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$125,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
BELDEN & BLAKE CORPORATION,
AS BORROWER
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
ABLECO FINANCE LLC,
AS COLLATERAL AGENT AND AS ADMINISTRATIVE AGENT
AND
FOOTHILL CAPITAL CORPORATION,
AS FUNDING AGENT
DATED AS OF AUGUST 23, 2000
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS......................................................2
Section 1.1 Defined Terms................................................2
Section 1.2 Other Definitional Provisions................................22
SECTION 2. THE LOANS........................................................23
Section 2.1 Commitments..................................................23
Section 2.2 Making the Loans.............................................24
Section 2.3 Notes; Repayment of Loans....................................27
Section 2.4 Interest.....................................................27
Section 2.5 Reduction of Commitment; Prepayment of Loans....................28
Section 2.6 Fees.........................................................29
Section 2.7 Securitization...............................................30
Section 2.8 Taxes........................................................31
SECTION 3. LETTERS OF CREDIT................................................33
Section 3.1 Letter of Credit Guaranty....................................33
Section 3.2 Participations...............................................35
Section 3.3 Letters of Credit...............................................36
SECTION 4. FEES, PAYMENTS AND OTHER COMPENSATION............................36
Section 4.1 Audit and Collateral Monitoring Fees.........................36
Section 4.2 Payments; Computations and Statements........................36
Section 4.3 Sharing of Payments, Etc.....................................38
Section 4.4 Apportionment of Payments....................................38
Section 4.5 Increased Costs and Reduced Return...........................39
SECTION 5. REPRESENTATIONS AND WARRANTIES...................................41
Section 5.1 Financial Condition..........................................41
Section 5.2 No Change....................................................42
Section 5.3 Corporate Existence; Compliance with Law.....................42
Section 5.4 Corporate Power; Authorization; Enforceable Obligations......42
Section 5.5 No Legal Bar.................................................42
Section 5.6 No Material Litigation.......................................43
Section 5.7 No Default...................................................43
Section 5.8 Ownership of Property; Liens.................................43
Section 5.9 Intellectual Property........................................43
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Section 5.10 No Burdensome Restrictions...................................44
Section 5.11 Taxes........................................................44
Section 5.12 Federal Reserve Regulations..................................44
Section 5.13 ERISA........................................................44
Section 5.14 Investment Company Act; Other Regulations....................45
Section 5.15 Subsidiaries.................................................45
Section 5.16 Purpose of Loans.............................................45
Section 5.17 Environmental Matters........................................45
Section 5.18 No Material Misstatements....................................46
Section 5.19 Capitalization of the Borrower...............................47
Section 5.20 Location of Real Property and Leased Premises................47
Section 5.21 Solvency.....................................................47
Section 5.22 Labor Matters................................................48
Section 5.23 Insurance....................................................48
Section 5.24 Future Commitments...........................................48
Section 5.25 Security Documents...........................................48
Section 5.26 Nature of Business...........................................49
Section 5.27 Year 2000....................................................49
Section 5.28 Location of Bank Accounts....................................49
Section 5.29 Material Contracts...........................................49
Section 5.30 Holding Company Act..........................................50
Section 5.31 Bankruptcy Filing............................................50
Section 5.32 [Intentionally Omitted.].....................................50
Section 5.33 Location of Inventory; Place of Business; Chief
Executive Office........................................50
Section 5.34 Hedging Agreements...........................................50
Section 5.35 Inactive Subsidiaries........................................50
SECTION 6. CONDITIONS PRECEDENT..............................................50
Section 6.1 Conditions to Initial Extensions of Credit...................50
Section 6.2 Conditions to Each Extension of Credit.......................54
SECTION 7. AFFIRMATIVE COVENANTS............................................55
Section 7.1 Financial Statements.........................................55
Section 7.2 Certificates; Other Information..............................58
Section 7.3 Payment of Obligations.......................................59
Section 7.4 Conduct of Business and Maintenance of Existence;
Compliance with Law and Contractual Obligations............59
Section 7.5 Maintenance of Property; Insurance...........................59
Section 7.6 Inspection of Property; Books and Records;
Discussions.............................................60
Section 7.7 Notices......................................................60
Section 7.8 Environmental Laws...........................................61
Section 7.9 Further Assurances...........................................62
Section 7.10 Additional Collateral........................................62
Section 7.11 Collateral Value.............................................63
Section 7.12 [Intentionally Omitted]......................................63
Section 7.13 Maintenance and Operation of Property........................63
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Section 7.14 Subordination................................................64
Section 7.15 Borrowing Base...............................................64
Section 7.16 Change in Collateral; Collateral Records.....................64
Section 7.17 Landlord Waivers; Collateral Access Agreements...............64
Section 7.18 Additional Collateral Reviews................................65
SECTION 8. NEGATIVE COVENANTS...............................................65
Section 8.1 Financial Covenant Conditions................................65
Section 8.2 Limitation on Indebtedness...................................66
Section 8.3 Limitation on Liens..........................................67
Section 8.4 Limitation on Guarantee Obligations..........................68
Section 8.5 Limitation on Fundamental Changes............................69
Section 8.6 Limitation on Sale of Assets.................................69
Section 8.7 Limitation on Dividends......................................71
Section 8.8 Limitation on Investments, Loans and Advances................71
Section 8.9 Limitation on Optional Payments and Modifications of Debt
Instruments, Other Material Agreements..................72
Section 8.10 Limitation on Transactions with Affiliates...................72
Section 8.11 Limitation on Sales and Leasebacks...........................73
Section 8.12 Limitation on Changes in Fiscal Year.........................73
Section 8.13 Limitation on Negative Pledge Clauses........................73
Section 8.14 Limitation on Lines of Business..............................73
Section 8.15 Redeemable Capital Stock.....................................73
Section 8.16 Forward Sales................................................73
Section 8.17 Hedging Agreements...........................................73
SECTION 9. EVENTS OF DEFAULT................................................74
SECTION 10. AGENTS..........................................................77
Section 10.1 Appointment..................................................77
Section 10.2 Nature of Duties.............................................78
Section 10.3 Rights, Exculpation, Etc.....................................78
Section 10.4 Reliance.....................................................79
Section 10.5 Indemnification..............................................79
Section 10.6 Agents Individually..........................................79
Section 10.7 Successor Agent..............................................80
Section 10.8 Collateral Matters...........................................80
Section 10.9 Collateral Sub-Agents........................................82
Section 10.10 Rights of Agents.............................................82
SECTION 11. MISCELLANEOUS...................................................82
Section 11.1 Notices, Etc.................................................82
Section 11.2 Amendments, Etc..............................................84
Section 11.3 No Waiver; Remedies, Etc.....................................84
Section 11.4 Expenses; Taxes; Attorneys' Fees.............................85
Section 11.5 Right of Set-off.............................................86
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Section 11.6 Severability.................................................86
Section 11.7 Assignments and Participations...............................86
Section 11.8 Counterparts.................................................89
SECTION 11.9 GOVERNING LAW................................................89
SECTION 11.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE........89
SECTION 11.11 WAIVER OF JURY TRIAL, ETC....................................90
Section 11.12 Consent by the Agents and Lenders............................90
Section 11.13 No Party Deemed Drafter......................................90
Section 11.14 Reinstatement; Certain Payments..............................90
Section 11.15 Indemnification..............................................91
Section 11.16 Records......................................................91
Section 11.17 Binding Effect...............................................91
Section 11.18 Confidentiality..............................................92
Section 11.19 No Novation..................................................92
Section 11.20 Interest.....................................................93
Section 11.21 Releases of Collateral.......................................94
SECTION 12. MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE
AND OTHER COLLATERAL............................................95
Section 12.1 Collection of Accounts Receivable; Management of
Collateral..............................................95
Section 12.2 Accounts Receivable Documentation............................97
Section 12.3 Status of Accounts Receivable and Other Collateral...........97
Section 12.4. Collateral Custodian.........................................98
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SCHEDULES AND EXHIBITS
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Schedule 1.1(a) Commitments
Schedule 1.1(b) Persons Deemed Not to be Wholly-Owned Subsidiaries
Schedule 5.1 Material Changes since December 31, 1999
Schedule 5.9 Intellectual Property
Schedule 5.15 Subsidiaries
Schedule 5.17 Environmental Matters
Schedule 5.19 Capitalization
Schedule 5.20A Owned Real Property (other than Oil and Gas Properties)
Schedule 5.20B Leased Real Property (other than Oil and Gas Properties)
Schedule 5.20C Real Property Constituting Oil and Gas Properties
Schedule 5.25 Financing Statements
Schedule 5.28 Location of Bank Accounts
Schedule 5.29 Material Contracts
Schedule 5.33 Location of Hydrocarbon Products
Schedule 5.34 Hedging Agreements
Schedule 6.1 Sources and Uses
Schedule 7.16 Collateral Locations
Schedule 8.2 Existing Indebtedness
Schedule 8.3 Existing Liens
Schedule 8.4 Guarantee Obligations
Schedule 8.6 Issuance of Capital Stock to Employees
Schedule 8.11 Sale and Leaseback Transactions
Schedule 12.1 Lockboxes
Exhibit A-1 Form of Revolving Credit Note
Exhibit A-2 Form of Term Loan Note
Exhibit B Form of Notice of Borrowing
Exhibit C-1 Form of Corporate Opinion
Exhibit C-2 Form of Michigan Opinion
Exhibit C-3 Form of Ohio Opinion
Exhibit C-4 Form of New York and Pennsylvania Opinion
Exhibit C-5 Form of Opinion of Corporate Counsel
Exhibit D-1 Form of Michigan Mortgage
Exhibit D-2 Form of New York Mortgage
Exhibit D-3 Form of Ohio Mortgage
Exhibit D-4 Form of Pennsylvania Mortgage
Exhibit E Form of Borrowing Base Certificate
Exhibit F [Intentionally Omitted]
Exhibit G Form of Release Certificate
Exhibit PV-10 PV-10 Value Calculation
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 23,
2000, among Belden & Blake Corporation, an Ohio corporation (the "BORROWER"),
the several financial institutions and other entities from time to time parties
to this Agreement (individually a "LENDER" and collectively the "LENDERS"),
Ableco Finance LLC ("ABLECO"), as collateral agent and administrative agent for
the Lenders (in such capacity, the "COLLATERAL AGENT" or the "ADMINISTRATIVE
AGENT") and Foothill Capital Corporation ("FOOTHILL"), as funding agent for the
Lenders (in such capacity, the "FUNDING AGENT" and together with the Collateral
Agent, the Administrative Agent, each an "AGENT" and collectively, the
"AGENTS").
W I T N E S S E T H:
- - - - - - - - - - -
WHEREAS, the Borrower and certain banks, financial
institutions and other entities (the "EXISTING LENDERS"), The Chase Manhattan
Bank, as administrative agent, Bankers Trust Company, as syndication agent and
NationsBank of Texas, N.A., as documentation agent, are parties to a Credit
Agreement, dated as of June 27, 1997, as amended by the First Amendment dated as
of January 27, 1998, Amendment, dated as of February 18, 1998, Third Amendment,
dated as of May 10, 1999, Fourth Amendment, dated as of December 14, 1999 and
Consent and Fifth Amendment, dated as of March 21, 2000 (as so amended, the
"EXISTING CREDIT AGREEMENT"), pursuant to which the Existing Lenders have
extended credit to the Borrower in an amount, as of the Closing Date, equal to
the Existing Indebtedness (as hereafter defined);
WHEREAS, the Borrower has asked the Agents to arrange, and for
the Lenders to extend, credit to the Borrower on the terms and conditions set
forth in this Amended and Restated Credit Agreement through: (i) the purchase of
the Existing Indebtedness from the Existing Lenders, including the assignment
to, and the assumption by, the Lenders of all of the rights and obligations of
the Existing Lenders under the Existing Credit Agreement and the assignment to
the Agents, for the ratable benefit of the Lenders, of all rights of the agents
under the Existing Credit Agreement and related Loan Documents (as hereafter
defined) in the collateral securing the Existing Indebtedness, such Existing
Indebtedness to remain outstanding from and after the date of such purchase as
revolving credit loans subject to the terms and conditions of this Amended and
Restated Credit Agreement; and (ii) the making of additional loans on and after
the date of such purchase consisting of (a) revolving credit loans the aggregate
outstanding principal amount of which shall not exceed the Total Revolving
Credit Commitment (as hereafter defined), including a subfacility for the
issuance and/or guarantee of letters of credit in an aggregate amount not to
exceed the L/C Subfacility (as hereafter defined) and (b) term loans in an
aggregate principal amount not to exceed the Total Term Loan Commitment (as
hereafter defined), all on the terms and conditions of this Amended and Restated
Credit Agreement;
WHEREAS, the proceeds of the loans and letter of credit will
be used by the Borrower to repay the Chase Term Loan (as hereafter defined), to
repurchase Senior Subordinated Notes (as hereafter defined), PROVIDED that not
more than $40,000,000 of proceeds of the Loans may be used to repurchase such
Senior Subordinated Notes, to pay fees and expenses in connection with the
transactions contemplated herein and for general corporate purposes, including
the Borrower's capital expenditure program; and
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WHEREAS, the Lenders are severally, and not jointly, willing
to extend such credit to the Borrower and amend and restate the Existing Credit
Agreement on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree that the
Existing Credit Agreement shall be amended and restated as follows:
SECTION 1. DEFINITIONS
Section 1.1 DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ABLECO": as defined in the preamble to this Agreement.
"ACCOUNT DEBTOR": each debtor, customer or obligor in any way
obligated on or in connection with any Account Receivable.
"ACCOUNT RECEIVABLE": any and all rights of the Borrower or
its Subsidiaries to payment for goods sold and services rendered, including
accounts, general intangibles and any and all such rights evidenced by chattel
paper, instruments or documents, whether due or to become due and whether or not
earned by performance, and whether now or hereafter acquired or arising in the
future and any proceeds arising therefrom or relating thereto.
"ADMINISTRATIVE AGENT": as defined in the preamble to this
Agreement.
"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the securities having ordinary voting power for the election
of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
Notwithstanding anything herein to the contrary, in no event shall the Agents or
any Lender be considered an "Affiliate" of the Borrower.
"AGREEMENT": this Amended and Restated Credit Agreement, as
further amended, supplemented or otherwise modified from time to time after the
date hereof.
"AGENT ADVANCES": as defined in subsection 10.8(a).
"AGENT REGISTER": as defined in subsection 11.7(d).
"AGENT RESERVE": as defined in the definition of Borrowing
Base.
"AGENTS": as defined in the preamble to this Agreement.
"ASSIGNMENT": the Assignment and Acceptance and each
assignment or other similar agreement, document or instrument entered into
between or among Chase, as the
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administrative agent under the Existing Credit Agreement, the Existing Lenders
and/or any other party to the Existing Credit Agreement, on the one hand, and
the Collateral Agent, the Funding Agent, and/or the Lenders, on the other hand.
"BANKRUPTCY CODE": the United States Bankruptcy Code, as in
effect from time to time.
"BASE RATE": for any day, a rate per annum equal to the rate
of interest publicly announced by Chase in New York, New York from time to time
as its prime rate. The prime rate is determined from time to time by Chase as a
means of pricing some loans to its borrowers and neither is tied to any external
rate of interest or index nor necessarily reflects the lowest rate of interest
actually charged by Chase to any particular class or category of customers. Each
change in the Base Rate shall be effective from and including the date such
change is publicly announced as being effective.
"BASIS DIFFERENTIAL": in the case of any Oil and Gas Property,
the difference between the NYMEX futures contract prices and the sales prices at
the delivery point where the gas or oil, as the case may be, produced by such
Oil and Gas Property is sold.
"BORROWER": as defined in the preamble to this Agreement.
"BORROWING BASE": as of any date, an amount equal to the sum
of (i) 65% of the PV-10 Value of the Proved Developed Producing Reserves of the
Borrower and the Eligible Guarantors that are subject to a Mortgage, or with
respect to personal property constituting production payments received from
Section 29 Properties, the Guarantee and Collateral Agreement and UCC financing
statements, that in each case create a first priority perfected Lien in such Oil
and Gas Properties in favor of the Collateral Agent for the ratable benefit of
the Lenders, (ii) 45% of the PV-10 Value of the Proved Developed Non-Producing
Reserves of the Borrower and the Eligible Guarantors that are subject to a
Mortgage, or with respect to personal property constituting production payments
received from Section 29 Properties, the Guarantee and Collateral Agreement and
UCC financing statements, that in each case create a first priority perfected
Lien in such Oil and Gas Properties in favor of the Collateral Agent for the
ratable benefit of the Lenders, (iii) 40% of the PV-10 Value of the Proved
Undeveloped Reserves of the Borrower and the Eligible Guarantors that are
subject to a Mortgage or with respect to personal property constituting
production payments received from Section 29 Properties, the Guarantee and
Collateral Agreement and UCC financing statements, that in each case create a
first priority perfected Lien in such Oil and Gas Properties in favor of the
Collateral Agent for the ratable benefit of the Lenders, (iv) 65% of the PV-10
Value of the Proved Developed Producing Reserves of the Borrower and the
Eligible Guarantors acquired by the Borrower or any Eligible Guarantor pursuant
to a Permitted Business Acquisition that are subject to a Mortgage, or with
respect to personal property constituting production payments received from
Section 29 Properties, the Guarantee and Collateral Agreement and UCC financing
statements, that in each case create a first priority perfected Lien in such Oil
and Gas Properties in favor of the Collateral Agent for the ratable benefit of
the Lenders, (v) 45% of the PV-10 Value of the Proved Developed Non-Producing
Reserves of the Borrower and the Eligible Guarantors acquired by the Borrower or
any Eligible Guarantor pursuant to a Permitted Business Acquisition that are
subject to a Mortgage, or with respect to personal property constituting
production payments received
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from Section 29 Properties, the Guarantee and Collateral Agreement, that in each
case create a first priority perfected Lien in such Oil and Gas Properties in
favor of the Collateral Agent for the ratable benefit of the Lenders, and (vi)
40% of the PV-10 Value of the Proved Undeveloped Reserves of the Borrower and
the Eligible Guarantors acquired by the Borrower pursuant to a Permitted
Business Acquisition that are subject to a Mortgage, or with respect to personal
property constituting production payments received from Section 29 Properties,
the Guarantee and Collateral Agreement and the UCC financing statements, that in
each case create a first priority perfected Lien in such Oil and Gas Properties
in favor of the Collateral Agent for the ratable benefit of the Lenders, each as
set forth on the Borrowing Base Certificate most recently delivered by the
Borrower to the Agents pursuant to subsection 6.1(c) or 7.1(g), as applicable.
Anything to the contrary in this Agreement notwithstanding, the Agents may, and
shall at the request of the Required Lenders, (x) create reserves against the
Borrowing Base or (v) reduce one or more of the percentages set forth above with
respect to the stated categories of oil and gas reserves (in either case without
declaring an Event of Default) as the applicable Agent determines, in its
reasonable judgment (from the perspective of an asset-based lender), as being
appropriate to reflect impediments to the Collateral Agent's ability to realize
upon the Collateral or impairments or reductions to the value of the Collateral
(in each case, an "AGENT RESERVE", and collectively, the "AGENT RESERVES"),
provided that, in the absence of a continuing Event of Default, the Collateral
Agent shall give the Borrower thirty (30) days prior written notice of the
creation of an Agent Reserve. Without limiting the generality of the foregoing,
Agent Reserves may include (but are not limited to) reserves based upon (i) past
due or accrued taxes or other governmental charges, including ad valorem,
personal property and other taxes which may have priority over the Liens or
security interests of the Collateral Agent in the Collateral; (ii) Liens in
favor of third Persons (whether or not such Liens are permitted under subsection
8.3); (iii) estimates of present and future costs, expenses, deposits and
liabilities related to the plugging and abandonment of the Oil and Gas
Properties (net of the amount thereof which has been taken into account in the
most recent Reserve Report or is fully secured by an escrow arrangement
acceptable to the Agents); and (iv) without duplication of the foregoing,
amounts owing by the Borrower to any Person to the extent secured by a Lien
(whether or not such Lien is permitted under subsection 8.3) on, or trust
(constructive or otherwise) over, any of the Collateral (including proceeds
thereof or collections from the sale of Hydrocarbons which may from time to time
come into the possession of any of the Lenders or their agents), which Lien or
trust, in the reasonable determination of the Agents (from the perspective of an
asset-based lender), has a reasonable possibility of having a priority superior
to the Collateral Agent's Liens (such as landlord liens, ad valorem taxes,
production taxes, severance taxes, sales taxes, collections attributable to sale
of Hydrocarbons of Persons other than the Borrower or its Subsidiaries) in and
to such item of Collateral, proceeds or collection. The Borrower and the Agents
understand and agree that any amount of Agent Reserves shall not be considered a
disbursement bearing interest hereunder, but rather simply shall be an amount
that is not available for borrowing by the Borrower. Notwithstanding anything to
the contrary, the maximum value of the Oil and Gas Properties located in the
State of New York shall not at any time exceed $20,000,000.
"BORROWING BASE CERTIFICATE": as defined in subsection 6.1(c).
"BUSINESS DAY": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close.
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"CAPITAL GUIDELINE": any law, rule, regulation, policy,
guideline or directive (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) (i) regarding capital
adequacy, capital ratios, capital requirements, the calculation of a bank's
capital or similar matters, or (ii) affecting the amount of capital required to
be obtained or maintained by any Lender, any Person controlling any Lender, or
the Issuing Lender or the manner in which any Lender, any Person controlling any
Lender or the Issuing Lender allocate capital to any of its contingent
liabilities (including letters of credit), advances, acceptances, commitments,
assets or liabilities.
"CAPITAL LEASE": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"CAPITAL STOCK": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) securities with maturities of one year
or less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of deposit
and eurodollar time deposits with maturities of one year or less from the date
of acquisition and overnight bank deposits of any Lender or of any commercial
bank (i) having capital and surplus in excess of $500,000,000 or (ii) which has
a short-term commercial paper rating which satisfies the requirements set forth
in clause (d) below, (c) purchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition, having a term
of not more than 30 days with respect to securities issued, fully guaranteed or
insured by the United States Government or any agency thereof, (d) commercial
paper of a domestic issuer rated at least A-2 by Standard and Poor's or P-2 by
Moody's, (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's, (f) securities with maturities of one year or less from
the date of acquisition backed by standby letters of credit issued by any Lender
or any commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which have
assets in excess of $100,000,000.
"CHANGE OF CONTROL": the occurrence of any of the events set
forth in paragraph (k) of Section 9.
"CHASE": The Chase Manhattan Bank, N.A. or its successor.
"CHASE TERM LOAN": the term loans outstanding to the Borrower
from Chase which are evidenced by Promissory Notes of the Borrower dated March
22, 1999 and June 15, 1999, each as amended, in the respective principal amounts
of $9,000,000 and $5,000,000, which
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term loans are to be repaid on the Effective Date out of the proceeds of
Revolving Credit Loans made on the Effective Date pursuant to this Agreement.
"CLOSING FEE": as defined in subsection 2.6(a).
"CODE": the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL": all assets of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"COLLATERAL AGENT": as defined in the preamble to this
Agreement.
"COLLECTION ACCOUNTS": as defined in subsection 12.1(a).
"COMMITMENTS": with respect to each Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitment.
"COMMODITY HEDGING AGREEMENT": a commodity hedging or purchase
agreement or similar arrangement entered into with the intent of protecting
against fluctuations in commodity prices or the exchange of notional commodity
obligations, either generally or under specific contingencies.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 414(b) or (c) of the Code or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of the
Code.
"CONSOLIDATED INTEREST EXPENSE": with respect to the Borrower
and its Subsidiaries on a consolidated basis for any period, the sum of (i)
gross interest expense (including all cash and accrued interest expense) of the
Borrower and its Subsidiaries for such period on a consolidated basis, including
to the extent included in interest expense in accordance with GAAP (x) the
amortization of debt discounts and (y) the portion of any payments or accruals
with respect to Capital Leases allocable to interest expense and (ii)
capitalized interest of the Borrower and its Subsidiaries on a consolidated
basis.
"CONSOLIDATED NET INCOME": for any period, net income of the
Borrower and its Subsidiaries determined on a consolidated basis in accordance
with GAAP, excluding, however, any extraordinary or nonrecurring gain (but not
loss), together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"CONTRACTUAL OBLIGATION": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"DEFAULT": any of the events specified in Section 9, whether
or not any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
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"DISPOSITION": any transaction, or series of related
transactions, pursuant to which the Borrower or any of its Subsidiaries sells,
assigns, transfers or otherwise disposes of any property or assets owned by the
Borrower or any of its Subsidiaries (whether now owned or hereafter acquired) to
any other Person, in each case whether or not the consideration therefor
consists of cash, securities or other assets owned by the acquiring Person.
"DOLLARS" and "$": dollars in lawful currency of the United
States of America.
"DRAW DOWN FEE": as defined in subsection 2.6(d).
"EBITDA": with respect to the Borrower, for any period,
Consolidated Net Income for that period, PLUS, without duplication and to the
extent deducted from revenues in determining Consolidated Net Income for that
period, (a) the aggregate amount of Consolidated Interest Expense for that
period, (b) the aggregate amount of letter of credit fees paid during that
period, (c) the aggregate amount of income tax expense for that period, (d) all
amounts attributable to depreciation, depletion and amortization for that
period, (e) the aggregate amount of exploration expenses for that period, (f)
the aggregate amount of any extraordinary or nonrecurring loss (but not gain),
together with any related provision for taxes for such loss (but not gain) for
that period and (g) all non-cash or extraordinary expenses during that period,
and MINUS, without duplication and to the extent added to revenues in
determining Consolidated Net Income for that period, all non-cash or
extraordinary income during that period, in each case determined in accordance
with GAAP and without duplication of amounts.
"EFFECTIVE DATE": as defined in subsection 6.1.
"ELIGIBLE GUARANTOR": a Wholly-Owned Subsidiary of the
Borrower that is a party to the Guarantee and Collateral Agreement.
"ENVIRONMENTAL CONSULTANT": as defined in subsection 7.8(c).
"ENVIRONMENTAL LAWS": any and all laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, or other legally enforceable
requirement (including, without limitation, common law) of any foreign
government, the United States, or any state, local, municipal or other
governmental authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment or of human
health, as has been, is now, or may at any time hereafter be, in effect.
"ENVIRONMENTAL LIABILITIES AND COSTS": all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
treble damages, costs and expenses (including all reasonable fees, disbursements
and expenses of counsel, experts and consultants and costs of investigations and
feasibility studies), fines, penalties, sanctions and interest incurred as a
result of any claim or demand by any Governmental Authority or any third party,
and which relate to any environmental condition or a Release of Materials of
Environmental Concern from or onto (i) any property presently or formerly owned
by the Borrower or its Subsidiaries or (ii) any facility which received
Materials of Environmental Concern generated by the Borrower or its
Subsidiaries.
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"ENVIRONMENTAL PERMITS": any and all permits, licenses,
registrations, notifications, approvals, exemptions and any other authorization
required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA EVENT": (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived under
subsections 22, 23, 25, 27 or 28 of PBGC Sec. 4043); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any Commonly Controlled Entity of
any liability under Title IV or ERISA with respect to the termination of any
Plan; (e) the receipt by the Borrower or any Commonly Controlled Entity from the
PBGC or a plan administrator of any notice relating to an intention to terminate
any Plan or Plans or to appoint a trustee to administer any Plan under Section
4042 of ERISA; (f) the incurrence by the Borrower or any Commonly Controlled
Entity of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any
Commonly Controlled Entity of any notice, or the receipt by any Multiemployer
Plan from the Borrower or any Commonly Controlled Entity of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, Insolvent or in Reorganization,
within the meaning of Title IV of ERISA.
"EXISTING INDEBTEDNESS": the amount due and payable by the
Borrower to the Existing Lenders under the Existing Credit Agreement on the
Effective Date in respect of principal and interest which shall not exceed
$50,000,000.
"EVENT OF DEFAULT": as defined in Section 9.
"FEDERAL FUNDS RATE": for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Funding Agent from
three Federal funds brokers of recognized standing selected by the Funding
Agent.
"FINAL MATURITY DATE": August 22, 2002, or such earlier date
on which any Loan shall become due and payable, in whole or in part, in
accordance with the terms of this Agreement and the other Loan Documents.
"FOOTHILL": as defined in the preamble to this Agreement.
"FUNDING AGENT": as defined in the preamble to this Agreement.
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"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time, PROVIDED that for purposes of
determining compliance with the covenants contained in Section 8, "GAAP" shall
mean generally accepted accounting principles in the United States of America as
in effect on the date hereof and applied on a basis consistent with the
application used in the financial statements referred to in subsection 5.1,
PROVIDED, FURTHER, that if there occurs after the date of this Agreement any
change in GAAP that affects in any respect the calculation of any covenant
contained in Section 8 hereof, the Collateral Agent and the Borrower shall
negotiate in good faith amendments to the provisions of this Agreement that
relate to the calculation of such covenant with the intent of having the
respective positions of the Lenders and the Borrower after such change in GAAP
conform as nearly as possible to their respective positions as of the date of
this Agreement and, until any such amendments have been agreed upon, the
covenants in Section 8 hereof shall be calculated as if no such change in GAAP
has occurred.
"GOVERNMENTAL AUTHORITY": any nation or government, any
Federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing regulatory or administrative powers or functions of or
pertaining to government.
"GUARANTEE AND COLLATERAL AGREEMENT": the Guarantee and
Collateral Agreement executed and delivered by the Borrower and each of the
Guarantors, dated as of June 27, 1997, as amended, modified or supplemented from
time to time, which has been assigned to the Collateral Agent and the Lenders
pursuant to the Assignment.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counter indemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other obligations
(the "PRIMARY OBLIGATIONS") of any other third Person (the "PRIMARY OBLIGOR") in
any manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of
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such Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith. Obligations of the Borrower or any Subsidiary pursuant to indemnities
which (a) are granted in the ordinary course of business, including, without
limitation, such obligations in connection with stock purchase agreements or
asset purchase and sale agreements and (b) do not cover Indebtedness of the
types described in clauses (a) through (f) of the definition of Indebtedness,
shall not constitute "Guarantee Obligations" for purposes of this Agreement.
"GUARANTOR": each of the Subsidiaries of the Borrower, other
than those Persons listed on Schedule 1.1(b).
"HEDGING AGREEMENT": any Interest Rate Protection Agreement,
Commodity Hedging Agreement, foreign currency exchange agreement, commodity
price protection agreement or other interest or currency exchange rate or
commodity price hedging arrangement.
"HIGHEST LAWFUL RATE": with respect to the Agents or a Lender,
the maximum non-usurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
Obligations under laws applicable to the Agents or such Lender which are
currently in effect or, to the extent allowed by law, under such applicable laws
which may hereafter be in effect and which allow a higher maximum non-usurious
interest rate than applicable laws now allow.
"HYDROCARBON INTERESTS": all rights, titles, interests and
estates now owned or hereafter acquired in and to oil and gas leases, oil, gas
and mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee
or lease interests, farm-outs overriding royalty and royalty interests, net
profit interests, oil payments, production payment interests and similar mineral
interests, including any reserved or residual interest of whatever nature.
"HYDROCARBONS": oil, gas, casinghead gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons, all products refined,
separated, settled and dehydrated therefrom and all products refined therefrom,
including, without limitation, kerosene, liquefied petroleum gas, refined
lubricating oils, diesel fuel, drip gasoline, natural gasoline, helium, sulfur
and all other minerals.
"INDEBTEDNESS": of any Person at any date (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices and
accrued current liabilities incurred in the ordinary course of business), (b)
any other indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person under
Capital Leases, (d) all obligations of such Person in respect of letters of
credit and acceptances issued or created for the account of such Person, (e) all
obligations of such Person under Commodity Hedging Agreements and Interest Rate
Protection Agreements, (f) all obligations of others of the type referred to in
clauses (a) through (e) above and which are secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, except that the amount of any nonrecourse
obligation shall be deemed to be the lesser of the
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value of the property securing such obligation and the amount of such obligation
so secured and (g) all Guarantee Obligations with respect to the items described
in clauses (a) through (e) above.
"INITIAL RESERVE REPORT": as defined in subsection 6.1(u).
"INSTRUMENTS": as defined in subsection 12.1.
"INSOLVENCY": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"INSOLVENCY PROCEEDING": any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTEREST RATE PROTECTION AGREEMENT": an interest rate swap,
cap or collar agreement or similar arrangement entered into with the intent of
protecting against fluctuations in interest rates or the exchange of notional
interest obligations, either generally or under specific contingencies.
"INVESTMENTS": as defined in subsection 8.9.
"ISSUING LENDER": Wells Fargo Bank, National Association in
its capacity as issuer of a Letter of Credit, and any other Lender or Affiliate
of any Lender in each case either designated by the Borrower as an Issuing
Lender or consented to by the Borrower as an Issuing Lender (provided that such
consent is not unreasonably withheld), and consented to by the Agents.
"L/C APPLICATION": as defined in subsection 3.1(a).
"L/C COMMITMENT": the obligation of the Funding Agent and the
Lenders to assist the Borrower in obtaining the issuance of Letters of Credit by
the Issuing Lender pursuant to Section 3 of this Agreement.
"L/C SUBFACILITY": that portion of the Total Revolving Credit
Commitment equal to $20,000,000.
"LETTERS OF CREDIT": as defined in subsection 3.1(a).
"LETTER OF CREDIT GUARANTY" means one or more guaranties by
the Funding Agent in favor of the Issuing Lender guaranteeing the Borrower's
obligations to the Issuing Lender under a reimbursement agreement, L/C
Application or other like document in respect of any Letters of Credit.
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"LETTER OF CREDIT OBLIGATIONS": at any time and, without
duplication, the sum of (i) the Reimbursement Obligations at such time, PLUS
(ii) the aggregate maximum amount available for drawing under the Letters of
Credit outstanding at such time, PLUS (iii) all amounts for which the Funding
Agent may be liable to the Issuing Lender pursuant to any Letter of Credit
Guaranty.
"LIABILITIES": as defined in subsection 2.7.
"LIEN": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Capital Lease having substantially the same economic effect as any of the
foregoing).
"LOAN(S)": the Revolving Credit Loans and the Term Loans.
"LOAN ACCOUNT": an account maintained hereunder by the Funding
Agent on its books of account, at the Payment Office and with respect to the
Borrower, in which the Borrower will be charged with all Loans made to, and all
other Letter of Credit Obligations incurred by, the Borrower.
"LOAN DOCUMENTS": this Agreement, any Notes, the L/C
Applications, each Assignment, the New York Mortgage Release, and the Security
Documents.
"LOAN PARTIES": each Parent, the Borrower, the Guarantors and
each other Subsidiary of the Borrower which is a party to a Loan Document.
"LOAN SERVICING FEE": as defined in subsection 2.6(c).
"LOCKBOX BANK": as defined in subsection 12.1(a).
"LOCKBOXES": as defined in subsection 12.1(a).
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a)
the business, assets, property, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole, (b) the validity or
enforceability of this or any of the other Loan Documents or the rights and
remedies of the Collateral Agent and the Lenders hereunder or thereunder, or (c)
the validity, perfection or priority of one or more Liens in favor of the
Collateral Agent on Collateral with an aggregate value in excess of 7.5% of the
Borrowing Base as set forth on the Borrowing Base Certificate most recently
delivered by the Borrower to the Agents pursuant to subsection 7.1(g).
"MATERIAL COLLATERAL": as defined in subsection 7.18.
"MATERIAL CONTRACT": with respect to any Person, each contract
or agreement to which such Person or any of its Subsidiaries is a party (a)
involving aggregate consideration payable to or by such Person or such
Subsidiary of $1,000,000 or more (other than (i) purchase orders in the ordinary
course of the business of such Person or such Subsidiary and (ii) contracts
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that by their terms may be terminated by such Person or such Subsidiary upon
less than 60 days' notice without penalty or premium) or (b) otherwise material
to the business, operations, condition (financial or otherwise), performance,
prospects or properties of such Person and its Subsidiaries, taken as a whole.
"MATERIALS OF ENVIRONMENTAL CONCERN": (a) any element,
compound or chemical that is defined, listed or otherwise classified as a
contaminant, pollutant, toxic pollutant, toxic or hazardous substances,
extremely hazardous substance or chemical, hazardous waste, special waste, or
solid waste under Environmental Laws; (b) any gasoline or petroleum (including
crude oil or any fraction thereof), or their refined products; (c)
polychlorinated biphenyls, urea formaldehyde insulation , and any other
substance that is regulated pursuant to or could give rise to liability under
any Environmental Law; (d) any substance exhibiting a hazardous waste
characteristic, including but not limited to, corrosivity, ignitability,
toxicity or reactivity as well as any radioactive or explosive materials; and
(e) any raw materials, building components, including but not limited to
asbestos-containing materials and manufactured products containing hazardous
substances.
"MICHIGAN MORTGAGE": the collective reference to the Open-End
Mortgage, substantially in the form of Exhibit D-1 hereto, executed and
delivered by the appropriate Loan Party with respect to specified Oil and Gas
Properties and other Collateral located in Michigan, as the same may be amended,
supplemented or otherwise modified from time to time.
"MOODY'S": Moody's Investors Service, Inc. and any successor
thereto.
"MORTGAGED PROPERTY": all of the Oil and Gas Properties and
other Collateral purported to be subject to the Lien of the Mortgages.
"MORTGAGES": collectively, (i) the Michigan Mortgage, (ii) the
New York Mortgage, (iii) the Ohio Mortgage, and (iv) the Pennsylvania Mortgage,
and each other mortgage, deed of trust, assignment, security agreement or
mortgage executed by the Borrower or any other Loan Party and in form and
substance reasonably satisfactory to the Collateral Agent which purports to
create a Lien in favor of the Collateral Agent, in each case as amended,
supplemented or otherwise modified from time to time.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS": (i) with respect to any Disposition by
any Person, the amount of cash received (directly or indirectly) from time to
time (whether as initial consideration or through the payment of deferred
consideration) by or on behalf of such Person or any of its Subsidiaries or
Affiliates, in connection therewith (it being understood that any cash received
from any Disposition of property or assets not owned by such Person shall not be
included for purposes of this definition) after deducting therefrom only (A) the
principal amount of any Indebtedness secured by any Lien permitted by subsection
8.3 on any asset (other than Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection with such
Disposition (other than Indebtedness under this Agreement), (B) reasonable
expenses related thereto reasonably incurred by such Person or such Affiliate in
connection therewith, (C) transfer taxes paid by such Person or such Affiliate
in connection
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therewith, and (D) net income taxes to be paid in connection with such
Disposition (after taking into account any tax credits or deductions and any tax
sharing arrangements) and (ii) with respect to the issuance or incurrence of any
Indebtedness by any Person, or the sale or issuance by any Person of any shares
of its Capital Stock, the aggregate amount of cash received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of such Person or any of its
Subsidiaries or Affiliates in connection therewith after deducting therefrom
only reasonable brokerage commissions, underwriting fees and discounts, legal
fees and similar fees and commissions.
"NEW YORK MORTGAGE": the collective reference to the Open-End
Mortgage, Assignment and Security Agreement, substantially in the form of
Exhibit D-2 hereto, to be executed and delivered by the appropriate Loan Party
with respect to specified Oil and Gas Properties and other Collateral located in
New York, if required pursuant to the terms hereof, as the same may be amended,
supplemented or otherwise modified from time to time.
"NEW YORK MORTGAGE RELEASE": the release of any executed and
unrecorded or recorded New York Mortgages, signed by Chase as the administrative
agent under the Existing Credit Agreement.
"NOTES": the Revolving Credit Notes and the Term Loan Notes.
"NOTICE OF BORROWING" as defined in subsection 2.2(a).
"NYMEX": the New York Mercantile Exchange or its successor
entity.
"NYMEX STRIP PRICE": as of any date of determination, (i) for
the 36 month period commencing with the month in which the date of determination
occurs, the average of the 36 succeeding monthly futures contract prices,
commencing with the month during which the determination date occurs, for each
of the appropriate crude oil and natural gas categories included in the most
recent Reserve Report provided by the Borrower to the Agents pursuant to
subsection 7.1(e), as quoted on the NYMEX, and (ii) for periods after such 36
month period, the average of the quoted prices for the period from and including
the 25th month in such 36 month period through the 36th month in such period;
PROVIDED, that if the NYMEX no longer provides futures contract price quotes or
has ceased to operate, the comparable futures contract prices quoted on such
other nationally recognized commodities exchange as the Collateral Agent shall
designate.
"OBLIGATIONS": as defined in the Guarantee and Collateral
Agreement.
"OHIO MORTGAGE": the collective reference to the Open-End
Mortgage, Assignment and Security Agreement, substantially in the form of
Exhibit D-3 hereto, executed and delivered by the appropriate Loan Party with
respect to specified Oil and Gas Properties and other Collateral located in
Ohio, as the same may be amended, supplemented or otherwise modified from time
to time.
"OIL AND GAS BUSINESS": (a) the acquisition, exploration,
exploitation, development, operation and disposition of interests in oil and gas
properties and Hydrocarbons, (b) the gathering, marketing, treating, processing,
storage, selling and transporting of any
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<PAGE> 21
production from such interests or properties, including, without limitation, the
marketing of Hydrocarbons obtained from unrelated Persons; (c) any business
relating to or arising from exploration for or development, production,
treatment, processing, storage, transportation or marketing of oil, gas and
other minerals and products produced in association therewith; (d) any business
relating to oilfield sales and service; and (e) any activity that is ancillary
or necessary or desirable to facilitate the activities described in clauses (a)
through (d) of this definition.
"OIL AND GAS PROPERTIES": Hydrocarbon Interests; the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; all
presently existing or future unitization, pooling agreements and declarations of
pooled units and the units created thereby (including without limitation all
units created under orders, regulations and rules of any Governmental Authority
having jurisdiction) which may affect all or any portion of the Hydrocarbon
Interests; all pipelines, gathering lines, compression facilities, tanks and
processing plants; all interests held in royalty trusts whether presently
existing or hereafter created; all Hydrocarbons in and under and which may be
produced, saved, processed or attributable to the Hydrocarbon Interests, the
lands covered thereby and all hydrocarbons in pipelines, gathering lines, tanks
and processing plants and all rents, issues, profits, proceeds, products,
revenues and other incomes from or attributable to the Hydrocarbon Interests;
all tenements, hereditaments, appurtenances and Properties in any way
appertaining, belonging, affixed or incidental to the Hydrocarbon Interests, and
all rights, titles, interests and estates described or referred to above,
including any and all real property, now owned or hereafter acquired, used or
held for use in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property and including any and all surface leases,
rights-of-way, easements and servitude together with all additions,
substitutions, replacements, accessions and attachments to any and all of the
foregoing; all oil, gas and mineral leasehold and fee interests, all overriding
royalty interests, mineral interests, royalty interests, net profits interests,
net revenue interests, oil payments, production payments, carried interests and
any and all other interests in Hydrocarbons; in each case whether now owned or
hereafter acquired directly or indirectly.
"OTHER TAXES": as defined in subsection 2.8(a).
"PARENT PLEDGE AGREEMENTS": the Pledge Agreements, dated as of
July 27, 1997, executed and delivered by TPG, TPG Investors II, L.P., TPG
Parallel II, L.P. and Johnson Rice & Company, L.L.C. in favor of Chase, as
administrative agent for the ratable benefit of the Existing Lenders which has
been assigned to the Collateral Agent and to the Lenders pursuant to the
Assignment.
"PARENT": TPG and Johnson Rice & Company, L.L.C.
"PAYMENT OFFICE": the office of the bank or other financial
institution designated by the Funding Agent from time to time where the Funding
Agents maintains an account, to which account the Borrower shall make all
payments to the Funding Agent under this Agreement and the other Loan Documents.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
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"PENNSYLVANIA MORTGAGE": the collective reference to the
Open-End Mortgage, Assignment and Security Agreement, substantially in the form
of Exhibit D-4 hereto, executed and delivered by the appropriate Loan Party with
respect to specified Oil and Gas Properties and other Collateral located in
Pennsylvania, as the same may be amended, supplemented or otherwise modified
from time to time.
"PERMITTED BUSINESS ACQUISITION": the formation of a new
Subsidiary or any acquisition of all or substantially all the assets of, or
shares of capital stock, partnership interests, joint venture interests, limited
liability company interests or other similar equity interests in, a Person or
division or line of business of a Person (or any subsequent investment made in a
previously acquired Permitted Business Acquisition) if immediately after giving
effect thereto: (a) no Default or Event of Default shall have occurred and be
continuing or would result therefrom, (b) all transactions related thereto shall
be consummated in accordance with applicable laws, (c) all of the Capital Stock
of any acquired or newly formed corporation, partnership, association or other
business entity are owned directly by the Borrower or a domestic Wholly-Owned
Subsidiary and all actions required to be taken, if any, with respect to such
acquired or newly formed Subsidiary under subsection 7.10 shall have been taken,
(d)(i) the Borrower shall be in compliance, on a PRO FORMA basis after giving
effect to such acquisition or formation, with the covenants contained in
subsection 8.1 recomputed as at the last day of the most recently ended fiscal
quarter of the Borrower as if such acquisition had occurred on the first day of
each relevant period for testing such compliance, and the Borrower shall have
delivered to the Collateral Agent an officers' certificate to such effect,
together with all relevant financial information for such Person or assets and
(ii) any acquired or newly formed Subsidiary shall not be liable for any
Indebtedness or Guarantee Obligations (except for Indebtedness and Guarantee
Obligations permitted by subsections 8.2 and 8.4, respectively), (e) any
acquired or newly formed Subsidiary shall not have (except for Indebtedness and
Guarantee Obligations permitted by subsections 8.2 and 8.4, respectively) any
material liabilities (contingent or otherwise), including, without limitation,
liabilities under Environmental Laws and liabilities with respect to any Plan,
and the Borrower shall have delivered to the Funding Agent a certificate,
approved by the Board of Directors of the Borrower and signed by a Responsible
Officer (who shall attest to such approval), that to the best of the Board of
Directors' knowledge, no such material liabilities exist, and (f) the Loans and
Letter of Credit Obligations shall, both immediately before and immediately
after giving effect to such acquisition or formation, be in compliance with the
then current Borrowing Base.
"PERMITTED BUSINESS INVESTMENTS": investments made in the
ordinary course of, and of a nature that is or shall have become customary in,
the Oil and Gas Business as a means of actively exploiting, exploring for,
acquiring, developing, processing, gathering, marketing or transporting oil and
gas through agreements, transactions, interests or arrangements which permit one
to share risks or costs, comply with regulatory requirements regarding local
ownership or satisfy other objectives customarily achieved through the conduct
of Oil and Gas Business jointly with third parties, including, without
limitation, the entry into operating agreements, working interests, royalty
interests, mineral leases, processing agreements, farm-out and farm-in
agreements, division orders, contracts for the sale, transportation or exchange
of oil or natural gas, unitization and pooling declarations and agreements and
area of mutual interest agreements, production sharing agreements or other
similar or customary agreements, transactions, properties, interests, and
investments and expenditures in connection therewith; PROVIDED that an
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investment in capital stock, partnership interests, joint venture interests,
limited liability company interests or other similar equity interests in a
Person shall not constitute a Permitted Business Investment.
"PERMITTED SUBORDINATED REFINANCING DEBT": Indebtedness of the
Borrower issued in exchange for, or the net proceeds of which are used to
refinance, replace, defease or refund, any or all of the Senior Subordinated
Notes; PROVIDED that (a) the principal amount of such Permitted Subordinated
Refinancing Debt does not exceed the principal amount (or accreted value, if
applicable) of the Senior Subordinated Notes so refinanced, replaced, defeased
or refunded, plus the amount of premiums, prepayments, penalties and other
amounts required to be paid in connection therewith and the reasonable and
customary fees and expenses incurred in connection therewith, (b) the
subordination provisions in such Permitted Subordinated Refinancing Debt are no
less favorable to the Lenders than the subordination provisions contained in the
Senior Subordinated Notes, (c) the interest rate on such Permitted Subordinated
Refinancing Debt is a market rate of interest to the extent such interest rate
is no higher than interest rate on the Senior Subordinated Notes and the
interest periods are no shorter than the interest periods with respect to the
Senior Subordinated Notes and (d) the timing and amounts of principal repayments
(including any sinking fund therefor) on such Permitted Subordinated Refinancing
Debt are no sooner and greater, respectively, than the timing and amounts of
principal repayments under the Senior Subordinated Notes.
"PERSON": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit pension
plan, other than a Multiemployer Plan, which is subject to Title IV of ERISA and
in respect of which the Borrower or a Commonly Controlled Entity is (or, if such
plan were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an "employer" as defined in Section 3(5) of ERISA.
"POST-DEFAULT RATE": a rate of interest per annum equal to the
rate of interest otherwise in effect from time to time pursuant to the terms of
this Agreement plus 2.0% or, if a rate of interest is not otherwise in effect,
the Base Rate plus 2.0%.
"PROPERTIES": any kind of facility, fixture, property or
asset, whether real, personal or mixed, or tangible or intangible owned, leased
or operated by the Borrower or any Subsidiary.
"PRO RATA SHARE": (a) with respect to a Lender's obligation to
make Revolving Credit Loans and receive payments of interest, fees, and
principal with respect thereto, the percentage obtained by dividing (i) such
Lender's Revolving Credit Commitment, by (ii) the Total Revolving Credit
Commitment; PROVIDED, that, if the Revolving Credit Commitments have been
reduced to zero, the numerator shall be the aggregate unpaid principal amount of
such Lender's Revolving Credit Loans (including Agent Advances) and its interest
in the Letter of Credit Obligations and the denominator shall be the aggregate
unpaid principal amount of all of the Revolving Credit Loans (including Agent
Advances) and Letter of Credit Obligations;
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(b) with respect to a Lender's obligation to make the Term
Loan and receive payments of interest, fees, and principal with respect thereto,
the percentage obtained by dividing (i) such Lender's Term Loan Commitment, by
(ii) the Total Term Loan Commitment; PROVIDED that, if the Term Loan Commitments
have been reduced to zero, the numerator shall be the aggregate unpaid principal
amount of such Lender's Term Loan and the denominator shall be the aggregate
unpaid principal amount of all Term Loans; and
(c) with respect to all other matters (including, without
limitation, the indemnification obligations arising under subsection 10.5), the
percentage obtained by dividing (i) the sum of such Lender's Commitment, by (ii)
the sum of the Total Commitment; PROVIDED, that if such Lender's Commitment
shall have been reduced to zero, such Lender's Commitment shall be the aggregate
unpaid principal amount of such Lender's Loans and its interest in the Letter of
Credit Obligations and if the Total Commitment shall have been reduced to zero,
the Total Commitment shall be the aggregate unpaid principal amount of the Loans
and the Letter of Credit Obligations.
"PROVED DEVELOPED NON-PRODUCING RESERVES": those Oil and Gas
Properties designated as "proved developed non-producing" (in accordance with
the Definitions for Oil and Gas Reserves approved by the Board of Directors of
the Society for Petroleum Engineers, Inc. from time to time) in the Reserve
Report and used in establishing the Borrowing Base.
"PROVED DEVELOPED PRODUCING RESERVES": those Oil and Gas
Properties designated as "proved developed producing" (in accordance with the
Definitions for Oil and Gas Reserves approved by the Board of Directors of the
Society for Petroleum Engineers, Inc. from time to time) in the Reserve Report
and used in establishing the Borrowing Base.
"PROVED RESERVES": those Oil and Gas Properties designated as
"proved" (in accordance with the Definitions for Oil and Gas Reserves approved
by the Board of Directors of the Society for Petroleum Engineers, Inc. from time
to time) in the Reserve Report and used in establishing the Borrowing Base.
"PROVED UNDEVELOPED RESERVES": those Oil and Gas Properties
designated as "proved undeveloped producing" (in accordance with the Definitions
for Oil and Gas Reserves approved by the Board of Directors of the Society for
Petroleum Engineers, Inc. from time to time) in the Reserve Report and used in
establishing the Borrowing Base.
"PV-10 VALUE": as of any date of determination, the sum of the
present values of the amounts of net revenues before income taxes expected to be
received in each of the months following the date of determination on the basis
of estimated production from Proved Reserves during such months determined as
follows:
(i) each such monthly net revenue amount shall be calculated
(x) on the basis of the applicable NYMEX Strip Price for the appropriate
category of oil or gas as of such date of determination, adjusting such price to
reflect (A) the appropriate Basis Differential with respect to Hydrocarbons
produced from specific Oil and Gas Properties of the Borrower as set forth on
EXHIBIT PV-10, as such Exhibit may from time to time be amended at the request
of the Borrower with the consent of the Agents, which consent shall not be
unreasonably withheld,
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conditioned or delayed, (B) the prices for fixed price contracts for such month,
(C) the prices for hedged volumes for such month and (D) Btu content, (y)
assuming that production costs remain constant throughout the periods of the
calculation of such monthly net revenues, and (z) otherwise applying the
financial accounting and reporting standards prescribed by the SEC for
application of the successful efforts method of accounting for such revenues
under Rule 4-10 of Regulation S-X as promulgated by the SEC from time to time;
and
(ii) the present value of each such monthly net revenue
amount shall be determined by discounting each such monthly net revenue amount
from the month in which it is expected to be received, on a monthly basis, to
such date of determination at a rate of 10% per annum.
"RATING AGENCIES": as defined in subsection 2.7.
"REGISTER": as defined in subsection 2.3(c).
"REGISTERED LOAN": as defined in subsection 2.3(d).
"REGISTERED NOTE": as defined in subsection 2.3(d).
"REGULATION U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"REIMBURSEMENT OBLIGATIONS": the obligation of the Borrower to
reimburse the Funding Agent and the Lenders for amounts payable by the Funding
Agent or the Lenders under a Letter of Credit Guaranty in respect of any drawing
made under any Letter of Credit, together with interest thereon as provided in
subsection 2.4.
"RELEASE": any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, seeping, migrating,
dumping or disposing of any Material of Environmental Concern (including the
abandonment or discarding of barrels, containers and other closed receptacles
containing any Material of Environmental Concern) into the indoor or outdoor
environment, including ambient air, soil, surface or ground water.
"RELEASE CERTIFICATE": as defined in subsection 11.21.
"REMEDIAL ACTION": all actions taken to (i) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way address
Materials of Environmental Concern in the indoor or outdoor environment; (ii)
prevent or minimize a Release or threatened Release of Materials of
Environmental Concern so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment; (iii) perform
pre-remedial studies and investigations and post-remedial operation and
maintenance activities; or (iv) any other actions authorized by 42 U.S.C. 9601.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
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"REQUIRED LENDERS": at any time, Lenders the Pro Rata Shares
of which aggregate at least 51%.
"REQUIREMENT OF LAW": as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"RESERVE REPORT": a report of Wright & Company (or such other
petroleum engineer of recognized national standing as may be selected by the
Borrower with the consent of the Agents, such consent not to unreasonably
withheld) in the form of the Initial Reserve Report, setting forth, as of June
30 or December 31 (i) the volumetric quantity and both the PV-10 Value and the
SEC Value, of the oil and gas reserves attributable to the Oil and Gas
Properties of the Borrower and the Eligible Guarantors, included in the
calculation of the Borrowing Base, together with a projection of the rate of
production and future net income, taxes, operating expenses and capital
expenditures with respect thereto as of such date, and (ii) such other
information as the Collateral Agent may reasonably request.
"RESPONSIBLE OFFICER": of any Loan Party, the chief executive
officer, the president or any vice president of such Loan Party or, with respect
to financial matters, the chief financial officer or treasurer of such Loan
Party.
"REVOLVING CREDIT COMMITMENT": as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to the Borrower
hereunder in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Lender's name on Schedule 1.1(a), as
such amount may be reduced from time to time in accordance with the provisions
of this Agreement.
"REVOLVING CREDIT LOANS": the revolving credit loans made to
the Borrower pursuant to subsection 2.1(a)(i).
"REVOLVING CREDIT NOTE": as defined in subsection 2.3(a).
"SEC": the Securities and Exchange Commission or any successor
entity thereto.
"SEC VALUE": the future net revenues before income taxes from
Proved Reserves, estimated utilizing the actual price for the appropriate
category of oil or gas as of the date of determination and assuming that oil and
natural gas prices and production costs thereafter remain constant, then
discounted at the rate of 10% per year to obtain the present value, and
otherwise applying the financial accounting and reporting standards prescribed
by the SEC for application of the successful efforts method of accounting under
Rule 4-10 of Regulation S-X as promulgated by the SEC from time to time.
"SECTION 29 PROPERTIES": as defined in subsection 8.6(k).
"SECURITIZATION": as defined in subsection 2.7.
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"SECURITIZATION PARTIES": as defined in subsection 2.7.
"SECURITY DOCUMENTS": the collective reference to the
Guarantee and Collateral Agreement, the Parent Pledge Agreements, the Mortgages
and all other security documents hereafter delivered to the Collateral Agent
granting a Lien on any asset or assets of any Person to secure the obligations
and liabilities of the Borrower hereunder and under any of the other Loan
Documents or to secure any guarantee of any such obligations and liabilities.
"SENIOR DEBT": with respect to the Borrower and its
Subsidiaries, Indebtedness of the Borrower and its Subsidiaries other than
Subordinated Indebtedness.
"SENIOR SUBORDINATED INDENTURE": the Indenture, dated as of
June 27, 1997, between the Borrower and LaSalle National Bank, as trustee,
pursuant to which the Senior Subordinated Notes are outstanding.
"SENIOR SUBORDINATED NOTES": the 9 7/8% Senior Subordinated
Notes of the Borrower due 2007.
"SETTLEMENT PERIOD": as defined in subsection 2.2(d)(i).
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. and any successor thereto.
"SUBORDINATED INDEBTEDNESS": the Senior Subordinated Notes,
Permitted Subordinated Refinancing Debt and any other Indebtedness of the
Borrower subordinated to the prior payment in full of the Obligations in a
manner acceptable to the Collateral Agent as evidenced by its written approval.
"SUBSIDIARY": as to any Person, a corporation, partnership or
other entity of which more than 50% of the total voting power of shares of stock
or other equity ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by reason of the
happening of a contingency) to vote in the election of directors, a managing
general partner, or majority of general partners or other managers or trustees
thereof, is at the time owned or controlled, directly or indirectly by such
Person or one or more of the other Subsidiaries of such Person (or a combination
thereof). Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to any direct or indirect
Subsidiary or Subsidiaries of the Borrower.
"TAXES": as defined in subsection 2.8(a).
"TERM LOAN COMMITMENT": as to any Lender, the obligation of
such Lender to make a single Term Loan to the Borrower hereunder in an aggregate
principal amount not to exceed the amount set forth opposite such Lender's name
on Schedule 1.1(a).
"TERM LOAN": a term loan made to the Borrower pursuant to
subsection 2.1(a).
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"TERM LOAN NOTE": as defined in subsection 2.3(a).
"TERM LOAN COMMITMENT TERMINATION DATE": December 26, 2000.
"TOTAL COMMITMENT": the sum of the Total Revolving Credit
Commitment and the Total Term Loan Commitment.
"TOTAL RESERVE VALUE": the sum of (a) 65% of the PV-10 Value
of the Proved Developed Producing Reserves of the Borrower and the Eligible
Guarantors, (b) 45% of the PV-10 Value of the Proved Developed Non-Producing
Reserves of the Borrower and the Eligible Guarantors, (c) 40% of the PV-10 Value
of the Proved Undeveloped Reserves of the Borrower and the Eligible Guarantors,
(d) 65% of the PV-10 Value of the Proved Developed Producing Reserves of the
Borrower and the Eligible Guarantors acquired by the Borrower or any Eligible
Guarantor pursuant to a Permitted Business Acquisition, (e) 45% of the PV-10
Value of the Proved Developed Non-Producing Reserves of the Borrower and the
Eligible Guarantors acquired by the Borrower or any Eligible Guarantor pursuant
to a Permitted Business Acquisition, and (f) 40% of the PV-10 Value of the
Proved Undeveloped Reserves of the Borrower and the Eligible Guarantors acquired
by the Borrower pursuant to a Permitted Business Acquisition; each as set forth
in the Borrowing Base Certificate most recently delivered by the Borrower to the
Agents pursuant to subsection 6.1(c) or 7.1(g), as applicable.
"TOTAL REVOLVING COMMITMENT": the sum of the amounts of the
Lender's Revolving Credit Commitments.
"TOTAL TERM LOAN COMMITMENT": the sum of the amounts of the
Lender's Term Loan Commitments.
"TPG": TPG Partners II, L.P.
"UNUSED LINE FEE": as defined in subsection 2.6(b).
"WITHDRAWAL LIABILITY": liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of subtitle E of Title IV of ERISA.
"WHOLLY-OWNED SUBSIDIARY": a Subsidiary of the Borrower, all
of the outstanding Capital Stock of which (other than directors' qualifying
shares) is owned, directly or indirectly, by the Borrower or one or more other
Wholly-Owned Subsidiaries of the Borrower, provided, that each of the Persons
listed on Schedule 1.1(b) shall be deemed not to be a Wholly-Owned Subsidiary.
Section 1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in any Loan Document or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein and in any Loan Document, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to
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the Borrower or any Subsidiary of the Borrower not defined in subsection 1.1 and
accounting terms partly defined in subsection 1.1, to the extent not defined,
shall have the respective meanings given to them under GAAP. References in this
Agreement or any other Loan Document to financial statements shall be deemed to
include all related schedules and notes thereto.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(e) References in this Agreement or any other Loan Document to
knowledge of any Loan Party of events or circumstances shall be deemed to refer
to events or circumstances of which a Responsible Officer has knowledge or
should have had knowledge if such Loan Party had exercised due diligence within
the meaning of Section 1-201 of the Uniform Commercial Code.
SECTION 2. THE LOANS.
Section 2.1 COMMITMENTS.
(a) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender severally agrees to
make:
(i) to the Borrower from time to time, but not more
frequently than once in any seven consecutive day period (unless the Funding
Agent is willing to accommodate more frequent borrowings of Revolving Credit
Loans), Revolving Credit Loans on any Business Day during the period from and
including the Effective Date to the Final Maturity Date, or until the earlier
reduction of its Revolving Credit Commitment to zero in accordance with the
terms hereof, in an aggregate principal amount at any time outstanding not to
exceed the amount of such Lender's Revolving Credit Commitment; and
(ii) a term loan to the Borrower in an aggregate principal
amount not to exceed the amount of such Lender's Term Loan Commitment, which
term loan may be borrowed by the Borrower on any Business Day during the period
from and including the Effective Date to and including the Term Loan Commitment
Termination Date, PROVIDED, that no Lender shall make, and the Borrower may not
borrow, more than five (5) separate Term Loans.
(b) Notwithstanding the foregoing (A) the aggregate principal
amount of the Revolving Credit Loans outstanding at any time to the Borrower
hereunder shall not exceed the lower of (x) the difference between (1) the Total
Revolving Commitment and (2) the aggregate Letter of Credit Obligations, and (y)
the difference between (1) the then current Borrowing Base and (2) the sum of
the aggregate Letter of Credit Obligations plus the aggregate outstanding
principal amount of the Total Term Loan, (B) the aggregate principal amount of
the Term Loans outstanding at any time to the Borrower hereunder shall not
exceed the lower of (x) $25,000,000
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and (y) the difference between (1) the then current Borrowing Base and (2) the
sum of the aggregate Letter of Credit Obligations plus the aggregate outstanding
principal amount of the Revolving Credit Loans, and (C) the aggregate principal
amount of the Loans outstanding at any time to the Borrower hereunder plus the
aggregate Letter of Credit Obligations shall not at any time exceed the maximum
principal amount of Indebtedness permitted to be incurred by the Borrower under
the Senior Subordinated Indenture. The Revolving Credit Commitment of each
Lender shall automatically and permanently be reduced to zero on the Final
Maturity Date pursuant to subsection 2.5(a)(i) Within the foregoing limits, the
Borrower may borrow, repay and reborrow, on or after the Effective Date and
prior to the Final Maturity Date, Revolving Credit Loans. Any principal amount
of the Term Loans which is repaid or prepaid may not be reborrowed.
Section 2.2 MAKING THE LOANS. (a) The Borrower shall give the
Funding Agent prior telephone notice (immediately confirmed in writing, in
substantially the form of Exhibit B hereto (a "NOTICE OF Borrowing"), not later
than 12:00 noon (New York City time) on the date which is five (5) Business Days
prior to the date of the proposed Loans (or such shorter period as the Funding
Agent is willing to accommodate from time to time), provided that, in no event
may the Notice of Borrowing for the Loans be given to the Funding Agent later
than 12:00 noon (New York City time) on the borrowing date of such Loans. Such
Notice of Borrowing shall be irrevocable and shall specify (i) the principal
amount of the proposed Loans, (ii) whether the Loans are requested to be
Revolving Credit Loans or Term Loans, (iii) the use of the proceeds of such
proposed Loans, and (iv) the proposed borrowing date, which must be a Business
Day. The Funding Agent and the Lenders may act without liability upon the basis
of written, telecopied or telephonic notice believed by the Funding Agent in
good faith to be from the Borrower (or from any Responsible Officer thereof
designated in writing purportedly from the Borrower to the Funding Agent). The
Borrower hereby waives the right to dispute the Funding Agent's record of the
terms of any such telephonic Notice of Borrowing. The Funding Agent and each
Lender shall be entitled to rely conclusively on any Responsible Officer's
authority to request a Loan on behalf of the Borrower until the Funding Agent
receives written notice to the contrary. The Funding Agent and the Lenders shall
have no duty to verify the authenticity of the signature appearing on any
written Notice of Borrowing. Except as otherwise provided in this subsection
2.2, Loans shall be made ratably by the Lenders in accordance with their
respective Revolving Credit Commitments and Term Loan Commitments, as the case
may be.
(b) Each Notice of Borrowing pursuant to this subsection 2.2
shall be irrevocable and the Borrower shall be bound to make a borrowing in
accordance therewith, and shall request Revolving Credit Loans or Term Loans in
a minimum amount of $1,000,000 and in an integral multiple of $1,000,000.
(c) (i) Except as otherwise provided in this subsection
2.2(c), all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares of the Total
Revolving Credit Commitment and the Total Term Loan Commitment, as the case may
be, it being understood that no Lender shall be responsible for any default by
any other Lender in that other Lender's obligations to make a Loan requested
hereunder, nor shall the Commitment of any Lender be increased or decreased as a
result of the default by any other Lender in that other Lender's obligation to
make a Loan requested hereunder, and each Lender shall be
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obligated to make the Loans required to be made by it by the terms of this
Agreement regardless of the failure by any other Lender.
(ii) Notwithstanding any other provision of this Agreement,
and in order to reduce the number of fund transfers among the Borrower, the
Funding Agent and the Lenders, the Borrower, the Funding Agent and the Lenders
agree that the Funding Agent may (but shall not be obligated to), and the
Borrower and the Lenders hereby irrevocably authorize the Funding Agent to,
fund, on behalf of the Lenders, Loans pursuant to subsection 2.1, subject to the
procedures for settlement set forth in subsection 2.2(d); PROVIDED, HOWEVER,
that (a) the Funding Agent shall in no event fund such Loans if the Funding
Agent shall have received written notice from the Required Lenders on the
Business Day prior to the day of the proposed Loan that one or more of the
conditions precedent contained in subsection 6.2 will not be satisfied on the
day of the proposed Loan, and (b) the Funding Agent shall not otherwise be
required to determine that, or take notice whether, the conditions precedent in
subsection 6.2 have been satisfied. If the Borrower gives a Notice of Borrowing
requesting a Loan and the Funding Agent elects not to fund such Loan on behalf
of the Lenders, then promptly after receipt of the Notice of Borrowing
requesting such Loan, the Funding Agent shall notify each Lender of the
specifics of the requested Loan and that it will not fund the requested Loan on
behalf of the Lenders. If the Funding Agent notifies the Lenders that it will
not fund a requested Loan on behalf of the Lenders, unless otherwise agreed by a
Lender and the Funding Agent in writing, each Lender shall make its Pro Rata
Share of the Loan available to the Funding Agent, in immediately available
funds, at the Payment Office no later than 3:00 p.m. (New York City time)
(provided that the Funding Agent requests payment from such Lender not later
than 1:00 p.m.) on the date of the proposed Loan. The Funding Agent will make
the proceeds of such Loans available to the Borrower on the day of the proposed
Loan by causing an amount, in immediately available funds, equal to the proceeds
of all such Loans received by the Funding Agent at the Payment Office or the
amount funded by the Funding Agent on behalf of the Lenders to be deposited in
an account designated by the Borrower.
(iii) If the Funding Agent has notified the Lenders that the
Funding Agent, on behalf of the Lenders, will fund a particular Loan pursuant to
subsection 2.2(c)(ii), the Funding Agent may assume that such Lender has made
such amount available to the Funding Agent on such day and the Funding Agent, in
its sole discretion, may, but shall not be obligated to, cause a corresponding
amount to be made available to the Borrower on such day. If the Funding Agent
makes such corresponding amount available to the Borrower and such corresponding
amount is not in fact made available to the Funding Agent by such Lender, the
Funding Agent shall be entitled to recover such corresponding amount on demand
from such Lender together with interest thereon, for each day from the date such
payment was due until the date such amount is paid to the Funding Agent, at the
Federal Funds Rate for three (3) Business Days and thereafter at the Base Rate.
During the period in which such Lender has not paid such corresponding amount to
the Funding Agent, notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, the amount so advanced by the Funding
Agent to the Borrower shall, for all purposes hereof, be a Revolving Credit Loan
or a Term Loan, as the case may be, made by the Funding Agent for its own
account. Upon any such failure by a Lender to pay the Funding Agent, the Funding
Agent shall promptly thereafter notify the Borrower of such failure and the
Borrower shall immediately pay such corresponding amount to the Funding Agent
for its own account.
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(iv) Nothing in this subsection 2.2(c) shall be deemed to
relieve any Lender from its obligations to fulfill its Commitments hereunder or
to prejudice any rights that the Funding Agent or the Borrower may have against
any Lender as a result of any default by such Lender hereunder.
(d) (i) With respect to all periods for which the Funding
Agent has funded Loans pursuant to subsection 2.2(c), on Friday of each week, or
if the applicable Friday is not a Business Day, then on the following Business
Day, or such shorter period as the Funding Agent may from time to time select
(any such week or shorter period being herein called a "SETTLEMENT PERIOD"), the
Funding Agent shall notify each Lender of the unpaid principal amount of the
Loans outstanding as of the last day of each such Settlement Period. In the
event that such amount is greater than the unpaid principal amount of the Loans
outstanding on the last day of the Settlement Period immediately preceding such
Settlement Period (or, if there has been no preceding Settlement Period, the
amount of the Loans made on the date of such Lender's initial funding), unless
otherwise agreed in writing between a Lender and the Funding Agent, each Lender
shall promptly (and in any event not later than 2:00 p.m. if the Funding Agent
requests payment from such Lender not later than 12:00 noon on such day) make
available to the Funding Agent its Pro Rata Share of the difference in
immediately available funds. In the event that such amount is less than such
unpaid principal amount, the Funding Agent shall promptly pay over to each
Lender its Pro Rata Share of the difference in immediately available funds. In
addition, if the Funding Agent shall so request at any time when a Default or an
Event of Default shall have occurred and be continuing, or any other event shall
have occurred as a result of which the Funding Agent shall determine that it is
desirable to present claims against the Borrower for repayment, unless otherwise
agreed in writing between a Lender and the Funding Agent, each Lender shall
promptly remit to the Funding Agent or, as the case may be, the Funding Agent
shall promptly remit to each Lender, sufficient funds to adjust the interests of
the Lenders in the then outstanding Loans to such an extent that, after giving
effect to such adjustment, each Lender's interest in the then outstanding Loans
will be equal to its Pro Rata Share thereof. The obligations of the Funding
Agent and each Lender under this subsection 2.2(d) shall be absolute and
unconditional. Each Lender shall only be entitled to receive interest on its Pro
Rata Share of the Loans which have been funded by such Lender.
(ii) In the event that any Lender fails to make any payment
required to be made by it pursuant to subsection 2.2(d)(i), the Funding Agent
shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from the date such payment
was due until the date such amount is paid to the Funding Agent, at the Federal
Funds Rate for three (3) Business Days and thereafter at the Base Rate. During
the period in which such Lender has not paid such corresponding amount to the
Funding Agent, notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, the amount so advanced by the Funding
Agent to the Borrower shall, for all purposes hereof, be a Loan made by the
Funding Agent for its own account. Upon any such failure by a Lender to pay the
Funding Agent, the Funding Agent shall promptly thereafter notify the Borrower
of such failure and the Borrower shall immediately pay such corresponding amount
to the Funding Agent for its own account. Nothing in this subsection 2.2(d)(ii)
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that the Funding Agent or the
Borrower may have against any Lender as a result of any default by such Lender
hereunder.
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Section 2.3 NOTES; REPAYMENT OF LOANS. (a) All Revolving
Credit Loans made by a Lender to the Borrower shall be evidenced by a single
revolving credit note (the "REVOLVING CREDIT NOTE"), duly executed on behalf of
the Borrower, dated the Effective Date, and delivered to and made payable to the
order of such Lender in a principal amount equal to the amount of such Lender's
Revolving Credit Commitment. The Term Loan made by a Lender to the Borrower
shall be evidenced by a single term note (the "TERM LOAN NOTE"), duly executed
on behalf of the Borrower, dated the Effective Date, and delivered to and made
payable to the order of such Lender in a principal amount equal to such Lender's
Term Loan Commitment.
(b) The outstanding principal of all Loans shall be due and
payable on the Final Maturity Date.
(c) The Borrower agrees to record each Loan on a register
maintained by the Borrower (the "REGISTER"). Each Loan recorded on the Register
(a "REGISTERED LOAN") may not be evidenced by promissory notes other than a
Revolving Credit Note or a Term Loan Note, each of which is a Registered Note
(as defined below). Upon the registration of any Loan, any promissory note
(other than a Registered Note) evidencing the same shall be null and void and
shall be returned to the Borrower. The Borrower agrees, at the request of any
Lender, to execute and deliver to such Lender a promissory note in registered
form to evidence such Registered Loan (i.e. containing the registered note
language set forth in Exhibits A-1 and A-2 hereto) and registered as provided in
subsection 11.7(b) (a "REGISTERED NOTE"), dated the date hereof, payable to such
Lender and otherwise duly completed. Once recorded on the Register, the Loan or
Loans evidenced by such Note may not be removed from the Register so long as it
remains outstanding, and a Registered Note may not be exchanged for a promissory
note that is not a Registered Note.
Section 2.4 INTEREST.
(a) REVOLVING CREDIT LOANS. The Revolving Credit Loans shall
bear interest on the principal amount thereof from time to time outstanding,
from the date of such Loan until such principal amount becomes due, at a rate
per annum equal to the Base Rate plus 2.0%.
(b) TERM LOAN. The Term Loan shall bear interest on the
principal amount thereof from time to time outstanding, from the date of such
Loan until such principal amount becomes due, at a rate per annum equal to the
Base Rate plus 3.0%.
(c) DEFAULT INTEREST. To the extent permitted by law, upon the
occurrence and during the continuance of an Event of Default, the principal of,
and all accrued and unpaid interest on, all Loans, and all fees, indemnities,
outstanding Reimbursement Obligations or any other Obligations of the Borrower
under this Agreement, the Notes and other Loan Documents shall bear interest,
from the date such Event of Default occurred until such Event of Default is
cured or waived in writing in accordance herewith, at a rate per annum equal at
all times to the Post-Default Rate.
(d) INTEREST PAYMENT. Interest on each Loan shall be payable
monthly, in arrears, on the first day of each month, commencing on the first day
of the month following the month in which such Loan is made and at maturity
(whether upon demand, by acceleration or otherwise). Interest at the
Post-Default Rate shall be payable on demand. The Borrower hereby
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authorizes the Funding Agent to, and the Funding Agent may, from time to time,
charge the Loan Account pursuant to Section 4.2 with the amount of any interest
payment due hereunder.
(e) GENERAL. All interest shall be computed on the basis of a
year of 360 days for the actual number of days, including the first day but
excluding the last day, elapsed.
Section 2.5 REDUCTION OF COMMITMENT; PREPAYMENT OF LOANS.
(a) REDUCTION OF COMMITMENTS.
(i) REVOLVING CREDIT COMMITMENTS. The Total Revolving Credit
Commitment shall terminate on the Final Maturity Date. The Borrower may, without
premium or penalty, at any time and from time to time reduce the Total Revolving
Credit Commitment to an amount (which may be zero) not less than the sum of (A)
the aggregate unpaid principal amount of all Revolving Credit Loans then
outstanding, (B) the aggregate principal amount of all Revolving Credit Loans
not yet made as to which a Notice of Borrowing has been given by the Borrower
under subsection 2.2, (C) the Letter of Credit Obligations at such time, and (D)
the stated amount of all Letters of Credit not yet issued as to which a request
has been made and not withdrawn. Each such reduction shall be in an amount which
is an integral multiple of $1,000,000, (unless the Total Revolving Credit
Commitment, as the case may be, in effect immediately prior to such reduction is
less than $1,000,000) shall be made by providing not less than three (3)
Business Days' prior written notice to the Agents and shall be irrevocable. Once
reduced, the Total Revolving Credit Commitment may not be increased. Each such
reduction of the Total Revolving Credit Commitment shall reduce the respective
Commitment of each Lender proportionately in accordance with its Pro Rata Share
thereof.
(ii) TERM LOAN COMMITMENT. The Total Term Loan Commitment
shall terminate at 5:00 p.m. (New York City time) on the Term Loan Commitment
Termination Date.
(b) OPTIONAL PREPAYMENT.
(i) REVOLVING CREDIT LOANS. The Borrower may prepay without
penalty or premium the principal of any Revolving Credit Loan, in whole or in
part, at any time or from time to time.
(ii) TERM LOAN. The Borrower may upon at least three (3)
Business Days' prior written notice to the Funding Agent, prepay without penalty
or premium, the principal amount of the Term Loan, in whole or in part on any
Business Day. Each prepayment made pursuant to this clause (b)(ii) shall be
accompanied by the payment of accrued interest to the date of such payment on
the amount prepaid.
(c) MANDATORY PREPAYMENT.
(i) The Borrower will prepay the Revolving Credit Loans
within three (3) Business Days, if at any time (A) the sum of the aggregate
principal amount of all Loans plus the aggregate amount of all Letter of Credit
Obligations exceeds (B) the Borrowing Base set forth in the most recent
Borrowing Base Certificate delivered to the Agents pursuant to subsection
7.1(g), such prepayment to be in an amount equal to the amount of such excess.
If at
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any time after the Borrower has complied with the first sentence of this
subsection 2.5(c), the sum of the aggregate principal amount of the Term Loans
plus the aggregate amount of Letter of Credit Obligations is greater than the
then current Borrowing Base, the Borrower shall immediately prepay the Term
Loans to the full amount of such excess and, if such excess remains after such
prepayment, the Borrower shall then provide cash collateral to the Funding Agent
in the amount of such excess, which cash collateral shall be deposited in an
interest bearing account maintained by the Funding Agent and, PROVIDED that no
Event of Default shall have occurred and be continuing, returned to the
Borrower, at such time as the aggregate amount of Letter of Credit Obligations
plus the aggregate principal amount of all outstanding Loans no longer exceeds
the then current Borrowing Base.
(ii) The Borrower will immediately prepay the outstanding
principal amount of the Term Loans in the event that the Total Revolving Credit
Commitment is terminated for any reason.
(iii) The Funding Agent shall on each Business Day apply all
funds transferred to or deposited in the Payment Office, to the payment, in
whole or in part; to the outstanding Revolving Credit Loans.
(iv) Immediately upon any Disposition by the Borrower or any
of its Subsidiaries pursuant to subsections 8.6(e) and (h), the Borrower shall
prepay the outstanding principal of the Revolving Credit Loans, and, if no
Revolving Credit Loans are outstanding, the Term Loans, each in an amount equal
to 100% of the Net Cash Proceeds received by the Borrower or any of its
Subsidiaries in connection with such Disposition. Upon the loss, destruction or
taking by condemnation of any Collateral, the Borrower shall prepay the
outstanding principal of the Revolving Credit Loans, and, if no Revolving Credit
Loans are outstanding, the Term Loans, each in an amount equal to 100% of the
proceeds received by the Borrower or any of its Subsidiaries in connection
therewith.
(d) Except as otherwise expressly provided in this subsection
2.5, payments with respect to any clause of this subsection 2.5 are in addition
to payments made or required to be made under any other clause of this
subsection 2.5.
(e) Any prepayment made pursuant to this subsection 2.5 (other
than payments pursuant to clauses (c)(i) and (c)(iii) of this subsection 2.5)
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of prepayment, and if such prepayment would reduce the amount of the
outstanding Loans to zero at a time when the Total Commitment has been
terminated, such prepayment shall be accompanied by the payment of the fees
accrued to such date pursuant to subsection 2.6.
Section 2.6 FEES.
(a) CLOSING FEE. On or prior to the Effective Date, the
Borrower shall pay to the Funding Agent for the account of the Lenders (to be
distributed in accordance with a written agreement among the Lenders) a
non-refundable closing fee (the "CLOSING FEE") equal to $2,500,000, which shall
be deemed fully earned when paid.
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(b) UNUSED LINE FEE. From and after the Effective Date and
until the Final Maturity Date, the Borrower shall pay to the Funding Agent for
the account of the Lenders (to be distributed in accordance with a written
agreement among the Lenders) an unused line fee (the "UNUSED LINE FEE"), which
shall accrue at the rate per annum of 0.75% on the excess, if any, of the Total
Commitment over the sum of the average principal amount of Loans and Letter of
Credit Obligations outstanding from time to time and shall be payable monthly in
arrears on the first Business Day of each month commencing September 1, 2000.
(c) LOAN SERVICING FEE. From and after the Effective Date and
until the Final Maturity Date, the Borrower shall pay to the Funding Agent for
the account of the Agents (to be distributed in accordance with a written
agreement among the Agents) a non-refundable loan servicing fee (the "LOAN
SERVICING FEE") equal to $25,000 each quarter, payable on the Effective Date and
quarterly in advance thereafter on the first Business Day of each calendar
quarter commencing on October 2, 2000 PROVIDED that the amount of the Loan
Servicing Fee payable on the Effective Date shall be a pro rata portion of the
quarterly Loan Servicing Fee determined based upon the number of days remaining
in the calendar quarter in which the Effective Date occurs.
(d) DRAW DOWN FEE. The Borrower shall pay to the Funding Agent
for the account of the Lenders (to be distributed in accordance with a written
agreement among the Lenders) a draw down fee (the "DRAW DOWN FEE") equal to 2.0%
of the amount of the Term Loan to be borrowed by the Borrower pursuant to
subsection 2.1(a)(ii), payable on the date of such borrowing.
Section 2.7 SECURITIZATION. The Borrower hereby acknowledges
that the Lenders and any of their Affiliates may sell or securitize the Loans (a
"SECURITIZATION") through the pledge of the Loans as collateral security for
loans to the Lenders or their Affiliates or through the sale of the Loans or the
issuance of direct or indirect interests in the Loans, which loans to the
Lenders or their Affiliates or direct or indirect interests will be rated by
Moody's, Standard & Poor's or one or more other rating agencies (the "RATING
AGENCIES"). The Borrower shall cooperate with the Lenders and their Affiliates
to effect the Securitization including, without limitation, by (a) amending this
Agreement and the other Loan Documents, and executing such additional documents,
as reasonably requested by the Lenders in connection with the Securitization,
PROVIDED THAT (i) any such amendment or additional documentation does not impose
material additional costs on the Borrower and (ii) any such amendment or
additional documentation does not materially adversely affect the rights, or
materially increase the obligations, of the Borrower under the Loan Documents or
change or affect in a manner adverse to the Borrower the financial terms of the
Loans, (b) providing such information as may be reasonably requested by the
Lenders in connection with the rating of the Loans or the Securitization, and
(c) providing in connection with any rating of the Loans a certificate (i)
agreeing to indemnify the Lenders and any of their Affiliates, any of the Rating
Agencies, or any party providing credit support or otherwise participating in
the Securitization (collectively, the "SECURITIZATION PARTIES") for any losses,
claims, damages or liabilities (THE "LIABILITIES") to which the Lenders, their
Affiliates or such Securitization Parties may become subject insofar as the
Liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Loan Document or in any
writing delivered by or on behalf of the Borrower and its Affiliates to the
Lenders in connection with any Loan Document or arise
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out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and such indemnity shall survive any transfer by the Lenders or
their successors or assigns of the Loans and (ii) agreeing to reimburse the
Lenders and any of their Affiliates for any legal or other expenses reasonably
incurred by such Persons in connection with defending such Liabilities.
Section 2.8 TAXES.
(a) All payments made by the Borrower hereunder, under the
Notes or under any other Loan Document shall be made without set-off,
counterclaim, deduction or other defense. All such payments shall be made free
and clear of and without deduction for any present or future income, franchise,
sales, use, excise, stamp or other taxes, levies, imposts, deductions, charges,
fees, withholdings, restrictions or conditions of any nature now or hereafter
imposed, levied, collected, withheld or assessed by any jurisdiction (whether
pursuant to United States Federal, state, local or foreign law) or by any
political subdivision or taxing authority thereof or therein, and all interest,
penalties or similar liabilities, excluding taxes based on or measured by the
net income of, and branch profit taxes of, any Lender, any Agent or the Issuing
Lender imposed by the jurisdiction in which such Lender, such Agent or the
Issuing Lender is organized or any political subdivision thereof or taxing
authority thereof or any jurisdiction in which such Person's principal office or
relevant lending office is located or any political subdivision thereof or
taxing authority thereof (such nonexcluded taxes being hereinafter collectively
referred to as "TAXES"). If the Borrower shall be required by law to deduct or
to withhold any Taxes from or in respect of any amount payable hereunder,
(i) the amount so payable shall be increased to the extent
necessary so that after making all required deductions and withholdings
(including Taxes on amounts payable to the Lenders or the Issuing Lender
pursuant to this sentence) the Lenders or the Issuing Lender receive an amount
equal to the sum they would have received had no such deductions or withholdings
been made,
(ii) the Borrower shall make such deductions or
withholdings, and
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxation authority in accordance with applicable law.
Whenever any Taxes are payable by the Borrower, as promptly as possible
thereafter, the Borrower shall send the Lenders, the Issuing Lender and the
Funding Agent an official receipt (or, if an official receipt is not available,
such other documentation as shall be reasonably satisfactory to the Lenders,
Issuing Lender or the Funding Agent, as the case may be) showing payment. In
addition, the Borrower agrees to pay any present or future taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, recordation or filing of, or otherwise with
respect to, this Agreement, the Notes, the Letters of Credit or any other Loan
Document other than the foregoing excluded taxes (hereinafter referred to as
"OTHER TAXES").
(b) The Borrower will indemnify the Lenders and the Issuing
Lender for the amount of Taxes or Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this subsection 2.8) paid by any Lender or
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the Issuing Lender and any liability (including penalties, interest and expenses
for nonpayment, late payment or otherwise) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be paid within 30 days from the date on
which such Lender or such Issuing Lender makes written demand which demand shall
identify the nature and amount of Taxes or Other Taxes for which indemnification
is being sought and the basis of the claim.
(c) Each Lender that is organized in a jurisdiction other than
the United States, a State thereof or the District of Columbia or, with respect
to any Lender that is treated as a partnership or disregarded entity for U.S.
federal income tax purposes, is treated as a foreign partnership for purposes of
U.S. federal withholding tax hereby agrees that:
(i) it shall, no later than the Effective Date (or, in the
case of a Lender which becomes a party hereto pursuant to subsections 2.7, 4.3
or 11.7 hereof after the Effective Date, the date upon which such Lender becomes
a party hereto) deliver to the Borrower and the Funding Agent: (A) two accurate,
complete and signed originals of U.S. Internal Revenue Service Form 4224 or
successor form, or (B) two accurate, complete and signed originals of U.S.
Internal Revenue Service Form 1001 or successor form, in each case indicating
that such Lender is on the date of delivery thereof entitled to receive payments
of interest for the account of its lending office under this Agreement free from
withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office
or offices or selects an additional lending office it shall, at the same time or
reasonably promptly thereafter, deliver to the Borrower through the Funding
Agent in replacement for, or in addition to, the forms previously delivered by
it hereunder: (A) if such changed or additional lending office is located in the
United States, two accurate, complete and signed originals of such Form 4224 or
successor form, or (B) two accurate, complete and signed originals of such Form
1001 or successor form, in each case indicating that such Lender is on the date
of delivery thereof entitled to receive payments of principal, interest and fees
for the account of such changed or additional lending office under this
Agreement free from withholding of United States Federal income tax;
(iii) it shall, promptly after the Borrower's reasonable
request to that effect, deliver to the Borrower such other forms or similar
documentation as such Lender is legally able to deliver as may be required from
time to time by any applicable law, treaty, rule or regulation in order to
establish such Lender's tax status for withholding purposes; and
(iv) the Borrower shall not be required to pay additional
amounts to such Lender pursuant to subsection 2.8(a) or, with respect to Taxes,
subsection 4.5, (x) to the extent that the obligations to withhold United States
Federal Income Tax results from the failure of such Lender to comply with this
subsection 2.8(c); PROVIDED, HOWEVER, that this clause (iv) shall not apply to a
Lender that designates a new or additional lending office to the extent that
additional amounts such Lender would be entitled to receive do not exceed the
additional amounts that would have been payable to the transferor Lender (or to
the original lending officer of such Lender) in the absence of the transfer to
such transferee Lender or designation of a new or additional lending officer and
(y) in the case of any Lender that is not a corporation, to the
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extent the Borrower was required to withhold amounts under the backup
withholding provisions contained in Section 3406 of the Code (or any successor
thereto).
(d) If the Borrower fails to perform its obligations under
this subsection 2.8, the Borrower shall indemnify the Lenders and the Issuing
Lender for any taxes, interest or penalties that may become payable as a result
of any such failure.
SECTION 3. LETTERS OF CREDIT.
Section 3.1 LETTER OF CREDIT GUARANTY.
(a) In order to assist the Borrower in establishing or opening
standby letters of credit, which shall not have expiration dates that exceed 365
days from the date of issuance (the "LETTERS OF CREDIT"), with the Issuing
Lender, the Borrower has requested the Funding Agent to join in the applications
to cause the issuance and/or guarantee payment or performance of such Letters of
Credit and any drafts thereunder through the issuance of a Letter of Credit
Guaranty, thereby lending the Funding Agent's credit to that of the Borrower,
and the Funding Agent has agreed to do so. These arrangements shall be
coordinated by the Funding Agent subject to the terms and conditions set forth
below. The Funding Agent shall not be required to be the issuer of any Letter of
Credit. The Borrower, or at the Funding Agent's discretion, the Funding Agent,
will be the account party for application for a Letter of Credit, which shall be
in a form customarily used by the Funding Agent or the Issuing Lender or on a
computer transmission system approved by the Funding Agent and the Issuing
Lender or such other written form or computer transmission system as may from
time to time be approved by the Issuing Lender and the Funding Agent, and shall
be duly completed in a manner reasonably acceptable to the Funding Agent,
together with such other certificates, agreements, documents and other papers
and information as the Issuing Lender or the Funding Agent may reasonably
request (the "L/C APPLICATION"). In the event of any conflict between the terms
of the L/C Application and this Agreement, for purposes of this Agreement, the
terms of this Agreement shall control.
(b) The aggregate Letter of Credit Obligations shall not
exceed the lowest of (i) the difference between (A) the Total Revolving Credit
Commitment and (B) the aggregate principal amount of Revolving Credit Loans then
outstanding, (ii) the amount by which (A) the Borrowing Base exceeds (B) the
aggregate principal amount of the Loans then outstanding, and (iii) the L/C
Subfacility. In addition, the terms and conditions of all Letters of Credit and
all changes or modifications thereto by the Borrower and/or the Issuing Lender
shall in all respects be subject to the prior approval of the Funding Agent in
the reasonable exercise of its sole and absolute discretion, PROVIDED, HOWEVER,
that (i) the expiry date of all Letters of Credit shall be no later than fifteen
days prior to the Final Maturity Date unless, on or prior to fifteen days prior
to the Final Maturity Date either such Letters of Credit shall be cash
collateralized in an amount equal to 110% of the face amount of such Letters of
Credit or the Borrower shall provide the Funding Agent and the Lenders with an
indemnification, in form and substance reasonably satisfactory to the Agents,
from a commercial bank or other financial institution acceptable to the Agents
for any Letter of Credit Obligations with respect to such Letters of Credit and
(ii) the Letters of Credit and all documentation in connection therewith shall
be in form and substance reasonably satisfactory to the Funding Agent and the
Issuing Lender.
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(c) The Funding Agent shall have the right, without notice to
the Borrower, to charge the Loan Account with the amount of any and all
indebtedness, liabilities and obligations of any kind (including indemnification
for breakage costs, capital adequacy and reserve requirement charges) incurred
by the Funding Agent or the Lenders under the Letter of Credit Guaranty or
incurred by an Issuing Lender with respect to a Letter of Credit at the earlier
of (i) payment by the Funding Agent or the Lenders under the Letter of Credit
Guaranty or (ii) the occurrence of an Event of Default. Any amount charged to
the Loan Account shall be deemed a Revolving Credit Loan hereunder made by the
Lenders to the Borrower, funded by the Funding Agent on behalf of the Lenders
and subject to subsection 2.2 of this Agreement. Any charges, fees, commissions,
costs and expenses charged to the Funding Agent for the Borrower's account by
the Issuing Lender in connection with or arising out of Letters of Credit or
transactions relating thereto will be charged to the Loan Account in full when
charged to or paid by the Funding Agent and, when charged, shall be conclusive
on the Borrower absent manifest error. Each of the Lenders and the Borrower
agrees that the Funding Agent shall have the right to make such charges
regardless of whether any Event of Default or Default shall have occurred and be
continuing or whether any of the conditions precedent in subsection 6.2 have
been satisfied.
(d) The Borrower unconditionally indemnifies each Agent and
each Lender and holds each Agent and each Lender harmless from any and all loss,
claim or liability incurred by any Agent or any Lender arising from any
transactions or occurrences relating to Letters of Credit, any drafts or
acceptances thereunder, the Collateral relating thereto, and all Obligations in
respect thereof, including any such loss or claim due to any action taken by the
Issuing Lender, other than for any such loss, claim or liability arising out of
the gross negligence or willful misconduct of the Issuing Lender, any Agent or
any Lender as determined by a final judgment of a court of competent
jurisdiction. The Borrower further agrees to jointly and severally hold each
Agent and each Lender harmless from any errors or omission, negligence or
misconduct by the Issuing Lender. The Borrower's unconditional obligations to
each Agent, the Issuing Lender and each Lender with respect to Letters of Credit
hereunder shall not be modified or diminished for any reason or in any manner
whatsoever, other than as a result of such Agent's, the Issuing Lender's or such
Lender's gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction. The Borrower agrees that any
charges incurred by the Funding Agent or the Issuing Lender for the Borrower's
account hereunder may be charged to the Loan Account.
(e) Upon any payments made to the Issuing Lender under the
Letter of Credit Guaranty, the Funding Agent or the Lenders, as the case may be,
shall, without prejudice to its rights under this Agreement (including that such
unreimbursed amounts shall constitute Loans hereunder), acquire by subrogation,
any rights, remedies, duties or obligations granted or undertaken by the
Borrower in favor of the Issuing Lender in any application for Letters of
Credit, any standing agreement relating to Letters of Credit or otherwise, all
of which shall be deemed to have been granted to the Funding Agent and the
Lenders and apply in all respects to the Funding Agent and the Lenders and shall
be in addition to any rights, remedies, duties or obligations contained herein.
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Section 3.2 PARTICIPATIONS.
(a) PURCHASE OF PARTICIPATIONS. Immediately upon issuance by
the Issuing Lender of any Letter of Credit pursuant to this Agreement, each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received from the Funding Agent, without recourse or warranty, an undivided
interest and participation, to the extent of such Lender's Pro Rata Share, in
all obligations of the Funding Agent in such Letter of Credit (including,
without limitation, all Reimbursement Obligations of the Borrower with respect
thereto pursuant to the Letter of Credit Guaranty or otherwise).
(b) SHARING OF PAYMENTS. In the event that the Funding Agent
makes any payment in respect of the Letter of Credit Guaranty and the Borrower
shall not have repaid such amount to the Funding Agent, the Funding Agent shall
charge the Loan Account in the amount of the Reimbursement Obligation, in
accordance with subsections 3.1(c) and 4.2 of this Agreement.
(c) OBLIGATIONS IRREVOCABLE. The obligations of a Lender to
make payments to the Funding Agent for the account of the Funding Agent, the
Lenders or the Issuing Lender with respect to a Letter of Credit shall be
irrevocable, without any qualification or exception whatsoever and shall be made
in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against a beneficiary named in
such Letter of Credit or any transferee of such Letter of Credit (or any Person
for whom any such transferee may be acting), any Agent, any Lender, or any other
Person, whether in connection with this Agreement, such Letter of Credit, the
transactions contemplated herein or any unrelated transactions (including any
underlying transactions between the Borrower or any other party and the
beneficiary named in such Letter of Credit);
(iii) any draft, certificate or any other document presented
under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
(v) any failure by any Agent to provide any notices required
pursuant to this Agreement relating to such Letter of Credit;
(vi) any payment by the Issuing Lender under such Letter of
Credit against presentation of a draft or certificate which does not comply with
the terms of such Letter of Credit; or
(vii) the occurrence of any Default or Event of Default.
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Section 3.3 LETTERS OF CREDIT.
(a) REQUEST FOR ISSUANCE. The Borrower may, upon notice not
later than 12:00 noon, New York City time, at least two (2) Business Days in
advance of the proposed issuance date, request the Funding Agent to assist the
Borrower in establishing or opening a Letter of Credit by delivering to the
Funding Agent, with a copy to the Issuing Lender, a L/C Application, together
with any necessary related documents. The Funding Agent shall not provide
support, pursuant to the Letter of Credit Guaranty, if the Funding Agent shall
have received written notice from the Required Lenders on the Business Day
immediately preceding the proposed issuance date for such Letter of Credit that
one or more of the conditions precedent in subsection 6.2 will not have been
satisfied on such date, and the Funding Agent shall otherwise be required to
determine that, or take notice whether, the conditions precedent set forth in
subsection 6.2 have been satisfied.
(b) LETTER OF CREDIT FEES. (i) The Borrower shall pay to the
Funding Agent for the account of the Lenders with a Revolving Credit Commitment,
in accordance with the Lenders' Pro Rata Shares for any Letter of Credit issued
hereunder, a nonrefundable fee equal to 1.5% per annum of the outstanding amount
of the Letter of Credit Obligations, payable monthly in arrears.
(ii) ISSUING LENDER CHARGES. The Borrower shall pay to the
Funding Agent the standard charges assessed by the Issuing Lender in connection
with the issuance, administration, amendment, payment or cancellation of Letters
of Credit.
(iii) CHARGES TO THE LOAN ACCOUNT. The Borrower hereby
authorizes the Funding Agent to, and the Funding Agent may, from time to time,
charge the Loan Account pursuant to subsections 3.1(c) and 4.2 of this Agreement
with the amount of any Letter of Credit fees or charges due under this
subsection 3.3.
SECTION 4. FEES, PAYMENTS AND OTHER COMPENSATION.
Section 4.1 AUDIT AND COLLATERAL MONITORING FEES. The Borrower
acknowledges that the Agents may visit the Borrower and the Guarantors and/or
conduct audits, inspections, valuations and/or field examinations of the
Borrower and the Guarantors at any time and from time to time during normal
business hours and otherwise in a manner so as to not unduly disrupt the
business of the Borrower and the Guarantors. The Borrower agrees to pay (i) $750
per day per examiner plus the examiner's out-of-pocket costs and reasonable
expenses incurred in connection with all such visits, inspections, valuations,
audits and examinations and (ii) the actual reasonable charges paid or incurred
by any Agent if it elects to employ the services of one or more third Persons to
perform financial or appraisal audits of the Borrower or any of its
Subsidiaries, to appraise or review the Collateral (including, without
limitation, in connection with subsections 7.6 and 7.18), or any portion
thereof.
Section 4.2 PAYMENTS; COMPUTATIONS AND STATEMENTS. (a) The
Borrower will make each payment under the Notes not later than 12:00 noon (New
York City time) on the day when due, in lawful money of the United States of
America and in immediately available funds, to the Funding Agent at the Payment
Office. All payments received by the Funding Agent after
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12:00 noon (New York City time) on any Business Day will be credited to the Loan
Account on the next succeeding Business Day. All payments shall be made by the
Borrower without defense, set-off or counterclaim to the Funding Agent and the
Lenders. Except as provided in subsection 2.2, after receipt, the Funding Agent
will promptly thereafter cause to be distributed like funds relating to the
payment of principal ratably to the Lenders in accordance with their Pro Rata
Shares and like funds relating to the payment of any other amount payable to any
Lender to such Lender, in each case to be applied in accordance with the terms
of this Agreement, provided that the Funding Agent will cause to be distributed
all interest and fees received from or for the account of the Borrower not less
than once each month and in any event promptly after receipt thereof. The
Lenders and the Borrower hereby authorize the Funding Agent to, and the Funding
Agent may, from time to time, charge the Loan Account of the Borrower with any
amount due and payable by the Borrower under any Loan Document. Each of the
Lenders and the Borrower agree that the Funding Agent shall have the right to
make such charges whether or not any Event of Default or Default shall have
occurred and be continuing or whether any of the conditions precedent in
subsection 6.2 have been satisfied. Any amount charged to the Loan Account of
the Borrower shall be deemed Revolving Credit Loans hereunder made by the
Lenders to the Borrower, funded by the Funding Agent on behalf of the Lenders
and subject to subsection 2.2 of this Agreement. The Lenders and the Borrower
confirm that any charges which the Funding Agent may so make to the Loan Account
of the Borrower as herein provided will be made as an accommodation to the
Borrower and solely at the Funding Agent's discretion, provided that the Funding
Agent shall from time to time upon the request of the Collateral Agent, charge
the Loan Account of the Borrower with any amount due and payable under any Loan
Document. Whenever any payment to be made under any such Loan Document shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day and such extension of time shall in such
case be included in the computation of interest or fees, as the case may be. All
computations of fees shall be made by the Funding Agent on the basis of a year
of 360 days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such fees are payable. Each
determination by the Funding Agent of an interest rate or fees hereunder shall
be conclusive and binding for all purposes in the absence of manifest error.
(b) The Funding Agent shall provide the Borrower, promptly
after the end of each calendar month, a summary statement (in the form from time
to time used by the Funding Agent) of the opening and closing daily balances in
the Loan Account of the Borrower during such month, the amounts and dates on all
Loans made to the Borrower during such month, the amounts and dates of all
payments on account of the Loans to the Borrower during such month and the Loans
to which such payments were applied, the amount of interest accrued on the Loans
to the Borrower during such month, any Letters of Credit issued by the Issuing
Lender for the account of the Borrower during such month, specifying the face
amount thereof, the amount of charges to such Loan Account and/or Loans made to
the Borrower during such month to reimburse the Lenders for drawings made under
Letters of Credit, and the amount and nature of any charges to such Loan Account
made during such month on account of fees, commissions, expenses and other
Obligations. All entries on any such statement shall be presumed to be correct
absent manifest error and, if the Borrower has not objected in writing 30 days
after the such statement is sent, shall be final and conclusive absent manifest
error.
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Section 4.3 SHARING OF PAYMENTS, ETC. Except as provided in
subsection 2.2 hereof, if any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) on account of any Obligation in excess of its ratable share of
payments on account of similar obligations obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
such similar obligations held by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them;
PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender of any interest or other amount paid by the purchasing Lender
in respect of the total amount so recovered). The Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
subsection 4.3 may, to the fullest extent permitted by law, exercise all its
rights (including the Lender's right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Section 4.4 APPORTIONMENT OF PAYMENTS.
(a) Subject to subsection 2.2 hereof and to any written
agreement among the Funding Agent and the Lenders, all payments of principal and
interest in respect of outstanding Loans, all payments in respect of the
Reimbursement Obligations, all payments of fees (other than the fees set forth
in subsection 2.6 hereof to the extent set forth in a written agreement among
the Agents and the Lenders, fees with respect to Letters of Credit provided for
in subsection 3.3(b)(ii) and the audit and collateral monitoring fee provided
for in subsection 4.1) and all other payments in respect of any other
Obligations, shall be allocated by the Funding Agent among such of the Lenders
as are entitled thereto, in proportion to their respective Pro Rata Shares or
otherwise as provided herein or, in respect of payments not made on account of
Loans or Letter of Credit Obligations, as designated by the Person making
payment when the payment is made.
(b) After the occurrence and during the continuance of an
Event of Default, all payments in respect of any Obligations and all proceeds of
the Collateral, shall, unless the Funding Agent shall otherwise agree, be
applied, subject to the provisions of this Agreement, (i) FIRST, ratably to pay
the Obligations in respect of any fees, expense reimbursements, indemnities and
other amounts then due to the Agents or the Issuing Lender until paid in full;
(ii) SECOND, ratably to pay the Obligations with respect to the Revolving Credit
Loans in respect of any fees and indemnities then due to the Lenders until paid
in full; (iii) THIRD, ratably to pay interest due in respect of the Revolving
Credit Loans, Agent Advances and Reimbursement Obligations until paid in full;
(iv) FOURTH, ratably to pay principal of the Revolving Credit Loans, Agent
Advances and Letter of Credit Obligations (or, to the extent such Obligations
are contingent, to provide cash collateral in respect of such Obligations) until
paid in full; (v) FIFTH, ratably to pay the Obligations with respect to the Term
Loans in respect of any fees and indemnities then due the Lenders until paid in
full; (vi) SIXTH, ratably to pay interest due in respect of the Term Loans until
paid in full; (vii) SEVENTH, ratably to pay principal of the Term
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Loans until paid in full; and (viii) EIGHTH, ratably to pay all other
Obligations then due and payable.
(c) In each instance, so long as no Event of Default has
occurred and is continuing, subsection 4.4(b) shall not be deemed to apply to
any payment by the Borrower specified by the Borrower to the Funding Agent to be
for the payment of Obligations related to the Term Loan, then due and payable
under any provision of this Agreement or the prepayment of all or part of the
principal of the Term Loan, in accordance with the terms and conditions of
subsection 2.5.
(d) For purposes of subsection 4.4(b), "paid in full" with
respect to interest shall include interest accrued after the commencement of any
Insolvency Proceeding irrespective of whether a claim for such interest is
allowable in such Insolvency Proceeding.
(e) In the event of a direct conflict between the priority
provisions of this subsection 4.4 and other provisions contained in any other
Loan Document, it is the intention of the parties hereto that both such priority
provisions in such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of this subsection 4.4 shall control and govern.
(f) Notwithstanding anything set forth in this Agreement to
the contrary, (i) all repayments of principal on the outstanding Loans made from
time to time hereunder shall be applied first in reduction of that portion of
the Revolving Credit Loans which is not secured by New York Mortgages, (ii) all
Revolving Credit Loans made from time to time hereunder shall be added first to
that portion of the Revolving Credit Loans which is not secured by New York
Mortgages, and (iii) any New York Mortgages which are granted from time to time
hereunder shall secure Revolving Credit Loans in a maximum principal amount of
$20,000,000, regardless of the then outstanding principal amount of the
Revolving Credit Loans, and each such New York Mortgage shall contain an
explicit declaration to that effect.
Section 4.5 INCREASED COSTS AND REDUCED RETURN.
(a) If any Lender or the Issuing Lender shall have determined
that the adoption or implementation of, or any change in, any law, rule, treaty
or regulation, or any policy, guideline or directive of, or any change in the
interpretation or administration thereof by, any court, central bank or other
administrative or Governmental Authority, or compliance by the Issuing Lender or
any Lender or any Person controlling any such Lender or the Issuing Lender with
any directive of or guideline from any central bank or other Governmental
Authority or the introduction of or change in any accounting principles
applicable to the Issuing Lender or any Lender or any Person controlling any
such Lender or the Issuing Lender (in each case, whether or not having the force
of law), shall (i) change the basis of taxation of payments to the Issuing
Lender or any Lender or any Person controlling any such Lender or the Issuing
Lender of any amounts payable hereunder (except for taxes on the overall net
income of the Issuing Lender or any Lender or any Person controlling any such
Lender or the Issuing Lender), (ii) impose, modify or deem applicable any
reserve, special deposit or similar requirement against any Loan, Letter of
Credit or against assets of or held by, or deposits with or for the account of,
or credit
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extended by, the Issuing Lender or any Lender, or any Person controlling any
such Lender or the Issuing Lender or (iii) impose on the Issuing Lender or any
Lender or any Person controlling any such Lender or the Issuing Lender any other
condition regarding this Agreement or any Loan or Letter of Credit, and the
result of any event referred to in clauses (i), (ii) or (iii) above shall be to
increase the cost to the Issuing Lender or any Lender of making any Loan,
issuing, guaranteeing or participating in any Letter of Credit, or agreeing to
make any Loan or issue, guaranty or participate in any Letter of Credit, or to
reduce any amount received or receivable by the Issuing Lender or any Lender
hereunder, then, upon demand by the Issuing Lender or such Lender, the Borrower
shall pay to the Issuing Lender or such Lender such additional amounts as will
compensate the Issuing Lender or such Lender for such increased costs or
reductions in amount.
(b) If any Lender or the Issuing Lender shall have determined
that the adoption or implementation of, or any change in, any Capital Guideline
by the Governmental Authority charged with the interpretation or administration
thereof, or compliance by the Issuing Lender, any Lender or any Person
controlling such Issuing Lender or any Lender with any Capital Guideline or with
any request or directive of any such Governmental Authority with respect to any
Capital Guideline, or the implementation of, or any change in, any applicable
accounting principles (in each case, whether or not having the force of law),
either (i) affects or would affect the amount of capital required or expected to
be maintained by the Issuing Lender, any Lender or any Person controlling such
Issuing Lender or any Lender, and the Issuing Lender or any Lender determines
that the amount of such capital is increased as a direct or indirect consequence
of any Loans made or maintained, Letters of Credit issued or any guaranty or
participation with respect thereto, or the Issuing Lender's, any Lender's or any
such other controlling Person's other obligations hereunder, or (ii) has or
would have the effect of reducing the rate of return on the Issuing Lender's,
any Lender's, any such other controlling Person's capital to a level below that
which such Issuing Lender, such Lender or such other controlling Person could
have achieved but for such circumstances as a consequence of any Loans made or
maintained, Letters of Credit issued, or any guaranty or participation with
respect thereto or any agreement to make Loans, to issue Letters of Credit or
such Issuing Lender's, such Lender's, such other controlling Person's other
obligations hereunder (in each case, taking into consideration such Issuing
Lender's, such Lender's or such other controlling Person's policies with respect
to capital adequacy), then, upon demand by the Issuing Lender or any Lender, the
Borrower shall pay to the Issuing Lender or such Lender from time to time such
additional amounts as will compensate the Issuing Lender or such Lender for such
cost of maintaining such increased capital or such reduction in the rate of
return on such Issuing Lender's, such Lender's or such other controlling
Person's capital.
(c) All amounts payable under this subsection 4.5 shall bear
interest from the date that is ten (10) days after the date of demand by the
Issuing Lender or a Lender until payment in full to the Issuing Lender or such
Lender at the Base Rate. A certificate of the Issuing Lender or any Lender
claiming compensation under this subsection 4.5 specifying the event herein
above described and the nature of such event shall be submitted by the Issuing
Lender or such Lender to the Borrower, setting forth the additional amount due
and an explanation of the calculation thereof, the Issuing Lender's or such
Lender's reasons for invoking the provisions of this subsection 4.5, and shall
be final and conclusive absent manifest error.
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SECTION 5. REPRESENTATIONS AND WARRANTIES.
To induce the Agents and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Agents and each
Lender that:
Section 5.1 FINANCIAL CONDITION. (a) The consolidated balance
sheets of the Borrower and its consolidated Subsidiaries at December 31, 1997
and December 31, 1998 and December 31, 1999 and the related consolidated
statements of operations, of cash flows and of changes in stockholders' equity
for the respective fiscal years ended on such dates, together with the related
notes and schedules thereto, reported on by Ernst & Young LLP, copies of which
have heretofore been furnished to each Lender, present fairly in all material
respects the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such dates, and the consolidated results of
their operations and their consolidated cash flows for the respective fiscal
years then ended.
(b) The unaudited consolidated balance sheet of the Borrower
and its consolidated Subsidiaries at March 31, 2000 and the related unaudited
consolidated statements of operations, of cash flows and of changes in
stockholders' equity for the 3-month period ended on such dates, together with
the related notes and schedules thereto, certified by a Responsible Officer,
copies of which have heretofore been furnished to each Lender, present fairly in
all material respects the consolidated financial condition of each of the
Borrower and its consolidated Subsidiaries as at such dates, and the
consolidated results of their respective operations and their consolidated cash
flows for the 3-month period then ended (subject to normal year-end audit
adjustments).
(c) The unaudited PRO FORMA consolidated balance sheet of the
Borrower and its consolidated Subsidiaries, as of the Effective Date, certified
by a Responsible Officer, copies of which have heretofore been furnished to each
Lender, represent in all material respects the PRO FORMA consolidated financial
condition of the Borrower and its consolidated Subsidiaries as of such date
after giving effect to the initial extensions of credit under this Agreement.
(d) All such financial statements referred to in subsections
5.1(a) and (b), including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein). On the Effective Date, neither the
Borrower nor any of its consolidated Subsidiaries have, at the date of the most
recent balance sheet referred to above, any material Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected in
the financial statements referred to in subsection 5.1(c) or in the notes
thereto to the extent required by GAAP. During the period from January 1, 2000
to and including the date hereof there has been no sale, transfer or other
disposition by the Borrower or any of its consolidated Subsidiaries of any
material part of its business or property and no purchase or other acquisition
of any business or property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of the Borrower and
its consolidated Subsidiaries at December 31, 1999, other than as set forth on
Schedule 5.1.
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Section 5.2 NO CHANGE. (a) Since December 31, 1999, there has
been no development, circumstance or event which has had or could reasonably be
expected to have a Material Adverse Effect, and (b) no dividends or other
distributions have been declared, paid or made upon the Capital Stock of the
Borrower nor has any of the Capital Stock of the Borrower been redeemed,
retired, purchased or otherwise acquired for value by any Loan Party.
Section 5.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of
the Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance in all material respects
with all applicable material Requirements of Law.
Section 5.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS. The Borrower and each of the other Loan Parties has the corporate
power and authority, and the legal right, to make, deliver and perform the Loan
Documents to which it is a party, grant the Liens granted by it pursuant to the
Security Documents and, in the case of the Borrower, to borrow hereunder and has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party (including the granting
of the Liens to be granted by it pursuant to the Security Documents and, in the
case of the Borrower, the borrowings hereunder). Other than the filing of the
Assignments with respect to the Mortgages and financing statements and other
actions necessary to assign the Liens created by the Security Documents, no
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder, the assignment of the Liens pursuant
to each Assignment to the Agents for the ratable benefit of the Lenders, and the
granting and perfection of the Liens, created by the Security Documents or with
the execution, delivery, performance, validity or enforceability of the Loan
Documents to which each Loan Party is a party other than those which have been
obtained and are in full force and effect. This Agreement has been, and each
other Loan Document to which any Loan Party is a party will be, duly executed
and delivered on behalf of such Loan Party. This Agreement constitutes, and each
other Loan Document to which any Loan Party is a party when executed and
delivered will constitute, a legal, valid and binding obligation of such Loan
Party enforceable against such Loan Party in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent transfer or conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
Section 5.5 NO LEGAL BAR. The execution, delivery and
performance of the Loan Documents, the assignment of the Liens pursuant to each
Assignment to the Collateral Agent for the ratable benefit of the Lenders and
the granting of the Liens under the Security Documents, the borrowings hereunder
and the use of the proceeds thereof will not violate any applicable Requirement
of Law or Contractual Obligation of the Borrower or of any of its Subsidiaries
and will not result in, or require, the creation or imposition of any Lien on
any of its or their
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respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation except pursuant to the Loan Documents.
Section 5.6 NO MATERIAL LITIGATION. No litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of the Borrower, threatened by or
against the Borrower or any of its Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
Section 5.7 NO DEFAULT. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
Section 5.8 OWNERSHIP OF PROPERTY; LIENS. (a) Except for the
Oil and Gas Properties, the Borrower and its Subsidiaries each have good and
defensible title in fee simple to, or a valid leasehold interest in, all its
real property and interests in real property set forth in Schedules 5.20A and
5.20B, and good and defensible title to, a valid leasehold interest in or a
license to use, all its other material property, and none of such property is
subject to any Lien except as permitted by subsection 8.3.
(b) The Borrower and its Subsidiaries each have good and
defensible title to all of its Oil and Gas Properties set forth in Schedule
5.20C which are real property and good title to all such Oil and Gas Properties
which are personal property, except for (i) such imperfections of title which do
not in the aggregate materially detract from the value thereof to, or the use
thereof in, the business of the Borrower or any of its Subsidiaries, (ii) Oil
and Gas Properties disposed of since the date of the most recent Reserve Report
as permitted by subsection 8.6 hereof, and (iii) Liens permitted by subsection
8.3 hereof. The quantum and nature of the interest of the Borrower and its
Subsidiaries in and to the Oil and Gas Properties as set forth in each Reserve
Report includes the entire interest of the Borrower and its Subsidiaries in such
Oil and Gas Properties as of the date of such Reserve Report and are complete
and accurate in all material respects as of the date of such Reserve Report; and
there are no "back-in" or "reversionary" interests held by third parties which
could materially reduce the interest of the Borrower or its Subsidiaries in such
Oil and Gas Properties except as expressly set forth in such Reserve Report. The
ownership of the Oil and Gas Properties by the Borrower and its Subsidiaries
shall not in any material respect obligate any such Loan Party to bear the costs
and expenses relating to the maintenance, development or operations of each such
Oil and Gas Property in an amount in excess of the working interest of such Loan
Party in each Oil and Gas Property set forth in the most recent Reserve Report.
Section 5.9 INTELLECTUAL PROPERTY. Each of the Borrower and
its Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not have a Material Adverse Effect (the "INTELLECTUAL PROPERTY").
All such Intellectual Property is set forth on Schedule 5.9. No claim has been
asserted and is pending by any Person challenging or questioning the use of any
such Intellectual
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Property or the validity or effectiveness of any such Intellectual Property, nor
does the Borrower know of any valid basis for any such claim. The use of such
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, do not have a Material Adverse Effect.
Section 5.10 NO BURDENSOME RESTRICTIONS. No applicable
Requirement of Law or Contractual Obligation of the Borrower or any of its
Subsidiaries has a Material Adverse Effect.
Section 5.11 TAXES. Each of the Borrower and its Subsidiaries
has filed all material tax returns which, to the knowledge of such Loan Party,
are required to be filed by it and has paid or caused to be paid all taxes shown
on said returns and all assessments, fees and other governmental charges levied
upon it or upon any of its property or income which are due and payable, other
than such taxes, assessments, fees and other governmental charges, if any, as
are being diligently contested in good faith and by appropriate proceedings and
with respect to which there have been established adequate reserves on the books
of the Borrower or its Subsidiaries, as the case may be, in accordance with
GAAP. No tax lien has been filed and, to the knowledge of the Borrower, no claim
is being asserted, with respect to any such taxes or assessments, fees or other
governmental charges, other than claims which are being contested in good faith
by appropriate proceedings, PROVIDED that adequate reserves with respect thereto
are being maintained on the books of the Borrower or the applicable Subsidiary,
as the case may be, in conformity with GAAP.
Section 5.12 FEDERAL RESERVE REGULATIONS. (a) Neither the
Borrower nor any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" "margin stock" within the respective meanings of each
of the quoted terms under Regulation T or Regulation U of the Board of Governors
of the Federal Reserve System as now and from time to time hereafter in effect.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, for
any purpose which entails a violation of, or which is inconsistent with, the
provisions of the Regulations of the Board of Governors of the Federal Reserve
System, including Regulation T, U or X.
Section 5.13 ERISA. No ERISA Event has occurred or is
reasonably expected to occur and solely with respect to any Commonly Controlled
Entity, no ERISA Event is reasonably likely to result in a payment by, or a Lien
securing liability to, the Borrower or its Subsidiaries in an amount in excess
of $5,000,000. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did not, as
of the last valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits; provided, that solely with respect to any Commonly
Controlled Entity, such excess is not reasonably likely to result in a payment
by, or a Lien securing liability to, the Borrower or its Subsidiaries in an
amount in excess of $5,000,000.
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Section 5.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS.
Neither the Borrower nor any of its Subsidiaries is an "investment company", or
a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under any Federal or state statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness under this
Agreement or the other Loan Documents.
Section 5.15 SUBSIDIARIES. The Persons listed on Schedule 5.15
constitute all the Subsidiaries of the Borrower at the Effective Date.
Section 5.16 PURPOSE OF LOANS. The proceeds of the Loans will
be used (a) to refinance Existing Indebtedness of the Borrower, (b) to repay the
Chase Term Loan, (c) to repurchase Senior Subordinated Notes, PROVIDED that (i)
the proceeds of the Term Loans shall be used exclusively to repurchase the
Senior Subordinated Notes, and any related fees or expenses of such purchase,
(ii) so long as the undrawn Term Loan Commitment of any Lender is greater than
zero, then no Revolving Credit Loans may be used to repurchase any Senior
Subordinated Notes, (iii) an amount equal to not more than $15,000,000 of
Revolving Credit Loans may be used either (A) to repurchase the Senior
Subordinated Notes, or (B) to repay the Term Loans (it being understood that (y)
to the extent the Borrower uses any proceeds of the Revolving Credit Loans to
repurchase any Senior Subordinated Notes then the Borrower may not use any
proceeds of the Revolving Credit Loans in excess of the amount so used, to repay
the Term Loans, and (z) to the extent the Borrower uses any proceeds of the
Revolving Credit Loans to repay the Term Loans then the Borrower may not use any
proceeds of the Revolving Credit Loans in excess of the amount so used, to
repurchase any Senior Subordinated Notes), and (iv) subject to the application
of the immediately preceding clause (iii), not more than $40,000,000 of proceeds
of the Loans may be used to repurchase Senior Subordinated Notes, (d) to pay
fees and expenses relating to the transactions contemplated herein and (e) for
general corporate purposes, including the Borrower's capital expenditure
program.
Section 5.17 ENVIRONMENTAL MATTERS. Other than exceptions to
any of the following set forth on Schedule 5.17:
(a) each of the Borrower and its Subsidiaries: (i) is, and
within the period of all applicable statutes of limitation has been, in
compliance in all material respects with all applicable material Environmental
Laws; (ii) holds all material Environmental Permits (each of which is in full
force and effect) required for any of its current or planned operations or for
any property owned, leased, or otherwise operated by it; (iii) is, and within
the period of all applicable statutes of limitation has been, in compliance in
all material respects with all of its material Environmental Permits; and (iv)
has filed in a timely manner for each renewal of a material Environment Permit
required for the conduct of the business of the Borrower and its Subsidiaries
and the costs of complying with such renewed or additional Environmental Permits
and any other Environmental Laws applicable to or reasonably expected to apply
to the Borrower and its Subsidiaries will not materially exceed the Borrower's
and its Subsidiaries' existing costs of complying with Environmental Permits and
Environmental Laws, provided that it being understood that for purpose of this
paragraph (a) material shall mean that the Borrower and its Subsidiaries have
incurred liability in excess of $10,000,000 in the aggregate not payable by
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insurance or the Borrower or its Subsidiaries violate a criminal statute that
results in an action brought by a Governmental Authority against the Borrower or
its Subsidiaries which would have a reasonable likelihood to include fines or
penalties or the forfeiture of any assets in excess of $10,000,000;
(b) Materials of Environmental Concern have not been
transported, disposed of, emitted, discharged, or otherwise Released or
threatened to be Released, to or at any real property presently or formerly
owned, leased or operated by the Borrower or any Subsidiary or at any other
location, which could reasonably be expected to (i) give rise to liability of
the Borrower or any Subsidiary under any applicable Environmental Law in an
aggregate amount in excess of $10,000,000, (ii) interfere in any material
respect with the Borrower's continued operations, or (iii) impair the fair
saleable value of any material real property owned or leased by the Borrower or
any Subsidiary;
(c) no judicial, administrative, or arbitral proceeding
(including any notice of violation or alleged violation) under or arising under
any Environmental Law to which the Borrower or any Subsidiary is, or to the
knowledge of the Borrower is reasonably expected to be, named as a party is
pending or, to the knowledge of the Borrower, threatened which is reasonably
likely to result in a Material Adverse Effect;
(d) the Borrower has not received any written request for
information, or been notified that it or any Subsidiary is a potentially
responsible party under the federal Comprehensive Environmental Response,
Compensation, and Liability Act or any similar Environmental Law, or with
respect to any Materials of Environmental Concern which is reasonably likely to
result in a Material Adverse Effect;
(e) neither the Borrower nor any Subsidiary has entered into
or agreed to any consent decree, order, or settlement or other agreement, nor is
subject to any judgment, decree, or order or other agreement, in any judicial,
administrative, arbitral, or other forum, relating to compliance with or
liability under any Environmental Law which is reasonably likely to result in a
Material Adverse Effect; and
(f) neither the Borrower nor any Subsidiary has assumed or
retained, by contract or operation of law, any liabilities of any kind, fixed,
contingent or otherwise, under any Environmental Law which is reasonably likely
to result in liability to the Borrower or its Subsidiaries in excess of
$1,000,000.
Section 5.18 NO MATERIAL MISSTATEMENTS. (a) All written
information, reports, financial statements, exhibits and schedules furnished to
the Agents or any Lender by or on behalf of the Borrower or any of its
Subsidiaries in connection with the negotiation of any Loan Document or included
therein or delivered pursuant thereto, when taken as a whole, did not contain,
and as they may be amended, supplemented or modified from time to time, will not
contain, as of the date such statements were made, any untrue statements of a
material fact and did not omit, and as they may be amended, supplemented or
modified from time to time, will not omit, to state as of the date such
statements were made, any material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they
were, are or will be made, not materially misleading.
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(b) All projections and estimates concerning the Borrower and
its Subsidiaries that are or have been made available to the Agents or any
Lender by or on behalf of the Borrower or any of its Subsidiaries, have been or
will be prepared based on good faith estimates and based upon assumptions
believed by the Borrower to be reasonable at the time of such preparation.
(c) All of the information which is required to be scheduled
in this Agreement is set forth on the Schedules attached hereto, is correct and
accurate and does not omit to state any information material thereto.
Section 5.19 CAPITALIZATION OF THE BORROWER. The authorized
Capital Stock, the par value thereof and the amount of such authorized Capital
Stock issued and outstanding for each of the Borrower and its Subsidiaries as of
the Effective Date are set forth on Schedule 5.19. All outstanding shares of
Capital Stock of the Borrower are fully paid and nonassessable and owned
beneficially and of record as set forth in Schedule 5.19 and will be free of all
Liens (other than the Liens created pursuant to the Security Documents).
Section 5.20 LOCATION OF REAL PROPERTY AND LEASED PREMISES.
(a) Part A of Schedule 5.20 lists completely and correctly as of the Effective
Date all material real property (other than Oil and Gas Properties) owned in fee
by the Borrower and each of its Subsidiaries and the addresses thereof.
(b) Part B of Schedule 5.20 lists completely and correctly as
of the Effective Date all material real property (other than Oil and Gas
Properties) leased by the Borrower and each of its Subsidiaries and the
respective addresses thereof.
(c) Part C of Schedule 5.20 lists completely and correctly as
of the Effective Date all Oil and Gas Properties which are real property located
in all jurisdictions other than in the State of New York and all Oil and Gas
Properties located in the State of New York whether leased or owned by the
Borrower and each of its Subsidiaries.
Section 5.21 SOLVENCY. (a) On the Closing Date and immediately
following the making of each Loan made on the Closing Date and after giving
effect to the application of the proceeds thereof, (i) the fair value of the
assets of the Borrower on a consolidated basis, at a fair valuation, will exceed
the debts and liabilities, direct, subordinated, contingent or otherwise, of the
Borrower on a consolidated basis; (ii) the present fair saleable value of the
property of the Borrower on a consolidated basis will be greater than the amount
that will be required to pay the probable liability of the Borrower on a
consolidated basis on its debts and other liabilities, direct, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (iii) the Borrower and its Subsidiaries on a consolidated basis will be
able to pay their debts and liabilities, direct, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (iv)
the Borrower and its Subsidiaries on a consolidated basis will not have
unreasonably small capital with which to conduct the businesses in which they
are engaged as such businesses are now conducted and are proposed to be
conducted following the Effective Date. For purposes of the representation
contained in this subsection 5.21(a), unliquidated, contingent, disputed and
unmatured claims shall be valued at the amount that can,
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in light of all the facts and circumstances existing at such time, be reasonably
expected to be an actual or matured liability.
(b) The Borrower neither intends to, nor believes that it or
any of its Subsidiaries will, incur debts beyond its ability to pay such debts
as they mature, taking into account the timing and amounts of cash available to
be received by it or any such Subsidiary and the time and amounts of cash to be
payable on or in respect of its Indebtedness or that of any such Subsidiary.
Section 5.22 LABOR MATTERS. There are no strikes pending or
threatened against the Borrower or any of its Subsidiaries. The hours worked and
payments made to the Borrower or any of its Subsidiaries have not been in
violation in any material respect of the Fair Labor Standards Act or any other
applicable law dealing with such matters. All material payments due from the
Borrower or any of its Subsidiaries or for which any claim may be made against
the Borrower or any of its Subsidiaries, on account of wages and employee health
and welfare insurance and other benefits have been paid or accrued as a
liability on the books of the Borrower or such Subsidiary to the extent required
by GAAP. The consummation of the transactions contemplated hereby will not give
rise to a right of termination or right of renegotiation on the part of any
union under any collective bargaining agreement to which the Borrower or any of
its Subsidiaries (or any predecessor) is a party or by which the Borrower or any
Subsidiary (or any predecessor) is bound.
Section 5.23 INSURANCE. Each of the Borrower and its
Subsidiaries carries and maintains with respect to its insurable properties
insurance (including, to the extent consistent with past practices,
self-insurance) with financially sound and reputable insurers of the types, to
such extent and against such risks as is customary with companies in the same or
similar businesses.
Section 5.24 FUTURE COMMITMENTS. Except with respect to gas
imbalances, take-or-pay or other prepayments with respect to any Oil and Gas
Property of the Borrower or any of its Subsidiaries which would require the
Borrower or any of its Subsidiaries either (a) to deliver Hydrocarbons produced
from Oil and Gas Properties or (b) to make cash settlements for such products
with a value not in excess of $1,000,000, on a net basis there are no gas
imbalances, take-or-pay or other prepayments with respect to any Oil and Gas
Property of the Borrower or any of its Subsidiaries or any cash settlement for
such products at some future time without then or thereafter receiving full
payment therefor.
Section 5.25 SECURITY DOCUMENTS. (a) The provisions of the
Guarantee and Collateral Agreement, as assigned pursuant to the Assignment, and
the Parent Pledge Agreements, as assigned pursuant to the Assignment, are
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. The stock certificates and notes
representing or constituting such pledged securities delivered to the Collateral
Agent, the Guarantee and Collateral Agreement, as assigned pursuant to the
Assignment, and the Parent Pledge Agreements, as assigned pursuant to the
Assignment, constitute a perfected first lien on, and security interest in, all
right, title and interest of the pledgor party therein in the pledged securities
described therein. The financing statements referred to in Schedule 5.25 have
been
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filed and recorded in the offices in the jurisdictions listed in Schedule 5.25
under the names set forth in Schedule 5.25. The Collateral Agent, for the
ratable benefit of the Lenders, has a fully perfected first priority security
interest in all right, title and interest of the Borrower and each of its
Subsidiaries in such Collateral (other than the pledged securities referred to
in clause (i) above) superior in right to any Liens which the Borrower, any of
its Subsidiaries or any third Person may have against such Collateral or
interests therein.
(b) Subject to the recordation of the assignment thereof to
the Collateral Agent, the provisions of the Mortgages, as assigned pursuant to
the Assignment, are effective to grant to the Collateral Agent, for the ratable
benefit of the Lenders, legal, valid and enforceable mortgage liens on all of
the right, title and interest of the Borrower or its Subsidiaries in the
mortgaged property described therein. Such Mortgages, to the extent recorded,
are recorded in the appropriate recording office and constitute perfected first
liens on, and security interest in, such mortgaged property.
Section 5.26 NATURE OF BUSINESS. The Borrower and its
Subsidiaries are not engaged in any business other than the Oil and Gas
Business.
Section 5.27 YEAR 2000. Any reprogramming required to permit
the proper functioning, in and following the year 2000, of (i) the Borrower's
and its Subsidiaries' computer systems and (ii) equipment containing embedded
microchips (including systems and equipment supplied by others or with which the
Borrower or its Subsidiaries systems interface) and the testing of all such
systems and equipment, as so reprogrammed, has been completed. The cost to the
Borrower and its Subsidiaries of such reprogramming and testing and of the
reasonably foreseeable consequences of year 2000 to the Borrower and its
Subsidiaries (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) will not result in an Event of Default
or a Material Adverse Effect. Except for such of the reprogramming referred to
in the preceding sentence as may be necessary, the computer and management
information systems of the Borrower and its Subsidiaries each Loan Party are
and, with ordinary course upgrading and maintenance, will continue for the term
of this Agreement to be, sufficient to permit the Borrower and its Subsidiaries
to conduct its business without a Material Adverse Effect.
Section 5.28 LOCATION OF BANK ACCOUNTS. Schedule 5.28 sets
forth a complete and accurate list as of the Effective Date of all deposit,
checking and other bank accounts, all securities and other accounts maintained
with any broker dealer and all other similar accounts maintained by the Borrower
and its Subsidiaries, together with a description thereof (i.e., the bank or
broker dealer at which such deposit or other account is maintained and the
account number and the purpose thereof).
Section 5.29 MATERIAL CONTRACTS. Set forth on Schedule 5.29 is
a complete and accurate list as of the Effective Date of all Material Contracts
of the Borrower and its Subsidiaries, showing the parties and subject matter
thereof and amendments and modifications thereto. Each such Material Contract
(i) is in full force and effect and is binding upon and enforceable against the
Borrower or its Subsidiaries that are a party thereto and, to the best knowledge
of such Person, all other parties thereto in accordance with its terms, (ii) has
not been
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otherwise amended or modified, and (iii) is not in default due to the action of
the Borrower or its Subsidiaries or, to the best knowledge of, any other party
thereto.
Section 5.30 HOLDING COMPANY ACT. None of the Loan Parties is
a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
Section 5.31 BANKRUPTCY FILING. None of the Borrower or its
Subsidiaries is contemplating either the filing of a petition by it under any
state or federal bankruptcy or insolvency laws or the liquidation of all or a
major portion of such Person's assets or property, and none of the Borrower or
its Subsidiaries has any knowledge of any Person contemplating the filing of any
such petition against it.
Section 5.32 [Intentionally Omitted.]
Section 5.33 LOCATION OF INVENTORY; PLACE OF BUSINESS; CHIEF
EXECUTIVE OFFICE. There is no location at which the Borrower has any Hydrocarbon
products (except for Hydrocarbon products in transit) other than those locations
listed on Schedule 5.33. Schedule 5.33 hereto contains a true, correct and
complete list, as of the Effective Date, of each location at which Hydrocarbon
products of the Borrower and its Subsidiaries are stored. None of the receipts
received by the Borrower or its Subsidiaries from any warehouse, common carrier
or other third party location states that the goods covered thereby are to be
delivered to bearer or to the order of a named Person or to a named Person and
such named Person's assigns. Schedule 5.33 sets forth a complete and accurate
list as of the date hereof of (A) each place of business of the Borrower and its
Subsidiaries and (B) the chief executive office of the Borrower and its
Subsidiaries.
Section 5.34 HEDGING AGREEMENTS. Schedule 5.34 sets forth, as
of the Effective Date, a true and complete list of all Hedging Agreements of the
Borrower and its Subsidiaries, the material terms hereof (including the type,
term, effective date, termination date and notional amounts or volumes), all
credit support agreements relating thereto (including any margin required or
supplied), and the counterparty to each such agreement.
Section 5.35 INACTIVE SUBSIDIARIES. The Persons set forth in
Schedule 1.1(b) conduct no operations or business and do not own properties and
assets with an aggregate fair market value in excess of $100,000.
SECTION 6. CONDITIONS PRECEDENT.
Section 6.1 CONDITIONS TO INITIAL EXTENSIONS OF CREDIT. The
agreement of each Lender to make the initial Loan requested to be made by it and
of the Issuing Lender to issue the initial Letter of Credit to be issued by it
is subject to the satisfaction of the following conditions precedent the first
Business Day on which the following conditions have been satisfied, the
"EFFECTIVE DATE"):
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(a) LOAN DOCUMENTS. The Collateral Agent shall have received
(with the number of original counterparts requested by the Collateral Agent) (i)
this Agreement, executed and delivered by a duly authorized officer of the
Borrower, (ii) an originally executed (A) Guarantee and Collateral Agreement,
(B) Existing Credit Agreement and all amendments thereto, (C) the Parent Pledge
Agreements, and (D) all other Loan Documents, (iii) the Revolving Credit Notes,
each executed and delivered by a duly authorized officer of the Borrower, (iv)
the Term Loan Notes, each executed and delivered by a duly authorized officer of
the Borrower, (v) the notes evidencing the Indebtedness outstanding under the
Existing Credit Agreement, duly endorsed by the Existing Lenders in favor of the
Collateral Agent and (vi) the First Amendment to the Guarantee and Collateral
Agreement, duly executed by each Eligible Guarantor and the Borrower.
(b) RELATED AGREEMENTS. The Collateral Agent shall have
received true and correct copies, certified as to authenticity by the Borrower,
of such other documents or instruments as may be reasonably requested by the
Collateral Agent, including, without limitation, a copy of any debt instrument
or security agreement to which the Borrower and its Subsidiaries will be a party
after the Effective Date.
(c) BORROWING CERTIFICATE. The Funding Agent shall have
received (with the number of original counterparts requested by the Funding
Agent), a certificate of the Borrower (a "BORROWING BASE CERTIFICATE"), dated
the Effective Date, substantially in the form of Exhibit E, with appropriate
insertions and attachments, each satisfactory in form and substance to the
Agents, executed by a Responsible Officer of the Borrower.
(d) CORPORATE PROCEEDINGS OF THE LOAN PARTIES. The Collateral
Agent shall have received (with the number of original counterparts requested by
the Collateral Agent), a copy of the resolutions, in form and substance
satisfactory to the Collateral Agent, of the Board of Directors of the Borrower
and each of the Guarantors authorizing (i) the execution, delivery and
performance of this Agreement and the Loan Documents to which it is a party,
(ii) in the case of the Borrower, the borrowings contemplated hereunder and
(iii) the granting by it of the Liens created pursuant to the Loan Documents,
certified by the Secretary or an Assistant Secretary of such Loan Party as of
the Effective Date, which certificate shall be in form and substance reasonably
satisfactory to the Collateral Agent and shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded.
(e) LOAN PARTY INCUMBENCY CERTIFICATES. The Collateral Agent
shall have received (with the number of original counterparts requested by the
Collateral Agent), a certificate of the Borrower and each of the Guarantors,
dated the Effective Date, as to the incumbency and signature of the officers of
the Borrower and each of the Guarantors executing any Loan Document reasonably
satisfactory in form and substance to the Collateral Agent, executed by the
President or any Vice President and the Secretary or any Assistant Secretary of
the Borrower and each of the Guarantors.
(f) CORPORATE DOCUMENTS. The Collateral Agent shall have
received (with the number of original counterparts requested by the Collateral
Agent), true and complete copies of the certificate of incorporation and by-laws
or other similar organizational documents of the Borrower and each of the
Guarantors, certified as of the Effective Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of the Borrower and each of
the Guarantors.
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(g) CONSENTS, LICENSES AND APPROVALS. All governmental and
third party approvals (including consents and acknowledgements) necessary in
connection with the execution, delivery and performance of the Loan Documents
shall have been obtained and be in full force and effect, and all applicable
waiting periods shall have expired without any action being taken or threatened
by any competent authority which would restrain, prevent or otherwise impose
adverse conditions on this Agreement. The Collateral Agent shall have received,
with a counterpart for each Lender, a certificate of the Borrower as to the
foregoing.
(h) FEES. The Lenders and the Agents shall have received all
fees and expenses required to be paid on or before the Effective Date for which
invoices have been presented.
(i) LEGAL OPINIONS. The Collateral Agent shall have received
the following legal opinions:
(i) the executed legal opinion of Cleary, Gottlieb, Steen &
Hamilton, counsel to the Borrower and the Guarantors, substantially in the form
of Exhibit C-1;
(ii) the executed legal opinion of Leibenguth, Boos &
Associates, P.C., Michigan Counsel to the Agents, substantially in the form of
Exhibit C-2;
(iii) the executed legal opinion of Vorys, Sater, Seymour
and Pease, Ohio Counsel to the Agents, substantially in the form of Exhibit C-3;
(iv) the executed legal opinion of Bulson & Lindhome,
Pennsylvania Counsel to the Agents, substantially in the form of Exhibit C-4;
and
(v) the executed legal opinion of Black McCuskey Souers &
Arbaugh, counsel to the Borrower and the Guarantors, substantially in the form
of Exhibit C-5.
Each such legal opinion shall cover such other matters
incident to the transactions contemplated by this Agreement as the Agents may
reasonably require.
(j) PLEDGED STOCK; STOCK POWERS. The Collateral Agent shall
have received the certificates representing the shares pledged pursuant to the
Guarantee and Collateral Agreement and the Parent Pledge Agreements, together
with an undated stock power for each such certificate executed in blank by a
duly authorized officer of the pledgor thereof, and the notes pledged, if any,
pursuant to the Guarantee and Collateral Agreement and the Parent Pledge
Agreements, each endorsed in blank by a duly authorized officer of the pledgor
thereof.
(k) ACTIONS TO PERFECT LIENS. Except as otherwise provided in
subsections 6.1(v) and 7.12, the Collateral Agent shall have received evidence
satisfactory to it that properly completed and executed financing statements (or
other similar documents), including, without limitation, duly executed financing
statements on form UCC-1, necessary or, in the opinion of the Collateral Agent,
desirable to perfect the Liens created by the Security Documents are filed
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in the appropriate offices and jurisdictions, and the Collateral Agent shall be
reasonably satisfied that, other than filing such financing statements and other
similar documents and the Assignments of the Mortgages, no other filings,
recordings, registrations, assignments, acknowledgements or other actions are
necessary or, in the opinion of the Collateral Agent, desirable to perfect the
Liens created by the Security Documents.
(l) COPIES OF DOCUMENTS. If requested by the Collateral Agent,
the Collateral Agent shall have received a copy, certified by such parties as
the Collateral Agent may reasonably deem appropriate, of any document burdening
the property covered by any Mortgage.
(m) LIEN SEARCHES. The Collateral Agent shall have received
the results of recent lien searches by Persons reasonably satisfactory to the
Collateral Agent, in such jurisdictions and offices as it shall request and such
searches shall reveal no Liens on any assets of the Borrower and its
Subsidiaries, except for (i) Liens permitted by subsection 8.3 and (ii) Liens to
be created by this Agreement and the other Loan Documents.
(n) INSURANCE. The Collateral Agent shall have received
evidence satisfactory to it of (i) copies of, or an insurance broker's or
agent's certificate as to coverage under, the insurance policies required by
subsection 7.5 and the applicable provisions of the Security Documents, and each
property and casualty policy covering any property which is Collateral shall be
endorsed or otherwise amended to include a "standard" or "New York" lender's
loss payable endorsement and to name the Collateral Agent for the ratable
benefit of the Lenders as additional insured, in form and substance reasonably
satisfactory to the Collateral Agent and (ii) confirmation from such insurance
broker that the scope and amount of coverage maintained by the Borrower and its
Subsidiaries are comparable to the scope and amount of the insurance maintained
by other companies of similar size in the same industry and general location.
(o) [Intentionally Omitted]
(p) [Intentionally Omitted]
(q) FINANCIAL STATEMENTS. The Collateral Agent shall have
received a copy of the audited consolidated financial statements of the Borrower
and its Subsidiaries for the fiscal year ended December 31, 1999.
(r) BORROWING BASE AVAILABILITY. As of the Effective Date, the
Borrowing Base as set forth in the Borrowing Base Certificate delivered pursuant
to subsection 6.1(c) shall exceed the sum of (i) the Existing Indebtedness, (ii)
all fees and expenses related to the transactions contemplated hereby and (iii)
all accounts payable of the Borrower and its Subsidiaries that are not at a
level and in a condition satisfactory to the Agents.
(s) BRING DOWN CERTIFICATE. The Agents shall have received a
certificate of the Borrower, dated the Effective Date, certifying that as of the
Effective Date each of the representations and warranties made by the Borrower
in the Loan Documents are true and correct on such date (unless such
representations and warranties are stated to relate to a specific earlier date,
in which case such representations and warranties shall be true and correct as
of such earlier date) and that no Default or Event of Default has occurred.
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(t) SOURCES AND USES. The Collateral Agent and the Lenders
shall be reasonably satisfied that the sources and uses of funds advanced under
the initial Loans shall not be materially inconsistent with the sources and uses
listed on Schedule 6.1.
(u) RESERVE REPORT. The Agents shall have received a Reserve
Report with respect to the Oil and Gas Properties of the Borrower prepared by
certified independent petroleum engineers or other independent petroleum
consultants in form and substance satisfactory to the Agents (collectively, the
"INITIAL RESERVE Report").
(v) TITLE TO OIL AND GAS PROPERTIES. The Lenders shall be
satisfied as to the title to the Oil and Gas Properties representing all of the
Oil and Gas Properties included in the Initial Reserve Report and the Collateral
Agent shall be satisfied that the Borrower and the Guarantors have executed and
delivered the Mortgages, and Chase shall have agreed in writing to execute and
deliver the Assignments of the Mortgages covering such percentage of Oil and Gas
Properties included in the Initial Reserve Report as shall be reasonably
acceptable to the Collateral Agent.
(w) [Intentionally Omitted.]
(x) ADDITIONAL MATTERS. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be reasonably satisfactory in form and substance to the Agents, and the Agents
shall have received such other documents and legal opinions in respect of any
aspect or consequence of the transactions contemplated hereby or thereby as it
shall reasonably request.
Section 6.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The
agreement of each Lender to make any extension of credit requested to be made by
it on any date (including, without limitation, its initial extension of credit
and any renewal or extension of a Letter of Credit) is subject to the
satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by each Loan Party in or pursuant to the
Loan Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date (unless such representations and
warranties are stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date).
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the extensions
of credit requested to be made on such date.
(c) ADDITIONAL MATTERS. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents and
shall be reasonably satisfactory in form and substance to the Agents, and the
Agents shall have received such other documents and legal
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opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
Each borrowing by, and Letter of Credit issued on behalf of,
the Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date thereof that the conditions contained in this subsection
have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS.
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Loan, Note or Letter of Credit remains outstanding and
unpaid or any amount is owing to any Lender or any Agent hereunder or under any
other Loan Document, the Borrower shall and (except in the case of delivery of
financial information, reports and notices) shall cause each of its Subsidiaries
to:
Section 7.1 FINANCIAL STATEMENTS. Furnish to the Agents with
sufficient copies for the Lenders:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of operations, cash flows and
changes in stockholders' equity for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out of the
scope of the audit, by Ernst & Young LLP or other independent certified public
accountants of nationally recognized standing reasonably acceptable to the
Required Lenders;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly fiscal periods of each
fiscal year of the Borrower and its consolidated Subsidiaries, the unaudited
consolidated balance sheets of the Borrower and its consolidated Subsidiaries as
at the end of such quarter and the related unaudited consolidated statements of
operations, cash flows and changes in stockholders' equity of the Borrower and
its consolidated Subsidiaries for such quarter and the portion of the fiscal
year through the end of such quarter, setting forth in each case in comparative
form the figures for the previous year, certified by a Responsible Officer as
being fairly stated in all material respects, in accordance with GAAP applied in
a manner consistent with that of the most recent audited financial statements
provided to the Lenders, except for the omission of footnotes and subject to
normal year-end adjustments;
(c) as soon as available, and in any event within 45 days
after the end of each of the first eleven fiscal months of each fiscal year of
the Borrower and its consolidated Subsidiaries an internally prepared unaudited
consolidated balance sheet, for such fiscal month of the Borrower and its
consolidated Subsidiaries as at the end of such month and the related unaudited
consolidated statements of operations and consolidated statements of cash flows
for such fiscal month and for the period from the beginning of such fiscal year
to the end of such fiscal month, all in reasonable detail and certified by a
Responsible Officer as fairly presenting, in all material respects, the
financial position of the Borrower and its consolidated Subsidiaries as of the
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end of such fiscal month and the results of operations and cash flows of the
Borrower and its consolidated Subsidiaries for such fiscal month, in accordance
with GAAP applied in a manner consistent with that of the most recent audited
financial statements furnished to the Lenders, except for omission of footnotes
and subject to normal year-end adjustments;
(d) as soon as available and in any event within 30 days after
the end of each fiscal month of the Borrower and its consolidated Subsidiaries,
reports in detail satisfactory to the Agents and certified by a Responsible
Officer as being accurate and complete in all material respects (i) listing all
Accounts Receivable of the Borrower as of the last Business Day of such fiscal
month, which shall include the amount and age of each Account Receivable,
showing separately those which are more than 30, 60, 90 and 120 days old and a
description of all Liens, set-offs, defenses and counterclaims with respect
thereto, together with a reconciliation of such report with the report delivered
to the Agents pursuant to this clause (d)(i) for the immediately preceding
fiscal month, the name and mailing address of each Account Debtor with respect
to each such Account Receivable and such other information as any Agent may
reasonably request and (ii) listing all accounts payable of the Borrower as of
each such day which shall include the amount and age of each account payable,
the name and mailing address of each account creditor and such other information
as any Agent may request, all in detail and in form satisfactory to the Agents;
(e) not later than 60 days after June 30th and December 31st
of each year, a Reserve Report, prepared under the supervision of the chief
engineer of the Borrower who shall certify such Reserve Report to be true and
accurate and to have been prepared in accordance with the procedures used in the
Initial Reserve Report, and together with each such Reserve Report, a
certificate of a Responsible Officer certifying that, to the best of his
knowledge (i) the information contained in the Reserve Report and any other
information delivered in connection therewith is true and correct, (ii) the
Borrower and its Subsidiaries own good and defensible title to its Oil and Gas
Properties evaluated in such Reserve Report and such Properties are free and
clear of all Liens except for Liens permitted under subsection 8.3, (iii) except
as set forth on an exhibit to the certificate, on a net basis there are no gas
imbalances, take-or-pay or other prepayments with respect to its Oil and Gas
Properties evaluated in such Reserve Report which would require the Borrower or
its Subsidiaries to deliver Hydrocarbons produced from such Oil and Gas
Properties or make cash payments at some future time without then or thereafter
receiving full payment therefor, (iv) except as set forth on an exhibit to the
certificate, none of its Oil and Gas Properties have been sold since the date of
the Reserve Report, most recently delivered pursuant to this subsection 7.1(e),
which exhibit shall list all of its Oil and Gas Properties sold and in such
detail as is reasonably required by the Collateral Agent, (v) attached as an
exhibit to the certificate is a list of its Oil and Gas Properties added to and
deleted from the Reserve Report most recently delivered pursuant to this
subsection 7.1(e) and a list of all Persons disbursing proceeds to the Borrower
or its Subsidiaries, as applicable, from its Oil and Gas Properties, (vi)
attached to the certificate as an exhibit is a list of all of the Oil and Gas
Properties evaluated by such Reserve Report that are subject to a Mortgage, or
with respect to personal property constituting production payments received from
Section 29 Properties, the Guarantee and Collateral Agreement and UCC financing
statements, that in each case create a first priority perfected Lien in such
Properties in favor of the Collateral Agent for the ratable benefit of the
Lenders and (vii) except as set forth on an exhibit to such certificate, there
has not been any change in the working interest or net revenue interest of the
Borrower and its Subsidiaries in any of the Oil and Gas Properties included on
such Reserve Report resulting in a change in the value
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of such Oil and Gas Property of $25,000 individually or $1,000,000 in the
aggregate, which change has occurred since the date of the last certificate
delivered pursuant to this subsection 7.1(e), such exhibit to set forth the
reason for such change;
(f) as soon as available and in any event within 15 days after
the end of each month ending after the Effective Date, a report setting forth,
in form reasonably acceptable to the Agents, the calculation of the PV-10 Value
of the Proved Reserves composing the Borrowing Base as determined by the Reserve
Report most recently delivered by the Borrower under subsection 7.1(e), such
calculation to be made by multiplying (i) the volumetric quantity of the
categories of estimated Proved Reserves set forth in such Reserve Report less
such aggregate projected production of Proved Reserves since the date of and as
provided in such Reserve Report by (ii) the applicable NYMEX Strip Price as of
the last Business Day of the month preceding the date of the delivery by the
Borrower of such report to the Agents; each such report shall (x) also include a
discussion of (A) any changes since the date of such Reserve Report in the
categorization of any Oil and Gas Properties among Proved Developed Producing
Reserves, Proved Developed Non-Producing Reserves, Proved Undeveloped Reserves
and "other", (B) any changes in the working interest or net revenue interest in
the Oil and Gas Properties of the Borrower and its Subsidiaries reflected on
such Reserve Report, and (C) such other information as the Agents shall
reasonably consider appropriate or necessary from the perspective of an
asset-based lender; and (y) be accompanied by a certificate of a Responsible
Officer of the Borrower certifying to the completeness and accuracy of the
report, including the calculation of the PV-10 Value of Proved Reserves
comprising the Borrowing Base; and
(g) as soon as available and in any event within three (3)
Business Days after the end of each week, a Borrowing Base Certificate current
as of the close of business on the Friday of the immediately preceding week,
supported by schedules showing the derivation thereof and containing such detail
and other information as any Agent may reasonably request from time to time,
PROVIDED that (i) the Borrowing Base set forth in the Borrowing Base Certificate
shall be (x) determined on the basis of the NYMEX Strip Prices used in
preparation of the report most recently delivered by the Borrower pursuant to
subsection 7.1(f) and (y) effective from and including the date such Borrowing
Base Certificate is duly received by the Agents but not including the date on
which a subsequent Borrowing Base Certificate is received by the Agents unless
either Agent disputes the eligibility of any Oil and Gas Property for inclusion
in the calculation of the Borrowing Base by notice of such dispute to the
Borrower and (ii) in the event of any dispute about the eligibility of any such
property for inclusion in the calculation of the Borrowing Base, the Agents'
good faith judgment shall control.
All such financial statements delivered pursuant to
subsections 7.1(a), (b) and (c) shall be complete and correct in all material
respects and shall be prepared in accordance with GAAP (except in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such accountants
or officer, as the case may be, and disclosed therein).
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Section 7.2 CERTIFICATES; OTHER INFORMATION. Furnish to the
Funding Agent, with sufficient copies for the Lenders:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in making
the examination necessary therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a), (b) and (c), a certificate of a Responsible
Officer stating that, to the best of such Responsible Officer's knowledge,
during such period (i) no Subsidiary has been formed or acquired (or, if any
such Subsidiary has been formed or acquired, the Borrower has complied with the
requirements of subsection 7.10 with respect thereto), (ii) neither the Borrower
nor any of its Subsidiaries has changed its name, its principal place of
business, its chief executive office or the location of any material item of
tangible Collateral without complying with the requirements of this Agreement
and the Security Documents with respect thereto and (iii) the Borrower has
observed or performed all of its covenants (and setting forth the calculations
used to determine compliance with the covenants set forth in subsection 8.1) and
other agreements, and satisfied every condition, contained in this Agreement and
the other Loan Documents to be observed, performed or satisfied by it, and that
such officer has obtained no knowledge of any Default or Event of Default except
as specified in such certificate;
(c) not later than 45 days after the end of each fiscal year
of the Borrower and its consolidated Subsidiaries, financial projections for the
Borrower and its consolidated Subsidiaries supplementing and superseding the
financial projections for such period previously delivered to the Agents,
prepared on a monthly basis and otherwise in form and substance satisfactory to
the Agents for the immediately succeeding fiscal year of the Borrower and its
Subsidiaries and on or before 45 days after the end of each fiscal quarter,
financial projections supplementing and superseding the financial projections
for such period previously delivered by the Borrower to the Agents, prepared on
a monthly basis and otherwise in form and substance satisfactory to the Agents,
for each remaining quarterly period in such fiscal year, all such financial
projections to be reasonable, to be prepared on a reasonable basis and in good
faith, and to be based on assumptions believed by the Borrower to be reasonable
at the time such projections are prepared and from the best information then
available to the Borrower;
(d) within five days after the same are filed, copies of all
correspondences, financial statements, documents and reports, if any, which the
Borrower may make to, or file with, the SEC to the extent such correspondences,
financial statements, documents and reports are not retrievable at the SEC's
website at www.sec.gov, and if such correspondences, financial statements,
documents and reports are retrievable at the SEC's website at www.sec.gov,
within five days after such filings, notice to the Agents of such filings;
(e) promptly upon receipt thereof, copies of all reports and
management letters submitted to the Borrower or any Subsidiary by independent
public accountants in connection with any interim or special audit of the books
or operations of the Borrower or such Subsidiary made by such accountants;
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(f) together with any Reserve Report delivered pursuant to
subsection 7.1(e), a schedule identifying as of the last day of the fiscal
period for which the financial statements are delivered or as of the date of
delivery of such Reserve Report, as the case may be, each commodity fixed price
contract having a term longer than one year then in effect as to which the
Borrower or any of its Subsidiaries is bound which provides for payments during
any year of such contract of $1,000,000 or more, and setting forth the names of
the parties thereto and of any guarantees thereof, and the volumes attributable
to each such contract;
(g) deliver to the Funding Agent within 30 days of obtaining
any renewal or replacement insurance policies as and when required by subsection
7.5(b)(v), certificates of insurance evidencing the Borrower's compliance with
subsection 7.5; and
(h) promptly, such additional financial and other information
concerning the Borrower and its Subsidiaries as any Lender (acting through the
Funding Agent) may from time to time reasonably request.
Section 7.3 PAYMENT OF OBLIGATIONS. Pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all of its obligations of whatever nature, except where the amount
or validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or the applicable Subsidiary, as the case
may be.
Section 7.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE;
COMPLIANCE WITH LAW AND CONTRACTUAL OBLIGATIONS. Except as permitted by
subsections 8.5 and 8.6, continue to engage in business of the same general type
as now conducted by it and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business; comply, in all material respects, with all material Requirements of
Law and comply with all Contractual Obligations except to the extent that
failure to comply with such Contractual Obligations could not reasonably be
expected to have, in the aggregate, a Material Adverse Effect.
Section 7.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Keep all
material property owned or leased by it that is useful and necessary in its
business in good working order and condition, ordinary wear and tear excepted;
maintain with financially sound and reputable insurance companies insurance of
such types, in such amounts and against such risks as is customary to be
maintained by companies engaged in the same or a similar business in the same
general area; and furnish to the Collateral Agent, upon written request, full
information as to the insurance carried.
(b) (i) Cause all such property and casualty insurance
policies with respect to the Collateral to be endorsed or otherwise amended to
include a "standard" or "New York" lender's loss payable endorsement (or other
endorsement acceptable to the Collateral Agent), in form and substance
reasonably satisfactory to the Collateral Agent, which endorsement shall provide
that, from and after the Effective Date, if the insurance carrier shall have
received written notice from the Collateral Agent of the occurrence of an Event
of Default, the insurance carrier shall pay all
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proceeds otherwise payable to the Borrower or the Loan Parties under such
policies directly to the Collateral Agent; (ii) cause all such policies to
provide that neither the Borrower, the Collateral Agent, nor any other party
shall be a co-insurer thereunder; (iii) if requested by the Collateral Agent,
deliver original or certified copies of all such policies to the Collateral
Agent; (iv) cause each such policy to provide that it shall not be canceled, or
not renewed (A) by reason of nonpayment of premium unless not less than 20 days'
prior written notice thereof has been given by the insurer to the Collateral
Agent or (B) for any other reason unless not less than 30 day's prior written
notice thereof has been given by the insurer to the Collateral Agent; and (v) if
requested in writing by the Collateral Agent, deliver to the Collateral Agent,
prior to the cancellation or nonrenewal of any such policy of insurance, a copy
of a renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Collateral Agent), or insurance certificate with
respect thereto, together with evidence satisfactory to the Collateral Agent of
payment of the premium therefor.
Section 7.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS;
DISCUSSIONS. Keep proper books of records and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities; and permit representatives (including, without limitation,
engineers, appraisers or other similar professionals) of any Lender to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
requested through the Agents and to discuss the business, operations, properties
and financial and other condition of the Borrower and its Subsidiaries with
officers and employees of the Borrower and its Subsidiaries and with its
independent certified public accountants.
Section 7.7 NOTICES. Promptly give notice to the Agents of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority which in the case of
either clause (i) or (ii), if not cured or if adversely determined, as the case
may be, could reasonably be expected, in the opinion of a Responsible Officer,
to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
of its Subsidiaries which could reasonably be expected, in the opinion of a
Responsible Officer, to result in an adverse judgment of $1,000,000 or more not
covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any ERISA Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the taking of any other action by the PBGC or the Borrower or
any
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Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan,
in either case which is reasonably likely to result in a payment of, or a Lien
securing liability to, the Borrower or its Subsidiaries in an amount in excess
of $1,000,000;
(e) any material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole; and
(f) the execution, receipt or delivery of any material notices
that the Borrower or its Subsidiaries executes or receives in connection with
any Material Contract, together with copies thereof.
Each notice pursuant to this subsection shall be accompanied
by a statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what the Borrower and its Subsidiaries have
taken or propose to take with respect thereto.
Section 7.8 ENVIRONMENTAL LAWS. (a)(i) Comply, in all material
respects, with all Environmental Laws applicable to it and material to the
business and operations of the Borrower or any of its Subsidiaries, and obtain,
comply with and maintain any and all Environmental Permits necessary for its
operations as conducted and as planned; and (ii) take all reasonable efforts to
ensure that all of its tenants, subtenants, contractors, subcontractors, and
invitees comply in all material respects with all Environmental Laws material to
the business and operations of the Borrower or any of its Subsidiaries, and
obtain, comply with and maintain any and all material Environmental Permits,
applicable to any of them insofar as any failure to so comply, obtain or
maintain reasonably could be expected to adversely affect the Borrower or any of
its Subsidiaries. For purposes of this subsection 7.8(a), noncompliance by the
Borrower or any of its Subsidiaries with any applicable Environmental Law or
Environmental Permit shall be deemed not to constitute a breach of this
covenant, provided that, upon learning of any actual or suspected noncompliance,
the Borrower and its Subsidiaries shall promptly undertake all reasonable
efforts to achieve compliance, appeal or take other notice to contest in good
faith such order or directive.
(b) Comply with all material orders and directives of all
Governmental Authorities regarding Environmental Laws, other than such orders
and directives as to which an appeal or other appropriate action to contest such
order or directive has been timely and properly taken in good faith.
(c) Prior to acquiring any ownership or leasehold interest in
real property or other interest in any real property that is reasonably likely
to give rise to the Borrower or its Subsidiaries being subject to potential
significant liability under or violations of any material Environmental Law: (i)
notify the Collateral Agent; and (ii) if requested by the Collateral Agent,
provide to the Collateral Agent a written report by an environmental consultant
reasonably acceptable to the Collateral Agent (the "ENVIRONMENTAL CONSULTANT")
assessing the presence or potential presence of significant levels of any
Materials of Environmental Concern on, under, in, or about the property, or of
other conditions that could give rise to potentially significant liability or
violations of any Environmental Law.
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Section 7.9 FURTHER ASSURANCES. Upon the request of any Agent,
promptly perform or cause to be performed any and all acts and execute or cause
to be executed any and all documents (including, without limitation, financing
statements and continuation statements) for filing under the provisions of the
Uniform Commercial Code or any other Requirement of Law which are necessary or
advisable to maintain in favor of the Funding Agent, for the benefit of the
Lenders, Liens on the Collateral that are duly perfected in accordance with all
applicable Requirements of Law.
Section 7.10 ADDITIONAL COLLATERAL. (a) It is the intention of
the parties hereto that the Obligations and guarantees thereof be secured by a
perfected first priority security interest in the following properties of the
Borrower and the Eligible Guarantors (i) if the Total Reserve Value is less than
$150,000,000, Oil and Gas Properties representing at least 85% of the PV-10
Value of the Oil and Gas Properties included in the most recently delivered
Reserve Report, (ii) all of the gathering system assets, (iii) all accounts
receivable, equipment, inventory, and intangibles and (iv) all of the Capital
Stock of the Borrower and the Eligible Guarantors other than as set forth on
Schedule 5.19. Accordingly, with respect to assets acquired after the Effective
Date that are intended to be subject to the Lien created by any of the Security
Documents but which are not so subject (other than any assets described in
paragraph (b) of this subsection), the Borrower and the Eligible Guarantors
shall, from time to time (and, in any event, (x) within 30 days after the
request by the Collateral Agent to do so and (y) with respect to Oil and Gas
Properties, only to the extent necessary to ensure compliance with subsection
7.11), (A) execute and deliver to the Collateral Agent such amendments to the
relevant Security Documents or such other documents as the Collateral Agent
shall reasonably deem necessary or advisable to grant to the Collateral Agent,
for the benefit of the Lenders, a perfected, first priority Lien on such assets,
(B) take all actions necessary or advisable to cause such Lien to be duly
perfected in accordance with all applicable Requirements of Law, including,
without limitation, the filing of financing statements in such jurisdictions as
may be requested by the Collateral Agent, and (C) if requested by the Collateral
Agent, deliver to the Collateral Agent legal opinions relating to the matters
described in clauses (A) and (B) immediately preceding, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Collateral Agent.
(b) With respect to any Person that, subsequent to the
Effective Date, becomes a Subsidiary of the Borrower, promptly upon the request
of the Collateral Agent: (i) cause such new Subsidiary (A) to become a party to
the Guarantee and Collateral Agreement, pursuant to documentation which is in
form and substance reasonably satisfactory to the Collateral Agent, and (B) to
take all actions reasonably necessary or advisable to cause the Lien created by
the Guarantee and Collateral Agreement to be duly perfected in accordance with
all applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be reasonably requested by the
Collateral Agent, (ii) cause the Capital Stock of such Person owned by the
Borrower and any of the Eligible Guarantors to be pledged to the Collateral
Agent, for the ratable benefit of the Lenders, pursuant to documentation
reasonably satisfactory to the Collateral Agent, and take all actions reasonably
necessary or advisable to cause the Lien thereon to be duly perfected in
accordance with all applicable Requirements of Law, and deliver the certificates
representing such Capital Stock to the Collateral Agent, together with undated
stock powers executed and delivered in blank by a duly authorized officer of the
Borrower or such Eligible Guarantors, as the case may be and (iii) if requested
by the Collateral Agent, deliver to the Collateral Agent legal opinions relating
to the
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matters described in clauses (i) and (ii) immediately preceding, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Collateral Agent.
(c) With respect to any Oil and Gas Property acquired after
the Effective Date by the Borrower or any Subsidiary, promptly (and in any event
within 30 days after the acquisition thereof) but only to the extent required to
maintain compliance with subsection 7.11: (i) execute and deliver to the
Collateral Agent such amendments to the relevant Security Documents or such
other documents as the Collateral Agent shall deem reasonably necessary or
advisable to grant to the Collateral Agent, for the benefit of the Lenders, a
Lien on such Oil and Gas Property; (ii) take all actions reasonably necessary or
advisable to cause such Lien to be duly perfected in accordance with all
applicable Requirements of Law, including, without limitation, the filing of
mortgages, deeds of trust or like documents or financing statements in such
jurisdictions as may be requested by the Collateral Agent; and (iii) if
requested by the Collateral Agent, deliver to the Collateral Agent legal
opinions relating to the matters described in clauses (i) and (ii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Collateral Agent.
(d) To the extent that motor vehicles subject to certificate
of title statutes owned by the Borrower or any of the Eligible Guarantors have
an aggregate value exceeding $2,000,000, the Collateral Agent may request, and
the Borrower shall, and shall cause the Eligible Guarantors to, within 30 days
of such request deliver each certificates of title applicable to such motor
vehicles, duly endorsed by the Borrower or any of the Eligible Guarantors to
permit the Collateral Agent to note its Lien for the benefit of the Lenders on
such certificates of title.
Section 7.11 COLLATERAL VALUE. Within 60 days after a Reserve
Report is delivered pursuant to subsection 7.1 that shows that the Total Reserve
Value is less than $150,000,000, cause to be included in the Collateral, Oil and
Gas Properties representing at least 85% of the PV-10 Value of the total Oil and
Gas Properties of the Borrower and the Eligible Guarantors included in the most
recently delivered Reserve Report, and cause such other portion of the Oil and
Gas Properties not included in the Collateral to be free and clear of all Liens
except Liens permitted by subsection 8.3.
Section 7.12 [Intentionally Omitted]
Section 7.13 MAINTENANCE AND OPERATION OF PROPERTY. To the
extent that the failure to comply could reasonably be expected to have a
material and adverse effect on the financial condition or operations of Borrower
or its Subsidiaries and consistent with the standards of a reasonably prudent
operator:
(a) Maintain, develop, and operate Borrower's Oil and
Gas Properties, and oil and gas gathering assets in a good and
workmanlike manner, and observe and comply with all of the terms and
provisions, express or implied, of all oil and gas leases relating to
the properties so long as the oil and gas leases are capable of
producing Hydrocarbons and accompanying elements in quantities and at
prices providing for continued efficient and profitable operation of
business;
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(b) Comply in all material respects with all
contracts and agreements applicable to or relating to Borrower's Oil
and Gas Properties or the production and sale of Hydrocarbons and
accompanying elements therefrom;
(c) At all times, maintain, preserve, and keep all
operating equipment used with respect to Borrower's Oil and Gas
Properties, and oil and gas gathering assets 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 the 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
Borrower or its Subsidiaries shall in good faith determine that the
action is not necessary or desirable for its continued efficient and
profitable operation of business; and
(d) With respect to Borrower's Oil and Gas
Properties, and oil and gas gathering assets which are operated by
operators other than Borrower or a Subsidiary, seek to enforce the
operators' contractual obligations to maintain, develop, and operate
such properties subject to the applicable operating agreements.
Section 7.14 SUBORDINATION. The Borrower shall cause all
Indebtedness and other obligations now or hereafter owed by the Borrower or its
Subsidiaries to any of its Affiliates, to be subordinated in right of payment
and security to the Indebtedness and other Obligations owing to the Agents and
the Lenders in accordance with a subordination agreement in form and substance
satisfactory to the Collateral Agent.
Section 7.15 BORROWING BASE. The Borrower shall within three
(3) Business Days after the sum of the aggregate principal amount of all Loans
and the aggregate amount of all Letter of Credit Obligations exceeds the
Borrowing Base set forth in the most recent Borrowing Base Certificate delivered
to the Agents pursuant to subsection 7.1(g), cause all Loans and Letter of
Credit Obligations to be in compliance with such Borrowing Base.
Section 7.16 CHANGE IN COLLATERAL; COLLATERAL RECORDS. (i)
Give the Collateral Agent not less than 30 days' prior written notice of any
change in the location of any Collateral having a value of in excess of
$1,000,000 ("MATERIAL COLLATERAL"), other than to locations set forth on
Schedule 7.16 and with respect to which the Collateral Agent has filed financing
statements and otherwise fully perfected its Liens thereon, (ii) advise the
Collateral Agent promptly, in sufficient detail, of any material adverse change
relating to the type, quantity or quality of any Material Collateral or the Lien
granted thereon, and (iii) execute and deliver, and cause each of its
Subsidiaries to execute and deliver, to the Collateral Agent for the benefit of
the Lenders from time to time, solely for the Collateral Agent's convenience in
maintaining a record of Material Collateral, such written statements and
schedules as the Collateral Agent may reasonably require, designating,
identifying or describing Material Collateral, in each case other than motor
vehicles of the Borrower and its Subsidiaries subject to certificates of title
statutes unless and until the aggregate value of such motor vehicles exceeds
$2,000,000.
Section 7.17 LANDLORD WAIVERS; COLLATERAL ACCESS AGREEMENTS.
Obtain at the time the Borrower or its Subsidiaries enters into a lease for real
property not occupied on the
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Effective Date or delivers possession of Material Collateral to a Person that
did not have possession of Material Collateral on the Effective Date, a
landlord's waiver from the landlord of such real property (which waiver may be
contained in such lease) or a collateral access agreement from the Person that
has possession of such Collateral, in form and substance reasonably satisfactory
to the Collateral Agent.
Section 7.18 ADDITIONAL COLLATERAL REVIEWS. Upon the request
of any Agent, the Borrower shall, and shall cause its Subsidiaries, to
cooperate, with any commercially reasonable review or examination of the
Collateral, including, without limitation, a review of title to the Oil and Gas
Properties of the Borrower and its Subsidiaries or a review of the Mortgages to
determine whether certain Oil and Gas Properties of the Borrower and its
Subsidiaries are included under such Mortgages.
SECTION 8. NEGATIVE COVENANTS.
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Loan, Note or any Letter of Credit remains outstanding and
unpaid or any amount is owing to any Lender or any Agent hereunder or under any
other Loan Document, the Borrower shall not, and shall not (except with respect
to subsection 8.1) permit any Subsidiary to, directly or indirectly:
Section 8.1 FINANCIAL COVENANT CONDITIONS.
(a) Senior Debt Interest Coverage Ratio. Permit, at the end of
each fiscal quarter of the Borrower with respect to the four (4) immediately
preceding fiscal quarters then ended (calculated cumulatively, without
duplication), the ratio of EBITDA for such four fiscal quarters to Consolidated
Interest Expense on Senior Debt for such period to be less than the ratios set
forth below opposite the date corresponding thereto.
September 30, 2000 6.0:1
December 31, 2000 5.8:1
March 31, 2001 5.0:1
June 30, 2001 4.3:1
September 30, 2001 4.0:1
December 31, 2001 3.7:1
March 31, 2002 3.4:1
June 30, 2002 3.2:1
(b) Senior Debt Leverage Ratio. Permit, at the end of each
fiscal quarter of the Borrower with respect to the four (4) immediately
preceding fiscal quarters then ended (calculated cumulatively, without
duplication), the ratio of Senior Debt as of the last day of such period to
EBITDA for such four fiscal quarters to be greater than the ratios set forth
below.
September 30, 2000 2.7:1
December 31, 2000 2.4:1
March 31, 2001 2.3:1
June 30, 2001 2.5:1
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September 30, 2001 2.6:1
December 31, 2001 2.6:1
March 31, 2002 2.7:1
June 30, 2002 3.2:1
(c) Current Ratio. Permit, the ratio of current assets (which
shall include an amount equal to the principal amount of Loans available under
this Agreement) to current liabilities (excluding all Indebtedness and accrued
interest expense otherwise included as current liabilities) to be less than 1.0
to 1.0 at the end of any fiscal quarter of the Borrower.
(d) LIQUIDITY. Permit cash and Cash Equivalents, together with
an amount equal to the principal amount of Loans available under this Agreement
(in each case to the extent not subject to any Lien other than those Liens
created hereby), to be less than $5,000,000 at any time.
Section 8.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume
or suffer to exist any Indebtedness or allow any Subsidiary to issue preferred
stock, except:
(a) Indebtedness of the Loan Parties under the Loan
Documents;
(b) Indebtedness of the Borrower issued to any
Wholly-Owned Subsidiary and Indebtedness and preferred stock of any
Wholly-Owned Subsidiary issued to the Borrower or any other
Wholly-Owned Subsidiary;
(c) (i) Indebtedness of the Borrower evidenced by the
Senior Subordinated Notes and (ii) Permitted Subordinated
Refinancing Debt, if any;
(d) Guarantee Obligations permitted by subsection 8.4;
(e) Indebtedness of the Borrower and its Wholly-Owned
Subsidiaries existing on the Effective Date listed on Schedule 8.2,
but not any extensions, renewals or replacements of such
Indebtedness;
(f) Indebtedness under Interest Rate Protection
Agreements entered into for the purpose of limiting interest rate
risks and not for the purpose of speculation, provided that the
obligations under such agreements are related to payment
obligations on Indebtedness otherwise permitted by the terms of
this covenant;
(g) Indebtedness under Commodity Hedging Agreements
provided that such contracts were entered into in the ordinary
course of business for the purpose of limiting risks that arise in
the ordinary course of business of the Borrower and its
Subsidiaries and not for the purpose of speculation; and
(h) additional Indebtedness of the Borrower and its
Wholly-Owned Subsidiaries not to exceed $10,000,000 in aggregate
principal amount at any one time outstanding.
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Section 8.3 LIMITATION ON LIENS. Create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, except for:
(a) Liens for taxes, assessments, fees and other
governmental charges and claims that are not yet due or which are
being contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on the
books of the Borrower or the applicable Subsidiary, as the case may
be, in conformity with GAAP;
(b) carriers', warehousemen's, suppliers' mechanics',
materialmen's, vendors', repairmen's, landlords' and other like Liens
arising in the ordinary course of business securing obligations which
are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of
the Borrower or the applicable Subsidiary, as the case may be, in
conformity with GAAP;
(c) Liens incurred and deposits made in connection
with workers' compensation, unemployment insurance and other social
security legislation and deposits securing liability to insurance
carriers under insurance or self-insurance arrangements;
(d) deposits made to secure the performance of bids,
tenders, trade contracts (other than for borrowed money), leases,
statutory and regulatory obligations, surety and appeal bonds,
performance and return-of-money bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) Liens constituting survey exceptions,
encumbrances, easements and reservations of, or rights of others for,
rights-of-way, zoning and other restrictions as to the use of real
properties and other similar encumbrances incurred in the ordinary
course of business which, with respect to all of the foregoing, do
not secure the payment of Indebtedness of the type described in
clauses (a)-(d) of the definition thereof and which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any Subsidiary;
(f) Liens in favor of the Borrower securing
Indebtedness of any Subsidiary to the Borrower;
(g) Liens encumbering gathering system assets that
arise under operation of law incurred in the ordinary course of
business which, with respect to all of the foregoing, do not secure
the payment of Indebtedness of the type described in clauses (a)-(d)
of the definition thereof and which, in the aggregate, are not
substantial in amount and which do not in any case materially detract
from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower
or any Subsidiary;
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(h) Liens reserved in oil and gas mineral leases for
bonus or rental payments payable to the lessor thereunder and for
compliance with the terms of such leases, provided that the amount of
any obligations secured thereby that are delinquent, that are not
diligently contested in good faith and for which adequate reserves
are not maintained by the Borrower or the applicable Subsidiary, as
the case may be, do not exceed, at any time outstanding, the amount
owing by the Borrower or any Subsidiary, as applicable, for one
month's payments as due thereunder; and PROVIDED, FURTHER, the
aggregate amount of obligations secured by Liens permitted by this
paragraph (h) shall not exceed, at any time outstanding, $5,000,000;
(i) Liens (not otherwise permitted hereunder) on
property not included in the Borrowing Base which secure obligations
not exceeding $5,000,000 in aggregate principal amount at any time
outstanding, provided no such Liens under this clause (i) shall
encumber any Capital Stock or other equity interests pledged under
the Guarantee and Collateral Agreement;
(j) Liens created pursuant to the Security Documents;
(k) Liens constituting "Permitted Encumbrances" under
and as such term is defined in the respective Mortgages;
(l) Liens existing on the date of this Agreement and
listed on Schedule 8.3;
(m) Liens arising under operating agreements, joint
venture agreements, partnership agreements, oil and gas leases,
farm-out and farm-in agreements, division orders, contracts for the
sale, transportation or exchange of oil or natural gas, unitization
and pooling declarations and agreements, area of mutual interest
agreements that are customary in the Oil and Gas Business; PROVIDED
that the amount of any obligations secured thereby that are
delinquent, that are not diligently contested in good faith and for
which adequate reserves are not maintained by the Borrower or the
applicable Subsidiary, as the case may be, do not exceed, at any time
outstanding, the amount owing by the Borrower or any Subsidiary, as
applicable, for one month's billed operating expenses or other
expenditures attributable to such entity's interest in the Property
covered thereby; and PROVIDED, FURTHER, the aggregate amount of
obligations secured by Liens permitted by this paragraph (m) shall
not exceed, at any time outstanding, $5,000,000; and
(n) pre-judgment Liens and judgment Liens not giving
rise to an Event of Default; PROVIDED, that the aggregate amount of
such Liens permitted by this paragraph (n) shall not exceed, at any
time outstanding, $5,000,000.
Section 8.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create,
incur, assume or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations with respect to the Senior
Subordinated Notes and Permitted Subordinated Refinancing Debt, which
Guarantee Obligations
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shall contain subordination provisions no less favorable to
the Lenders than the subordination provisions with respect to
the Senior Subordinated Notes;
(b) Guarantee Obligations in existence on the date
hereof and listed on Schedule 8.4;
(c) Guarantee Obligations by the Borrower or any
Subsidiary of Indebtedness of the Borrower or any Wholly-Owned
Subsidiary permitted by subsection 8.2;
(d) Guarantee Obligations arising under the Loan
Documents; and
(e) Guarantee Obligations permitted by subsection
8.8.
Section 8.5 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any
merger, consolidation or amalgamation as a constituent party, or liquidate, wind
up or dissolve itself (or suffer any liquidation or dissolution), or convey,
sell, lease, assign, transfer or otherwise dispose of, all or substantially all
of its property, business or assets, or make any material change in its present
method of conducting business except:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
one or more Wholly-Owned Subsidiaries of the Borrower (provided that
the Wholly-Owned Subsidiary or Subsidiaries shall be the continuing
or surviving Person);
(b) any Subsidiary of the Borrower may sell, lease,
transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or
any Wholly-Owned Subsidiary;
(c) any Wholly-Owned Subsidiary may be merged or
consolidated with any Person acquired in connection with a Permitted
Business Acquisition, provided such Wholly-Owned Subsidiary shall be
the continuing or surviving Person; and
(d) the Borrower and its Subsidiaries may effect any
transaction permitted by subsections 8.6 and 8.9.
Section 8.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or issue or sell any shares of the Borrower's
or such Subsidiary's Capital Stock to any Person, except:
(a) the sale or other disposition of obsolete or worn
out property in the ordinary course of business;
(b) the sale of inventory (including Hydrocarbons or
other mineral products or surplus) in the ordinary course of
business;
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(c) the sale or discount without recourse of Accounts
Receivable arising in the ordinary course of business in connection
with the compromise or collection thereof;
(d) as permitted by subsection 8.5;
(e) Dispositions not otherwise permitted under this
subsection 8.6 of up to $5,000,000 during any six-month period
commencing January 1 and ending June 30 or commencing July 1 and
ending December 31;
(f) a transfer of assets by the Borrower to a
Wholly-Owned Subsidiary or by a Wholly-Owned Subsidiary to the
Borrower or to another Wholly-Owned Subsidiary;
(g) an issuance of capital stock by a Wholly-Owned
Subsidiary to the Borrower or to another Wholly-Owned Subsidiary;
(h) the Disposition of Oil and Gas Properties not
containing Proved Reserves in the ordinary course of business;
PROVIDED, that, the aggregate value of Oil and Gas Properties so
abandoned, farmed-out or subleased during any six-month period
commencing January 1 and ending June 30 or commencing July 1 and
ending December 31 shall not exceed $2,500,000;
(i) the trade or exchange by the Borrower or any
Subsidiary of any Oil and Gas Property or interest therein owned or
held by the Borrower or such Subsidiary for any Oil and Gas Property
or interest therein owned or held by another Person, including any
cash or Cash Equivalents necessary in order to achieve an exchange of
equivalent value; PROVIDED, that, that the aggregate value of trades
or exchanges permitted by this paragraph (i) shall not exceed
$5,000,000 during any six-month period commencing January 1 and
ending June 30 or commencing July 1 and ending December 31;
(j) the making of an Investment permitted by
subsection 8.8 or a Restricted Payment permitted by subsection
8.7;
(k) the sale of Oil and Gas Properties in connection
with tax credit transactions complying with ss.29 of the Code
("SECTION 29 PROPERTIES"), which sale does not result in a reduction
in the Borrower's or its Subsidiaries', as the case may be, right to
receive the cash flow from such Oil and Gas Properties and which sale
is on terms reasonably acceptable to the Agents; and
(l) the issuance to employees of the Borrower or any
of its Subsidiaries of shares of Capital Stock of the Borrower, as
set forth on Schedule 8.6.
Notwithstanding anything to the contrary contained herein, no sale may be made
of the Capital Stock of any Subsidiary, except in connection with the sale of
all of its outstanding Capital Stock that is then held by the Borrower and any
other Subsidiary.
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Section 8.7 LIMITATION ON DIVIDENDS. Declare or pay any
dividend on (other than dividends of its own Capital Stock), or make any payment
on account of, or set apart assets for a sinking or other analogous fund for,
the purchase, redemption, defeasance, retirement or other acquisition of, any
shares of any class of Capital Stock of the Borrower or any Subsidiary or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Subsidiary (such declarations, payments, setting apart, purchases,
redemptions, defeasance, retirements, acquisitions and distributions being
herein called "RESTRICTED PAYMENTS"), except that:
(a) any Wholly-Owned Subsidiary may declare and pay
dividends to or make other distributions to the Borrower or to any
other Wholly-Owned Subsidiary;
(b) the Borrower may repurchase, redeem or otherwise
acquire or retire for value any Capital Stock of the Borrower or any
Subsidiary held by any of the Borrower's (or any of its
Subsidiaries') employees pursuant to any management equity
subscription agreement or stock option agreement in effect as of the
date hereof; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Capital Stock shall not
exceed $2,000,000 in any twelve-month period; and
(c) the Borrower may purchase, redeem or otherwise
acquire or retire for value any Capital Stock of the Borrower (i)
granted prior to June 27, 1997 and held by its former executives or
(ii) held by employees or former employee as required by any
established employee benefit plans or employment agreements.
Section 8.8 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES.
Make any advance, loan, extension of credit or capital contribution to, or incur
any Guarantee Obligation on behalf or for the benefit of, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment (including by the issuance of
letters of credit) in (collectively, "INVESTMENTS"), any Person (other than the
Borrower or any Wholly-Owned Subsidiary), except:
(a) extensions of trade credit in the ordinary
course of business;
(b) Investments in Cash Equivalents;
(c) loans and advances to officers and employees of
the Borrower or any Subsidiary for travel, entertainment and
relocation expenses in the ordinary course of business in an
aggregate amount for the Borrower and its Subsidiaries not to exceed
$2,000,000 at any one time outstanding;
(d) Investments constituting Permitted Business
Investments, PROVIDED that immediately before and immediately after
giving effect thereto the Revolving Credit Loans, the Term Loans and
the Letter of Credit Obligations are in compliance with the then
current Borrowing Base;
(e) Investments constituting Permitted Business
Acquisitions; and
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(f) up to $10,000,000 in the aggregate of Investments
(other than any Permitted Business Investments or Permitted Business
Acquisitions), provided such Investments are made or entered into in
the ordinary course of the Oil and Gas Business.
Section 8.9 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS
OF DEBT INSTRUMENTS, OTHER MATERIAL AGREEMENTS. (a) (i) Make any payments,
optional payment or prepayment on or redemption, defeasance or purchase of any
Indebtedness (other than (x) payment or prepayment of Indebtedness under this
Agreement and (y) redemption, defeasance or purchase of Indebtedness represented
by the Senior Subordinated Notes at an aggregate cost not to exceed $40,000,000,
(ii) amend, modify or change, or consent or agree to any amendment, modification
or change to any of the terms of any such Indebtedness (other than any such
amendment, modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon), (iii) make an Asset Sale Offer
after receipt of Net Proceeds from an Asset Sale (as such terms are defined in
the Senior Subordinated Indenture) unless all Obligations under the Loan
Documents have been paid in full and the Commitments hereunder terminated or
(iv) amend the subordination provisions of the Senior Subordinated Notes or any
Permitted Subordinated Refinancing Debt; PROVIDED, that as long as no Default or
Event of Default has occurred or is continuing or would exist after giving
effect thereto, the Borrower may redeem or repurchase Subordinated Indebtedness
otherwise permitted by this Agreement with the net cash proceeds from an
incurrence of Permitted Subordinated Refinancing Debt or the substantially
concurrent sale (other than to a Subsidiary of the Borrower) of Capital Stock or
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
(b) Amend, modify, supplement, waive or terminate, or permit
the amendment, modification, supplement, waiver or termination of or to, its
articles or certificate of incorporation in any manner materially adverse to the
Lenders.
(c) Designate any Indebtedness as "Designated Senior Debt"
under the Senior Subordinated Indenture without the consent of the Required
Lenders.
Section 8.10 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate
(other than transactions between or among the Borrower and the Wholly-Owned
Subsidiaries) unless such transaction is (a) not prohibited by another provision
of this Agreement, (b) in the ordinary course of the Borrower's or the
applicable Subsidiary's business and (c) upon fair and reasonable terms no less
favorable to the Borrower or the applicable Subsidiary, as the case may be, than
it would obtain in a comparable arm's length transaction with a Person which is
not an Affiliate or, in the event no comparable transaction with an unaffiliated
Person is available, on terms that are fair from a financial point of view to
the Borrower or the applicable Subsidiary. Notwithstanding the foregoing, the
following transactions shall not be deemed to violate this subsection 8.10: (i)
the purchase, redemption, acquisition of retirement of Capital Stock pursuant to
subsections 8.7(b) and (c); (ii) transactions between or among the Borrower
and/or its Wholly-Owned Subsidiaries; (iii) Restricted Payments permitted by
subsection 8.7 and Investments that are permitted by the
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provisions of subsection 8.8; (v) indemnification payments made to officers,
directors and employees of the Borrower or its Subsidiaries pursuant to charter,
by-law, statutory or contractual provisions; and (vi) reasonable fees and
compensation in the ordinary course of business paid to (including issuances and
grant of securities and stock options), and employment agreements and stock
option and ownership plans for the benefit of, officers, directors or employees
of the Borrower or any Subsidiary of the Borrower as determined in good faith by
the Borrower's Board of Directors.
Section 8.11 LIMITATION ON SALES AND LEASEBACKS. Enter into
any arrangement (a "SALE AND LEASEBACK TRANSACTION") with any Person providing
for the leasing by the Borrower or any Subsidiary of real or personal property
which has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or any Subsidiary, other than as set forth on
Schedule 8.11.
Section 8.12 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the
fiscal year of the Borrower and its consolidated Subsidiaries to end on a day
other than December 31.
Section 8.13 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into
with any Person any agreement which prohibits or limits the ability of the
Borrower or any Subsidiary to create, incur, assume or suffer to exist any Lien,
in favor of any of the Agents, the Lenders under the Loan Documents and their
respective assignees under the Loan Documents or any Person refinancing all or a
portion of the Commitments hereunder, upon any of its property, assets or
revenues, whether now owned or hereafter acquired.
Section 8.14 LIMITATION ON LINES OF BUSINESS. Enter into any
business, either directly or through any Subsidiary, except for the Oil and Gas
Business and those businesses in which the Borrower and its Subsidiaries are
engaged on the date of this Agreement or which are directly related thereto.
Section 8.15 REDEEMABLE CAPITAL STOCK. Issue any Capital Stock
which is mandatorily redeemable, or redeemable at the option of the holder
thereof, except such Capital Stock issued and outstanding as of the Effective
Date.
Section 8.16 FORWARD SALES. Except in accordance with ordinary
practice in the Oil and Gas Business, enter into or permit to exist any advance
payment agreement or other arrangement pursuant to which the Borrower or any of
its Subsidiaries, having received full or substantial payment of the purchase
price for a specified quantity of Hydrocarbons upon entering such agreement or
arrangement, is required to deliver, in one or more installments subsequent to
the date of such agreement or arrangement, such quantity of Hydrocarbons
pursuant to and during the terms of such agreement or arrangement.
Section 8.17 HEDGING AGREEMENTS. Enter into any Hedging
Agreement, other than Hedging Agreements entered into in the ordinary course of
business to hedge or mitigate risks to which the Borrower or any of its
Subsidiaries is exposed in the conduct of its business or the management of its
liabilities, PROVIDED that such Hedging Agreements may not be entered into for
speculative purposes.
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SECTION 9. EVENTS OF DEFAULT.
If any of the following events shall occur and be continuing
(each an "EVENT OF DEFAULT"):
(a) The Borrower shall fail to pay any principal of
any Loan or any Reimbursement Obligation when due in accordance with
the terms thereof or hereof; or the Borrower shall fail to pay any
interest on any Loan, or any other amount payable hereunder, within
five days after any such interest or other amount becomes due in
accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed
made by any Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement
or any such other Loan Document shall prove to have been incorrect in
any material respect on or as of the date made or deemed made; or
(c) The Borrower or any Subsidiary shall default in
the observance or performance of any agreement applicable to it
contained in subsection 2.5(c) (other than with respect to the last
sentence of clause (i) of subsection 2.5(c)), subsections 7.1, 7.5,
7.14, 7.15 or 7.16(i) or Section 8 of this Agreement; or
(d) The Borrower or any Subsidiary shall default in
the observance or performance of any agreements contained in the
following subsections, and such default shall continue unremedied for a
period of (i) five (5) consecutive days in respect of subsections
7.7(a) or 7.7(e), (ii) ten (10) consecutive days in respect of the
agreements contained in clauses (a) through (g) of subsection 7.2 or
subsections 7.10, 7.11, 7.16(ii), 7.16(iii) or 7.18 and (iii) thirty
(30) consecutive days in respect of subsections 7.2(h), 7.3, 7.4, 7.6,
7.7(b), 7.7(c), 7.7(d), 7.7(f), 7.8, 7.9 or 7.13 or any other
agreements under this Agreement or in any other Loan Document (to the
extent not otherwise set forth in this Section 9), in each case after
the earlier of (x) the Borrower's obtaining knowledge of such default
or (y) the receipt by the Borrower of notice thereof from any Agent or
any Lender; or
(e) The Borrower or any Subsidiary shall (i) default
in any payment of principal of or interest of any Indebtedness (other
than the Loans) or in the payment of any Guarantee Obligation, beyond
the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee
Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity
or such Guarantee Obligation to become payable, provided that the
aggregate principal amount of
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all such Indebtedness and Guarantee Obligations which would then become
due and payable would equal or exceed $10,000,000; or
(f) (i) The Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against the Borrower or any of its Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) the Borrower or
any of its Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower
or any of its Subsidiaries shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they
become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) an ERISA Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which ERISA Event or commencement of proceedings or appointment
of a trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title
IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA or (v) the Borrower or any Commonly Controlled
Entity shall, or in the reasonable opinion of the Required Lenders is
likely to, incur any liability in connection with a withdrawal from, or
the Insolvency or Reorganization of, a Multiemployer Plan; and in each
case in clauses (i) through (v) above, such event or condition,
together with all other such ERISA Events or conditions, if any, could
have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered
against the Borrower or any Subsidiary involving in the aggregate a
liability (to the extent not paid or covered by insurance) of
$10,000,000 or more, and all such judgments or decrees shall
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not have been vacated, discharged, stayed or bonded pending appeal
within 60 days after the entry thereof; or
(i) (i) Any of the Security Documents shall cease,
for any reason, to be in full force and effect with respect to any
asset with a value in excess of $10,000,000, or any Loan Party which is
a party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be created
thereby; or
(j) The subordination provisions contained in any
Subordinated Note Document or any other Subordinated Indebtedness shall
cease, for any reason, to be in full force and effect, or any Person
that is a party thereto or holders of at least 25% the aggregate
principal amount of the Senior Subordinated Notes shall so assert; or
(k) (i) TPG shall cease to own, directly or
indirectly, at least 51% of the voting Capital Stock of the Borrower;
(ii) the shares of Capital Stock of the Borrower owned directly or
indirectly by TPG shall cease to be owned free of Liens and other
claims (other than Liens created by the Loan Documents); or (iii) a
"Change of Control" (as defined in the Subordinated Note Documents or
any other document governing Indebtedness of Parent, the Borrower or
any Subsidiary) shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section, automatically the
Commitments shall immediately terminate and the Loans hereunder (with accrued
and unpaid interest thereon) and all other amounts owing under this Agreement
(including, without limitation, all Letters of Credit Obligations), whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) and the other Loan Documents shall
immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) the
Collateral Agent may, or upon the request of the Required Lenders, the
Collateral Agent shall, by written notice to the Borrower, declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) the Collateral Agent may, or upon the request of
the Required Lenders, the Collateral Agent shall, by written notice to the
Borrower, declare the Loans hereunder (with accrued and unpaid interest thereon)
and all other amounts owing under this Agreement (including, without limitation,
all amounts of Letter of Credit Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) and the other Loan Documents to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Collateral Agent an amount equal to the
aggregate then unexpired amount that is available to be drawn under such Letters
of Credit. The Borrower hereby grants to the Collateral Agent, for the benefit
of the Issuing Lender and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Collateral Agent to the payment of drafts
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drawn under such Letters of Credit, and the unused portion thereof after all
such Letters of Credit shall have expired, been cancelled or been fully drawn
upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under the Notes. After all such Letters of Credit shall have
expired, been cancelled or been fully drawn upon, all Reimbursement Obligations
shall have been satisfied and all other obligations of the Borrower hereunder
and under the other Loan Documents shall have been paid in full, the balance, if
any, in such cash collateral account shall be returned to the Borrower. The
Borrower shall execute and deliver to the Collateral Agent, for the account of
the Issuing Lender and the L/C Participants, such further documents and
instruments as the Collateral Agent may reasonably request to evidence the
creation and perfection of the within security interest in such cash collateral
account. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 10. AGENTS.
Section 10.1 APPOINTMENT. Each Lender (and each subsequent
holder of any Note by its acceptance thereof) hereby irrevocably appoints and
authorizes the Funding Agent, the Collateral Agent and the Administrative Agent
to perform the duties of each such Agent as set forth in this Agreement
including: (i) to receive on behalf of each Lender any payment of principal of
or interest on the Notes outstanding hereunder and all other amounts accrued
hereunder for the account of the Lenders and paid to such Agent, and, subject to
subsection 2.2 of this Agreement, to distribute promptly to each Lender its Pro
Rata Share of all payments so received; (ii) to distribute to each Lender copies
of all material notices and agreements received by such Agent and not required
to be delivered to each Lender pursuant to the terms of this Agreement, provided
that the Agents shall not have any liability to the Lenders for the Agents'
inadvertent failure to distribute any such notices or agreements to the Lenders;
(iii) to maintain, in accordance with its customary business practices, ledgers
and records reflecting the status of the Obligations, the Revolving Credit
Loans, the Letters of Credit Obligations and the Term Loan payments made by the
Borrower, and related matters and to maintain, in accordance with its customary
business practices, ledgers and records reflecting the status of the Collateral
and related matters; (iv) to execute or file any and all financing or similar
statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to this Agreement or any other Loan Document; (v) to make the Revolving Credit
Loans, the Term Loans, Agent Advances and the Letters of Credit, for such Agent
or on behalf of the applicable Lenders as provided in this Agreement or any
other Loan Document; (vi) to perform, exercise, and enforce any and all other
rights and remedies of the Lenders with respect to the Loan Parties, the
Obligations, or otherwise related to any of same to the extent reasonably
incidental to the exercise by such Agent of the rights and remedies specifically
authorized to be exercised by such Agent by the terms of this Agreement or any
other Loan Document; (vii) to incur and pay such fees necessary or appropriate
for the performance and fulfillment of its functions and powers pursuant to the
Loan Document; and (viii) subject to subsection 10.3 of this Agreement, to take
such action as such Agent deems appropriate on its behalf to administer the
Loans and the Loan Documents and to exercise such other powers delegated to such
Agent by the terms hereof or the Loan Documents (including, without limitation,
the power to give or to refuse to give notices, waivers, consents, approvals and
instructions and the power to make or to refuse to make determinations and
calculations) together with such powers as are reasonably incidental
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thereto to carry out the purposes hereof and thereof. As to any matters not
expressly provided for by this Agreement and the other Loan Documents
(including, without limitation, enforcement or collection of the Notes), the
Agents shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions of the Required Lenders shall be binding upon all
Lenders and all holders of Notes; PROVIDED, HOWEVER, that the Issuing Lender
shall not be required to refuse to honor a drawing under any Letter of Credit
and the Agents shall not be required to take any action which, in the reasonable
opinion of any Agent, exposes such Agent to liability or which is contrary to
this Agreement or any Loan Document or applicable law.
Section 10.2 NATURE OF DUTIES. The Agents shall have no duties
or responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of the Agents shall be mechanical and administrative
in nature. The Agents shall not have by reason of this Agreement or any Loan
Document a fiduciary relationship in respect of any Lender. Nothing in this
Agreement or any of the Loan Documents, express or implied, is intended to or
shall be construed to impose upon the Agents any obligations in respect of this
Agreement or any of the Loan Documents except as expressly set forth herein or
therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of the Loan Parties in connection with the
making and the continuance of the Loans hereunder and shall make its own
appraisal of the creditworthiness of the Loan Parties and the value of the
Collateral, and the Agents shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the initial Loan hereunder or at any time or times thereafter, PROVIDED
that, upon the reasonable request of a Lender, each Agent shall provide to such
Lender any documents or reports delivered to such Agent by the Loan Parties
pursuant to the terms of this Agreement or any Loan Document. If any Agent seeks
the consent or approval of the Required Lenders to the taking or refraining from
taking any action hereunder, such Agent shall send notice thereof to each
Lender. Each Agent shall promptly notify each Lender any time that the Required
Lenders have instructed such Agent to act or refrain from acting pursuant
hereto.
Section 10.3 RIGHTS, EXCULPATION, ETC. The Agents and their
directors, officers, agents or employees shall not be liable for any action
taken or omitted to be taken by them under or in connection with this Agreement
or the other Loan Documents, except for their own gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, the Agents (i)
may treat the payee of any Note as the holder thereof until the Agents receive
written notice of the assignment or transfer thereof, pursuant to subsection
11.7 hereof, signed by such payee and in form satisfactory to the Agent; (ii)
may consult with legal counsel (including, without limitation, counsel to such
Agent or counsel to the Loan Parties), independent public accountants, and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel or
experts; (iii) make no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, certificates, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Person, the existence
or possible existence of any Default or Event of Default, or to inspect the
Collateral or
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other property (including, without limitation, the books and records) of any
Person; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; and (vi) shall not be deemed to have made
any representation or warranty regarding the existence, value or collectibility
of the Collateral, the existence, priority or perfection of the Collateral
Agent's Lien thereon, or any certificate prepared by any Loan Party in
connection therewith, nor shall any Agent be responsible or liable to the
Lenders for any failure to monitor or maintain any portion of the Collateral.
The Agents shall not be liable for any apportionment or distribution of payments
made in good faith pursuant to subsection 2.7(c), and if any such apportionment
or distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders any payment in excess of the amount which they are determined
to be entitled. The Agents may at any time request instructions from the Lenders
with respect to any actions or approvals which by the terms of this Agreement or
of any of the Loan Documents the Agents is permitted or required to take or to
grant, and if such instructions are promptly requested, the Agents shall be
absolutely entitled to refrain from taking any action or to withhold any
approval under any of the Loan Documents until it shall have received such
instructions from the Required Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or refraining from acting under this Agreement, the Notes,
or any of the other Loan Documents in accordance with the instructions of the
Required Lenders.
Section 10.4 RELIANCE. Each Agent shall be entitled to rely
upon any written notices, statements, certificates, orders or other documents or
any telephone message believed by it in good faith to be genuine and correct and
to have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it.
Section 10.5 INDEMNIFICATION. To the extent that any Agent is
not reimbursed and indemnified by any Loan Party, the Lenders will reimburse and
indemnify such Agent and the Issuing Lender from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against such Agent or the
Issuing Lender in any way relating to or arising out of this Agreement or any of
the Loan Documents or any action taken or omitted by such Agent or the Issuing
Lender under this Agreement or any of the Loan Documents, in proportion to each
Lender's Pro Rata Share, including, without limitation, advances and
disbursements made pursuant to subsection 10.8; PROVIDED, HOWEVER, that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements for which there has been a final judicial determination that such
resulted from any Agent's or the Issuing Lender's gross negligence or willful
misconduct. The obligations of the Lenders under this subsection 10.5 shall
survive the payment in full of the Loans and the termination of this Agreement.
Section 10.6 AGENTS INDIVIDUALLY. With respect to its Pro Rata
Share of the Total Commitment hereunder, the Loans made by it and the Notes
issued to or held by it, each Agent shall have and may exercise the same rights
and powers hereunder and is subject to the same obligations and liabilities as
and to the extent set forth herein for any other Lender or holder of a
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Note. The terms "Lenders" or "Required Lenders" or any similar terms shall,
unless the context clearly otherwise indicates, include each Agent in its
individual capacity as a Lender or one of the Required Lenders. Each Agent and
its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of banking, trust or other business with the Borrower as if it were not
acting as an Agent pursuant hereto without any duty to account to the Lenders.
Section 10.7 SUCCESSOR AGENT.
(a) Each Agent may resign from the performance of all
its functions and duties hereunder and under the other Loan Documents
at any time by giving at least thirty (30) Business Days' prior written
notice to the Borrower and each Lender. Such resignation shall take
effect upon the acceptance by a successor Agent of appointment pursuant
to clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required
Lenders shall appoint a successor Agent who, in the absence of a
continuing Event of Default, shall be reasonably satisfactory to the
Borrower. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement and the other Loan
Documents. After any Agent's resignation hereunder as the Agent, the
provisions of this Section 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under
this Agreement and the other Loan Documents.
(c) If a successor Agent shall not have been so
appointed within said thirty (30) day period, the retiring Agent, with
the consent of the other Agent and, if an Event of Default is not
continuing, the Borrower, shall then appoint a successor Agent who
shall serve as Agent until such time, if any, as the Required Lenders,
with the consent of other Agent and, if an Event of Default is not
continuing, the Borrower, appoint a successor Agent as provided above.
Section 10.8 COLLATERAL MATTERS.
(a) Any Agent may from time to time, make such
disbursements and advances ("AGENT ADVANCES") which such Agent, in its
sole discretion, deems necessary or desirable to preserve or protect
the Collateral or any portion thereof, to enhance the likelihood or
maximize the amount of repayment by the Borrower of the Loans,
Reimbursement Obligations, Letter of Credit Obligations and other
Obligations or to pay any other amount chargeable to the Borrower
pursuant to the terms of this Agreement, including, without limitation,
costs, fees and expenses as described in subsection 11.4. The Agent
Advances shall be repayable on demand and be secured by the Collateral.
The Agent Advances shall not constitute Loans but shall otherwise
constitute Obligations hereunder. The applicable Agent shall notify
each Lender, the other Agent and the Borrower in writing of each such
Agent Advance, which notice shall include a description of the purpose
of such Agent Advance. Without limitation to its obligations pursuant
to subsection 10.5, each Lender agrees that it shall make available to
the applicable Agent, upon such Agent's demand, in Dollars in
immediately available funds, the amount equal to
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such Lender's Pro Rata Share of each such Agent Advance. If such funds
are not made available to such Agent by such Lender such Agent shall be
entitled to recover such funds, on demand from such Lender together
with interest thereon, for each day from the date such payment was due
until the date such amount is paid to such Agent, at the Federal Funds
Rate for three Business Days and thereafter at the Base Rate.
(b) The Lenders hereby irrevocably authorize the
Collateral Agent, at its option and in its discretion, to release any
Lien granted to or held by the Collateral Agent upon any Collateral
upon termination of the Total Commitments and payment and satisfaction
of all Loans, Reimbursement Obligations, Letter of Credit Obligations,
and all other Obligations which have matured and which the Collateral
Agent has been notified in writing are then due and payable; or
constituting the Disposition of property in compliance with subsection
11.20; or constituting property in which the Loan Parties owned no
interest at the time the Lien was granted or at any time thereafter; or
if approved, authorized or ratified in writing by the Lenders. Upon
request by the Collateral Agent at any time, the Lenders will confirm
in writing the Collateral Agent's authority to release particular types
or items of Collateral pursuant to this subsection 10.8(b).
(c) Without in any manner limiting the Collateral
Agent's authority to act without any specific or further authorization
or consent by the Lenders (as set forth in subsection 10.8(b)), each
Lender agrees to confirm in writing, upon request by the Collateral
Agent, the authority to release Collateral conferred upon the
Collateral Agent under subsection 10.8(b). Upon receipt by the
Collateral Agent of confirmation from the Lenders of its authority to
release any particular item or types of Collateral, and upon prior
written request by any Loan Party, the Collateral Agent shall (and is
hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Liens granted to the
Collateral Agent for the benefit of the Lenders upon such Collateral;
PROVIDED, HOWEVER, that (i) the Collateral Agent shall not be required
to execute any such document on terms which, in the Collateral Agent's
opinion, would expose the Collateral Agent to liability or create any
obligations or entail any consequence other than the release of such
Liens without recourse or warranty, and (ii) such release shall not in
any manner discharge, affect or impair the Obligations or any Lien upon
(or obligations of any Loan Party in respect of) all interests in the
Collateral retained by any Loan Party.
(d) The Collateral Agent shall have no obligation
whatsoever to any Lenders to assure that the Collateral exists or is
owned by the Loan Parties or is cared for, protected or insured or has
been encumbered or that the Lien granted to the Collateral Agent
pursuant to this Agreement has been properly or sufficiently or
lawfully created, perfected, protected or enforced or is entitled to
any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted
or available to the Collateral Agent in this subsection 10.8 or in any
of the Loan Documents, it being understood and agreed that in respect
of the Collateral, or any act, omission or event related thereto, the
Collateral Agent may act in any manner it may deem appropriate, in its
sole discretion, given the Collateral Agent's own interest in the
Collateral as one of the Lenders and that the Collateral Agent shall
have no duty or liability whatsoever to any other Lender.
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(e) The parties hereby agree that no Revolving Credit
Loans shall constitute, or be deemed to constitute, "any part of the
mortgage debt" as such phrase is used in Section 1301 of the New York
Real Property Actions and Proceedings Law.
Section 10.9 COLLATERAL SUB-AGENTS. Each Lender by its
execution and delivery of this Agreement (or any joinder hereto or any
Assignment hereunder) agrees that, in the event it shall hold any monies or
other investments on account of the Borrower or any other Loan Party, such
monies or other investments shall be held in the name and under the control of
such Lender, and such Lender shall hold such monies or other investments as a
collateral sub-agent for the Collateral Agent under this Agreement and the other
Loan Documents. The Borrower by its execution and delivery of this Agreement
hereby consents to the foregoing.
Section 10.10 RIGHTS OF AGENTS. Each of the Agents agree that
any rights granted to the Agents with respect to reviewing, monitoring or
valuing the Collateral or the Borrowing Base shall be performed by a single
Agent, determined by the Agents, without the other Agent duplicating the work
performed by the Agent initially performing such work.
SECTION 11. MISCELLANEOUS.
Section 11.1 NOTICES, ETC. All notices and other
communications provided for hereunder shall be in writing and shall be mailed,
telecopied or delivered, if to any Loan Party, at the following address:
Belden & Blake Corporation
5200 Stoneham Road
North Canton, Ohio 47720
Attention: Joseph M. Vitale, Esq.
Telephone: 330-499-1660
Telecopier: 330-498-5926
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: James F. Munsell, Esq.
Telephone: 212-225-2000
Telecopier: 212-225-3999
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if to the Collateral Agent or the Administrative Agent, to it
at the following address:
Ableco Finance LLC
450 Park Avenue, 28th Floor
New York, New York 10022
Attention: Kevin P. Genda
Telephone: 212-891-2100
Telecopier: 212-891-1541
with a copy to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Frederic L. Ragucci, Esq.
Telephone: 212-756-2000
Telecopier: 212-593-5955
if to the Funding Agent, to it at the following address:
2450 Colorado Avenue
Suite 3000 West
Santa Monica, California 90404
Attention: Business Finance Division Manager
Telephone: 310-453-7300
Telecopier: 310-478-9788
with a copy to:
Brobeck Phleger & Harrison LLP
550 South Hope Street
Los Angeles, California 90071
Attention: John F. Hilson, Esq.
Telephone: 213-745-3700
Telecopier: 213-239-1324
or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this subsection 11.1. All such notices and other
communications shall be effective, (i) if mailed, when received or three days
after deposited in the mails, whichever occurs first, (ii) if telecopied, when
transmitted and confirmation received, or (iii) if delivered, upon delivery,
except that notices to any Agent or the Issuing Lender pursuant to Sections 2
and 3 shall not be effective until received by such Agent or the Issuing Lender,
as the case may be.
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Section 11.2 AMENDMENTS, ETC. (a) No amendment or waiver of
any provision of this Agreement or any Note, and no consent to any departure by
the Borrower or any other Loan Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Agents with the consent of
the Required Lenders, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given PROVIDED,
HOWEVER, that no amendment, waiver or consent shall (i) increase the Commitment
of any Lender, reduce the principal of, or interest on, the Loans or the
Reimbursement Obligations payable to any Lender, reduce the amount of any fee
payable for the account of any Lender, or postpone or extend any date fixed for
any payment of principal of, or interest or fees on, the Loans or Letter of
Credit Obligations payable to any Lender, in each case without the written
consent of any Lender affected thereby, (ii) increase the Total Commitment
without the written consent of each Lender, (iii) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes that is
required for the Lenders or any of them to take any action hereunder, (iv) amend
the definition of "Required Lenders" or "Pro Rata Share", (v) release all or a
substantial portion of the Collateral (except as otherwise provided in this
Agreement and the other Loan Documents and except as permitted pursuant to
subsections 8.6(e) and (h)), subordinate any Lien granted in favor of the
Collateral Agent for the benefit of the Lenders, or release the Borrower or any
Guarantor, (vi) amend, modify or waive subsection 4.4 or this subsection 11.2 of
this Agreement, or (vii) amend the definition of "Borrowing Base", "PV-10
Value", "Proved Developed Producing Reserves", "Proved Developed Non-Producing
Reserves", "Proved Undeveloped Reserves", "Proved Reserves", "NYMEX Strip
Price", "Reserve Report", "Total Reserve Value" and "Basis Differential", in
each case without the written consent of each Lender. Notwithstanding the
foregoing, no amendment, waiver or consent shall, unless in writing and signed
by an Agent, affect the rights or duties of such Agent (but not in its capacity
as a Lender) under this Agreement or the other Loan Documents.
(b) The Funding Agent and Foothill, in its capacity as a
Lender, on the one hand, and the Collateral Agent and the Administrative Agent
and Ableco and its Affiliates, in its capacity as a Lender, on the other hand,
have executed an agreement on the Effective Date pursuant to which the Funding
Agent, Foothill, the Collateral Agent, the Administrative Agent and Ableco and
its Affiliates have agreed, among other things, to certain voting arrangements
relative to matters requiring the approval of the Lenders. The rights and duties
of the Funding Agent, Foothill, the Collateral Agent, and Ableco and its
Affiliates, with respect to such matters, are subject to such Agreement.
Notwithstanding the foregoing, the Borrower may rely on any written consent or
notice given one of by the Agents pursuant to the terms of this Agreement.
Section 11.3 NO WAIVER; REMEDIES, ETC. No failure on the part
of any Agent or any Lender to exercise, and no delay in exercising, any right
hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any right under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Agents and the Lenders provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the Agents
and the Lenders under any Loan Document against any party thereto are not
conditional or contingent on any attempt by the Agents and the Lenders to
exercise any of their rights under any other Loan Document against such party or
against any other Person.
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Section 11.4 EXPENSES; TAXES; ATTORNEYS' FEES. The Borrower
will pay on demand, all costs and expenses incurred by or on behalf of the
Agents (and, in the case of clauses (c) through (m) below, the Lenders),
regardless of whether the transactions contemplated hereby are consummated,
including, without limitation, reasonable out-of-pocket fees, costs, client
charges and expenses of counsel for the Agents (and, in the case of clauses (c)
through (m) below, the Lenders), accounting, engineering, due diligence,
periodic field audits, physical counts, valuations, investigations, searches and
filings, monitoring of assets, appraisals of Collateral, title searches and
reviews, mortgage reviews, environmental assessments, miscellaneous
disbursements, examination, travel, lodging and meals, arising from or relating
to: (a) the negotiation, preparation, execution, delivery, performance and
administration of this Agreement and the other Loan Documents, (including,
without limitation, the preparation of any additional Loan Documents, pursuant
to this Agreement or the review of any of the agreements, instruments and
documents referred to in this Agreement, (b) any requested amendments, waivers
or consents to this Agreement or the other Loan Documents whether or not such
documents become effective or are given, (c) the preservation and protection of
any of the Lenders' rights under this Agreement or the other Loan Documents, (d)
the defense of any claim or action asserted or brought against the Agents or the
Lenders by any Person that arises from or relates to this Agreement, any other
Loan Document, the Agents' or the Lenders' claims against the Borrower and each
other Loan Party, or any and all matters in connection therewith, (e) the
commencement or defense of, or intervention in, any court proceeding arising
from or related to this Agreement or any other Loan Document, (f) the filing of
any petition, complaint, answer, motion or other pleading by the Agents or the
Lenders, or the taking of any action in respect of the Collateral or other
security, in connection with this Agreement or any other Loan Document, (g) the
protection, collection, lease, sale, taking possession of or liquidation of, any
Collateral or other security in connection with this Agreement or any other Loan
Document, (h) any attempt to enforce any Lien or security interest in any
Collateral or other security in connection with this Agreement or any other Loan
Document, (i) any attempt to collect from the Borrower or any other Loan Party,
(j) the receipt by the Agents or the Lenders of any advice from professionals
with respect to any of the foregoing, (k) all liabilities and costs arising from
or in connection with the past, present or future operations of the Borrower and
each other Loan Party involving any damage to real or personal property or
natural resources or harm or injury alleged to have resulted from any Release of
Materials of Environmental Concern on, upon or into such property, (l) any
Environmental Liabilities and Costs incurred in connection with the
investigation, removal, cleanup and/or remediation of any Materials of
Environmental Concern present or arising out of the operations of any facility
of the Borrower and any other Loan Party, or (m) any Environmental Liabilities
and Costs incurred in connection with any Environmental Lien. Without limitation
of the foregoing or any other provision of any Loan Document: (x) the Borrower
agrees to pay all stamp, document, transfer, recording or filing taxes or fees
and similar impositions now or hereafter determined by any Agent or any Lender
to be payable in connection with this Agreement or any other Loan Document, and
the Borrower agrees to save the Agents and the Lenders harmless from and against
any and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such taxes, fees or
impositions, (y) the Borrower agrees to pay all broker fees that may become due
in connection with the transactions contemplated by this Agreement, provided,
that the Agents and the Lenders acknowledge that no such fees are due or owed to
them or their agents as of the Effective Date, and (z) if the Borrower fails to
perform any covenant or agreement contained herein or in any other Loan
Document, any Agent may itself perform or cause performance of such
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covenant or agreement, and the expenses of the such Agent incurred in connection
therewith shall be reimbursed on demand by the Borrower.
Section 11.5 RIGHT OF SET-OFF. Upon the occurrence and during
the continuance of any Event of Default, any Lender may, and is hereby
authorized to, at any time and from time to time, without notice to the Borrower
(any such notice being expressly waived by the Borrower) and to the fullest
extent permitted by law, set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any and all obligations of either now or
hereafter existing under any Loan Document, irrespective of whether or not such
Lender shall have made any demand hereunder or thereunder and although such
obligations may be contingent or unmatured. Each Lender agrees to notify the
Borrower promptly after any such set-off and application made by such Lender
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
Section 11.6 SEVERABILITY. Any provision of this Agreement,
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.
Section 11.7 ASSIGNMENTS AND PARTICIPATIONS.
(a) This Agreement and the Notes shall be binding upon and
inure to the benefit of the Borrower and the other Loan Parties and each Agent
and each Lender and their respective successors and assigns; PROVIDED, HOWEVER,
that each of the Borrower and the other Loan Parties may not assign or transfer
any of their rights hereunder, or under the Notes, without the prior written
consent of each Lender and any such assignment without the Lenders' prior
written consent shall be null and void.
(b) Each Lender may, with the written consent of the
Collateral Agent (which consent is not required for assignments to Affiliates of
Lender), assign to one or more other lenders or other entities, all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Loans made by it, the Notes
held by it and its Pro Rata Share of Letter of Credit Obligations); PROVIDED,
HOWEVER, that (i) if such assignment is not to an Affiliate of such Lender, such
assignment shall be in an amount which is at least $5,000,000 or a multiple of
$1,000,000 in excess thereof (or the remainder of such Lender's Commitment),
(ii) such assignment shall be pro rata in respect of such Lender's Revolving
Credit Commitment and Term Loan Commitments, (iii) the parties to each such
assignment shall execute and deliver to the Collateral Agent, for its
acceptance, an Assignment and Acceptance, together with any Note subject to such
assignment and such parties shall deliver to the Collateral Agent a processing
and recordation fee of $5,000 and (iv) no assignee shall be entitled to
increased costs or additional amounts under subsections 4.5 and 2.8,
respectively, in an amount which is greater than the amount of the increased
costs or additional amounts which the assigning Lender is entitled to receive
thereunder, PROVIDED, HOWEVER, that, in the absence of a continuing Event of
Default, Ableco and its Affiliates shall at all times retain no less than 50% of
the Total Commitment. Upon such execution, delivery and acceptance, from and
after the effective date specified in each Assignment and Acceptance, which
effective date
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shall be at least three Business Days after the delivery thereof to the
Collateral Agent (or such shorter period as shall be agreed to by the Collateral
Agent and the parties to such assignment), (A) the assignee thereunder shall
become a "Lender" hereunder and, in addition to the rights and obligations
hereunder held by it immediately prior to such effective date, have the rights
and obligations hereunder that have been assigned to it pursuant to such
Assignment and Acceptance and (B) the assigning Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(i) By executing and delivering an Assignment and
Acceptance, the assigning Lender and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (A) other than as
provided in such Assignment and Acceptance, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document furnished pursuant hereto; (B) the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Loan Parties or any of their Subsidiaries or the
performance or observance by the Loan Parties of any of their obligations under
this Agreement or any other Loan Document furnished pursuant hereto; (C) such
assignee confirms that it has received a copy of this Agreement and the other
Loan Documents, together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (D) such assignee will, independently and without
reliance upon the Assigning Lender, any Agent or any Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents; (E) such assignee appoints and
authorizes the Agents to take such action as agents on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Agents by the terms thereof, together with such powers as are
reasonably incidental thereto; and (F) such assignee agrees that it will perform
in accordance with their terms all of the obligations which by the terms of this
Agreement and the other Loan Documents are required to be performed by it as a
Lender.
(ii) The Collateral Agent shall maintain, or cause to
be maintained at its offices, a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitments of, and principal amount of the
Loans and Letter of Credit Obligations owing to each Lender from time to time
(the "AGENT REGISTER"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the Agents
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Agent Register shall
be available for inspection by the Borrower and any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(iii) Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee, together with the
Notes subject to such assignment, the Collateral Agent shall, if the Collateral
Agent consents to such assignment and if such Assignment and
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Acceptance has been completed (i) accept such Assignment and Acceptance, (ii)
give prompt notice thereof to the Borrower, (iii) record the information
contained therein in the Agent Register, and (iv) prepare and distribute to each
Lender and the Borrower a revised Schedule 1.1(a) hereto after giving effect to
such assignment, which revised Schedule 1.1(a) shall replace the prior Schedule
1.1(a) and become part of this Agreement.
(iv) A Registered Loan (and the Registered Note, if
any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Note shall expressly so provide). Any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register,
together with the surrender of the Registered Note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such Registered Note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new Registered Notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the Registered Note, if any evidencing the same), the
Agents shall treat the Person in whose name such Loan (and the Registered Note,
if any, evidencing the same) is registered as the owner thereof for the purpose
of receiving all payments thereon and for all other purposes, notwithstanding
notice to the contrary.
(v) In the event that any Lender sells participations
in the Registered Loan, such Lender shall maintain a register on which it enters
the name of all participants in the Registered Loans held by it (the
"PARTICIPANT REGISTER"). A Registered Loan (and the Registered Note, if any,
evidencing the same) may be participated in whole or in part only by
registration of such participation on the Participant Register (and each
Registered Note shall expressly so provide). Any participation of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by the registration of such participation on the Participant
Register.
(vi) Any foreign Person who purchases or is assigned
or participates in any portion of such Loan shall provide the Collateral Agent
(in the case of a purchase or assignment) or the Lender (in the case of a
participation) with a completed Internal Revenue Service Form W-8 (Certificate
of Foreign Status) or a substantially similar form for such purchaser,
participant or any other Affiliate who is a holder of beneficial interests in
the Loan.
(c) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (including, without limitation, all
or a portion of its Commitments, the Loans made by it and its Pro Rata Share of
the Letter of Credit Obligations); PROVIDED, that (i) such Lender's obligations
under this Agreement (including without limitation, its Commitments hereunder)
and the other Loan Documents shall remain unchanged; (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and the Borrower, the Collateral Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents, (iii) a participant shall not be considered a "Lender" for any
purpose under this Agreement or any other Loan Document and (iv) a participant
shall not be entitled to
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require such Lender to take or omit to take any action hereunder except (A)
action directly effecting an extension of the maturity dates or decrease in the
principal amount of the Loans or Letter of Credit Obligations, or (B) action
directly effecting an extension of the due dates or a decrease in the rate of
interest payable on the Loans or the fees payable under this Agreement, or (C)
actions directly effecting a release of all or a substantial portion of the
Collateral or the Borrower or any Guarantor (except as set forth in subsection
10.8 of this Agreement or any Loan Document).
Section 11.8 COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
SECTION 11.9 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN
THE STATE OF NEW YORK.
SECTION 11.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND
VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE
COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
LOAN PARTY HEREBY IRREVOCABLY ACCEPT IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH LOAN PARTY
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT
ITS ADDRESS FOR NOTICES AS SET FORTH IN SECTION 11.1, SUCH SERVICE TO BECOME
EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH LOAN PARTY HEREBY IRREVOCABLY
APPOINTS THE SECRETARY OF STATE OF THE STATE OF NEW YORK AS ITS AGENT FOR
SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE LENDER TO SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
EACH LOAN PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
EACH LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, EACH
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LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 11.11 WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY, THE
AGENTS AND THE LENDERS HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES
OR OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT,
DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN
CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDINGS OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH LOAN
PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF ANY AGENT
OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY AGENT OR ANY
LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK
TO ENFORCE THE FOREGOING WAIVERS. EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THIS AGREEMENT.
Section 11.12 CONSENT BY THE AGENTS AND LENDERS. Except as
otherwise expressly set forth herein to the contrary, if the consent, approval,
satisfaction, determination, judgment, acceptance or similar action (an
"ACTION") of any Agent or any Lender shall be permitted or required pursuant to
any provision hereof or any provision of any other agreement to which the
Borrower and any other Loan Party are parties and to which any Agent or any
Lender has succeeded thereto, such Action shall be required to be in writing and
may be withheld or denied by such Agent or such Lender, in its sole discretion,
with or without any reason, and without being subject to question or challenge
on the grounds that such Action was not taken in good faith.
Section 11.13 NO PARTY DEEMED DRAFTER. Each of the parties
hereto agrees that no party hereto shall be deemed to be the drafter of this
Agreement.
Section 11.14 REINSTATEMENT; CERTAIN PAYMENTS. If any claim is
ever made upon any Agent, any Lender or the Issuing Lender for repayment or
recovery of any amount or amounts received by such Agent, such Lender or the
Issuing Lender in payment or on account of any of the Obligations, such Agent,
such Lender or the Issuing Lender shall give prompt notice of such claim to each
other Agent and Lender and the Borrower, and if such Agent, such Lender or the
Issuing Lender repays all or part of such amount by reason of (i) any judgment,
decree or order of any court or administrative body having jurisdiction over
such Agent, such Lender or the Issuing Lender or any of their property, or (ii)
any good faith settlement or compromise of any such claim effected by such
Agent, such Lender or the Issuing Lender with any such claimant, then and in
such event each Loan Party agrees that (A) any such judgment, decree, order,
settlement or compromise shall be binding upon it notwithstanding the
cancellation of any Note or other instrument evidencing the Obligations or the
other Loan Documents or the termination of this Agreement or the other Loan
Documents, and (B) it shall be and remain liable to such Agent, such Lender or
the Issuing Lender hereunder for the amount so repaid or recovered to the same
extent as
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if such amount had never originally been received by such Agent, such Lender or
the Issuing Lender.
Section 11.15. INDEMNIFICATION. In addition to each Loan
Party's other Obligations under this Agreement, each Loan Party agrees to,
jointly and severally, defend, protect, indemnify and hold harmless each Agent,
each Lender, the Issuing Lender and all of their respective officers, directors,
employees, attorneys, consultants and agents (collectively called the
"INDEMNITEES") from and against any and all losses, damages, liabilities,
obligations, penalties, fees, reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees, costs and expenses) incurred by such
Indemnitees, whether prior to or from and after the Closing Date, whether
direct, indirect or consequential, as a result of or arising from or relating to
or in connection with any of the following: (i) the negotiation, preparation,
execution or performance or enforcement of this Agreement, any other Loan
Document or of any other document executed in connection with the transactions
contemplated by this Agreement, (ii) any Agent's or any Lender's furnishing of
funds to the Borrower or the Issuing Lender's issuing of Letters of Credit for
the account of the Borrower under this Agreement, including, without limitation,
the management of any such Loans, the Reimbursement Obligations or the Letter of
Credit Obligations, (iii) any matter relating to the financing transactions
contemplated by this Agreement or the other Loan Documents or by any document
executed in connection with the transactions contemplated by this Agreement or
the other Loan Documents, or (iv) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto (collectively, the "INDEMNIFIED MATTERS"); PROVIDED, HOWEVER, that
the Loan Parties shall not have any obligation to any Indemnitee under this
subsection 11.15 for any Indemnified Matter caused by the gross negligence or
willful misconduct of such Indemnitee, as determined by a final judgment of a
court of competent jurisdiction. Such indemnification for all of the foregoing
losses, damages, fees, costs and expenses of the Indemnitees are chargeable
against the Loan Account, PROVIDED, FURTHER, that Indemnified Matters described
in subsection 2.8 or 4.5 shall be subject to respective the limitations as set
forth therein. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this subsection 11.15 may be unenforceable because it is
violative of any law or public policy, each Loan Party shall, jointly and
severally, contribute the maximum portion which it is permitted to pay and
satisfy under applicable law, to the payment and satisfaction of all Indemnified
Matters incurred by the Indemnitees. This Indemnity shall survive the repayment
of the Obligations and the discharge of the Liens granted under the Loan
Documents.
Section 11.16 RECORDS. The unpaid principal of and interest on
the Notes, the interest rate or rates applicable to such unpaid principal and
interest, the duration of such applicability, the Commitments, and the accrued
and unpaid fees payable pursuant to subsection 2.6 hereof, including, without
limitation, the Closing Fee, Loan Servicing Fee, the Draw Down Fee, the Unused
Line Fee and the Letter of Credit Fee shall at all times be ascertained from the
records of the Collateral Agent, which shall be conclusive and binding absent
manifest error.
Section 11.17 BINDING EFFECT. This Agreement shall become
effective when it shall have been executed by the Borrower, each Agent and each
Lender and when the conditions precedent set forth in subsection 6.1 hereof have
been satisfied or waived in writing by the Collateral Agent, and thereafter
shall be binding upon and inure to the benefit of the Borrower, each Agent and
each Lender, and their respective successors and assigns, except that the Parent
and the Borrower shall not have the right to assign their rights hereunder or
any interest herein
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without the prior written consent of each Lender, and any assignment by any
Lender shall be governed by subsection 11.7 hereof.
Section 11.18 CONFIDENTIALITY. Each Agent and each Lender
agrees (on behalf of itself and each of its affiliates, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with its customary procedures for handling
confidential information of this nature and in accordance with safe and sound
practices of comparable commercial finance companies, any non-public information
supplied to it by the Loan Parties pursuant to this Agreement or the other Loan
Documents which is identified by the Loan Parties as being confidential at the
time the same is delivered to such Person (and which at the time is not, and
does not thereafter become, publicly available or available to such Person from
another source not known to be subject to a confidentiality obligation to such
Person not to disclose such information), PROVIDED that nothing herein shall
limit the disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel for any Agent or
any Lender, (iii) to examiners, auditors, accountants or Securitization Parties,
(iv) in connection with any litigation to which any Agent or any Lender is a
party or (v) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee or
participant) first agrees, in writing, to be bound by confidentiality provisions
similar in substance to this subsection 11.18. Each Agent and each Lender agrees
that, upon receipt of a request or identification of the requirement for
disclosure pursuant to clause (iv) hereof, it will make reasonable efforts to
keep the Loan Parties informed of such request or identification; PROVIDED that
the each Loan Party acknowledges that each Agent and each Lender may make
disclosure as required or requested by any Governmental Authority or
representative thereof and that each Agent and each Lender may be subject to
review by Securitization Parties or other regulatory agencies and may be
required to provide to, or otherwise make available for review by, the
representatives of such parties or agencies any such non-public information.
Section 11.19 NO NOVATION. This Amended and Restated Credit
Agreement does not extinguish the obligations for the payment of money
outstanding under the Existing Credit Agreement or discharge or release the
Obligations or the Lien or priority of any mortgage, pledge, security agreement
or any other security therefor. Nothing herein contained shall be construed as a
substitution or novation of the obligations outstanding under the Existing
Credit Agreement or instruments securing the same, which shall remain in full
force and effect, except as modified hereby or by instruments executed
concurrently herewith. Nothing expressed or implied in this Amended and Restated
Credit Agreement shall be construed as a release or other discharge of any
Borrower, Guarantor or any other Loan Party under the Existing Credit Agreement
(including the Collateral and Guarantee Agreement and the Parent Pledge
Agreements) from any of its obligations and liabilities as a "Borrower",
"Guarantor" or "Loan Party" thereunder. The Borrower and each other Loan Party
hereby (i) confirms and agrees that each Loan Document to which it is a party
is, and shall continue to be, in full force and effect and is hereby ratified
and confirmed in all respects except that on and after the Effective Date of
this Amended and Restated Credit Agreement all references in any such Loan
Document to "the Credit Agreement", "thereto", "thereof", "thereunder" or words
of like import referring to the Existing Credit Agreement shall mean the
Existing Credit Agreement as amended and restated by this Amended and Restated
Credit Agreement; and (ii) confirms and agrees that to the extent that any such
Loan Document purports to assign or pledge to the Collateral Agent for the
benefit
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of the Lenders, or to grant to the Collateral Agent for the benefit of the
Lenders a security interest in or lien on, any collateral as security for the
Obligations of the Borrower, the Guarantors or any other Loan Party from time to
time existing in respect of the Existing Credit Agreement and the Loan
Documents, such pledge, assignment and/or grant of the security interest or lien
is hereby ratified and confirmed in all respects.
Section 11.20. INTEREST. It is the intention of the parties
hereto that the Agents and each Lender shall conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby or by any
other Loan Document would be usurious as to the Agents or any Lender under laws
applicable to it (including the laws of the United States of America and the
State of New York or any other jurisdiction whose laws may be mandatorily
applicable to the Agents or such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in this Agreement or any other Loan Document or any agreement entered into in
connection with or as security for the Obligations, it is agreed as follows: (i)
the aggregate of all consideration which constitutes interest under law
applicable to the Agents or any Lender that is contracted for, taken, reserved,
charged or received by the Agents or such Lender under this Agreement or any
other Loan Document or agreements or otherwise in connection with the
Obligations shall under no circumstances exceed the maximum amount allowed by
such applicable law, any excess shall be canceled automatically and if
theretofore paid shall be credited by the Agents or such Lender on the principal
amount of the Obligations (or, to the extent that the principal amount of the
Obligations shall have been or would thereby be paid in full, refunded by the
Agents or such Lender, as applicable, to the Borrower); and (ii) in the event
that the maturity of the Obligations is accelerated by reason of any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to the Agents or any Lender may never include more than the
maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically by
the Agents or such Lender, as applicable, as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by the Agents or such
Lender, as applicable, on the principal amount of the Obligations (or, to the
extent that the principal amount of the Obligations shall have been or would
thereby be paid in full, refunded by the Agents or such Lender to the Borrower).
All sums paid or agreed to be paid to the Agents or any Lender for the use,
forbearance or detention of sums due hereunder shall, to the extent permitted by
law applicable to the Agents or such Lender, be amortized prorated, allocated
and spread throughout the full term of the Loans until payment in full so that
the rate or amount of interest on account of any Loans hereunder does not exceed
the maximum amount allowed by such applicable law. If at an time and from time
to time (i) the amount of interest payable to the Agents or any Lender on any
date shall be computed at the Highest Lawful Rate applicable to the Agents or
such Lender pursuant to this subsection 11.20 and (ii) in respect of any
subsequent interest computation period the amount of interest otherwise payable
to the Agents or such Lender would be less than the amount of interest payable
to the Agents or such Lender computed at the Highest Lawful Rate applicable to
the Agents or such Lender, then the amount of interest payable to the Agents or
such Lender in respect of such subsequent interest computation period shall
continue to be computed at the Highest Lawful Rate applicable to the Agents or
such Lender until the total amount of interest payable to the Agents or such
Lender shall equal the total amount of interest which would have been payable to
the Agents or such Lender if the total amount of interest had been computed
without giving effect to this subsection 11.20.
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For purposes of this subsection 11.20, the term "applicable
law" shall mean that law in effect from time to time and applicable to the loan
transaction between the Borrower, on the one hand, and the Agents and the
Lenders, on the other, that lawfully permits the charging and collection of the
highest permissible, lawful non-usurious rate of interest on such loan
transaction and this Agreement, including laws of the State of New York and, to
the extent controlling, laws of the United States of America.
The right to accelerate the maturity of the Obligations does
not include the right to accelerate any interest that has not accrued as of the
date of acceleration.
Section 11.21 RELEASES OF COLLATERAL.
(a) Upon the request of the Borrower made in connection with
any Disposition permitted pursuant to subsections 8.6(e) and (h), PROVIDED that
the Net Cash Proceeds of any such Disposition are deposited into a Collection
Account or a Lockbox, the Collateral Agent shall, at the expense of the
Borrower, release, without recourse, representation and warranty, its Lien on
any such Collateral. Notwithstanding anything to the contrary, the Collateral
Agent shall not have any obligation to release its Lien on any such Collateral
if the Collateral Agent determines, in its sole discretion exercised reasonably,
that the conditions of this clause (a) of subsection 11.21 have not been
satisfied.
(b) The Borrower may exercise its rights under this subsection
11.21 at any time during the term of this Agreement in connection with a
Disposition permitted under subsections 8.6(e) or (h) by delivering to the
Collateral Agent, not less than ten (10) Business Days prior to the date of the
proposed Disposition, a certificate substantially in the form of Exhibit G
hereto (the "RELEASE CERTIFICATE") executed by a Responsible Officer of the
Borrower which shall refer to this subsection 11.21 and any document that the
Borrower is requesting the Collateral Agent to sign in connection with any such
proposed release, to be accompanied by a counterpart of any such document
executed and acknowledged by all parties thereto (if any) other than the
Collateral Agent (and in form for execution by the Collateral Agent). The
Release Certificate shall certify (i) that as of the date of the Release
Certificate, both immediately before and immediately after giving effect to such
requested release (x) no Default or Event of Default has occurred and is
continuing both immediately before and immediately after giving effect to such
Disposition and (y) the sum of the aggregate principal amount of the Loans and
the aggregate Letter of Credit Obligations do not exceed the then current
Borrowing Base, (ii) the amount of such Net Cash Proceeds to be received
together with, in the case of any Disposition or series of related Dispositions
resulting in the receipt by the Borrower or its Subsidiaries of cash proceeds in
excess of $1,000,000, a reasonably detailed statement of all cash proceeds of
property or assets owed to third parties, (iii) that such Net Cash Proceeds have
been, or, as a condition to the requested release, will be, deposited into a
Collection Account or a Lockbox, (iv) prior to or simultaneously with such
requested release by the Borrower and the delivery by the Collateral Agent of
any documents relating thereto, the Funding Agent shall have received such
payment, (v) if such Collateral constitutes Oil and Gas Properties, immediately
prior to and after giving effect to such release, (x) if the Total Reserve Value
is less than $150,000,000, Oil and Gas Properties of the Borrower and the
Eligible Guarantors representing at least 85% of the PV-10 Value of the total
Oil and Gas Properties of the Borrower and the Eligible Guarantors included in
the most recently delivered Reserve Report are and will be subject to a
perfected first
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priority security interest in favor of the Collateral Agent and (y) the value of
such property to be released pursuant to this subsection 11.2, together will all
other Oil and Gas Properties of the Borrower and the Eligible Guarantors
released pursuant to this subsection 11.21 during the six-month period
commencing January 1 and ending June 30 or commencing July 1 and ending December
31, does not and will not exceed $5,000,000.
SECTION 12. MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS
RECEIVABLE AND OTHER COLLATERAL.
Section 12.1 COLLECTION OF ACCOUNTS RECEIVABLE; MANAGEMENT OF
COLLATERAL. (a) On or prior to the date which is forty-five (45) days after the
Effective Date, the Borrower shall have assisted the Funding Agent, and shall
have caused the establishment of (and during the term of this Agreement, shall
continue to assist in maintaining), (i) one or more lockboxes in the name of the
Funding Agent and identified on Schedule 12.1 hereto (collectively, the
"LOCKBOXES") with the financial institutions set forth on Schedule 12.1 hereto
or such other financial institutions selected by the Borrower and acceptable to
the Funding Agent in its sole discretion (each being referred to as a "LOCKBOX
BANK"), and (ii) an account (a "COLLECTION ACCOUNT" and, collectively, the
"COLLECTION ACCOUNTS") in the name of the Collateral Agent with each Lockbox
Bank. The Borrower shall irrevocably instruct their Account Debtors, with
respect to Accounts Receivable of the Borrower, to remit all payment to be made
by checks or other drafts to the Lockboxes and to remit all payments to be made
by wire transfer or by Automated Clearing House, Inc. payments as directed by
the Funding Agent and shall instruct each Lockbox Bank to deposit all amounts
received in its Lockbox to the Collection Account at such Lockbox Bank on the
day received or, if such day is not a Business Day, on the next succeeding
Business Day. Until the Funding Agent has advised the Borrower to the contrary
after the occurrence and during the continuance of an Event of Default, the
Borrower may and will enforce, collect and receive all amounts owing on the
Accounts Receivable of the Borrower for the Funding Agent's benefit and on the
Funding Agent's behalf, but at the Borrower's expense; such privilege shall
terminate, at the election of any Agent, upon the occurrence and during the
continuance of any Event of Default. All checks, drafts, notes, money orders,
acceptances, cash and other evidences of Indebtedness received directly by the
Borrower from any Account Debtor and all Net Cash Proceeds, received pursuant to
an event described in subsection 2.5(c)(iv), as the case may be, shall be held
by the Borrower in trust for the Agents and the Lenders and upon receipt be
deposited by the Borrower in original form and no later than the next Business
Day after receipt thereof into a Collection Account; PROVIDED, that, in the
absence of a continuing Event of Default, the Borrower may retain and not
deposit into a Collection Account or a Lockbox not more than $100,000 of such
collections in any calendar month. The Borrower shall not commingle such
collections with the Borrower's own funds or the funds of any Subsidiary or
Affiliate of the Borrower or with the proceeds of any assets not included in the
Collateral. The Funding Agent shall charge the Loan Account on the last day of
each month with one (1) collection days for all funds to be sent to the Payment
Office to be credited to the Funding Agent's Account. The effect of such "one
collection days" being charged in the preceding sentence is the equivalent of
charging one Business Day of interest on such collections. Prior to the
occurrence and continuance of an Event of Default, at least 73% of all funds,
and during the existence of an Event of Default, all funds, received in the
Collection Account shall be sent by wire transfer or Automated Clearing House
Inc. payment to the Payment Office which will be credited to the Funding Agent's
Account for application at the end
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of each Business Day to reduce the then principal balance of the Revolving
Credit Loans, and, if no Revolving Credit Loans are outstanding, the Term Loans,
conditional upon final payment to the Funding Agent. No checks, drafts or other
instrument received by the Funding Agent shall constitute final payment to the
Funding Agent unless and until such instruments have actually been collected.
(b) After the occurrence and during the continuance of an
Event of Default, any Agent may send a notice of assignment and/or notice of the
Lenders' security interest to any and all Account Debtors or third parties
holding or otherwise concerned with any of the Collateral, and thereafter the
Agents shall have the sole right to collect the Accounts Receivable and/or take
possession of the Collateral and the books and records relating thereto. The
Borrower shall not, without prior written consent of the Agents, grant any
extension of time of payment of any Account Receivable, compromise or settle any
Account Receivable for less than the full amount thereof, release, in whole or
in part, any Person or property liable for the payment thereof, or allow any
credit or discount whatsoever thereon, except, in the absence of a continuing
Event of Default.
(c) The Borrower hereby appoints each Agent or its designee on
behalf of such Agent as the Borrower's attorney-in-fact with power exercisable
during the continuance of any Event of Default to endorse the Borrower's name
upon any notes, acceptances, checks, drafts, money orders or other evidences of
payment relating to the Accounts Receivable, to sign the Borrower's name on any
invoice or bill of lading relating to any of the Accounts Receivable, drafts
against Account Debtors with respect to Accounts Receivable, assignments and
verifications of Accounts Receivable and notices to Account Debtors with respect
to Accounts Receivables, to send verification of Accounts Receivable, and, to
notify the Postal Service authorities to change the address for delivery of mail
addressed to the Borrower to such address as such Agent may designate and to do
all other acts and things necessary to carry out this Agreement. All acts of
said attorney or designee are hereby ratified and approved, and said attorney or
designate shall not be liable for any acts of omission or commission (other than
acts or omissions constituting gross negligence or willful misconduct), or for
any error of judgment or mistake of fact or law; this power being coupled with
an interest is irrevocable until all of the Loans, Reimbursement Obligations,
Letter of Credit Obligations and other Obligations under the Loan Documents are
paid in full and all of the Loan Documents are terminated.
(d) Nothing herein contained shall be construed to constitute
any Agent as agent of the Borrower for any purpose whatsoever, and the Agents
shall not be responsible or liable for any shortage, discrepancy, damage, loss
or destruction of any part of the Collateral wherever the same may be located
and regardless of the cause thereof (other than from acts or omissions of the
Agents constituting gross negligence or willful misconduct as determined by a
final judgment of a court of competent jurisdiction). The Agents shall not,
under any circumstance or in any event whatsoever, have any liability for any
error or omission or delay of any kind occurring in the settlement, collection
or payment of any of the Accounts Receivable or any instrument received in
payment thereof or for any damage resulting therefrom (other than acts or
omissions of the Agents constituting gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction). The
Agents, by anything herein or in any assignment or otherwise, do not assume any
of the obligations under any
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contract or agreement assigned to any Agent and shall not be responsible in any
way for the performance by the Borrower of any of the terms and conditions
thereof.
(e) If any Account Receivable includes a charge for any tax
payable to any Governmental Authority, the Agents are hereby authorized (but in
no event obligated) in its discretion to pay the amount thereof to the proper
taxing authority for the Borrower's account and to charge the Borrower therefor.
The Borrower shall notify the Agents if any Account Receivable includes any
taxes due to any such Governmental Authority and, in the absence of such notice,
the Agents shall have the right to retain the full proceeds of such Account
Receivable and shall not be liable for any taxes that may be due by reason of
the sale and delivery creating such Account Receivable.
(f) Notwithstanding any other terms set forth in the Loan
Documents, the rights and remedies of the Agents and the Lenders herein
provided, and the obligations of the Loan Parties set forth herein, are
cumulative of, may be exercised singly or concurrently with, and are not
exclusive of, any other rights, remedies or obligations set forth in any other
Loan Document or as provided by law.
Section 12.2 ACCOUNTS RECEIVABLE DOCUMENTATION. At such
intervals as the Agents may require, execute and deliver confirmatory written
assignments of the Accounts Receivable to the Agents and furnish such further
schedules and/or information as any Agent may require relating to the Accounts
Receivable, including, without limitation, sales invoices or the equivalent,
credit memos issued, remittance advices, reports and copies of deposit slips and
copies of original shipping or delivery receipts for all merchandise sold. In
addition, the Borrower shall notify the Agents of any non-compliance in respect
of the representations, warranties and covenants contained in subsection 12.3.
The items to be provided under this subsection 12.2 are to be in form reasonably
satisfactory to the Agents and are to be executed and delivered to the Agents
from time to time solely for their convenience in maintaining records of the
Collateral. The Borrower's failure to give any of such items to the Agents shall
not affect, terminate, modify or otherwise limit the Collateral Agent's Lien on
the Collateral. The Borrower shall not re-date any invoice or sale or make sales
on extended dating beyond that customary in the Borrower's industry, and shall
not re-bill any Accounts Receivable without promptly disclosing the same to the
Agents and providing the Agents with copy of such re-billing, identifying the
same as such. If the Borrower becomes aware of anything materially detrimental
to any of the Borrower's customers' credit, the Borrower will promptly advise
the Agents thereof.
Section 12.3 STATUS OF ACCOUNTS RECEIVABLE AND OTHER
COLLATERAL. With respect to Collateral of any Loan Party at the time the
Collateral becomes subject to the Collateral Agent's Lien, each Loan Party
covenants, represents and warrants: (a) such Loan Party shall be the sole owner,
free and clear of all Liens except in the favor of the Collateral Agent for the
benefit of the Lenders or otherwise permitted hereunder, and fully authorized to
sell, transfer, pledge and/or grant a security interest in each and every item
of said Collateral; (b) each Account Receivable shall be a good and valid
account representing an undisputed bona fide indebtedness incurred or an amount
indisputably owed by the Account Debtor therein named, for a fixed sum as set
forth in the invoice relating thereto with respect to any absolute sale and
delivery upon the specified terms of goods sold or services rendered by the such
Loan Party; (c) no Account Receivable shall be subject to any defense, offset,
counterclaim, discount or allowance except as
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may be stated in the invoice relating thereto, discounts and allowances as may
be customary in such Loan Party's business and as otherwise disclosed to the
Agents, and each Account Receivable will be paid when due; (d) none of the
transactions underlying or giving rise to any Account Receivable shall violate
any applicable state or federal laws or regulations, and all documents relating
thereto shall be legally sufficient under such laws or regulations and shall be
legally enforceable in accordance with their terms; (e) no agreement under which
any deduction or offset of any kind, other than normal trade discounts, may be
granted or shall have been made by such Loan Party at or before the time such
Accounts Receivable is created; (f) all agreements, instruments and other
documents relating to any Account Receivable shall be true and correct and in
all material respects what they purport to be; (g) all signatures and
endorsements that appear on all material agreements, instruments and other
documents relating to Account Receivable shall be genuine and all signatories
and endorsers shall have full capacity to contract; (h) such Loan Party shall
maintain books and records pertaining to said Collateral in such detail, form
and scope as the Agents shall reasonably require; (i) such Loan Party shall
immediately notify the Agents if any accounts arise out of contracts with the
United States or any department, agency, or instrumentality thereof and will
execute any instruments and take any steps required by the Agents in order that
all monies due or to become due under any such contract shall be assigned to the
Agents and notice thereof given to the United States Government under the
Federal Assignment of Claims Act; (j) such Loan Party will, immediately upon
learning thereof, report to the Agents any material loss or destruction of, or
substantial damage to, any of the Collateral, and any other matters affecting
the value, enforceability or collectibility of any of the Collateral; (k) if any
amount payable under or in connection with any Account Receivable is evidenced
by a promissory note or other instrument, such promissory note or instrument
shall be immediately pledged, endorsed, assigned and delivered to the Collateral
Agent for the benefit of the Lenders as additional Collateral; (l) such Loan
Party shall not re-date any invoice or sale or make sales on extended dating
beyond that which is customary in the ordinary course of its business and in the
industry; and (m) such Loan Party is not and shall not be entitled to pledge the
Agents' or the Lenders' credit on any purchases or for any purpose whatsoever.
Section 12.4. COLLATERAL CUSTODIAN. Upon the occurrence and
during the continuance of any Default or Event of Default, the Collateral Agent
may at any time and from time to time employ and maintain on the premises of any
Loan Party a custodian selected by the Collateral Agent who shall have full
authority to do all acts necessary to protect the Collateral Agent's and the
Lenders' interests. Each Loan Party hereby agrees to, and to cause its
Subsidiaries to, cooperate with any such custodian and to do whatever the
Collateral Agent may reasonably request to preserve the Collateral. All costs
and expenses incurred by the Collateral Agent by reason of the employment of the
custodian shall be the responsibility of the Borrower and charged to the Loan
Account.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
BELDEN & BLAKE CORPORATION
By: /s/ Robert W. Peshek
---------------------------------
Title: Vice President, Finance
and Chief Financial Officer
Name: Robert W. Peshek
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ABLECO FINANCE LLC, as Collateral Agent and
Administrative Agent
By: /s/ Kevin P. Genda
---------------------------------
Title: Sr. Vice President
FOOTHILL CAPITAL CORPORATION, as
Funding Agent
By: /s/ Rhonda B. Foreman
---------------------------------
Title: Senior Vice President
ABLECO FINANCE LLC, as Lender
By: /s/ Kevin P. Genda
---------------------------------
Title: Sr. Vice President
FOOTHILL CAPITAL CORPORATION, as Lender
By: /s/ Rhonda B. Foreman
---------------------------------
Title: Senior Vice President
FOOTHILL INCOME TRUST, L.P., as Lender,
By: FIT GP, LLC,
its general partner
By: /s/ Dennis R. Ascher
---------------------------------
Title: Manager Member
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