-Extension Notice
Date") in each such twelve-month period to be agreed upon at the time such
Letter of Credit is issued. Unless otherwise directed by the L/C Issuer,
the Borrower shall not be required to make a specific request to the L/C
Issuer for any such extension. Once an Auto-Extension Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may not
require) the L/C Issuer to permit the extension of such Letter of Credit
at any time to an expiry date not later than the Letter of Credit
Expiration Date; provided, however, that the L/C Issuer shall not permit
any such extension if (A) the L/C Issuer has determined that it would not
be permitted, or would have no obligation, at such time to issue such
Letter of Credit in its revised form (as extended) under the terms hereof
(by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or
otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is five Business Days before the
Non-Extension Notice Date (1) from the Administrative Agent that the
Required Lenders have elected not to permit such extension or (2) from the
Administrative Agent, any Lender or the Borrower that one or more of the
applicable conditions specified in Section 4.02 is not then satisfied, and
in each such case directing the L/C Issuer not to permit such extension.
(iv) Promptly after its delivery of any Letter of Credit or any
amendment to a Letter of Credit to an advising bank with respect thereto
or to the beneficiary thereof, the L/C Issuer will also deliver to the
Borrower and the Administrative Agent a true and complete copy of such
Letter of Credit or amendment.
(c) Drawings and Reimbursements; Funding of Participations.
(i) Upon receipt from the beneficiary of any Letter of Credit of any
notice of a drawing under such Letter of Credit, the L/C Issuer shall
notify the Borrower and the Administrative Agent thereof. Not later than
11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of
Credit (each such date, an "Honor Date"), the Borrower shall reimburse the
L/C Issuer through the Administrative Agent in an amount equal to the
amount of such drawing. If the Borrower fails so to reimburse the L/C
Issuer by such time, the Administrative Agent shall promptly notify each
Lender of the Honor Date, the amount of the unreimbursed drawing (the
"Unreimbursed Amount"), and the amount of such Lender's Applicable
Percentage thereof. In such event, the Borrower shall be deemed to have
requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date
in an amount equal to the Unreimbursed Amount, without regard to the
minimum and multiples specified in Section 2.02 for the principal amount
of Base Rate Loans, but subject to the amount of the unutilized portion of
the Aggregate Commitments and the conditions set forth in Section 4.02
(other than the delivery of a Loan Notice). Any notice given by the L/C
Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may
be given by telephone if immediately confirmed in writing;
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provided that the lack of such an immediate confirmation shall not affect
the conclusiveness or binding effect of such notice.
(ii) Each Lender shall upon any notice pursuant to Section
2.03(c)(i) make funds available to the Administrative Agent for the
account of the L/C Issuer at the Administrative Agent's Office in an
amount equal to its Applicable Percentage of the Unreimbursed Amount not
later than 1:00 p.m. on the Business Day specified in such notice by the
Administrative Agent, whereupon, subject to the provisions of Section
2.03(c)(iii), each Lender that so makes funds available shall be deemed to
have made a Base Rate Loan to the Borrower in such amount. The
Administrative Agent shall remit the funds so received to the L/C Issuer.
(iii) With respect to any Unreimbursed Amount that is not fully
refinanced by a Borrowing of Base Rate Loans because the conditions set
forth in Section 4.02 cannot be satisfied or for any other reason, the
Borrower shall be deemed to have incurred from the L/C Issuer an L/C
Borrowing in the amount of the Unreimbursed Amount that is not so
refinanced, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the Default Rate. In
such event, each Lender's payment to the Administrative Agent for the
account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed
payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.03.
(iv) Until each Lender funds its Loan or L/C Advance pursuant to
this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn
under any Letter of Credit, interest in respect of such Lender's
Applicable Percentage of such amount shall be solely for the account of
the L/C Issuer.
(v) Each Lender's obligation to make Loans or L/C Advances to
reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c), shall be absolute and unconditional
and shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may
have against the L/C Issuer, the Borrower or any other Person for any
reason whatsoever; (B) the occurrence or continuance of a Default, or (C)
any other occurrence, event or condition, whether or not similar to any of
the foregoing; provided, however, that each Lender's obligation to make
Loans pursuant to this Section 2.03(c) is subject to the conditions set
forth in Section 4.02 (other than delivery by the Borrower of a Loan
Notice). No such making of an L/C Advance shall relieve or otherwise
impair the obligation of the Borrower to reimburse the L/C Issuer for the
amount of any payment made by the L/C Issuer under any Letter of Credit,
together with interest as provided herein.
(vi) If any Lender fails to make available to the Administrative
Agent for the account of the L/C Issuer any amount required to be paid by
such Lender pursuant to the foregoing provisions of this Section 2.03(c)
by the time specified in Section 2.03(c)(ii), the L/C Issuer shall be
entitled to recover from such Lender (acting through the Administrative
Agent), on demand, such amount with interest thereon for the period from
34
the date such payment is required to the date on which such payment is
immediately available to the L/C Issuer at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by the L/C Issuer
in accordance with banking industry rules on interbank compensation. A
certificate of the L/C Issuer submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause
(vi) shall be conclusive absent manifest error.
(d) Repayment of Participations.
(i) At any time after the L/C Issuer has made a payment under any
Letter of Credit and has received from any Lender such Lender's L/C
Advance in respect of such payment in accordance with Section 2.03(c), if
the Administrative Agent receives for the account of the L/C Issuer any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from the Borrower or otherwise, including proceeds of
Cash Collateral applied thereto by the Administrative Agent), the
Administrative Agent will distribute to such Lender its Applicable
Percentage thereof (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender's L/C
Advance was outstanding) in the same funds as those received by the
Administrative Agent.
(ii) If any payment received by the Administrative Agent for the
account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be
returned under any of the circumstances described in Section 10.05
(including pursuant to any settlement entered into by the L/C Issuer in
its discretion), each Lender shall pay to the Administrative Agent for the
account of the L/C Issuer its Applicable Percentage thereof on demand of
the Administrative Agent, plus interest thereon from the date of such
demand to the date such amount is returned by such Lender, at a rate per
annum equal to the Federal Funds Rate from time to time in effect. The
obligations of the Lenders under this clause shall survive the payment in
full of the Obligations and the termination of this Agreement.
(e) Obligations Absolute. The obligation of the Borrower to reimburse the
L/C Issuer for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following:
(i) any lack of validity or enforceability of such Letter of Credit,
this Agreement, or any other Loan Document;
(ii) the existence of any claim, counterclaim, setoff, defense or
other right that the Borrower or any Subsidiary may have at any time
against any beneficiary or any transferee of such Letter of Credit (or any
Person for whom any such beneficiary or any such transferee may be
acting), the L/C Issuer or any other Person, whether in connection with
this Agreement, the transactions contemplated hereby or by such Letter of
Credit or any agreement or instrument relating thereto, or any unrelated
transaction;
(iii) any draft, demand, certificate or other document presented
under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or
35
any statement therein being untrue or inaccurate in any respect; or any
loss or delay in the transmission or otherwise of any document required in
order to make a drawing under such Letter of Credit;
(iv) any payment by the L/C Issuer under such Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit; or any payment made by the
L/C Issuer under such Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of such Letter of Credit, including any
arising in connection with any proceeding under any Debtor Relief Law; or
(v) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Borrower or any Subsidiary.
The Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower's instructions or other irregularity, the
Borrower will immediately notify the L/C Issuer. The Borrower shall be
conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.
(f) Role of L/C Issuer. Each Lender and the Borrower agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuer,
the Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable to any
Lender for (i) any action taken or omitted in connection herewith at the request
or with the approval of the Lenders or the Required Lenders, as applicable; (ii)
any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Issuer Document. The Borrower hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Borrower's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. None
of the L/C Issuer, the Administrative Agent, any of their respective Related
Parties nor any correspondent, participant or assignee of the L/C Issuer shall
be liable or responsible for any of the matters described in clauses (i) through
(v) of Section 2.03(e); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrower may have a claim against the L/C Issuer,
and the L/C Issuer may be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by the L/C
Issuer's willful misconduct or gross negligence or the L/C Issuer's willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing, the L/C Issuer may accept documents that
36
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary, and the
L/C Issuer shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.
(g) Cash Collateral. Upon the request of the Administrative Agent, (i)
if the L/C Issuer has honored any full or partial drawing request under any
Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if,
as of the Letter of Credit Expiration Date, any L/C Obligation for any reason
remains outstanding, the Borrower shall, in each case, immediately Cash
Collateralize the then Outstanding Amount of all L/C Obligations. Sections 2.04
and 8.02(c) set forth certain additional requirements to deliver Cash Collateral
hereunder. For purposes of this Section 2.03, Section 2.04 and Section 8.02(c),
"Cash Collateralize" means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as
collateral for the L/C Obligations, Cash Collateral pursuant to documentation in
form and substance reasonably satisfactory to the Administrative Agent and the
L/C Issuer (which documents are hereby consented to by the Lenders). Derivatives
of such term have corresponding meanings. The Borrower hereby grants to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a
security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing. Cash Collateral shall be maintained in
blocked, non-interest bearing deposit accounts at Bank of America.
(h) Applicability of ISP and UCP. Unless otherwise expressly agreed by
the L/C Issuer and the Borrower when a Letter of Credit is issued (including any
such agreement applicable to an Existing Letter of Credit), (i) the rules of the
ISP shall apply to each standby Letter of Credit, and (ii) the rules of the
Uniform Customs and Practice for Documentary Credits, as most recently published
by the International Chamber of Commerce at the time of issuance shall apply to
each commercial Letter of Credit.
(i) Letter of Credit Fees. The Borrower shall pay to the Administrative
Agent for the account of each Lender in accordance with its Applicable
Percentage the Letter of Credit Fee. Letter of Credit Fees shall be due and
payable not later than fifteen (15) days following the first Business Day after
the end of each March, June, September and December, commencing with the first
such date to occur after the issuance of such Letter of Credit, on the Letter of
Credit Expiration Date and thereafter on demand. Notwithstanding anything to the
contrary contained herein, upon the request of the Required Lenders, while any
Event of Default exists, all Letter of Credit Fees shall accrue at the Default
Rate.
(j) Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer. The Borrower shall pay directly to the L/C Issuer for its own account a
fronting fee with respect to each Letter of Credit, at the rate per annum
specified in the Fee Letter, computed on the actual daily maximum amount
available to be drawn under such Letter of Credit (whether or not such maximum
amount is then in effect under such Letter of Credit) and on a quarterly basis
in arrears, and due and payable on the first Business Day after the end of each
March, June, September and December, commencing with the first such date to
occur after the issuance of such Letter of Credit, on the Letter of Credit
Expiration Date and thereafter on demand. In
37
addition, the Borrower shall pay directly to the L/C Issuer for its own account
the customary issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the L/C Issuer relating to letters of
credit as from time to time in effect. Such customary fees and standard costs
and charges are due and payable on demand and are nonrefundable.
(k) Conflict with Issuer Documents. In the event of any conflict between
the terms hereof and the terms of any Issuer Document, the terms hereof shall
control.
(l) Letters of Credit Issued for Restricted Subsidiaries.
Notwithstanding that a Letter of Credit issued or outstanding hereunder is in
support of any obligations of, or is for the account of, a Restricted
Subsidiary, the Borrower shall be obligated to reimburse the L/C Issuer
hereunder for any and all drawings under such Letter of Credit. The Borrower
hereby acknowledges that the issuance of Letters of Credit for the account of
Restricted Subsidiaries inures to the benefit of the Borrower, and that the
Borrower's business derives substantial benefits from the businesses of such
Restricted Subsidiaries.
2.04 PREPAYMENTS.
(a) The Borrower may, upon notice to the Administrative Agent, at any
time or from time to time voluntarily prepay Loans in whole or in part without
premium or penalty; provided that (i) such notice must be received by the
Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to
any date of prepayment of Eurodollar Rate Loans and (B) on the date of
prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans
shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000
in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
or, in each case, if less, the entire principal amount thereof then outstanding.
Each such notice shall specify the date and amount of such prepayment and the
Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify
each Lender of its receipt of each such notice, and of the amount of such
Lender's Applicable Percentage of such prepayment. If such notice is given by
the Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.
Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued
interest on the amount prepaid, together with any additional amounts required
pursuant to Section 3.05. Each such prepayment shall be applied to the Loans of
the Lenders in accordance with their respective Applicable Percentages.
(b) If for any reason the Total Outstandings at any time exceed the
Aggregate Commitments then in effect, the Borrower shall immediately prepay
Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal
to such excess; provided, however, that the Borrower shall not be required to
Cash Collateralize the L/C Obligations pursuant to this Section 2.04(b) unless
after the prepayment in full of the Loans the Total Outstandings exceed the
Aggregate Commitments then in effect.
(c) Except with respect to (i) a Special Redetermination pursuant to
Section 2.13(c), or (ii) a Borrowing Base adjustment pursuant to Section 2.13(d)
or 2.13(e), in the event a Borrowing Base Deficiency exists after giving effect
to any Redetermination, the Borrower shall,
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within ten (10) days following notice thereof from Administrative Agent, provide
written notice (the "Election Notice") to Administrative Agent stating the
action which the Borrower proposes to take to remedy such Borrowing Base
Deficiency, and the Borrower shall thereafter, at its option, either (1)
eliminate such Borrowing Base Deficiency by making a single mandatory prepayment
of principal on the Loans in an amount equal to the entire amount of such
Borrowing Base Deficiency within thirty (30) days of such election, (2)
eliminate such Borrowing Base Deficiency by making six (6) consecutive mandatory
prepayments of principal on the Loans each of which shall be in the amount of
one sixth (1/6th) of the amount of such Borrowing Base Deficiency commencing on
the first Monthly Date following the date on which such Borrowing Base
Deficiency is determined to exist and continuing on each Monthly Date
thereafter, and in connection therewith, the Credit Parties shall (A) dedicate a
sufficient amount (as determined by Administrative Agent in its sole discretion)
of the monthly cash flow from the Credit Parties' oil and gas properties to
satisfy such payments, and (B) execute and deliver such collateral assignments
and/or security agreements in form and substance satisfactory to Administrative
Agent which it may, in its discretion, require with respect thereto, or (3)
within thirty (30) days following the delivery of such Election Notice submit
additional oil and gas properties owned by the Credit Parties for consideration
in connection with the redetermination of the Borrowing Base which
Administrative Agent and Required Lenders deem sufficient in their sole
discretion to eliminate such Borrowing Base Deficiency. If a Borrowing Base
Deficiency cannot be eliminated pursuant to this Section 2.04(c) by prepayment
of the Loans in full (as a result of outstanding L/C Obligations), on each
Monthly Date, the Borrower shall also deposit cash with Administrative Agent, to
be held by Administrative Agent to secure outstanding L/C Obligations in the
manner contemplated by Section 2.03, in an amount at least equal to one sixth
(1/6th) of the balance of such Borrowing Base Deficiency (i.e., one-sixth of the
difference between the Borrowing Base Deficiency and the remaining outstanding
principal under the Loans on the date such Borrowing Base Deficiency is first
determined to occur). In the event a Borrowing Base Deficiency shall occur (or
an increase in any pre-existing Borrowing Base Deficiency shall occur) as a
result of a Special Redetermination pursuant to Section 2.13(c), the Borrower
shall be required to make a mandatory prepayment of the Loans within thirty (30)
days following receipt of notice of such Borrowing Base Deficiency (or increase
in any pre-existing Borrowing Base Deficiency) in an amount equal to the amount
of such Borrowing Base Deficiency (or increase in any pre-existing Borrowing
Base Deficiency).
(d) Immediately upon the consummation by any Credit Party of any Asset
Disposition, the Borrower shall make a mandatory prepayment on the Loans in an
amount, if any, required to eliminate any Borrowing Base Deficiency.
Notwithstanding the foregoing, in the event a Default or Event of Default is in
existence on the date of the consummation of any Asset Disposition, all Net Cash
Proceeds from any such Asset Disposition shall be applied as a mandatory
prepayment on the Loans.
(e) Immediately upon the incurrence by any Credit Party of any Debt
described in clause (c) of the definition of Permitted Subordinate Debt, the
Borrower shall make a mandatory prepayment on the Loans in an amount, if any,
required to eliminate any Borrowing Base Deficiency. Notwithstanding the
foregoing, in the event a Default or Event of Default is in existence on the
date of the incurrence of any Permitted Subordinate Debt, all proceeds from any
such Permitted Subordinate Debt shall be applied as a mandatory prepayment on
the Loans.
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2.05 TERMINATION OR REDUCTION OF COMMITMENTS. The Borrower may, upon
notice to the Administrative Agent, terminate the Aggregate Commitments, or from
time to time permanently reduce the Aggregate Commitments; provided that (i) any
such notice shall be received by the Administrative Agent not later than 11:00
a.m. five Business Days prior to the date of termination or reduction, (ii) any
such partial reduction shall be in an aggregate amount of $10,000,000 or any
whole multiple of $1,000,000 in excess thereof, (iii) the Borrower shall not
terminate or reduce the Aggregate Commitments if, after giving effect thereto
and to any concurrent prepayments hereunder, the Total Outstandings would exceed
the Aggregate Commitments, and (iv) if, after giving effect to any reduction of
the Aggregate Commitments, the Letter of Credit Sublimit exceeds the amount of
the Aggregate Commitments, such Letter of Credit Sublimit shall be automatically
reduced by the amount of such excess. The Administrative Agent will promptly
notify the Lenders of any such notice of termination or reduction of the
Aggregate Commitments. Any reduction of the Aggregate Commitments shall be
applied to the Commitment of each Lender according to its Applicable Percentage.
All fees accrued until the effective date of any termination of the Aggregate
Commitments shall be paid on the effective date of such termination.
2.06 REPAYMENT OF LOANS. The Borrower shall repay to the Lenders on the
Maturity Date the aggregate principal amount of Loans outstanding on such date.
2.07 INTEREST.
(a) Subject to the provisions of subsection (b) below, (i) each
Eurodollar Rate Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period at a rate per annum equal to the Eurodollar
Rate for such Interest Period plus the Applicable Margin; and (ii) each Base
Rate Loan shall bear interest on the outstanding principal amount thereof from
the applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Margin.
(b) (i) If any amount of principal of any Loan is not paid when due
(without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.
(ii) If any amount (other than principal of any Loan) payable by
the Borrower under any Loan Document is not paid when due (without regard
to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, then upon the request of the Required Lenders,
such amount shall thereafter bear interest at a fluctuating interest rate
per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws.
(iii) Upon the request of the Required Lenders, while any Event of
Default exists, the Borrower shall pay interest on the principal amount of
all outstanding Obligations hereunder at a fluctuating interest rate per
annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws.
40
(iv) Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.
2.08 FEES. In addition to certain fees described in subsections (i) and
(j) of Section 2.03:
(a) Commitment Fee. The Borrower shall pay to the Administrative Agent
for the account of each Lender in accordance with its Applicable Percentage, a
commitment fee equal to the Applicable Margin times the actual daily amount by
which the Borrowing Base exceeds the sum of (i) the Outstanding Amount of Loans
and (ii) the Outstanding Amount of L/C Obligations. The commitment fee shall
accrue at all times during the Availability Period, including at any time during
which one or more of the conditions in Article IV is not met, and shall be due
and payable quarterly in arrears not later than fifteen (15) days following the
last Business Day of each March, June, September and December, commencing with
the first such date to occur after the Closing Date, and on the Maturity Date.
The commitment fee shall be calculated quarterly in arrears, and if there is any
change in the Applicable Margin during any Fiscal Quarter, the actual daily
amount shall be computed and multiplied by the Applicable Margin separately for
each period during such quarter that such Applicable Margin was in effect.
(b) Other Fees. (i) The Borrower shall pay to the Arranger and the
Administrative Agent for their own respective accounts fees in the amounts and
at the times specified in the Fee Letter. Such fees shall be fully earned when
paid and shall not be refundable for any reason whatsoever.
(ii) The Borrower shall pay to the Lenders such fees as shall have been
separately agreed upon in writing in the amounts and at the times so
specified. Such fees shall be fully earned when paid and shall not be
refundable for any reason whatsoever.
2.09 COMPUTATION OF INTEREST AND FEES. All computations of interest for
Base Rate Loans when the Base Rate is determined by Bank of America's "prime
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis
of a 365-day year). Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the
day on which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to Section 2.11(a),
bear interest for one day. Each determination by the Administrative Agent of an
interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.
2.10 EVIDENCE OF DEBT.
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(a) The Credit Extensions made by each Lender shall be evidenced by one
or more accounts or records maintained by such Lender and by the Administrative
Agent in the ordinary course of business. The accounts or records maintained by
the Administrative Agent and each Lender shall be conclusive absent manifest
error of the amount of the Credit Extensions made by the Lenders to the Borrower
and the interest and payments thereon. Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the Obligations. In
the event of any conflict between the accounts and records maintained by any
Lender and the accounts and records of the Administrative Agent in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest error. Upon the request of any Lender made through
the Administrative Agent, the Borrower shall execute and deliver to such Lender
(through the Administrative Agent) a Note, which shall evidence such Lender's
Loans in addition to such accounts or records. Each Lender may attach schedules
to its Note and endorse thereon the date, Type (if applicable), amount and
maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in subsection
(a), each Lender and the Administrative Agent shall maintain in accordance with
its usual practice accounts or records evidencing the purchases and sales by
such Lender of participations in Letters of Credit. In the event of any conflict
between the accounts and records maintained by the Administrative Agent and the
accounts and records of any Lender in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of manifest
error.
2.11 PAYMENTS GENERALLY; ADMINISTRATIVE AGENT'S CLAWBACK.
(a) General. All payments to be made by the Borrower shall be made
without condition or deduction for any counterclaim, defense, recoupment or
setoff. Except as otherwise expressly provided herein, all payments by the
Borrower hereunder shall be made to the Administrative Agent, for the account of
the respective Lenders to which such payment is owed, at the Administrative
Agent's Office in Dollars and in immediately available funds not later than 2:00
p.m. on the date specified herein. The Administrative Agent will promptly
distribute to each Lender its Applicable Percentage (or other applicable share
as provided herein) of such payment in like funds as received by wire transfer
to such Lender's Lending Office. All payments received by the Administrative
Agent after 2:00 p.m. shall be deemed received on the next succeeding Business
Day and any applicable interest or fee shall continue to accrue. If any payment
to be made by the Borrower shall come due on a day other than a Business Day,
payment shall be made on the next following Business Day, and such extension of
time shall be reflected in computing interest or fees, as the case may be.
(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.02 and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent
42
forthwith on demand such corresponding amount in immediately available funds
with interest thereon, for each day from and including the date such amount is
made available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (A) in the case of a payment to be made by such Lender,
the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation and (B) in the case of a payment to be made by the Borrower, the
interest rate applicable to Base Rate Loans. If the Borrower and such Lender
shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period. If
such Lender pays its share of the applicable Borrowing to the Administrative
Agent, then the amount so paid shall constitute such Lender's Loan included in
such Borrowing. Any payment by the Borrower shall be without prejudice to any
claim the Borrower may have against a Lender that shall have failed to make such
payment to the Administrative Agent.
(ii) Payments by the Borrower; Presumptions by Administrative
Agent. Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the L/C Issuer
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute
to the Lenders or the L/C Issuer, as the case may be, the amount due. In
such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the L/C Issuer, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or the L/C Issuer, in immediately available
funds with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Rate and a rate
determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.
A notice of the Administrative Agent to any Lender or the Borrower with
respect to any amount owing under this subsection (b) shall be conclusive,
absent manifest error.
(c) Failure to Satisfy Conditions Precedent. If any Lender makes
available to the Administrative Agent funds for any Loan to be made by such
Lender as provided in the foregoing provisions of this Article II, and such
funds are not made available to the Borrower by the Administrative Agent because
the conditions to the applicable Credit Extension set forth in Article IV are
not satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.
(d) Obligations of Lenders Several. The obligations of the Lenders
hereunder to make Loans, to fund participations in Letters of Credit and to make
payments pursuant to Section 10.04(c) are several and not joint. The failure of
any Lender to make any Loan, to fund any such participation or to make any
payment under Section 10.04(c) on any date required hereunder shall not relieve
any other Lender of its corresponding obligation to do so on such
43
date, and no Lender shall be responsible for the failure of any other Lender to
so make its Loan, to purchase its participation or to make its payment under
Section 10.04(c).
(e) Funding Source. Nothing herein shall be deemed to obligate any
Lender to obtain the funds for any Loan in any particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for any Loan in any particular place or manner.
2.12 SHARING OF PAYMENTS BY LENDERS. If any Lender shall, by exercising
any right of setoff or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of the Loans made by it, or the
participations in L/C Obligations held by it resulting in such Lender's
receiving payment of a proportion of the aggregate amount of such Loans or
participations and accrued interest thereon greater than its pro rata share
thereof as provided herein, then the Lender receiving such greater proportion
shall (a) notify the Administrative Agent of such fact, and (b) purchase (for
cash at face value) participations in the Loans and subparticipations in L/C
Obligations of the other Lenders, or make such other adjustments as shall be
equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and other amounts owing them,
provided that:
(i) if any such participations or subparticipations are purchased
and all or any portion of the payment giving rise thereto is recovered,
such participations or subparticipations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest;
and
(ii) the provisions of this Section shall not be construed to apply
to (x) any payment made by the Borrower pursuant to and in accordance with
the express terms of this Agreement or (y) any payment obtained by a
Lender as consideration for the assignment of or sale of a participation
in any of its Loans or subparticipations in L/C Obligations to any
assignee or participant, other than to the Borrower or any Subsidiary
thereof (as to which the provisions of this Section shall apply).
Each of the Borrower and Operating consents to the foregoing and agrees,
to the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower and Operating rights of setoff and counterclaim with
respect to such participation as fully as if such Lender were a direct creditor
of the Borrower and Operating in the amount of such participation.
2.13 BORROWING BASE.
(a) Reserve Report; Proposed Borrowing Base. As soon as available and in
any event by March 31 and September 30 of each year commencing September 30,
2004, the Borrower shall deliver to Administrative Agent and each Lender a
Reserve Report prepared as of the immediately preceding December 31 and June 30,
respectively. Simultaneously with the delivery to Administrative Agent and each
Lender of each Reserve Report, the Borrower shall notify Administrative Agent
and each Lender of the amount of the Borrowing Base which the Borrower
44
requests become effective on the next Redetermination Date (or such date
promptly following such Redetermination Date as Required Lenders shall elect).
(b) Scheduled Redeterminations of the Borrowing Base; Procedures and
Standards. Based in part on the Reserve Reports made available to Lenders
pursuant to 2.13(a), Lenders shall redetermine the Borrowing Base on or prior to
the next Redetermination Date (or such date promptly thereafter as reasonably
possible based on the engineering and other information available to Lenders).
Any Borrowing Base which becomes effective as a result of any Redetermination of
the Borrowing Base shall be subject to the following restrictions: (a) such
Borrowing Base shall not exceed the Borrowing Base requested by the Borrower
pursuant to Section 2.13(a) or 2.13(c) (as applicable), (b) such Borrowing Base
shall not exceed the Aggregate Commitment then in effect, (c) to the extent such
Borrowing Base represents an increase from the Borrowing Base in effect prior to
such Redetermination, such Borrowing Base shall be approved by all Lenders, and
(d) any Borrowing Base which represents a decrease in the Borrowing Base in
effect prior to such Redetermination, or a reaffirmation of such prior Borrowing
Base, shall be approved by Required Lenders. Each Redetermination shall be made
by Lenders in accordance with their normal and customary procedures for
evaluating oil and gas reserves and other related assets as such exist at that
particular time and will otherwise be in their sole discretion. Without limiting
such discretion, the Borrower acknowledges and agrees that each Lender may
consider such credit factors as it deems appropriate which are consistent with
its normal and customary procedures for evaluating oil and gas reserves and
shall have no obligation in connection with any Redetermination to approve any
increase from the Borrowing Base in effect prior to such Redetermination.
Administrative Agent shall propose (on behalf of Administrative Agent) such
redetermined Borrowing Base to Lenders within thirty (30) days following receipt
by Administrative Agent and each Lender of a Reserve Report. Such proposed
Borrowing Base shall be determined by Administrative Agent 1) in accordance with
its normal and customary procedures for evaluating oil and gas reserves and
other related assets as such exist at that particular time, 2) in part by
utilizing the arithmetic average of the Agents' pricing forecast and discount
rates established by Agents and in existence at that particular time, adjusted
to reflect the effect of the Borrower's and its Restricted Subsidiaries' Hedge
Transactions, and 3) otherwise in their sole discretion. After having received
notice of such proposed Borrowing Base by Administrative Agent, Required Lenders
(or all Lenders in the event of a proposed increase) shall have fifteen (15)
days to agree or disagree with such proposal. If at the end of such fifteen (15)
day period, Required Lenders (or all Lenders in the event of a proposed
increase) have not communicated their approval or disapproval, such silence
shall be deemed an approval and Administrative Agent's proposal shall be the new
Borrowing Base. If, however, Required Lenders (or any Lender in the event of a
proposed increase) notify Administrative Agent within such fifteen (15) day
period of their disapproval, Required Lenders (or all Lenders in the event of a
proposed increase) shall, within a reasonable period of time, agree on a new
Borrowing Base. Promptly following any Redetermination of the Borrowing Base,
Administrative Agent shall notify the Borrower of the amount of the Borrowing
Base as redetermined, which Borrowing Base shall be effective as of the date
specified in such notice, and shall remain in effect for all purposes of this
Agreement until the next Redetermination.
(c) Special Redetermination. In addition to Scheduled Redeterminations,
the Borrower and Required Lenders shall each be permitted to make (i) Special
Redeterminations pursuant to Section 5.09, and (ii) other Special
Redeterminations of the Borrowing Base;
45
provided, that, Required Lenders shall be permitted to make only one (1) Special
Redetermination pursuant to this Section 2.13(c) in any calendar year, and the
Borrower shall be permitted to make only two (2) Special Redeterminations
pursuant to this Section 2.13(c) in any calendar year. Any request for a Special
Redetermination shall be made pursuant to a written notice to the other parties
to this Agreement, and, in the case of a request by the Borrower, such notice
shall be accompanied by a Reserve Report and a notification of the Borrowing
Base requested by the Borrower in connection with such Special Redetermination.
Any Special Redetermination shall be made by Administrative Agent and Lenders in
accordance with the procedures and standards set forth in Section 2.13(b);
provided, that, no Reserve Report will be required to be delivered to
Administrative Agent and Lenders in connection with any Special Redetermination
requested by Required Lenders pursuant to this Section 2.13(c).
(d) Asset Disposition Adjustment. In addition to Scheduled
Redeterminations, Special Redeterminations, and Permitted Subordinate Debt
adjustments, as set forth below in subsection 2.13(e), the Borrowing Base shall
reduce simultaneously with the completion by any Credit Party of any Asset
Disposition by the lesser of (i) the Borrowing Base value of the Borrowing Base
Properties which are subject to such Asset Disposition (which shall be the
Borrowing Base value assigned thereto by Administrative Agent and approved by
Required Lenders, and which, in the case of any exchange, shall be the net
reduction in the Borrowing Base value realized or resulting from such exchange),
and (ii) the Net Cash Proceeds received by any Credit Party from such Asset
Disposition.
(e) Permitted Subordinate Debt Adjustment. In addition to Scheduled
Redeterminations, Special Redeterminations and Asset Disposition adjustments, as
set forth above in subsection 2.13(d), to the extent from time to time Debt
described in clause (c) of the definition of Permitted Subordinate Debt is
outstanding, the Borrowing Base otherwise determined pursuant to the terms of
this Section 2.13 shall be reduced by thirty-three and one-third percent
(33-1/3%) of the amount of such Debt.
(f) Borrowing Base Deficiency. If a Borrowing Base Deficiency exists
after giving effect to any Redetermination, the Borrower shall be obligated to
eliminate such Borrowing Base Deficiency by making the mandatory prepayments of
the Loans or by taking such other action required by Section 2.04.
(g) Initial Borrowing Base. Notwithstanding anything to the contrary
contained herein, the Borrowing Base in effect during the period commencing on
the Closing Date and ending on the effective date of the first Redetermination
after the Closing Date shall be $400,000,000.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 TAXES.
(a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes,
46
provided that if the Borrower shall be required by applicable law to deduct any
Indemnified Taxes (including any Other Taxes) from such payments, then (i) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent, Lender or L/C Issuer, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall timely pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) Payment of Other Taxes by the Borrower. Without limiting the
provisions of subsection (a) above, the Borrower shall timely pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.
(c) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, each Lender and the L/C Issuer, within 30 days after
demand therefor, which demand shall contain an invoice itemizing in reasonable
detail the Taxes, Other Taxes and liability that is subject to the Borrower's
indemnification according to this Section 3.01 for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by the Administrative Agent, such Lender or the L/C Issuer, as the case may
be, and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the L/C Issuer (with a copy to the Administrative
Agent), or by the Administrative Agent on its own behalf or on behalf of a
Lender or the L/C Issuer, shall be conclusive absent manifest error.
(d) Evidence of Payments. Within 30 days after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Status of Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law or reasonably
requested by the Borrower or the Administrative Agent, 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 of withholding. In
addition, any Lender, if requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.
47
Without limiting the generality of the foregoing, in the event that the
Borrower is resident for tax purposes in the United States, any Foreign Lender
shall deliver to the Borrower and the Administrative Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:
(i) duly completed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the
United States is a party,
(ii) duly completed copies of Internal Revenue Service Form W-8ECI,
(iii) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a "bank"
within the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent
shareholder" of the Borrower within the meaning of section 881(c)(3)(B) of
the Code, or (C) a "controlled foreign corporation" described in section
881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue
Service Form W-8BEN, or
(iv) any other form prescribed by applicable law as a basis for
claiming exemption from or a reduction in United States Federal
withholding tax duly completed together with such supplementary
documentation as may be prescribed by applicable law to permit the
Borrower to determine the withholding or deduction required to be made.
For any period with respect to which a Lender has failed to provide the
Borrower and Administrative Agent with the appropriate form pursuant to Section
3.01(e) (unless such failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under Section
3.01 with respect to Taxes imposed by the United States; provided, however, that
should a Lender, which is otherwise exempt from or subject to a reduced rate of
withholding Tax, become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.
(f) Treatment of Certain Refunds. If the Administrative Agent, any
Lender or the L/C Issuer determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section, it shall pay to the Borrower an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent, such Lender or the L/C Issuer, as the case
may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower,
upon the request of the Administrative Agent, such Lender or the L/C Issuer,
agrees to repay the amount paid over to the Borrower (plus any penalties,
interest or other charges imposed by the
48
relevant Governmental Authority) to the Administrative Agent, such Lender or the
L/C Issuer in the event the Administrative Agent, such Lender or the L/C Issuer
is required to repay such refund to such Governmental Authority. This subsection
shall not be construed to require the Administrative Agent, any Lender or the
L/C Issuer to make available its tax returns (or any other information relating
to its taxes that it deems confidential) to the Borrower or any other Person.
3.02 ILLEGALITY. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to the Borrower through the Administrative Agent, any obligation of such Lender
to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrower shall,
upon demand from such Lender (with a copy to the Administrative Agent), prepay
or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted.
3.03 INABILITY TO DETERMINE RATES. If the Required Lenders determine that
for any reason in connection with any request for a Eurodollar Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan , or
(c) the Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to
such Lenders of funding such Loan, the Administrative Agent will promptly so
notify the Borrower and each Lender. Thereafter, the obligation of the Lenders
to make or maintain Eurodollar Rate Loans shall be suspended until the
Administrative Agent (upon the instruction of the Required Lenders) revokes such
notice. Upon receipt of such notice, the Borrower may revoke any pending request
for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a request for a
Borrowing of Base Rate Loans in the amount specified therein.
3.04 INCREASED COSTS; RESERVES ON EURODOLLAR RATE LOANS.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit, compulsory loan, insurance charge or similar requirement against
assets of, deposits with
49
or for the account of, or credit extended or participated in by, any
Lender (except any reserve requirement contemplated by Section 3.04(e)) or
the L/C Issuer;
(ii) subject any Lender or the L/C Issuer to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any Eurodollar Rate Loan made by
it, or change the basis of taxation of payments to such Lender or the L/C
Issuer in respect thereof (except for Indemnified Taxes or Other Taxes
covered by Section 3.01 and the imposition of, or any change in the rate
of, any Excluded Tax payable by such Lender or the L/C Issuer); or
(iii) impose on any Lender or the L/C Issuer or the London interbank
market any other condition, cost or expense affecting this Agreement or
Eurodollar Rate Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or the
L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or
of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender or the L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon delivery by such Lender or the L/C Issuer of a certificate
complying with Section 3.04(c), the Borrower will, pursuant to Section 3.04(c),
pay to such Lender or the L/C Issuer, as the case may be, such additional amount
or amounts as will compensate such Lender or the L/C Issuer, as the case may be,
for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or the L/C Issuer determines
that any Change in Law affecting such Lender or the L/C Issuer or any Lending
Office of such Lender or such Lender's or the L/C Issuer's holding company, if
any, regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or the L/C Issuer's capital or on the capital of
such Lender's or the L/C Issuer's holding company, if any, as a consequence of
this Agreement, the Commitments of such Lender or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the L/C Issuer, to a level below that which such Lender or the
L/C Issuer or such Lender's or the L/C Issuer's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's or
the L/C Issuer's policies and the policies of such Lender's or the L/C Issuer's
holding company with respect to capital adequacy), then from time to time the
Borrower will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will, pursuant to Section 3.04(c), compensate
such Lender or the L/C Issuer or such Lender's or the L/C Issuer's holding
company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender or the L/C
Issuer setting forth the amount or amounts necessary to compensate such Lender
or the L/C Issuer or its holding company, as the case may be, as specified in
subsection (a) or (b) of this Section and delivered to the Borrower shall be
conclusive absent manifest error. The Borrower shall pay such Lender or the L/C
Issuer, as the case may be, the amount shown as due on any such certificate
within 10 days after receipt thereof.
50
(d) Delay in Requests. Failure or delay on the part of any Lender or the
L/C Issuer to demand compensation pursuant to the foregoing provisions of this
Section shall not constitute a waiver of such Lender's or the L/C Issuer's right
to demand such compensation, provided that the Borrower shall not be required to
compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of
this Section for any increased costs incurred or reductions suffered more than
nine months prior to the date that such Lender or the L/C Issuer, as the case
may be, notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender's or the L/C Issuer's intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).
(e) Reserves on Eurodollar Rate Loans. The Borrower shall pay to each
Lender, as long as such Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including eurocurrency funds
or deposits (currently known as "Eurocurrency liabilities"), additional interest
on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual
costs of such reserves allocated to such Loan by such Lender (as determined by
such Lender in good faith, which determination shall be conclusive), which shall
be due and payable on each date on which interest is payable on such Loan,
provided the Borrower shall have received at least 10 days' prior notice (with a
copy to the Administrative Agent) of such additional interest from such Lender.
If a Lender fails to give notice 10 days prior to the relevant Interest Payment
Date, such additional interest shall be due and payable 10 days from receipt of
such notice.
3.05 COMPENSATION FOR LOSSES. Upon demand of any Lender (with a copy to
the Administrative Agent) from time to time, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan
other than a Base Rate Loan on a day other than the last day of the Interest
Period for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure of
such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by the
Borrower; or
(c) any assignment of a Eurodollar Rate Loan on a day other than the
last day of the Interest Period therefor as a result of a request by the
Borrower pursuant to Section 10.13;
including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the London
51
interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.
3.06 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.
(a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.04, or the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to
Section 3.02, then such Lender shall use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice pursuant
to Section 3.02, as applicable, and (ii) in each case, would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, the
Borrower may replace such Lender in accordance with Section 10.13.
3.07 SURVIVAL. All of the Borrower's obligations under this Article III
shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.
ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 CONDITIONS OF INITIAL CREDIT EXTENSION. The obligation of the L/C
Issuer and each Lender to make its initial Credit Extension hereunder is subject
to satisfaction of the following conditions precedent:
(a) The Administrative Agent's receipt of the following, each of which
shall be originals or telecopies (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Credit Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date)
and each in form and substance satisfactory to the Administrative Agent and each
of the Lenders:
(i) executed counterparts of this Agreement and the Guaranty,
sufficient in number for distribution to the Administrative Agent, each
Lender and the Borrower;
(ii) a Note executed by the Borrower in favor of each Lender
requesting a Note;
(iii) the Pledge Agreement duly executed and delivered by the
Borrower and each First Tier Restricted Subsidiary, together with (A) all
certificates (or other evidence
52
acceptable to Administrative Agent) evidencing one hundred percent (100%)
of the issued and outstanding Equity Interests of each Restricted
Subsidiary of every class, which certificates shall be duly endorsed or
accompanied by appropriate stock powers (as applicable) executed in blank,
and (B) such other agreements and writings, including, without limitation,
UCC financing statements and/or amendments to financing statements, in
form and substance satisfactory to Administrative Agent;
(iv) the Mortgages duly executed and delivered by the applicable
Credit Parties, together with such other assignments, conveyances,
agreements and other writings, including, without limitation, UCC
financing statements and/or amendments to financing statements, in form
and substance satisfactory to Administrative Agent;
(v) such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each
Credit Party as the Administrative Agent may require evidencing the
identity, authority and capacity of each Responsible Officer thereof
authorized to act as a Responsible Officer in connection with this
Agreement and the other Loan Documents to which such Credit Party is a
party;
(vi) such documents and certifications as the Administrative Agent
may reasonably require to evidence that each Credit Party is duly
organized or formed, validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification, except to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect;
(vii) a favorable opinion of Baker Botts, L.L.P., counsel to the
Credit Parties, addressed to the Administrative Agent and each Lender,
substantially in the form of Exhibit H;
(viii) a favorable opinion of Crowley, Haughey, Hanson, Toole &
Dietrich, special Montana counsel for Administrative Agent, addressed to
the Administrative Agent and each Lender, as to the enforceability of the
Mortgages in Montana and otherwise in form and substance satisfactory to
Administrative Agent;
(ix) a favorable opinion of Hinkle, Hensley, Shanor & Martin,
L.L.P., special New Mexico counsel for Administrative Agent, addressed to
the Administrative Agent and each Lender, as to the enforceability of the
Mortgages in New Mexico and otherwise in form and substance satisfactory
to Administrative Agent;
(x) a favorable opinion of Wold Johnson, P.C., special North
Dakota counsel for Administrative Agent, addressed to the Administrative
Agent and each Lender, as to the enforceability of the Mortgages in North
Dakota and otherwise in form and substance satisfactory to Administrative
Agent;
(xi) a favorable opinion of Conner & Winters, special Oklahoma
counsel for Administrative Agent, addressed to the Administrative Agent
and each Lender, as to the enforceability of the Mortgages in Oklahoma and
otherwise in form and substance satisfactory to Administrative Agent;
53
(xii) a favorable opinion of Pruitt, Gushee & Bachtell, special Utah
counsel for Administrative Agent, addressed to the Administrative Agent
and each Lender, as to the enforceability of the Mortgages in Utah and
otherwise in form and substance satisfactory to Administrative Agent;
(xiii) such lien search reports as Administrative Agent shall
require, prepared as of a date not more than twenty (20) days prior to the
Closing Date, conducted in such jurisdictions and reflecting such names as
Administrative Agent shall request;
(xiv) a certificate of a Responsible Officer of each Credit Party
either (A) attaching copies of all consents, licenses and approvals
required in connection with the execution, delivery and performance by
such Credit Party and the validity against such Credit Party of the Loan
Documents to which it is a party, and such consents, licenses and
approvals shall be in full force and effect, or (B) stating that no such
consents, licenses or approvals are so required;
(xv) a certificate signed by a Responsible Officer of the Borrower
certifying (A) that the conditions specified in Sections 4.02(a) and (b)
have been satisfied, and (B) that there has been no event or circumstance
since March 31, 2004 that has had or could be reasonably expected to have,
either individually or in the aggregate, a Material Adverse Effect;
(xvi) a duly completed Compliance Certificate as of the last day of
the Fiscal Quarter of the Borrower most recently ended prior to the
Closing Date, signed by a Responsible Officer of the Borrower;
(xvii) a duly completed Certificate of Ownership Interests signed by
a Responsible Officer of each of the Credit Parties that owns Borrowing
Base Properties;
(xviii) evidence that all insurance required to be maintained
pursuant to the Loan Documents has been obtained and is in effect;
(xix) evidence satisfactory to it that (A) all Loans (as defined in
the Existing Credit Agreement) of the Lenders (as defined in the Existing
Credit Agreement) which will not execute and deliver an Addendum (and will
not have a Commitment hereunder) with respect to this Agreement ("Exiting
Lenders") shall have been or shall concurrently be repaid in full,
together with any accrued interest thereon and any accrued fees payable to
such Exiting Lenders under the Existing Credit Agreement to but excluding
the Closing Date, and (ii) the commitments under the Existing Credit
Agreement of such Exiting Lenders shall have been or shall concurrently be
terminated;
(xx) a report or reports in form, scope and detail acceptable to
Administrative Agent and Lenders setting forth the results of a review of
the Credit Parties' Mineral Interests and other operations, which
report(s) shall not reflect the existence of facts or circumstances which
would constitute a material violation of any Environmental Law or which
are likely to result in a material liability to any Borrower-Related
Party, and/or otherwise reveal any conditions or circumstances which would
reflect that the
54
representations and warranties contained in Section 5.14 hereof are
inaccurate in any respect; and
(xxi) such other assurances, certificates, documents, consents or
opinions as the Administrative Agent, the L/C Issuer or the Required
Lenders reasonably may require.
(b) Administrative Agent's (or its counsel's) completion of a review of
title to the Title Required Reserve Value of all Borrowing Base Properties,
which review shall not have revealed any condition or circumstance that would
reflect that the representations and warranties contained in Section 5.09 hereof
are inaccurate in any material respect.
(c) The transactions contemplated by this Agreement shall be permitted
by applicable Law and regulation and shall not subject Administrative Agent, any
Lender, or any Borrower-Related Party to any Material Adverse Change.
(d) No litigation, arbitration or similar proceeding shall be pending or
threatened which calls into question the validity or enforceability of this
Agreement, the other Loan Documents or the transactions contemplated hereby or
thereby.
(e) Any fees required to be paid on or before the Closing Date shall
have been paid.
(f) Unless waived by the Administrative Agent, the Borrower shall have
paid all fees, charges and disbursements of counsel to the Administrative Agent
to the extent invoiced prior to or on the Closing Date, plus such additional
amounts of such fees, charges and disbursements as shall constitute its
reasonable estimate of such fees, charges and disbursements incurred or to be
incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude a final settling of accounts between the Borrower
and the Administrative Agent).
Without limiting the generality of the provisions of Section 9.04, for
purposes of determining compliance with the conditions specified in this Section
4.01, each Lender that has executed and delivered an Addendum shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.
4.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Lender
to honor any Request for Credit Extension (other than a Loan Notice requesting
only a conversion of Loans to the other Type, or a continuation of Eurodollar
Rate Loans) is subject to the following conditions precedent:
(a) The representations and warranties of the Borrower and each other
Borrower-Related Party contained in Article V or any other Loan Document, or
which are contained in any document furnished at any time under or in connection
herewith or therewith, shall be true and correct in all material respects on and
as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date, and except that for
purposes of this Section 4.02, the representations and warranties contained in
subsections (a) and (b) of
55
Section 5.04 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01.
(b) No Default shall exist, or would result from such proposed Credit
Extension or from the application of the proceeds thereof.
(c) The Administrative Agent and, if applicable, the L/C Issuer shall
have received a Request for Credit Extension in accordance with the requirements
hereof.
(d) After giving effect to such Credit Extension, the Total Outstandings
shall not exceed the Borrowing Base then in effect.
Each Request for Credit Extension (other than a Loan Notice requesting
only a conversion of Loans to the other Type or a continuation of Eurodollar
Rate Loans) submitted by the Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
The Borrower and Operating jointly and severally represent and warrant to
Administrative Agent and each Lender that each of the following statements is
true and correct on the date hereof, and, subject to Section 4.02(a), will be
true and correct on the occasion of each Borrowing and the issuance of each
Letter of Credit:
5.01 EXISTENCE AND POWER OF EACH BORROWER-RELATED PARTY. Each
Borrower-Related Party (a) is a corporation, limited liability company or
partnership duly incorporated or organized (as applicable), validly existing and
in good standing under the Laws of its jurisdiction of incorporation or
organization (as applicable), (b) has all corporate, limited liability company
or partnership power (as applicable) and all material governmental licenses,
authorizations, consents and approvals required to carry on its businesses as
now conducted and as proposed to be conducted, and (c) is duly qualified to
transact business as a foreign corporation, foreign limited liability company or
foreign partnership (as applicable) in each jurisdiction where a failure to be
so qualified would not reasonably be expected to result in a Material Adverse
Change.
5.02 CREDIT PARTY AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION. The
execution, delivery and performance of this Agreement and the other Loan
Documents by each Credit Party (to the extent each Credit Party is a party to
this Agreement and such Loan Documents) are within such Credit Party's
corporate, partnership or limited liability company powers (as applicable), when
executed will be duly authorized by all necessary corporate, partnership, or
limited liability company action (as applicable), require no action by or in
respect of, or filing with, any Governmental Authority and do not contravene, or
constitute a default under, any provision of applicable Law (including, without
limitation, the Margin Regulations) or of the partnership agreement, the
articles or certificate of incorporation, bylaws, regulations or comparable
charter or organizational documents of any Credit Party or of any agreement,
judgment, injunction, order, decree or other instrument binding upon any Credit
Party or result in
56
the creation or imposition of any Lien on any asset of any Credit Party other
than the Liens securing the Obligations.
5.03 BINDING EFFECT. This Agreement constitutes a valid and binding
agreement of the Borrower and Operating; the other Loan Documents when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of each Credit Party executing the same; and each Loan
Document is, or when executed and delivered, will be, enforceable against each
Credit Party which executes the same in accordance with its terms except as (a)
the enforceability thereof may be limited by bankruptcy, insolvency or similar
Laws affecting creditors rights generally, and (b) the availability of equitable
remedies may be limited by equitable principles of general applicability.
5.04 FINANCIAL INFORMATION.
(a) The most recent annual audited consolidated and consolidating
balance sheet of the Borrower and the related consolidated and consolidating
statements of operations and cash flows for the Fiscal Year then ended, copies
of which have been delivered to each Lender, fairly present, in conformity with
GAAP, the consolidated financial position of the Borrower as of the end of such
Fiscal Year and its consolidated results of operations and cash flows for such
Fiscal Year.
(b) The most recent quarterly unaudited consolidated and consolidating
balance sheet of the Borrower delivered to Lenders, and the related unaudited
consolidated statements of operations and cash flows for the Fiscal Quarter then
ended, fairly present, in conformity with GAAP applied on a basis consistent
with the financial statements referred to in Section 5.04, the consolidated
financial position of the Borrower as of such Fiscal Quarter and its
consolidated results of operations and cash flows for such Fiscal Quarter.
(c) Except as disclosed in writing to Lenders prior to the execution and
delivery of this Agreement, since the date of the Borrower's most recent annual
and quarterly consolidated balance sheet and consolidated statements of
operations and cash flow delivered to Lenders, no Material Adverse Change has
occurred (including, without limitation, no Material Adverse Change with respect
to any facts or information regarding any Borrower-Related Party as represented
to Administrative Agent or any Lender on or prior to the date hereof).
(d) After giving effect to the transactions contemplated by this
Agreement, (i) the Borrower and its Subsidiaries, taken as a whole, and each
Credit Party is Solvent, (ii) no Credit Party intends to, and no Credit Party
believes that it will, incur debts or liabilities beyond its ability to pay as
such debts and liabilities mature, and (iii) no Credit Party is engaged in a
business or transaction, and no Credit Party is about to engage in business or a
transaction for which such Credit Party's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Credit Party is engaged.
5.05 LITIGATION. Except for matters disclosed on Schedule 5.05, there is
no action, suit or proceeding pending against, or to the knowledge of the
Borrower or Operating, threatened against or affecting any Borrower-Related
Party before any Governmental Authority in which there is a reasonable
possibility of an adverse decision which would reasonably be expected to
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result in a Material Adverse Change or which could in any manner draw into
question the validity of the Loan Documents.
5.06 ERISA COMPLIANCE.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws, except
such noncompliance as could not reasonably be expected to have a Material
Adverse Effect. Each Plan that is intended to qualify under Section 401(a) of
the Code is qualified in form and operation under such section and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. Any Borrower-Related Party and each ERISA
Affiliate have made all required contributions to each Plan subject to Section
412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.
(b) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur,
except that with respect to an ERISA Event that arises in connection with the
acquisition of a business by a Borrower Related Party or an ERISA Affiliate and
relates to a plan maintained by such acquired business no such ERISA Event has
occurred or is reasonably expected to occur which could reasonably be expected
to result in a Material Adverse Effect; (ii) no Pension Plan has Unfunded
Pension Liability in excess of $5,000,000; (iii) neither any Borrower-Related
Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) neither any
Borrower-Related Party nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(v) neither any Borrower-Related Party nor any ERISA Affiliate has engaged in a
transaction that could be subject to Sections 4069 or 4212(c) of ERISA.
5.07 TAXES AND FILING OF TAX RETURNS. Except to the extent being
contested by appropriate proceedings in accordance with Section 6.07 hereof,
each Borrower-Related Party has filed all tax returns required to have been
filed and has paid all Taxes shown to be due and payable on such returns,
including interest and penalties, and all other Taxes which are payable by such
party, to the extent the same have become due and payable. Neither the Borrower
nor Operating knows of any proposed material Tax assessment against any
Borrower-Related Party and all Tax liabilities of each Borrower-Related Party
are adequately provided for. Except as disclosed in writing to Lenders prior to
the date hereof, no income tax liability of any Borrower-Related Party has been
asserted by the Internal Revenue Service or other Governmental Authority for
Taxes in excess of those already paid.
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5.08 OWNERSHIP OF PROPERTIES GENERALLY. Each Credit Party has good and
defensible title to all material properties and assets purported to be owned by
it, including, without limitation, all assets reflected in the balance sheets
referred to in Section 5.04(a) and (b) (except to the extent subject to a
disposition permitted under Section 7.05 since the date of such balance sheets)
and all assets which are used by the Credit Parties in the operation of their
respective businesses, and none of such properties or assets is subject to any
Lien other than Permitted Encumbrances and Immaterial Title Deficiencies.
5.09 MINERAL INTERESTS. Each Credit Party has good and defensible title
to all of its Borrowing Base Properties, free and clear of all Liens except
Permitted Encumbrances and Immaterial Title Deficiencies. Subject only to
Immaterial Title Deficiencies and Permitted Encumbrances, all Borrowing Base
Properties are valid, subsisting, and in full force and effect, and all rentals,
royalties, and other amounts due and payable in respect thereof have been duly
paid. Without regard to any consent or non-consent provisions of any joint
operating agreement covering any Proved Mineral Interests of any Credit Party,
but subject to Immaterial Title Deficiencies and Permitted Encumbrances, each
Credit Party's share of (a) the costs for each of its Borrowing Base Properties
is not greater than the decimal fraction set forth in the Reserve Report, before
and after payout, as the case may be, and described therein by the respective
designations "working interests," "WI," "gross working interest," "GWI," or
similar terms, and (b) production from, allocated to, or attributed to each of
its Borrowing Base Properties is not less than the decimal fraction set forth in
the Reserve Report, before and after payout, as the case may be, and described
therein by the designations "net revenue interest," "NRI," or similar terms.
Each well drilled in respect of each Borrowing Base Property which is
categorized as proved developed producing reserves and described in the Reserve
Report (i) is capable of, and, with the exception of wells which are presently
not producing Hydrocarbons pending the completion of workovers and repairs to
such wells, is presently, producing Hydrocarbons in commercially profitable
quantities, and each Credit Party is receiving payments for its share of
production, and no material amount of funds in respect of any thereof are held
in suspense, and (ii) has been drilled, bottomed, completed, and operated in
compliance with all applicable Laws in all material respects and no such well
which is currently producing Hydrocarbons is subject to any penalty in
production by reason of such well having produced in excess of its allowable
production. The breach of any representation or warranty set forth in Section
5.08 (as it relates to Borrowing Base Properties) or this Section 5.09 shall not
automatically cause an Event of Default under Section 8.01(e) hereof. Instead,
upon becoming aware that any Credit Party has breached, or caused the breach of,
any representation or warranty set forth in Section 5.08 (as it relates to
Borrowing Base Properties) or this Section 5.09, Required Lenders may cause to
be made a Special Redetermination of the Borrowing Base according to Section
2.13(c) hereof, in which case that portion of the Borrowing Base Properties as
to which the representations and warranties of Section 5.08 (as it relates to
Borrowing Base Properties) or this Section 5.09 have been breached shall be
excluded from the Mineral Interests evaluated for purposes of the Borrowing
Base; provided, however, an Event of Default shall occur if, upon
redetermination of the Borrowing Base, the Borrowing Base as so redetermined has
been reduced by more than twenty-five percent (25%) from the Borrowing Base in
effect immediately prior to such Redetermination or the Borrower fails to pay in
full when due any mandatory prepayment required by Section 2.04 hereof as a
result of such Borrowing Base Deficiency.
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5.10 LICENSES, PERMITS, ETC. Each Borrower-Related Party possesses such
valid franchises, certificates of convenience and necessity, operating rights,
licenses, permits, consents, authorizations, exemptions and orders of
Governmental Authorities, as are necessary to carry on its business as now
conducted and as proposed to be conducted, except to the extent a failure to
obtain any such item would not reasonably be expected to result in a Material
Adverse Change.
5.11 COMPLIANCE WITH LAW. The business and operations of the
Borrower-Related Parties have been and are being conducted in accordance with
all applicable Laws other than violations of Laws which would not reasonably be
expected to (either individually or collectively) result in a Material Adverse
Change.
5.12 FULL DISCLOSURE. No statement or information contained in this
Agreement, any other Loan Document, or any other document, certificate or
statement furnished by or on behalf of any Borrower-Related Party to the
Administrative Agent or the Lenders, or any of them, for use in connection with
the transactions contemplated by this Agreement or the other Loan Documents,
taken as a whole, contained as of the date such statement, information, document
or certificate was so furnished, any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements contained
herein or therein, in respect of the circumstances under which they were made,
not misleading as of the date made or deemed made; provided, that with respect
to the estimates, projections and pro forma financial information contained in
the materials referenced above, the Borrower only represents that they are based
upon good faith estimates and assumptions believed by management of 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 Borrower-Related Party (other
than the future impact of generally known industry wide risks normally
associated with the type of business conducted by the Borrower and its
Subsidiaries) that could reasonably be expected to have a Material Adverse
Effect that has not been expressly disclosed herein, in the other Loan Documents
or in any other documents, certificates and statements furnished to the
Administrative Agent and the Lenders for use in connection with the transactions
contemplated hereby and by the other Loan Documents.
5.13 ORGANIZATIONAL STRUCTURE; NATURE OF BUSINESS. The Borrower-Related
Parties are engaged principally in the business of acquiring, exploring,
developing, operating and disposing of Mineral Interests and the production,
marketing, processing, gathering and transporting of Hydrocarbons therefrom.
Schedule 5.13 hereto accurately reflects, as of the date hereof, (a) the
jurisdiction of incorporation or organization of each Borrower-Related Party,
(b) each jurisdiction in which each Borrower-Related Party is qualified to
transact business as a foreign corporation, foreign partnership or foreign
limited liability company, (c) the authorized, issued and outstanding Equity
Interests of each Borrower-Related Party other than the Borrower (and the
record, and to the knowledge of the Borrower and Operating, beneficial owners of
such Equity Interests), and (d) all outstanding warrants, options, subscription
rights, convertible securities or other rights to purchase Equity Interests of
each Borrower-Related Party.
5.14 ENVIRONMENTAL MATTERS. Except for matters disclosed on Schedule 5.14
hereto, no operation conducted by any Borrower-Related Party and no real or
personal property now or
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previously owned or leased by any Borrower-Related Party (including, without
limitation, any Credit Party's Mineral Interests) and no operations conducted
thereon, and to the Borrower's or Operating's knowledge, no operations of any
prior owner, lessee or operator of any such properties, is or has been in
violation of any Environmental Law other than violations which neither
individually nor in the aggregate would reasonably be expected to result in a
Material Adverse Change. Except for matters disclosed on Schedule 5.14 hereto,
no Borrower-Related Party, nor any such property or operation is the subject of
any existing, pending or, to the Borrower's or Operating's knowledge, threatened
Environmental Complaint which would reasonably be expected to, individually or
in the aggregate, result in Material Adverse Change. All notices, permits,
licenses, and similar authorizations required to be obtained or filed in
connection with the ownership of each tract of real property or operations of
any Borrower-Related Party thereon and each item of personal property owned,
leased or operated by any Borrower-Related Party including, without limitation,
notices, licenses, permits and authorizations required in connection with any
past or present treatment, storage, disposal, or release of Hazardous Substances
into the environment, have been duly obtained or filed except to the extent the
failure to obtain or file such notices, licenses, permits and authorizations
would not reasonably be expected to result in a Material Adverse Change. All
Hazardous Substances generated at each tract of real property and by each item
of personal property owned, leased or operated by any Borrower-Related Party
have been transported, treated, and disposed of only by carriers or facilities
maintaining valid permits under RCRA and all other Environmental Laws for the
conduct of such activities except in such cases where the failure to obtain such
permits would not reasonably be expected to, individually or in the aggregate,
result in a Material Adverse Change. Except for matters disclosed on Schedule
5.14 hereto, there have been no Hazardous Discharges which were not in
compliance with Environmental Laws other than Hazardous Discharges which would
not reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Change. Except for matters disclosed on Schedule 5.14 hereto,
no Borrower-Related Party has any contingent liability in connection with any
Hazardous Discharge which would reasonably be expected to result in a Material
Adverse Change.
5.15 BURDENSOME OBLIGATIONS. No Borrower-Related Party, nor any of the
properties of any Borrower-Related Party is subject to any Law or any pending
or, to its knowledge, threatened change of Law or subject to any restriction
under its partnership agreement, regulations, certificate of limited
partnership, articles of organization, articles (or certificate) of
incorporation, bylaws or comparable charter or other organizational documents or
under any agreement or instrument to which any Borrower-Related Party or by
which any Borrower-Related Party or any of their properties may be subject or
bound, which is so unusual or burdensome as to be reasonably likely in the
foreseeable future to result in a Material Adverse Change. Without limiting the
foregoing, no Borrower-Related Party is a party to or bound by any agreement or
subject to any order of any Governmental Authority which violates Section 7.14.
5.16 FISCAL YEAR. The Borrower's Fiscal Year is January 1 through
December 31.
5.17 NO DEFAULT. Neither a Default nor an Event of Default has occurred
or will exist after giving effect to the transactions contemplated by this
Agreement or the other Loan Documents.
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5.18 GOVERNMENT REGULATION. No Borrower-Related Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act (as any of the preceding acts have been
amended), the Investment Company Act of 1940 or any other Law which regulates
the incurring by such Borrower-Related Party of Debt, including, but not limited
to Laws relating to common contract carriers or the sale of electricity, gas,
steam, water or other public utility services.
5.19 INSIDER. No Borrower-Related Party is, and no Person having
"control" (as that term is defined in 12 U.S.C. Section 375(b) or regulations
promulgated thereunder) of any Borrower-Related Party is an "executive officer,"
"director" or "shareholder" of any Lender or any bank holding company of which
any Lender is a Subsidiary or of any Subsidiary of such bank holding company.
5.20 GAS BALANCING AGREEMENTS AND ADVANCE PAYMENT CONTRACTS. On the date
of this Agreement, (a) there is no Material Gas Imbalance, and (b) the aggregate
amount of all Advance Payments received by any Credit Party under Advance
Payment Contracts which have not been satisfied by delivery of production does
not exceed $1,000,000.
5.21 INSURANCE. The properties of each Borrower-Related Party are insured
with financially sound and reputable insurance companies not Affiliates of such
Borrower-Related Party, in such amounts, with such deductibles and covering such
risks as are customarily carried by companies engaged in similar businesses and
owning similar properties in localities where such Borrower-Related Party
operates.
5.22 SUBSIDIARIES; EQUITY INTERESTS.
(a) As of the date of this Agreement, the Borrower has no Subsidiaries
other than those specifically disclosed in Part (a) of Schedule 5.22, and all of
the outstanding Equity Interests in such Subsidiaries have been validly issued,
are fully paid and nonassessable and are owned by a Borrower-Related Party in
the amounts specified on Part (a) of Schedule 5.22 free and clear of all Liens
(except as security for the Obligations). As of the date of this Agreement, all
of the Borrower's Subsidiaries are Restricted Subsidiaries.
(b) As of the date of this Agreement, the Borrower has no equity
investments in any other corporation or entity other than those specifically
disclosed in Part (b) of Schedule 5.22. All of the outstanding Equity Interests
in the Borrower have been validly issued, and are fully paid and nonassessable.
ARTICLE VI.
AFFIRMATIVE COVENANTS
The Borrower and Operating jointly and severally covenant and agree that,
so long as there remain any Outstanding Amounts or any Lender has any Commitment
hereunder:
6.01 INFORMATION. The Borrower and Operating will deliver, or cause to be
delivered, to the Administrative Agent:
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(a) as soon as available and in any event within ninety (90) days after
the end of each Fiscal Year, beginning with the Fiscal Year ended December 31,
2004, a consolidated and consolidating balance sheet of the Borrower as of the
end of such Fiscal Year and the related consolidated and consolidating
statements of income and statements of cash flow for such Fiscal Year, setting
forth in each case (as applicable), in comparative form the figures for the
previous Fiscal Year, all reported by the Borrower in accordance with GAAP and
audited by Ernst & Young or another firm of independent public accountants of
nationally recognized standing and reasonably acceptable to Administrative Agent
(it being understood that, to the extent the foregoing are contained in the
Borrower's Annual Report on Form 10 K, the Borrower may satisfy the foregoing
requirement by delivering copies of its Annual Report on Form 10 K);
(b) as soon as available and in any event within forty-five (45) days
after the end of each of the first three (3) Fiscal Quarters of each Fiscal
Year, beginning with the Fiscal Quarter ending June 30, 2004, unaudited
consolidated and consolidating balance sheets of the Borrower as of the end of
such Fiscal Quarter and the related unaudited consolidated and consolidating
statements of income and statements of cash flow for such quarter and for the
portion of the Borrower's Fiscal Year ended at the end of such Fiscal Quarter,
setting forth in each case (as applicable), in comparative form the figures for
the corresponding quarter and the corresponding portion of the Borrower's
previous Fiscal Year (it being understood that, to the extent the foregoing are
contained in the Borrower's Quarterly Report on Form 10 Q, the Borrower may
satisfy the foregoing requirement by delivering copies of its Quarterly Report
on Form 10 Q);
(c) simultaneously with the delivery of each set of financial statements
referred to in Section 6.01(a) and Section 6.01(b), a Compliance Certificate of
the Borrower, (i) setting forth in reasonable detail the calculations required
to establish whether the Borrower was in compliance with the requirements of
Section 7.13 on the date of such financial statements, (ii) stating whether
there exists on the date of such certificate any Default and, if any Default
then exists, setting forth the details thereof and the action which the Borrower
and/or Operating are taking or propose to take with respect thereto, (iii)
stating whether or not such financial statements fairly reflect in all material
respects the results of operations and financial condition of the
Borrower-Related Parties as of the date of the delivery of such financial
statements and for the period covered thereby, (iv) setting forth (A) whether as
of such date there is a Material Gas Imbalance and, if so, setting forth the
amount of net gas imbalances under Gas Balancing Agreements to which any Credit
Party is a party or by which any Mineral Interests owned by any Credit Party is
bound, and (B) the aggregate amount of all Advance Payments received under
Advance Payment Contracts to which any Credit Party is a party or by which any
Mineral Interests owned by any Credit Party is bound which have not been
satisfied by delivery of production, if any, and (v) a summary of the Hedge
Transactions to which each Credit Party is a party on such date;
(d) promptly upon the mailing thereof to the stockholders of the
Borrower generally, copies of all financial statements, material reports and
proxy statements so mailed;
(e) promptly upon the filing thereof, copies of all final registration
statements, post effective amendments thereto and annual, quarterly or special
reports which any Borrower-Related Party shall have filed with the Securities
and Exchange Commission; provided, that the Borrower and Operating must deliver,
or cause to be delivered, any annual reports which any Borrower-Related Party
shall have filed with the Securities and Exchange Commission, within
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ninety (90) days after the end of each Fiscal Year of such Borrower-Related
Party, and any quarterly reports which any Borrower-Related Party shall have
filed with the Securities and Exchange Commission, within forty-five (45) days
after the end of each of the first three (3) Fiscal Quarters of each Fiscal Year
of such Borrower-Related Party;
(f) promptly upon receipt of same, any notice or other information
received by any Borrower-Related Party indicating (i) any potential, actual or
alleged non-compliance with or violation of the requirements of any
Environmental Law which could reasonably be expected to result in liability to
any Borrower-Related Party for fines, clean up or any other remediation
obligations or any other liability in excess of $5,000,000 in the aggregate;
(ii) any potential, actual, alleged or threatened Hazardous Discharge which
Hazardous Discharge would impose on any Borrower-Related Party a duty to report
to a Governmental Authority or to pay cleanup costs or to take remedial action
under any Environmental Law which could reasonably be expected to result in
liability to any Borrower-Related Party for fines, clean up and other
remediation obligations or any other liability in excess of $5,000,000 in the
aggregate; or (iii) the existence of any Lien arising under any Environmental
Law securing any obligation to pay fines, clean up or other remediation costs or
any other liability in excess of $5,000,000 in the aggregate. Without limiting
the foregoing, the Borrower and Operating shall provide, and cause each other
Borrower-Related Party to provide, to Administrative Agent promptly upon receipt
of same by any Borrower-Related Party copies of all environmental consultants or
engineers reports received by any other Borrower-Related Party which would
render the representations and warranties contained in Section 5.14 untrue or
inaccurate in any respect;
(g) in the event any notification is provided to any Lender or
Administrative Agent pursuant to Section 6.01(f) hereof or Administrative Agent
or any Lender otherwise learns of any event or condition under which any such
notice would be required, then, upon request of Required Lenders, the Borrower
and Operating shall, as soon as practicable after such request, cause to be
furnished to Administrative Agent and each Lender a report by an environmental
consulting firm reasonably acceptable to Administrative Agent, stating that a
review of such event, condition or circumstance has been undertaken (the scope
of which shall be reasonably acceptable to Administrative Agent) and detailing
the findings, conclusions and recommendations of such consultant. the Borrower
and Operating shall bear all expenses and costs associated with such review and
updates thereof;
(h) promptly upon any Responsible Officer of any Credit Party becoming
aware of (i) the occurrence of any Default, or (ii) the breach of any material
representation or warranty set forth herein or in any other Loan Document, a
certificate of an Responsible Officer of the Borrower or Operating setting forth
the details thereof and (as applicable) the action which the Borrower and/or
Operating are taking or propose to take with respect thereto;
(i) no later than March 31 and September 30 of each year, reports of
production, volumes, revenue, expenses and product prices for all Mineral
Interests owned by any Credit Party for the periods of six (6) months ending the
preceding December 31 and June 30, respectively. Such reports shall be prepared
on an accrual basis and shall be reported on an accounting key code basis;
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(j) promptly notify Administrative Agent of any Material Adverse Change
affecting any Borrower-Related Party and of any matter that could reasonably be
expected to cause a Material Adverse Change;
(k) promptly notify Administrative Agent of any material change in
accounting policies or financial reporting practices by any Borrower-Related
Party;
(l) promptly upon the closing and consummation of the issuance of the
Permitted Subordinate Debt, a true and correct copy of each document, instrument
and agreement evidencing or otherwise pertaining to the Permitted Subordinate
Debt; and
(m) from time to time such additional information regarding the
financial position or business of any Borrower-Related Party as Administrative
Agent, at the request of any Lender, may reasonably request.
6.02 BUSINESS OF BORROWER-RELATED PARTIES. The principal business of the
Borrower-Related Parties shall continue to be the acquisition, exploration,
development, operation and disposition of Mineral Interests and the production,
marketing, processing, gathering and transportation of Hydrocarbons therefrom.
6.03 MAINTENANCE OF EXISTENCE. Each of the Borrower and Operating shall
at all times (a) maintain its corporate, partnership or limited liability
company existence in its state of incorporation or organization (except for a
merger or consolidation of Operating permitted under Section 7.04, and (b)
maintain, and cause each other Borrower-Related Party to maintain, its good
standing and qualification to transact business in all jurisdictions where the
failure to maintain good standing or qualification to transact business could
reasonably be expected to result in a Material Adverse Change.
6.04 TITLE DATA. The Borrower and Operating shall, upon request of
Required Lenders, and in addition to the title information required to be
delivered pursuant to Section 4.01(b) and Section 6.15, cause to be delivered to
Administrative Agent such title opinions and other information regarding title
to Mineral Interests owned by any Credit Party that are included in the
Borrowing Base as are appropriate to determine the status thereof.
6.05 BOOKS AND RECORDS; RIGHT OF INSPECTION.
(a) The Borrower and Operating will, and will cause each other
Borrower-Related Party to, maintain proper books of record and account, in which
full, true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the assets and
business of such Borrower-Related Party.
(b) The Borrower and Operating will permit, and will cause each other
Borrower-Related Party to permit, any officer, employee or agent of
Administrative Agent or of any Lender, at their own risk, to visit and inspect
any of the assets of any Borrower-Related Party, examine each Borrower-Related
Party's books of record and accounts, take copies and extracts therefrom, and
discuss the affairs, finances and accounts of each Borrower-Related Party with
such Borrower-Related Party's officers, accountants and auditors, all at such
reasonable times and as often as Administrative Agent or any Lender may
reasonably request, all at the expense of
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the Borrower; provided however, that with respect to discussions with the
Borrower's independent accountants, the Borrower shall be given the opportunity
to have a representative present during such discussions.
6.06 MAINTENANCE OF INSURANCE. The Borrower and Operating will, and will
cause each other Borrower-Related Party to, at all times maintain or cause to be
maintained insurance covering such risks as are customarily carried by
businesses similarly situated, including, without limitation, the following: (a)
workmen's compensation insurance; (b) employer's liability insurance; (c)
comprehensive general public liability and property damage insurance; (d)
insurance against losses customarily insured against as a result of damage by
fire, lightning, hail, tornado, explosion and other similar risk; and (e)
comprehensive automobile liability insurance. All loss payable clauses or
provisions in all policies of insurance maintained by the Credit Parties
pursuant to this Section 6.06 shall be endorsed in favor of and made payable to
Administrative Agent for the ratable benefit of Lenders, as their interests may
appear.
6.07 PAYMENT OF TAXES AND CLAIMS. The Borrower and Operating will, and
will cause each other Borrower-Related Party to, pay (a) all Taxes imposed upon
it or any of its assets or with respect to any of its franchises, business,
income or profits before any material penalty or interest accrues thereon, and
(b) all material claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by Law have or might become a Lien (other than a Permitted Encumbrance) on
any of its assets; provided, however, no payment of Taxes or claims shall be
required if (i) the amount, applicability or validity thereof is currently being
contested in good faith by appropriate action promptly initiated and diligently
conducted in accordance with good business practices and no material part of the
property or assets of any Borrower-Related Party is subject to any pending levy
or execution, (ii) the Borrower-Related Parties, as and to the extent required
in accordance with GAAP, shall have set aside on their books reserves
(segregated to the extent required by GAAP) deemed by them to be adequate with
respect thereto, and (iii) the Borrower-Related Parties have notified
Administrative Agent of such circumstances in detail reasonably satisfactory to
Administrative Agent.
6.08 COMPLIANCE WITH LAWS AND DOCUMENTS. The Borrower and Operating will,
and will cause each other Borrower-Related Party to, comply with all Laws, their
respective partnership agreements, regulations, certificates of limited
partnership, articles of organization, certificates (or articles) of
incorporation, bylaws, and similar organizational documents, and all Material
Agreements to which any Borrower-Related Party is a party, if a violation, alone
or when combined with all other such violations, could reasonably be expected to
result in a Material Adverse Change.
6.09 OPERATION OF PROPERTIES AND EQUIPMENT.
(a) The Borrower and Operating will, and will cause each other Credit
Party to, maintain, develop and operate (or cause the operator to maintain and
operate to the extent any such Credit Party is not the operator) its Mineral
Interests in a good and workmanlike manner, and observe and comply in all
material respects with all of the terms and provisions, express or implied, of
all oil and gas leases relating to such Mineral Interests so long as such
Mineral
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Interests are capable of producing Hydrocarbons and accompanying elements in
paying quantities.
(b) The Borrower and Operating will, and will cause each other Credit
Party to, comply in all material respects with all contracts and agreements
applicable to or relating to its Mineral Interest or the production and sale of
Hydrocarbons and accompanying elements therefrom.
(c) The Borrower and Operating will, and will cause each other Credit
Party to, at all times maintain, preserve and keep all operating equipment used
with respect to its Mineral Interests in proper repair, working order and
condition, and make all necessary or appropriate repairs, renewals,
replacements, additions and improvements thereto so that the efficiency of such
operating equipment shall at all times be properly preserved and maintained;
provided, that, no item of operating equipment need be so repaired, renewed,
replaced, added to or improved if the Borrower or Operating, as applicable,
shall in good faith determine that such action is not necessary or desirable for
the continued efficient and profitable operation of the business of such Credit
Party.
6.10 ENVIRONMENTAL LAW COMPLIANCE. The Borrower and Operating will, and
will cause each other Borrower-Related Party to, comply with all Environmental
Laws, including, without limitation, (a) all licensing, permitting, notification
and similar requirements of Environmental Laws, and (b) all provisions of all
Environmental Laws regarding storage, discharge, release, transportation,
treatment and disposal of Hazardous Substances, a violation of which would
result in a Material Adverse Change. The Borrower and Operating will, and will
cause each other Borrower-Related Party to, promptly pay and discharge when due
all legal debts, claims, liabilities and obligations with respect to any
clean-up or remediation measures necessary to comply with Environmental Laws;
provided, however, no payment of such debts, claims, liabilities and obligations
shall be required if (i) the amount, applicability or validity thereof is
currently being contested in good faith by appropriate action promptly initiated
and diligently conducted in accordance with good business practices and no
material part of the property or assets of any Borrower-Related Party is subject
to any pending levy or execution, (ii) the Borrower-Related Parties, as and to
the extent required in accordance with GAAP, shall have set aside on their books
reserves (segregated to the extent required by GAAP) deemed by them to be
adequate with respect thereto, and (iii) the Borrower-Related Parties have
notified Administrative Agent of such circumstances in detail reasonably
satisfactory to Administrative Agent.
6.11 ERISA REPORTING REQUIREMENTS. The Borrower and Operating shall
furnish, or cause to be furnished, to Administrative Agent:
(a) promptly, and in any event (i) within thirty (30) days after any
Borrower-Related Party or any ERISA Affiliate knows or has reason to know that
any ERISA Event described in clause (a) of the definition of ERISA Event or any
event described in Section 4063(a) of ERISA with respect to any Plan of any
Borrower-Related Party or any ERISA Affiliate has occurred, and (ii) within
fifteen (15) days after any Borrower-Related Party or any ERISA Affiliate knows
or has reason to know that any other ERISA Event with respect to any Plan of any
Borrower-Related Party or any ERISA Affiliate has occurred or a request for
minimum funding waiver
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under Section 412 of the Code with respect to any Plan of any Borrower-Related
Party or any ERISA Affiliate has been made, a written notice describing such
event and describing what action is being taken or is proposed to be taken with
respect thereto, together with a copy of any notice of event that is given to
the PBGC;
(b) promptly, and in any event within five (5) Business Days after
receipt thereof by any Borrower-Related Party or any ERISA Affiliate from the
PBGC, copies of each notice received by any Borrower-Related Party or any ERISA
Affiliate of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(c) promptly, and in any event within thirty (30) days after the receipt
by any Borrower-Related Party of a request therefor by a Lender, copies of any
annual and other report (including Schedule B thereto) with respect to a Plan
filed by any Borrower-Related Party or any ERISA Affiliate with the United
States Department of Labor, the Internal Revenue Service or the PBGC;
(d) promptly, and in any event within ten (10) Business Days after
receipt thereof, a copy of any correspondence any Borrower-Related Party or any
ERISA Affiliate receives from the Plan Sponsor (as defined in Section
4001(a)(10) of ERISA) of any Plan asserting withdrawal liability pursuant to
Section 4219 or 4202 of ERISA upon any Borrower-Related Party or any ERISA
Affiliate, and a statement from the chief financial officer of such
Borrower-Related Party or such ERISA Affiliate setting forth details as to the
events giving rise to such withdrawal liability and the action which such
Borrower-Related Party or such ERISA Affiliate is taking or proposes to take
with respect thereto;
(e) notification within thirty (30) days of the effective date thereof
of any material increases in the benefits of any existing Plan which is not a
Multiemployer Plan, or the establishment of any new Plans, or the commencement
of contributions to any Plan to which any Borrower-Related Party or any ERISA
Affiliate was not previously contributing; and
(f) notification within five (5) Business Days after any
Borrower-Related Party or any ERISA Affiliate knows or has reason to know that
any such Borrower-Related Party or any such ERISA Affiliate has or intends to
file a notice of intent to terminate any Plan under a distress termination
within the meaning of Section 4041(c) of ERISA and a copy of such notice.
6.12 ADDITIONAL DOCUMENTS. The Borrower and Operating will, and will
cause each other Credit Party (to the extent each is party thereto) to, cure
promptly any defects in the creation and issuance of each Note, and the
execution and delivery of this Agreement and the other Loan Documents and, at
the Borrower's and Operating's expense, the Borrower and Operating shall
promptly and duly execute and deliver to each Lender, and cause each other
Credit Party to promptly and duly execute and deliver to each Lender, upon
reasonable request, all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants and agreements
of the Credit Parties in this Agreement and the other Loan Documents as may be
reasonably necessary or appropriate in connection therewith.
6.13 ENVIRONMENTAL REVIEW. In connection with any acquisition by any
Borrower-Related Party, if such acquisition or a series of related acquisitions
involves assets valued at
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greater than $10,000,000, other than (a) undeveloped oil and gas leasehold
interests, or (b) an acquisition of additional interests in assets in which any
Borrower-Related Party previously held an interest, the Borrower and Operating
shall (x) notify the Administrative Agent of such acquisition, and (y) if
requested by the Administrative Agent, provide to the Administrative Agent a
report or reports in form, scope and detail reasonably acceptable to
Administrative Agent from environmental engineering firms reasonably acceptable
to Administrative Agent, which report or reports shall set forth the results of
a Phase I environmental review of such assets.
6.14 SECURITY.
(a) The Obligations shall be secured by first and prior Liens (subject
only to Permitted Encumbrances and Immaterial Title Deficiencies) covering and
encumbering (i) the Mineral Interests owned by the Credit Parties specified by
Administrative Agent or Required Lenders which shall in all events include not
less than the Mortgage Required Reserve Value of all Proved Mineral Interests
then owned by the Credit Parties, and (ii) all of the issued and outstanding
Equity Interests owned by the Borrower of each existing and future Restricted
Subsidiary of the Borrower and all of the issued and outstanding Equity
Interests owned by each First Tier Restricted Subsidiary of each existing and
future Restricted Subsidiary of any such First Tier Restricted Subsidiary. The
Borrower and Operating hereby consent and authorize Administrative Agent, and
its agents, successors and assigns, to file any and all necessary financing
statements under the Uniform Commercial Code (as in effect in the State of Texas
from time to time) assignments or continuation statements as necessary from time
to time (in Administrative Agent's discretion) to perfect (or continue
perfection) of the Liens granted pursuant to the Loan Documents.
(b) On the Closing Date and on or before each Redetermination Date after
the Closing Date, and at such other times as Administrative Agent or Required
Lenders shall request, the Borrower and Operating shall, and shall cause each
other Credit Party that owns Borrowing Base Properties to, deliver to
Administrative Agent, for the ratable benefit of each Lender, Mortgages duly
executed by such Credit Party, together with such other assignments,
conveyances, agreements and other writings, including, without limitation, UCC
financing statements and/or amendments to financing statements as Administrative
Agent shall deem necessary or appropriate to grant, evidence and perfect the
Liens required by Section 6.14(a) preceding with respect to Mineral Interests
then held by such Credit Party which are not the subject of existing first and
prior, perfected Liens securing the Obligations as required by Section 6.14(a)
preceding.
(c) On the date of the creation or acquisition by the Borrower of any
Restricted Subsidiary, or on the date of creation or acquisition by any First
Tier Restricted Subsidiary of any Restricted Subsidiary, or on the date any
Unrestricted Subsidiary becomes a Restricted Subsidiary, the Borrower or such
First Tier Restricted Subsidiary (as applicable) shall execute and deliver to
Administrative Agent an addendum to the Pledge Agreement pursuant to which the
Equity Interests of the Borrower or such First Tier Restricted Subsidiary in
such Restricted Subsidiary shall be pledged to Administrative Agent, together
with (i) all certificates (or other evidence acceptable to Administrative Agent)
evidencing the issued and outstanding Equity Interests of any such Restricted
Subsidiary of every class which shall be duly endorsed or
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accompanied by stock powers executed in blank (as applicable), and (ii) such UCC
financing statements and/or amendments to financing statements as Administrative
Agent shall deem necessary or appropriate to grant, evidence and perfect the
Liens required by Section 6.14(a) in the issued and outstanding Equity Interests
of each such Restricted Subsidiary.
6.15 TITLE OPINIONS. At any time any Credit Party is required to execute
and deliver Mortgages to Administrative Agent pursuant to Section 6.14(a), the
Borrower shall also deliver to Administrative Agent such opinions of counsel
(including, if so requested, title opinions, and in each case addressed to
Administrative Agent) or other evidence of title as Administrative Agent shall
reasonably deem necessary or appropriate to verify (a) the applicable Credit
Party's title to the Title Required Reserve Value of the Proved Mineral
Interests which are subject to such Mortgages, and (b) the validity and
perfection of the Liens created by such Mortgages.
6.16 GUARANTEES. Payment and performance of the Obligations shall be
fully guaranteed by Operating and each other existing or hereafter created or
acquired Restricted Subsidiary of the Borrower and each Unrestricted Subsidiary
that becomes a Restricted Subsidiary, pursuant to a Guaranty. On the date of
creation or acquisition by the Borrower or any of its Subsidiaries of any
Restricted Subsidiary, or on the date any Unrestricted Subsidiary becomes a
Restricted Subsidiary, the Borrower shall cause such Restricted Subsidiary to
execute and deliver to Administrative Agent a Guaranty.
ARTICLE VII.
NEGATIVE COVENANTS
The Borrower and Operating agree that, so long as there remain any
Outstanding Amounts, or any Lender has any Commitment hereunder:
7.01 INCURRENCE OF DEBT. The Borrower and Operating will not, nor will
the Borrower and/or Operating permit any other Credit Party to, incur, become or
remain liable for any Debt other than (a) the Obligations (including, without
limitation, Debt pursuant to any Hedge Transaction entered into by a Credit
Party with a Lender or any Affiliate of any Lender), (b) the Permitted
Subordinate Debt, (c) other Debt under Hedge Transactions, provided, that such
Hedge Transactions comply with the terms and provisions of this Agreement,
including, without limitation, Section 7.10, (d) other Debt in an aggregate
principal amount outstanding at any time not to exceed $30,000,000, and (e)
intercompany Debt between Credit Parties.
7.02 RESTRICTED PAYMENTS. The Borrower and Operating will not, nor will
the Borrower and/or Operating permit any other Credit Party to, directly or
indirectly, declare or pay, or incur any liability to declare or pay, any
Restricted Payment, except that, so long as no Default shall have occurred and
be continuing at the time of any action described below or would result
therefrom and no Borrowing Base Deficiency exists:
(a) the Borrower may make a Restricted Payment or a Restricted
Investment under Section 7.08(j) if, immediately after giving effect to such
Restricted Payment or such Restricted Investment under Section 7.08(j), the
aggregate amount of Restricted Payments made by the Borrower pursuant to this
Section 7.02(a) during the period commencing on the Closing Date and ending on
the date such Restricted Payment is made plus the amount of Restricted
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Investments then outstanding under Section 7.08(j) would not exceed the sum of
(i) $20,000,000, plus (ii) fifty percent (50%) of the Consolidated Net Income
for such period (or less one hundred percent (100%) of the Consolidated Net
Income for such period if it is a loss), computed on a cumulative basis;
(b) the Borrower may make any Restricted Payment in exchange for, or
with the net cash proceeds received from, a substantially concurrent issue of
new shares of its common stock or other common Equity Interests;
(c) each Credit Party may make a Restricted Payment of the type
identified in item (c) of the definition thereof; and
(d) the Borrower may make a Restricted Payment of the type identified in
item (b) of the definition thereof in connection with a Permitted Refinancing
thereof or in connection with a Special Mandatory Redemption.
7.03 NEGATIVE PLEDGE. The Borrower and Operating will not, nor will the
Borrower and/or Operating permit any other Credit Party to, create, assume or
suffer to exist any Lien on any asset of any Credit Party other than Permitted
Encumbrances and Immaterial Title Deficiencies.
7.04 CONSOLIDATIONS AND MERGERS. The Borrower and Operating will not, nor
will the Borrower and/or Operating permit any other Credit Party to, consolidate
or merge with or into any other Person; provided that, so long as no Default or
Event of Default exists or will result and all representations and warranties
will be true and correct after giving effect thereto, (a) the Borrower may merge
or consolidate with another Person so long as the Borrower is the surviving
entity, and (b) any wholly owned Restricted Subsidiary of the Borrower may merge
or consolidate with any other Person so long as a wholly owned Restricted
Subsidiary of the Borrower is the surviving entity.
7.05 DISPOSITIONS. The Borrower and Operating will not, nor will the
Borrower and/or Operating permit any other Credit Party to, sell, lease,
transfer, abandon or otherwise dispose of any asset other than:
(a) dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;
(b) dispositions of equipment to the extent that (i) such equipment is
exchanged for credit against the purchase price of similar replacement equipment
or (ii) the proceeds of such disposition are reasonably promptly applied to the
purchase price of such replacement equipment;
(c) the sale in the ordinary course of business of Hydrocarbons produced
from the Credit Parties' Mineral Interests,
(d) Asset Dispositions and other dispositions of Mineral Interests;
provided, that, all mandatory prepayments required by Section 2.04 in connection
with such Asset Disposition
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(after giving effect to any adjustment pursuant to Section 2.13(d) for such
Asset Disposition) are made concurrently with the closing thereof;
(e) a disposition between Credit Parties;
(f) the creation of a Permitted Encumbrance;
(g) the surrender or waiver of contract rights or the disposition,
settlement, release or surrender of contract, tort or other claims of any kind;
(h) any disposition of defaulted receivables that arose in the ordinary
course of business for collection;
(i) during each calendar year, a single transaction or series of related
transactions that involve the disposition of assets (other than Mineral
Interests or Debt of or Equity Interests in a Credit Party) with a fair market
value of less than $5,000,000;
(j) a Restricted Payment permitted by Section 7.02; and
(k) an Investment permitted by Section 7.08.
In no event will any Credit Party (other than the Borrower) sell, transfer
or dispose of, or permit any other Credit Party (other than the Borrower) to
sell, transfer or dispose of any capital stock of, or other equity interest in,
any Restricted Subsidiary of the Borrower nor will the Borrower or Operating
permit any other Credit Party (other than the Borrower) to issue or sell any
capital stock or other equity interest or any option, warrant or other right to
acquire such capital stock or equity interest or security convertible into such
capital stock or equity interest to any Person other than a Credit Party unless
(i) such disposition is otherwise permitted by this Section 7.05 and (ii) the
remaining ownership in such Person, if any, would be a Restricted Investment
permitted by Section 7.08.
7.06 AMENDMENTS TO ORGANIZATIONAL DOCUMENTS; OTHER MATERIAL AGREEMENTS.
The Borrower and Operating will not, nor will the Borrower and/or Operating
permit any other Credit Party to, enter into or permit any material modification
or amendment of, or waive any material right or obligation of any Person under,
(a) its certificate or articles of incorporation, bylaws, partnership agreement,
regulations or other organizational documents if such modification, amendment or
waiver could reasonably be expected to have a Material Adverse Effect, or (b)
the documents, instruments and agreements evidencing or otherwise pertaining to
the Permitted Subordinate Debt.
7.07 USE OF PROCEEDS. The proceeds of Borrowings will not be used for any
purpose other than (a) to make intercompany advances from the Borrower to
another Credit Party, (b) to refinance the obligations outstanding under the
Existing Credit Agreement, (c) working capital, (d) to finance the acquisition,
exploration, development and operation of Mineral Interests and the production,
marketing, processing and transportation of Hydrocarbons therefrom, and related
capital assets, and (e) for general corporate purposes. None of such proceeds
(including, without limitation, proceeds of Letters of Credit issued hereunder)
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any Margin
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Stock, and none of such proceeds will be used in violation of applicable Law
(including, without limitation, the Margin Regulations). Letters of Credit will
be issued hereunder only for the purpose of securing bids, tenders, bonds,
contracts and other obligations entered into in the ordinary course of the
Borrower's and its Restricted Subsidiaries' business. Without limiting the
foregoing, no Letter of Credit will be issued hereunder for the purpose of
providing credit enhancement with respect to any Debt or equity security of any
Credit Party, or to secure any Credit Party's obligations with respect to Hedge
Transactions other than (i) Hedge Transactions with a Lender or an Affiliate of
any Lender, or (ii) Hedge Transactions with a counterparty other than a Lender
or an Affiliate of a Lender provided that such Hedge Transactions otherwise
comply with the terms and provisions of this Agreement, including, without
limitation, Section 7.01 and Section 7.10.
7.08 INVESTMENTS. The Borrower and Operating will not, nor will the
Borrower and/or Operating permit any other Credit Party to, directly or
indirectly, make or have outstanding any Investment other than:
(a) Permitted Cash Equivalent Investments;
(b) Investments in a Restricted Subsidiary that has provided a Guaranty
and the Equity Interests of which have been pledged to Administrative Agent; or
investments in a Person that will, upon the making of such Investment, become a
wholly-owned Restricted Subsidiary or be merged or consolidated with or into, or
transfer or convey all or substantially all of its assets or a business unit to,
the Borrower or any wholly-owned Restricted Subsidiary; provided that (i) the
Borrower shall comply with Sections 6.13 and 6.14, as applicable, (ii) no
Default exists or will result therefrom, (iii) no Borrowing Base Deficiency
exists, and (iv) the representations and warranties set forth in Article V will
be true and correct in all material respects after giving effect thereto;
(c) to the extent constituting a Guarantee permitted by Section 7.01;
(d) to the extent constituting a Restricted Payment permitted by Section
7.02(b), (c), or (d);
(e) receivables owing to the Borrower or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however, that
such trade terms may include such concessionary trade terms as the Borrower or
any such Restricted Subsidiary deems reasonable under the circumstances;
(f) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses for
accounting purposes and that are made in the ordinary course of business;
(g) loans or advances to officers, directors and employees made in the
ordinary course of business consistent with past practices of the Borrower or
such Restricted Subsidiary;
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(h) Investments made in exchange for, or with the net cash proceeds
received from, a substantially concurrent issue of new shares of common stock or
other common Equity Interest of the Borrower;
(i) Restricted Investments up to an aggregate amount under this Section
7.08(i) not to exceed $25,000,000 at any one time outstanding; and
(j) Restricted Investments up to an aggregate amount under this Section
7.08(j) not to exceed the amount permitted under Section 7.02(a).
7.09 TRANSACTIONS WITH AFFILIATES. The Borrower and Operating will not,
nor will the Borrower and/or Operating permit any other Credit Party to, engage
in any transaction with an Affiliate (other than a Credit Party) unless such
transaction is as favorable to such party as could be obtained in an arm's
length transaction with an unaffiliated Person in accordance with prevailing
industry customs and practices.
7.10 HEDGE TRANSACTIONS. The Borrower and Operating will not, nor will
the Borrower and/or Operating permit any other Credit Party to, enter into any
Hedge Transactions other than (i) Oil and Gas Hedge Transactions that would not
cause the volume of Hydrocarbons with respect to which a settlement payment is
calculated under such Oil and Gas Hedge Transactions to exceed seventy-five
percent (75%) of the Credit Parties' anticipated production from Proved
Producing Mineral Interests during the period from the immediately preceding
settlement date (or the commencement of such Hedge Transaction if there is no
prior settlement date) to such settlement date, and/or (ii) the purchase of a
floor or put that has the effect of setting a minimum commodity price for up to
one hundred percent (100%) of such anticipated production from Proved Producing
Mineral Interests (inclusive of any floor or put included in clause (i) of this
Section 7.10).
7.11 FISCAL YEAR. The Borrower will not change its Fiscal Year.
7.12 CHANGE IN BUSINESS. The Borrower and Operating will not, nor will
the Borrower and/or Operating permit any other Credit Party to, be engaged, as
its principal business, in any business other than the businesses described in
Section 5.13 hereof.
7.13 FINANCIAL COVENANTS.
(a) The Borrower will not permit its ratio of Consolidated Current
Assets to Consolidated Current Liabilities to be less than 1.0 to 1.0 at the
last day of each Fiscal Quarter, commencing June 30, 2004.
(b) At the last day of each Fiscal Quarter, commencing June 30, 2004,
the Borrower will not permit its ratio of (i) Consolidated EBITDA (for the four
(4) Fiscal Quarters ending on such date) to (ii) the sum of (A) Consolidated Net
Interest Expense (for the four (4) Fiscal Quarters ending on such date) plus (B)
Letter of Credit Fees (accruing during the Fiscal Quarter ending on such date)
to be less than 2.5 to 1.
7.14 BURDENSOME AGREEMENTS. The Borrower and Operating will not, nor will
the Borrower and/or Operating permit any other Credit Party to, enter into any
Material Agreement
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(other than this Agreement or any other Loan Document) that (a) limits the
ability (i) of any Restricted Subsidiary to make Restricted Payments to the
Borrower or any Guarantor or otherwise to transfer property to the Borrower or
any Guarantor, (ii) of any Restricted Subsidiary to Guarantee the Debt of the
Borrower or (iii) of the Borrower or any Restricted Subsidiary to create, incur,
assume or suffer to exist Liens on property of such Person; or (b) requires the
grant of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation of such Person, except:
(1) (A) as contained in documents governing Permitted Subordinate Debt
that, taken as a whole, are no more restrictive than those contained in the
Original Issuance;
(B) as contained in documents governing any other Debt permitted by
Section 7.01(c) and (d) that, taken as a whole, are no more restrictive than
those contained in the Loan Documents;
(C) any customary encumbrance or restriction with respect to a
Restricted Subsidiary imposed pursuant to a merger agreement or an agreement
entered into for the sale or disposition of all or substantially all the capital
stock or assets of such Restricted Subsidiary pending the closing of such sale
or disposition; and
(2) with respect to clause (a)(iii) only,
(A) any such encumbrance or restriction consisting of customary
nonassignment provisions (including provisions forbidding subletting or
sublicensing) in leases governing leasehold interests and licenses to the extent
such provisions restrict the transfer of the lease or license or the property
leased, or licensed thereunder;
(B) customary restrictions contained in asset sale agreements limiting
the transfer of such assets pending the closing of such sale; and
(C) restrictions in the instruments creating a Permitted Encumbrance
described in clause (g), (i), (j), (l) or (n) of the definition of Permitted
Encumbrances, limiting Liens on the property subject to such Permitted
Encumbrance.
7.15 DESIGNATION OF UNRESTRICTED SUBSIDIARIES.
(a) The Borrower will not designate any Subsidiary as an Unrestricted
Subsidiary, unless:
(i) such Subsidiary has been designated as an "Unrestricted
Subsidiary" as that term is used in the Indenture governing the Permitted
Subordinate Debt;
(ii) neither such Subsidiary nor any of its Subsidiaries has any
Debt except Non-Recourse Debt;
(iii) neither such Subsidiary nor any of its Subsidiaries is a party
to any agreement, arrangement, understanding or other transaction with the
Borrower or any Restricted Subsidiary, except those agreements and other
transactions entered into in
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writing in the ordinary course of business at prices and on terms and
conditions not less favorable to the Borrower and each Restricted
Subsidiary than could be obtained on an arm's-length basis from unrelated
third parties;
(iv) neither such Subsidiary nor any of its Subsidiaries is a
Guarantor or has any outstanding Letter of Credit issued for its account;
(v) neither such Subsidiary nor any of its Subsidiaries owns any
Mineral Interests included in the Borrowing Base in effect at the time of
such designation;
(vi) at the time of such designation and immediately after giving
effect thereto, no Borrowing Base Deficiency shall exist and no Default
shall have occurred and be continuing;
(vii) the Borrower would have been in compliance with Section
7.13(b) on the last day of the most recently ended Fiscal Quarter of the
Borrower had such Subsidiary been an Unrestricted Subsidiary on such day;
(viii) neither such Subsidiary nor any of its Subsidiaries owns any
Debt or Equity Interest of, or is the beneficiary of any Lien on any
property of, the Borrower or any Restricted Subsidiary;
(ix) at or immediately prior to such designation, the Borrower
delivers a certificate to the Administrative Agent certifying (A) the
names of such Subsidiary and all of its Subsidiaries, and (B) that all
requirements of this Section 7.15 have been met for such designation; and
(x) the Investment represented by such designation is permitted
under Section 7.08(h), Section 7.08(i) and/or Section 7.08(j).
(b) If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Agreement and any Debt of
such Subsidiary shall be deemed to be incurred as of such date.
(c) The Borrower will not permit any Unrestricted Subsidiary to acquire
or create any Subsidiary of such Unrestricted Subsidiary unless such Subsidiary
is designated as an Unrestricted Subsidiary in accordance with this Section
7.15.
(d) In the case of any designation by Borrower of a Person as an
Unrestricted Subsidiary on the first day that such Person is a Subsidiary of
Borrower in accordance with the provisions of this Agreement, such designation
shall be deemed to have occurred for all purposes of this Agreement
simultaneously with, and automatically upon, such person becoming a Subsidiary.
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ARTICLE VIII.
DEFAULTS
8.01 EVENTS OF DEFAULT. If one or more of the following events
(collectively "Events of Default" and individually an "Event of Default") shall
have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal on any Loan or
any reimbursement obligation with respect to any Letters of Credit when due;
(b) the Borrower shall fail to pay when due accrued interest on any Loan
or any fees or any other amount payable hereunder and such failure shall
continue for a period of three (3) days following the due date;
(c) the Borrower and/or Operating shall fail to observe or perform any
covenant or agreement contained in Article VII of this Agreement;
(d) any Credit Party shall fail to observe or perform any covenant or
agreement contained in this Agreement or any other Loan Documents (other than
those referenced in Sections 8.01(a), 8.01(b) or 8.01(c)) and such failure
continues for a period of thirty (30) days after the earlier of (i) the date any
Responsible Officer of any Credit Party acquires knowledge of such failure, or
(ii) written notice of such failure has been given to any Credit Party by
Administrative Agent or any Lender;
(e) any representation, warranty, certification or statement made or
deemed to have been made by any Credit Party in any certificate, financial
statement or other document delivered pursuant to this Agreement shall prove to
have been incorrect in any material respect when made or confirmed;
(f) any Credit Party shall fail to make any payment when due on any Debt
of such Person in a principal amount equal to or greater than $5,000,000 or any
other event or condition (other than a Special Mandatory Redemption) shall occur
which (i) results in the acceleration of the maturity of any such Debt, or (ii)
entitles the holder of such Debt to accelerate the maturity thereof;
(g) any Credit Party shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar Law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate, partnership or limited liability company action to authorize
any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced against
any Credit Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar Law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
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substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty (60) days; or an
order for relief shall be entered against any Credit Party under the federal
bankruptcy Laws as now or hereafter in effect;
(i) one (1) or more final judgments or orders for the payment of money
aggregating in excess of $5,000,000 shall be rendered against any Credit Party
and such judgment or order shall continue unsatisfied and unstayed for thirty
(30) days;
(j) (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Borrower-Related Party under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$5,000,000, or (ii) any Borrower-Related Party or any ERISA Affiliate fails to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$5,000,000;
(k) this Agreement or any other Loan Document shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Credit Party, or
any Credit Party shall deny that it has any further liability or obligation
under any of the Loan Documents to which it is a party, or any Lien created by
the Loan Documents shall for any reason (other than the release thereof in
accordance with the Loan Documents) cease to be a valid, first priority,
perfected Lien upon any of the collateral purported to be covered thereby; or
(l) a Change of Control shall occur;
then, and in every such event, Administrative Agent shall without
presentment, notice or demand (unless expressly provided for herein) of any kind
(including, without limitation, notice of intention to accelerate and
acceleration), all of which are hereby waived, (i) if requested by Required
Lenders, terminate the Commitments and they shall thereupon terminate, and (ii)
if requested by Required Lenders, take such other actions as may be permitted by
the Loan Documents including, declaring the Loans (together with accrued
interest thereon) to be, and the Loans shall thereupon become, immediately due
and payable; provided that in the case of any of the Events of Default specified
in Section 8.01(g) or Section 8.01(h), without any notice to any Credit Party or
any other act by Administrative Agent or Lenders, the Commitments shall
thereupon terminate and the Loans (together with accrued interest thereon) shall
become immediately due and payable.
8.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs and
is continuing, the Administrative Agent shall, at the request of, or may, with
the consent of, the Required Lenders, take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan
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Document to be immediately due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby expressly waived by the
Borrower;
(c) require that the Borrower Cash Collateralize the L/C Obligations (in
an amount equal to the then Outstanding Amount thereof); and
(d) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents;
provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Lender.
8.03 APPLICATION OF FUNDS. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:
First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;
Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders and the L/C Issuer (including fees, charges and disbursements of counsel
to the respective Lenders and the L/C Issuer (including fees and time charges
for attorneys who may be employees of any Lender or the L/C Issuer) and amounts
payable under Article III), ratably among them in proportion to the amounts
described in this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loans, L/C Borrowings and other Obligations, ratably
among the Lenders and the L/C Issuer in proportion to the respective amounts
described in this clause Third payable to them;
Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, L/C Borrowings and amounts owing to any Lender or any
Affiliate of any Lender in respect of any Hedge Transaction entered into by a
Credit Party with such Lender or such Affiliate of any Lender ratably among the
Lenders, the L/C Issuer and such Lender or Affiliate of any Lender in respect of
such Hedge Transactions in proportion to the respective amounts described in
this clause Fourth held by them;
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Fifth, to the Administrative Agent for the account of the L/C Issuer, to
Cash Collateralize that portion of L/C Obligations comprised of the aggregate
undrawn amount of Letters of Credit; and
Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by Law.
Subject to Section 2.03(c), amounts used to Cash Collateralize the
aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above
shall be applied to satisfy drawings under such Letters of Credit as they occur.
If any amount remains on deposit as Cash Collateral after all Letters of Credit
have either been fully drawn or expired, such remaining amount shall be applied
to the other Obligations, if any, in the order set forth above.
ARTICLE IX.ADMINISTRATIVE AGENT
9.01 APPOINTMENT AND AUTHORITY. Each of the Lenders and the L/C Issuer
hereby irrevocably appoints Bank of America to act on its behalf as the
Administrative Agent hereunder and under the other Loan Documents and authorizes
the Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the
Administrative Agent, the Lenders and the L/C Issuer, and neither the Borrower
nor Operating shall have rights as a third party beneficiary of any of such
provisions.
9.02 RIGHTS AS A LENDER. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.
9.03 EXCULPATORY PROVISIONS. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel,
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may expose the Administrative Agent to liability or that is contrary to any Loan
Document or applicable law; and
(c) shall not, except as expressly set forth herein and in the other
Loan Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not
taken by it (i) with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower, a
Lender or the L/C Issuer.
The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.
9.04 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to have been made by the proper Person, and shall not incur any liability
for relying thereon. In determining compliance with any condition hereunder to
the making of a Loan, or the issuance of a Letter of Credit, that by its terms
must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the
Administrative Agent may presume that such condition is satisfactory to such
Lender or the L/C Issuer unless the Administrative Agent shall have received
notice to the contrary from such Lender or the L/C Issuer prior to the making of
such Loan or the issuance of such Letter of Credit. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
9.05 DELEGATION OF DUTIES. The Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub agents appointed by the
Administrative Agent. The Administrative
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Agent and any such sub agent may perform any and all of its duties and exercise
its rights and powers by or through their respective Related Parties. The
exculpatory provisions of this Article shall apply to any such sub agent and to
the Related Parties of the Administrative Agent and any such sub agent, and
shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as
Administrative Agent.
9.06 RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative Agent may at
any time give notice of its resignation to the Lenders, the L/C Issuer and the
Borrower. Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, in consultation with the Borrower, to appoint a successor,
which shall be a bank with an office in the United States, or an Affiliate of
any such bank with an office in the United States. If no such successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting the
qualifications set forth above; provided that if the Administrative Agent shall
notify the Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral security held by the
Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the
Loan Documents, the retiring Administrative Agent shall continue to hold such
collateral security until such time as a successor Administrative Agent is
appointed) and (2) all payments, communications and determinations provided to
be made by, to or through the Administrative Agent shall instead be made by or
to each Lender and the L/C Issuer directly, until such time as the Required
Lenders appoint a successor Administrative Agent as provided for above in this
Section. Upon the acceptance of a successor's appointment as Administrative
Agent hereunder, such successor shall succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring Administrative Agent shall be discharged
from all of its duties and obligations hereunder or under the other Loan
Documents (if not already discharged therefrom as provided above in this
Section). The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the retiring Administrative
Agent's resignation hereunder and under the other Loan Documents, the provisions
of this Article and Section 10.04 shall continue in effect for the benefit of
such retiring Administrative Agent, its sub agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Administrative Agent was acting as Administrative Agent.
Any resignation by Bank of America as Administrative Agent pursuant to
this Section shall also constitute its resignation as L/C Issuer. Upon the
acceptance of a successor's appointment as Administrative Agent hereunder, (a)
such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring L/C Issuer, (b) the retiring L/C
Issuer shall be discharged from all of their respective duties and obligations
hereunder or under the other Loan Documents, and (c) the successor L/C Issuer
shall issue letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or make other arrangement
satisfactory to the retiring L/C Issuer to effectively assume the obligations of
the retiring L/C Issuer with respect to such Letters of Credit.
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9.07 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each Lender
and the L/C Issuer acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender or any of their Related
Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and the L/C Issuer also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.
9.08 NO OTHER DUTIES, ETC. Anything herein to the contrary
notwithstanding, none of the Bookrunners, Arrangers, Syndication Agents or
Documentation Agents listed on the cover page hereof shall have any powers,
duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Administrative Agent, a
Lender or the L/C Issuer hereunder.
9.09 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Credit Party, the Administrative Agent (irrespective
of whether the principal of any Loan or L/C Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered, by intervention in such proceeding or otherwise
(a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders, the L/C
Issuer and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the L/C
Issuer and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders, the L/C Issuer and the Administrative Agent
under Sections 2.03(i) and 2.03(j), 2.09 and 10.04) allowed in such judicial
proceeding; and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the L/C Issuer to make such payments to the Administrative Agent
and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Sections 2.09
and 10.04.
Nothing contained herein shall be deemed to authorize the Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Lender or
the L/C Issuer any plan of
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reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or to authorize the Administrative Agent to vote in
respect of the claim of any Lender in any such proceeding.
9.10 COLLATERAL AND GUARANTY MATTERS. The Lenders and the L/C Issuer
irrevocably authorize the Administrative Agent, at its option and in its
discretion,
(a) to release any Lien on any property granted to or held by the
Administrative Agent under any Loan Document (i) upon termination of the
Aggregate Commitments and payment in full of all Obligations (other than
contingent indemnification obligations) and the expiration or termination of all
Letters of Credit, (ii) that is sold or to be sold as part of or in connection
with any sale permitted hereunder or under any other Loan Document, or (iii)
subject to Section 10.01, if approved, authorized or ratified in writing by the
Required Lenders; and
(b) to release any Guarantor from its obligations under the Guaranty if
such Person ceases to be a Restricted Subsidiary as a result of a transaction
permitted hereunder.
Upon request by the Administrative Agent at any time, the Required Lenders
will confirm in writing the Administrative Agent's authority to release or
subordinate its interest in particular types or items of property, or to release
any Guarantor from its obligations under the Guaranty pursuant to this Section
9.10.
ARTICLE X.
MISCELLANEOUS
10.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Credit Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Credit
Party, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no such
amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01(a) without the written
consent of each Lender;
(b) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02) without the written consent of
such Lender;
(c) postpone any date fixed by this Agreement or any other Loan Document
for any payment (excluding mandatory prepayments) of principal, interest, fees
or other amounts due to the Lenders (or any of them) hereunder or under any
other Loan Document without the written consent of each Lender directly affected
thereby;
(d) reduce the principal of, or the rate of interest specified herein
on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso
to this Section 10.01) any fees or other amounts payable hereunder or under any
other Loan Document without the written consent of each Lender directly affected
thereby; provided, however, that only the consent of the
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Required Lenders shall be necessary (i) to amend the definition of "Default
Rate" or to waive any obligation of the Borrower to pay interest or Letter of
Credit Fees at the Default Rate or (ii) to amend any financial covenant
hereunder (or any defined term used therein) even if the effect of such
amendment would be to reduce the rate of interest on any Loan or L/C Borrowing
or to reduce any fee payable hereunder;
(e) change Section 2.13 or Section 8.03 in a manner that would alter the
pro rata sharing of payments required thereby without the written consent of
each Lender;
(f) change any provision of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender;
(g) release all or substantially all of the Guarantors from the
Guaranties without the written consent of each Lender; or
(h) release all or substantially all of the Collateral in any
transaction or series of related transactions without the written consent of
each Lender;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Commitment of such Lender may not be increased or extended
without the consent of such Lender.
10.02 NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION.
(a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier as
follows, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:
(i) if to the Borrower, Operating, the Administrative Agent or the
L/C Issuer, to the address, telecopier number, electronic mail address or
telephone number specified for such Person on Schedule 10.02; and
(ii) if to any other Lender, to the address, telecopier number,
electronic mail address or telephone number specified in its
Administrative Questionnaire.
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Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).
(b) Electronic Communications. Notices and other communications to the
Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic
communication (including e mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent, provided that the foregoing
shall not apply to notices to any Lender or the L/C Issuer pursuant to Article
II if such Lender or the L/C Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and
other communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
(c) Change of Address, Etc. Each of the Borrower, Operating, the
Administrative Agent and the L/C Issuer may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the
other parties hereto. Each other Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the
Borrower, the Administrative Agent and the L/C Issuer.
(d) Reliance by Administrative Agent, L/C Issuer and Lenders. The
Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely
and act upon any notices (including telephonic Loan Notices) purportedly given
by or on behalf of the Borrower or Operating even if (i) such notices were not
made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof.
The Borrower shall indemnify the Administrative Agent, the L/C Issuer, each
Lender and the Related Parties of each of them from all losses, costs, expenses
and liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower. All telephonic notices to and
other telephonic communications with the Administrative Agent may be recorded by
the Administrative Agent, and each of the parties hereto hereby consents to such
recording.
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10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender, the L/C
Issuer or the Administrative Agent to exercise, and no delay by any such Person
in exercising, any right, remedy, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.04 EXPENSES; INDEMNITY; DAMAGE WAIVER.
(a) Costs and Expenses. The Borrower shall pay (i) all reasonable out of
pocket expenses incurred by the Administrative Agent and its Affiliates
(including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out of pocket expenses incurred by the L/C
Issuer in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all out of
pocket expenses incurred by the Administrative Agent, any Lender or the L/C
Issuer (including the fees, charges and disbursements of any counsel for the
Administrative Agent, any Lender or the L/C Issuer), and shall pay all fees and
time charges for attorneys who may be employees of the Administrative Agent, any
Lender or the L/C Issuer, in connection with the enforcement or protection of
its rights (A) in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or (B) in connection with the Loans
made or Letters of Credit issued hereunder, including all such out of pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit.
(b) Indemnification by the Borrower. The Borrower shall indemnify each
Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each
Related Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including the fees,
charges and disbursements of any counsel for any Indemnitee), and shall
indemnify and hold harmless each Indemnitee from all fees and time charges and
disbursements for attorneys who may be employees of any Indemnitee, incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by the
Borrower or any other Credit Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the L/C Issuer to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Substances
on or from any property owned or operated by the Borrower or any of its
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
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contract, tort or any other theory, whether brought by a third party or by the
Borrower or any other Credit Party, and regardless of whether any Indemnitee is
a party thereto, in all cases, whether or not caused by or arising, in whole or
in part, out of the negligence of the Indemnitee; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses (x) are determined by a court
of competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnitee or (y) result
from a claim brought by the Borrower or any other Credit Party against an
Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or
under any other Loan Document, if the Borrower or such Credit Party has obtained
a final and nonappealable judgment in its favor on such claim as determined by a
court of competent jurisdiction.
(c) Reimbursement by Lenders. To the extent that the Borrower for any
reason fails to indefeasibly pay any amount required under subsection (a) or (b)
of this Section to be paid by it to the Administrative Agent (or any sub-agent
thereof), the L/C Issuer or any Related Party of any of the foregoing, each
Lender severally agrees to pay to the Administrative Agent (or any such
sub-agent), the L/C Issuer or such Related Party, as the case may be, such
Lender's Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent (or any such sub-agent) or the L/C Issuer in
its capacity as such, or against any Related Party of any of the foregoing
acting for the Administrative Agent (or any such sub-agent) or L/C Issuer in
connection with such capacity. The obligations of the Lenders under this
subsection (c) are subject to the provisions of Section 2.11(d).
(d) Waiver of Consequential Damages, Etc. To the fullest extent
permitted by applicable law, the Borrower shall not assert, and hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the
use of the proceeds thereof. No Indemnitee referred to in subsection (b) above
shall be liable for any damages arising from the use by unintended recipients of
any information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby.
(e) Payments. All amounts due under this Section shall be payable not
later than ten Business Days after demand therefor.
(f) Survival. The agreements in this Section shall survive the
resignation of the Administrative Agent and the L/C Issuer, the replacement of
any Lender, the termination of the Aggregate Commitments and the repayment,
satisfaction or discharge of all the other Obligations.
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10.05 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf
of the Borrower is made to the Administrative Agent, the L/C Issuer or any
Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its
right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the
Administrative Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each Lender
and the L/C Issuer severally agrees to pay to the Administrative Agent upon
demand its applicable share (without duplication) of any amount so recovered
from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect. The obligations of the Lenders
and the L/C Issuer under clause (b) of the preceding sentence shall survive the
payment in full of the Obligations and the termination of this Agreement.
10.06 SUCCESSORS AND ASSIGNS.
(a) Successors and Assigns Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that neither the
Borrower nor Operating may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee in accordance
with the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (d) of this
Section, (iii) by way of pledge or assignment of a security interest subject to
the restrictions of subsection (f) of this Section, or (iv) to an SPC in
accordance with the provisions of subsection (h) of this Section (and any other
attempted assignment or transfer by any party hereto shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants to the extent provided in subsection (d)
of this Section and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans
(including for purposes of this subsection (b), participations in L/C
Obligations) at the time owing to it); provided that
(i) except in the case of an assignment of the entire remaining
amount of the assigning Lender's Commitment and the Loans at the time
owing to it or in the case of an assignment to a Lender or an Affiliate of
a Lender or an Approved Fund with respect to a Lender, the aggregate
amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject
to each such
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assignment, determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent or, if
"Trade Date" is specified in the Assignment and Assumption, as of the
Trade Date, shall not be less than $5,000,000 unless each of the
Administrative Agent and, so long as no Event of Default has occurred and
is continuing, the Borrower otherwise consents (each such consent not to
be unreasonably withheld or delayed);
(ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations
under this Agreement with respect to the Loans or the Commitment assigned;
(iii) any assignment of a Commitment must be approved by the
Administrative Agent and the L/C Issuer unless the Person that is the
proposed assignee is itself a Lender (whether or not the proposed assignee
would otherwise qualify as an Eligible Assignee); and
(iv) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500, and the Eligible Assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose
as an agent of the Borrower, shall maintain at the Administrative Agent's Office
a copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by each of the Borrower and the L/C Issuer at any
reasonable time and from time to time upon reasonable prior notice. In addition,
at
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any time that a request for a consent for a material or substantive change to
the Loan Documents is pending, any Lender wishing to consult with other Lenders
in connection therewith may request and receive from the Administrative Agent a
copy of the Register.
(d) Participations. Any Lender may at any time, without the consent of,
or notice to, the Borrower or the Administrative Agent, sell participations to
any Person (other than a natural person or the Borrower or any of the Borrower's
Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such
Lender's rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans (including such Lender's
participations in L/C Obligations) owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent, the Lenders
and the L/C Issuer shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement.
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.12 as though it were a
Lender.
(e) Limitations upon Participant Rights. A Participant shall not be
entitled to receive any greater payment under Section 3.01 or 3.04 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.01 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 3.01(e) as though it were a
Lender.
(f) Certain Pledges. Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.
(g) Electronic Execution of Assignments. The words "execution,"
"signed," "signature," and words of like import in any Assignment and Assumption
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of
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a paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act.
(h) Special Purpose Funding Vehicles. Notwithstanding anything to the
contrary contained herein, any Lender (a "Granting Lender") may grant to a
special purpose funding vehicle identified as such in writing from time to time
by the Granting Lender to the Administrative Agent and the Borrower (an "SPC")
the option to provide all or any part of any Loan that such Granting Lender
would otherwise be obligated to make pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPC to fund any Loan,
and (ii) if an SPC elects not to exercise such option or otherwise fails to make
all or any part of such Loan, the Granting Lender shall be obligated to make
such Loan pursuant to the terms hereof or, if it fails to do so, to make such
payment to the Administrative Agent as is required under Section 2.11(b)(ii).
Each party hereto hereby agrees that (i) neither the grant to any SPC nor the
exercise by any SPC of such option shall increase the costs or expenses or
otherwise increase or change the obligations of the Borrower under this
Agreement (including its obligations under Section 3.04), (ii) no SPC shall be
liable for any indemnity or similar payment obligation under this Agreement for
which a Lender would be liable, and (iii) the Granting Lender shall for all
purposes, including the approval of any amendment, waiver or other modification
of any provision of any Loan Document, remain the lender of record hereunder.
The making of a Loan by an SPC hereunder shall utilize the Commitment of the
Granting Lender to the same extent, and as if, such Loan were made by such
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 senior debt 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 proceeding
under the laws of the United States or any State thereof. Notwithstanding
anything to the contrary contained herein, any SPC may (i) with notice to, but
without prior consent of the Borrower and the Administrative Agent and without
paying any processing fee therefor, assign all or any portion of its right to
receive payment with respect to any Loan to the Granting Lender and (ii)
disclose on a confidential basis any non-public information relating to its
funding of Loans to any rating agency, commercial paper dealer or provider of
any surety or Guarantee or credit or liquidity enhancement to such SPC.
(i) Resignation as L/C Issuer after Assignment. Notwithstanding anything
to the contrary contained herein, if at any time Bank of America assigns all of
its Commitment and Loans pursuant to subsection (b) above, Bank of America may,
upon 30 days' notice to the Borrower and the Lenders, resign as L/C Issuer. In
the event of any such resignation as L/C Issuer, the Borrower shall be entitled
to appoint from among the Lenders a successor L/C Issuer hereunder; provided,
however, that no failure by the Borrower to appoint any such successor shall
affect the resignation of Bank of America as L/C Issuer, as the case may be. If
Bank of America resigns as L/C Issuer, it shall retain all the rights and
obligations of the L/C Issuer hereunder with respect to all Letters of Credit
outstanding as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto (including the right to require the Lenders
to make Base Rate Loans or fund risk participations in Unreimbursed Amounts
pursuant to Section 2.03(c)).
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10.07 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY. Each of the
Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates' respective
partners, directors, officers, employees, agents, advisors and representatives
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to
the Administrative Agent, any Lender, the L/C Issuer or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrower.
For purposes of this Section, "Information" means all information received
from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary
or any of their respective businesses, other than any such information that is
available to the Administrative Agent, any Lender or the L/C Issuer on a
nonconfidential basis prior to disclosure by the Borrower or any Subsidiary,
provided that, in the case of information received from the Borrower or any
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
10.08 RIGHT OF SETOFF. If an Event of Default shall have occurred and be
continuing, each Lender, the L/C Issuer and each of their respective Affiliates
is hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by such
Lender, the L/C Issuer or any such Affiliate to or for the credit or the account
of the Borrower or Operating against any and all of the obligations of the
Borrower or Operating now or hereafter existing under this Agreement or any
other Loan Document to such Lender or the L/C Issuer, irrespective of whether or
not such Lender or the L/C Issuer shall have made any demand under this
Agreement or any other Loan Document and although such obligations of the
Borrower or Operating may be contingent or unmatured or are owed to a branch or
office of such Lender or the L/C Issuer different from the branch or office
holding such deposit or obligated on such indebtedness. The rights of each
Lender, the L/C Issuer and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender
and the
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L/C Issuer agrees to notify the Borrower and the Administrative Agent promptly
after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application.
10.09 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the "Maximum Rate"). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged, or received by the Administrative Agent or
a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.
10.10 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
10.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
10.12 SEVERABILITY. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The
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invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
10.13 REPLACEMENT OF LENDERS. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, or if
any Lender fails to consent to any increase in the Borrowing Base proposed by
the Administrative Agent, or if any Lender is a Defaulting Lender, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 10.06), all of its interests, rights and
obligations under this Agreement and the related Loan Documents to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment), provided that:
(a) the Borrower shall have paid to the Administrative Agent the
assignment fee specified in Section 10.06(b);
(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and L/C Advances, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents (including any amounts under Section 3.05) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for
compensation under Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter; and
(d) such assignment does not conflict with applicable Laws.
A Lender shall not be required to make any such assignment or delegation
if, prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
10.14 GOVERNING LAW; JURISDICTION; ETC.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS.
(b) SUBMISSION TO JURISDICTION. EACH OF THE BORROWER AND OPERATING
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF THE UNITED
STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF SUCH STATE, AND ANY APPELLATE
COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT
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OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE
COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT
THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE
TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST THE BORROWER OR OPERATING OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.
(c) WAIVER OF VENUE. EACH OF THE BORROWER AND OPERATING IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
10.15 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.16 USA PATRIOT ACT NOTICE. Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Borrower that pursuant to the requirements of
the USA Patriot Act (Title III
96
of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender or the Administrative Agent, as
applicable, to identify the Borrower in accordance with the Act.
10.17 TIME OF THE ESSENCE. Time is of the essence of the Loan Documents.
10.18 SPECIAL PROVISIONS.
(a) From and after the Closing Date, (i) each Exiting Lender shall cease
to be a party to this Agreement, (ii) no Exiting Lender shall have any
obligations or liabilities under this Agreement with respect to the period from
and after the Closing Date and, without limiting the foregoing, no Exiting
Lender shall have any Commitment under this Agreement or any L/C Obligations
outstanding hereunder, (iii) all Existing Letters of Credit will be deemed
issued and outstanding under this Agreement and will be governed as if issued
under this Agreement and (iv) no Exiting Lender shall have any rights under the
Existing Credit Agreement, this Agreement or any other Loan Document (other than
rights under the Existing Credit Agreement expressly stated to survive the
termination of the Existing Credit Agreement and the repayment of amounts
outstanding thereunder). Effective as of the Closing Date, Fleet National Bank,
as administrative agent under the Existing Credit Agreement, has resigned and,
by a separate assignment, has assigned all of the rights and Liens securing the
Existing Credit Agreement to the Administrative Agent hereunder.
(b) The Lenders that are Lenders under the Existing Credit Agreement
hereby waive any requirements for notice of prepayment, minimum amounts of
prepayments of Loans (as defined in the Existing Credit Agreement), ratable
reductions of the commitments of the Lenders under the Existing Credit Agreement
and ratable payments on account of the principal or interest of any Loan (as
defined in the Existing Credit Agreement) under the Existing Credit Agreement to
the extent such prepayment, reductions or payments are required under the
Existing Credit Agreement.
(c) The Lenders hereby authorize the Administrative Agent and the
Borrower to request borrowings from the Lenders, to make prepayments of Loans
(as defined in the Existing Credit Agreement) and to reduce commitments under
the Existing Credit Agreement among the Lenders (as defined in the Existing
Credit Agreement) in order to ensure that, upon the effectiveness of this
Agreement, the Loans of the Lenders shall be outstanding on a ratable basis in
accordance with their respective Applicable Percentages and that the Commitments
shall be as set forth on Schedule 2.01 hereto and no such borrowing, prepayment
or reduction shall violate any provisions of the Existing Credit Agreement or
this Agreement. The Lenders hereby confirm that, from and after the Closing
Date, all participations of the Lenders in respect of Letters of Credit
outstanding hereunder pursuant to Section 2.03(c) shall be based upon the
Applicable Percentages of the Lenders (after giving effect to this Agreement).
(d) The Lenders that are Lenders under the Existing Credit Agreement
hereby ratify and confirm:
97
(i) the amendment and restatement of that certain Mortgage-Short
Term Mortgage Redemption, Collateral Real Estate Mortgage, Line of Credit
Mortgage, Deed of Trust, Trust Deed, Security Agreement, Financing
Statement and Assignment of Production dated as of June 25, 2002 from
Operating, as Mortgagor, to Fleet National Bank, as administrative agent,
as Mortgagee ("Prior Mortgagee"), or to George W. Passela or to GeoScout
Land & Title Company, Inc., as Trustee, which amendment and restatement is
made pursuant to that certain Assignment of Liens and Amended and Restated
Mortgage-Short Term Mortgage Redemption, Collateral Real Estate Mortgage,
Line of Credit Mortgage, Deed of Trust, Trust Deed, Security Agreement,
Financing Statement and Assignment of Production dated as of August 19,
2004 entered into (A) by and among Prior Mortgagee, Administrative Agent,
Borrower and Operating, and (B) from Operating, as Mortgagor, to
Administrative Agent, as Mortgagee, or to Prlap, Inc. or to GeoScout Land
& Title Company, Inc., as Trustee;
(ii) the amendment and restatement of those certain Pledge
Agreements, each dated as of June 25, 2002, made pursuant to the Existing
Credit Agreement by the following Pledgors, respectively: Borrower, EAP
Operating, Inc. ("Operating GP"), EAP Properties, Inc. ("Properties"), and
EAP Energy, Inc. ("Energy"), which amendment and restatement is made
pursuant to that certain Amended and Restated Pledge Agreement dated as of
August 19, 2004 made by Borrower, Operating GP, Operating, Properties, and
Energy in favor of Administrative Agent for the benefit of Lenders; and
(iii) the amendment and restatement of those certain Facility
Guaranties, each dated as of June 25, 2002 and made pursuant to the
Existing Credit Agreement by the following Guarantors, respectively:
Operating GP, Operating, Energy, EAP Energy Services, L.P. ("Services"),
and Properties, which amendment and restatement is made pursuant to that
certain Amended and Restated Guaranty dated as of August 19, 2004 made by
Operating GP, Operating, Energy, Services, and Properties.
(e) The Borrower hereby terminates, effective as of the Closing Date, in
full the commitments under the Existing Credit Agreement of the Exiting Lenders.
10.19 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
98
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ENCORE ACQUISITION COMPANY
By: /s/ ROY W. JAGEMAN
--------------------------------
Roy W. Jageman
Executive Vice President, Chief
Financial Officer, Treasurer and
Corporate Secretary
ENCORE OPERATING, L.P.
By: EAP Operating, Inc., its sole
general partner
By: /s/ ROY W. JAGEMAN
--------------------------------
Roy W. Jageman
Executive Vice President, Chief
Financial Officer, Treasurer and
Corporate Secretary
ENCORE CREDIT AGREEMENT
S-1
BANK OF AMERICA, N.A.,
as Administrative Agent
By: /s/ JEFFREY H. RATHKAMP
--------------------------------
Name: Jeffrey H. Rathkamp
------------------------------
Title:
-----------------------------
ENCORE CREDIT AGREEMENT
S-2
BANK OF AMERICA, N.A., as a Lender,
L/C Issuer
By: /s/ JEFFREY H. RATHKAMP
--------------------------------
Name: Jeffrey H. Rathkamp
------------------------------
Title: Director
-----------------------------
ENCORE CREDIT AGREEMENT
S-3
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
BANK OF SCOTLAND, as Lender
By: /s/ KAREN WORKMAN
-------------------------------
Name: Karen Workman
Title: Assistant Vice President
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
BNP PARIBAS, as a Lender and
Co-Documentation Agent
By: /s/ DAVID DODD
------------------------------
Name: David Dodd
Title: Director
By: /s/ POLLY SCHOTT
------------------------------
Name: Polly Schott
Title: Vice President
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
CALYON NEW YORK BRANCH, as a Lender
By: /s/ PHILIPPE SOUSTRA
------------------------------
Name: Philippe Soustra
Title: Executive Vice President
By: /s/ JACQUES BUSQUET
------------------------------
Name: Jacques Busquet
Title: Executive Vice President
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
CITIBANK, N.A., as a Lender and
Co-Documentation Agent
By: /s/ JORONNE JETER
------------------------------
Name: Joronne Jeter
Title: Attorney-in-Fact
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
COMERICA BANK, as a Lender
By: /s/ MICHELE L. JONES
------------------------------
Name: Michele L. Jones
Title: Vice President -
Texas Division
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
COMPASS BANK, as a Lender
By: /s/ John M. Falbo
--------------------------------
Name: John M. Falbo
Title: Senior Vice President
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
FORTIS CAPITAL CORP., as a lender
and Co-Syndication Agent
By: /s/ Darrell W. Holley
-------------------------------
Name: Darrell W. Holley
Title: Managing Director
/s/ David Montgomery
-------------------------------
Name: David Montgomery
Title: Senior Vice President
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
THE FROST NATIONAL BANK, as a
lender
By: /s/ Clifford Keiser
--------------------------------
Name: Clifford Keiser
Title: Sr. Vice President
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
KEYBANK NATIONAL ASSOCIATION, as a Lender
-----------------------------------------
(Name of Lender)
By: /s/ THOMAS RAJAN
-------------------------------------
Name: Thomas Rajan
Title: Vice President
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
SUNTRUST BANK, as a Lender
-----------------------------------
(Name of Lender)
By: /s/ JAMES M. WARREN
------------------------------
Name: James M. Warren
Title: Director
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
UNION BANK OF CALIFORNIA, N.A., as a Lender
-------------------------------------------
(Name of Lender)
By: /s/ SCOTT MYATT
---------------------------------------
Name: Scott Myatt
Title: Assistant Vice President
By: /s/ SEAN MURPHY
---------------------------------------
Name: Sean Murphy
Title: Vice President
Dated as of August 19, 2004.
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and restatement of
the Existing Credit Agreement pursuant to the Amended and Restated Credit
Agreement, dated as of August 19, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Encore Acquisition
Company ("the Borrower"), Encore Operating, L.P., Bank of America, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), and the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders"), and agrees to all of the provisions thereof,
and (ii) becomes a party to the Credit Agreement, as a Lender, with obligations
applicable to such Lender thereunder, including, without limitation, the
obligation to make extensions of credit to the Borrower in an aggregate
principal amount not to exceed the amount of its Commitment, as the case may be,
as set forth opposite the undersigned Lender's name in Schedule 2.01 to the
Credit Agreement, as such amount may be changed from time to time as provided in
the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender and Co-Syndication Agent
By: /s/ DAVID HUMPHREYS
-------------------------------
Name: David Humphreys
Title: Director
Dated as of August 19, 2004.
SCHEDULE 2.01
COMMITMENTS
AND APPLICABLE PERCENTAGES
APPLICABLE
LENDER COMMITMENT PERCENTAGE
------ ---------- ----------
Bank of America, N.A. $ 84,375,000 11.25%
Fortis Capital Corp. $ 75,000,000 10.00%
Wachovia Bank, N.A. $ 75,000,000 10.00%
Citibank, N.A. $ 75,000,000 10.00%
BNP Paribas $ 75,000,000 10.00%
Calyon New York Branch $ 50,625,000 6.75%
Comerica Bank $ 50,625,000 6.75%
The Frost National Bank $ 50,625,000 6.75%
KeyBank National Association $ 50,625,000 6.75%
SunTrust Bank $ 50,625,000 6.75%
Compass Bank $ 37,500,000 5.00%
Union Bank of $ 37,500,000 5.00%
California, N.A.
Bank of Scotland $ 37,500,000 5.00%
Total $750,000,000 100.000000000%
1