Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1 Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: S-1/A Pre-Effective Amendment to Registration Statement HTML 3.40M
(General Form)
21: CORRESP ¶ Comment-Response or Other Letter to the SEC HTML 118K
2: EX-1.(A) Underwriting Agreement HTML 301K
3: EX-4.(D) Instrument Defining the Rights of Security Holders HTML 15K
4: EX-4.(E) Instrument Defining the Rights of Security Holders HTML 15K
5: EX-5 Opinion re: Legality HTML 19K
6: EX-8 Opinion re: Tax Matters HTML 80K
7: EX-10 Material Contract HTML 54K
8: EX-10.(H)(1) Material Contract HTML 30K
9: EX-10.(H)(2) Material Contract HTML 26K
10: EX-10.(H)(3) Material Contract HTML 48K
11: EX-10.(O) Material Contract HTML 52K
12: EX-10.(Q) Material Contract HTML 121K
13: EX-10.(R) Material Contract HTML 37K
14: EX-10.(S) Material Contract HTML 76K
15: EX-10.(T) Material Contract HTML 33K
16: EX-10.(U) Material Contract HTML 35K
17: EX-10.(W) Material Contract HTML 1.05M
18: EX-10.(X) Material Contract HTML 55K
19: EX-23.(A) Consent of Experts or Counsel HTML 12K
20: EX-24 Power of Attorney HTML 16K
THIS
REVOLVING CREDIT AGREEMENT dated as of December 18, 2006, among ATLAS ENERGY
OPERATING COMPANY, LLC, a Delaware limited liability company (the “Borrower”);
AER
PIPELINE CONSTRUCTION, INC., a Delaware corporation (“AER
Construction”);
AIC,
LLC, a Delaware limited liability company (“AIC”);
ATLAS
AMERICA, LLC, a Pennsylvania limited liability company (“Atlas
PA”);
ATLAS
ENERGY RESOURCES, LLC, a Delaware limited liability company (“AER”);
ATLAS
ENERGY OHIO, LLC, an Ohio limited liability company (“Atlas
Ohio”);
ATLAS
NOBLE, LLC, a Delaware limited liability company (“Atlas
Noble”);
ATLAS
RESOURCES, LLC, a Pennsylvania limited liability company (“Atlas
Resources”);
REI-NY, LLC, a Delaware limited liability company (“REI”);
RESOURCE ENERGY, LLC, a Delaware limited liability company (“Resource
Energy”);
RESOURCE WELL SERVICES, LLC, a Delaware limited liability company (“RWS”);
and
VIKING RESOURCES LLC, a Pennsylvania limited liability company (“Viking”)
(AER
Construction, AIC, Atlas PA, AER, Atlas Ohio, Atlas Noble, Atlas Resources,
REI,
Resource Energy, RWS, and Viking collectively, the “Guarantors”;
the
Borrower and the Guarantors collectively, the “Obligors”);
each
of the lenders that is a signatory hereto or which becomes a signatory hereto
as
provided in Section
12.06
(individually, together with its successors and assigns, a “Lender”
and,
collectively, the “Lenders”);
WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders
(in
such capacity, together with its successors in such capacity the “Administrative
Agent”),
BANK
OF AMERICA, N.A., AND COMPASS BANK, as co-syndication agents, BANK OF OKLAHOMA,
N.A., U.S. BANK, NATIONAL ASSOCIATION, and BNP PARIBAS, as co-documentation
agents, and WACHOVIA BANK, NATIONAL ASSOCIATION, as issuing bank (in such
capacity, together with its successors in such capacity, the “Issuing
Bank”).
The
Borrower has requested that the Lenders provide a revolving credit facility,
and
the Lenders are willing to do so on the terms and conditions set forth herein.
In
consideration of the premises, the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:
ARTICLE
I
Definitions
and Accounting Matters
Section
1.01 Terms
Defined Above.
As used
in this Agreement, the terms “Administrative Agent,”“AER,”“AER Construction,”“AIC,”“Atlas Noble,”“Atlas Ohio,”“Atlas PA,”“Atlas Resources,”“Borrower,”“Guarantors,”“Issuing Bank,”“Lender,”“Lenders,”“Obligors,”“REI,”“Resource
Energy,”“RWS,” and “Viking” shall have the meanings indicated above.
Section
1.02 Certain
Defined Terms.
As used
herein, the following terms shall have the following meanings (all terms defined
in this Article
I
or in
other provisions of this Agreement in the singular to have equivalent meanings
when used in the plural and vice
versa):
AAI
means
Atlas America, Inc., a Delaware corporation
AAI
Credit Agreement
means
the Amended and Restated Credit Agreement dated as of April 27, 2006, among
AAI,
as borrower, the lenders party thereto, and Wachovia Bank, National Association,
as administrative agent, as amended prior to the date hereof.
Additional
Costs
shall
have the meaning assigned such term in Section
5.01(a).
Adjusted
LIBOR
shall
mean, with respect to any LIBOR Loan, a rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Administrative Agent
to
be equal to the quotient of (i) LIBOR for such Loan for the Interest Period
for
such Loan divided by (ii) 1 minus the Reserve Requirement for such Loan for
such
Interest Period.
AEM
shall
mean Atlas Energy Management, Inc., a Delaware corporation.
Affected
Loans
shall
have the meaning assigned such term in Section
5.04.
Affiliate
of any
Person shall mean (i) any Person directly or indirectly controlled by,
controlling or under common control with such first Person, (ii) any director
or
officer of such first Person or of any Person referred to in clause (i) above
and (iii) if any Person in clause (i) above is an individual, any member of
the
immediate family (including parents, spouse and children) of such individual
and
any trust whose principal beneficiary is such individual or one or more members
of such immediate family and any Person who is controlled by any such member
or
trust. For purposes of this definition, any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or 10% or more
of
the partnership or other ownership interests of any other Person (other than
as
a limited partner of such other Person) will be deemed to “control”
(including, with its correlative meanings, “controlled
by”
and
“under
common control with”)
such
corporation or other Person.
Agreement
shall
mean this Credit Agreement, as the same may from time to time be further amended
or supplemented.
Aggregate
Maximum Revolving Credit Amounts
at any
time shall equal the sum of the Maximum Revolving Credit Amounts of the Lenders
(initially, $250,000,000), as the same may be reduced pursuant to Section
2.03(d).
Aggregate
Revolving Credit Commitments
at any
time shall equal the amount calculated in accordance with Section
2.03.
Aggregate
Revolving Credit Commitments Utilization shall
mean at any time, an amount equal to the quotient of (i) the aggregate principal
amount of Loans outstanding plus LC Exposure, divided by (ii) the Aggregate
Revolving Credit Commitments.
Applicable
Commitment Fee Rate shall
mean the per annum percentage set forth at the appropriate intersection in
the
table shown below, based on the Aggregate Revolving Credit Commitments
Utilization as in effect from time to time:
Each
change in the Applicable Commitment Fee Rate resulting from a change in the
Aggregate Revolving Credit Commitments Utilization shall take effect on the
day
such change in the Aggregate Revolving Credit Commitments Utilization occurs.
Applicable
Lending Office
shall
mean, for each Lender and for each Type of Loan, the lending office of such
Lender (or an Affiliate of such Lender) designated for such Type of Loan on
the
signature pages hereof or such other offices of such Lender (or of an Affiliate
of such Lender) as such Lender may from time to time specify to the
Administrative Agent and the Borrower as the office by which its Loans of such
Type are to be made and maintained.
Applicable
Margin
shall
mean the applicable per annum percentage set forth at the appropriate
intersection in the table shown below, based on the Borrowing Base Utilization
as in effect from time to time:
Applicable
Margin
Borrowing
Base Utilization
LIBOR
Loans
Base
Rate Loans
Less
than or equal to 25%
1.00
%
0.00
%
Greater
than 25%,
but
less than or equal to 50%
1.25
%
0.25
%
Greater
than 50%,
but
less than or equal to 75%
1.50
%
0.50
%
Greater
than 75%
1.75
%
0.75
%
Each
change in the Applicable Margin resulting from a change in the Borrowing Base
Utilization shall take effect on the day such change in the Borrowing Base
Utilization occurs.
Assignment
shall
have the meaning assigned such term in Section
12.06(b).
Atlas
America E&P Operations shall
have the meaning assigned such term in the Registration Statement.
Base
Rate
shall
mean, with respect to any Base Rate Loan, for any day, a rate per annum equal
to
the higher of (i) the Federal Funds Rate for any such day plus 1/2
of 1% or
(ii) the Prime Rate for such day. Each change in any interest rate provided
for
herein based upon the Base Rate resulting from a change in the Base Rate shall
take effect at the time of such change in the Base Rate.
Base
Rate Loans
shall
mean Loans that bear interest at rates based upon the Base Rate.
Borrowing
Base
shall
mean at any time an amount equal to the amount determined in accordance with
Section
2.08.
Borrowing
Base Deficiency
shall
mean, and occur at any time when, the amount by which the aggregate outstanding
principal amount of the Loans plus the LC Exposure exceeds the Borrowing Base,
whether as the result of a redetermination, a scheduled reduction, or otherwise.
Borrowing
Base Period
shall
mean (i) the period from the Closing Date until March 14, 2007, and (ii) each
six-month period commencing March 15 and September 15 thereafter.
Borrowing
Base Utilization
shall
mean at any time, an amount equal to the quotient of (i) the aggregate principal
amount of Loans outstanding plus LC Exposure, divided by (ii) the Borrowing
Base.
Business
Day
shall
mean any day other than a day on which commercial banks are authorized or
required to close in Texas or North Carolina and, where such term is used in
the
definition of “Quarterly
Date”
or
if
such day relates to a borrowing or continuation of, a payment or prepayment
of
principal of or interest on, or a conversion of or into, or the Interest Period
for, a LIBOR Loan or a notice by the Borrower with respect to any such borrowing
or continuation, payment, prepayment, conversion or Interest Period, any day
which is also a day on which dealings in Dollar deposits are carried out in
the
London interbank market.
Change
of Control
means
the occurrence of any of the following events: (a) after the Closing Date,
any
Person or two or more Persons acting as a group shall acquire beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act, and including holding proxies to vote for
the
election of directors other than proxies held by AER’s management or their
designees to be voted in favor of persons nominated by AER’s Board of Directors)
of 35% or more of the outstanding voting units of AER, measured by voting power
(including both common units and any preferred units entitling the holders
thereof to vote with the holders of common units in elections for directors
of
AER), (b) the Borrower shall fail beneficially to own, directly or indirectly,
85% of the outstanding shares of voting capital stock of any Wholly Owned
Subsidiary now or hereafter existing that is a Guarantor, (c) AER shall fail
beneficially to own, directly or indirectly, 100% of the membership interests
of
Borrower, or (d) AAI and/or one or more of its directly or indirectly
wholly-owned subsidiaries ceases to own at least 51% of the equity of AEM.
Closing
Date
shall
mean the date upon which the conditions precedent for initial funding set forth
in Section
6.01
are
satisfied.
Code
shall
mean the Internal Revenue Code of 1986, as amended from time to time and any
successor statute.
Commitment
shall
mean for any Lender, its Revolving Credit Commitment.
Consolidated
Interest Coverage Ratio
shall
mean the ratio of (i) EBITDA for such Person and its Consolidated Subsidiaries
on a consolidated basis for the fiscal quarter ending on such date to (ii)
cash
interest payments made for such Person and its Consolidated Subsidiaries on
a
consolidated basis for such fiscal quarter.
Consolidated
Net Income
shall
mean with respect to such Person and its Consolidated Subsidiaries, for any
period, the aggregate of the net income (or loss) of such Person and its
Consolidated Subsidiaries after allowances for taxes for such period, determined
on a consolidated basis in accordance with GAAP; provided that there shall
be
excluded from such net income (to the extent otherwise included therein) the
following: (i) the net income of any other entity in which such Person or any
Consolidated Subsidiary has an interest (which interest does not cause the
net
income of such other entity to be consolidated with the net income of such
Person and its Consolidated Subsidiaries in accordance with GAAP), except to
the
extent of the amount of dividends or distributions actually paid in such period
by such other entity to such Person or to a Consolidated Subsidiary, as the
case
may be; (ii) the net income (but not loss) of any Consolidated Subsidiary to
the
extent that the declaration or payment of dividends or similar distributions
or
transfers or loans by that Consolidated Subsidiary is not at the time permitted
by operation of the terms of its charter or any agreement, instrument or
Governmental Requirement applicable to such Consolidated Subsidiary, or is
otherwise restricted or prohibited in each case determined in accordance with
GAAP; (iii) the net income (or loss) of any entity acquired in a
pooling-of-interests transaction for any period prior to the date of such
transaction; (iv) any gains or losses attributable to
discontinued operations,
in an aggregate amount not to exceed $5,000,000 or to Property sales not in
the
ordinary course of business, and (v) the cumulative effect of a change in
accounting principles and any gains or losses attributable to writeups or write
downs of assets.
Consolidated
Subsidiaries shall
mean each Subsidiary of a Person (whether now existing or hereafter created
or
acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of such Person in accordance with
GAAP; provided,
however,
that
the Consolidated Subsidiaries of Borrower shall not include the Unrestricted
Entities, except with respect to the financial statements delivered from time
to
time by Borrower pursuant to Sections
8.01 (a)
and
(b).
Debt
shall
mean, for any Person the sum of the following (without duplication): (i) all
obligations of such Person for borrowed money or evidenced by bonds, debentures,
notes or other similar instruments (including principal, interest, fees and
charges); (ii) all obligations of such Person (whether contingent or otherwise)
in respect of bankers’ acceptances, letters of credit, surety or other bonds and
similar instruments; (iii) all obligations of such Person to pay the deferred
purchase price of Property or services (other than for borrowed money); (iv)
all
obligations under leases which shall have been, or should have been, in
accordance with GAAP, recorded as capital leases in respect of which such Person
is liable (whether contingent or otherwise); (v) all obligations under operating
leases which require such Person or its Affiliate to make payments over the
term
of such lease, including payments at termination, based on the purchase price
or
appraisal value of the Property subject to such lease plus a marginal interest
rate, and used primarily as a financing vehicle for, or to monetize, such
Property; (vi) all Debt (as described in the other clauses of this definition)
and other obligations of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person; (vii) all Debt (as described
in the other clauses of this definition) and other obligations of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the debtor or obligations of others; (viii) all obligations
or
undertakings of such Person to maintain or cause to be maintained the financial
position or covenants of others or to purchase the Debt or Property of others;
(ix) obligations to deliver goods or services including Hydrocarbons in
consideration of advance payments; (x) obligations to pay for goods or services
whether or not such goods or services are actually received or utilized by
such
Person; (xi) any capital stock of such Person in which such Person has a
mandatory obligation to redeem such stock; (xii) any Debt of a Subsidiary for
which such Person is liable either by agreement or because of a Governmental
Requirement; (xiii) the undischarged balance of any production payment created
by such Person or for the creation of which such Person directly or indirectly
received payment; and (xiv) all obligations of such Person under Hedging
Agreements.
Default
shall
mean an Event of Default or an event which with notice or lapse of applicable
grace period or both would become an Event of Default.
Dollars
and
$
shall
mean lawful money of the United States of America.
EBITDA
shall
mean, for any period, the sum of Consolidated Net Income for such period plus
the following expenses or charges to the extent deducted from Consolidated
Net
Income in such period: interest, income taxes, depreciation, depletion and
amortization.
Engineering
Reports
shall
have the meaning assigned such term in Section
2.08.
Environmental
Laws
shall
mean any and all Governmental Requirements pertaining to health or the
environment in effect in any and all jurisdictions in which any Obligor or
any
Subsidiary is conducting or at any time has conducted business, or where any
Property of any Obligor or any Subsidiary is located, including without
limitation, the Oil Pollution Act of 1990 (“OPA”),
the
Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 (“CERCLA”),
as
amended,
the Federal Water Pollution Control Act, as amended, the Occupational Safety
and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act
of
1976 (“RCRA”),
as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986,
as
amended, the Hazardous Materials
Transportation Act, as amended, and other environmental conservation or
protection laws. The term “oil”
shall
have the meaning specified in OPA, the terms “hazardous
substance”
and
“release”
or
“threatened
release”
have
the meanings specified in CERCLA, and the terms “solid
waste”
and
“disposal”
or
“disposed”
have
the meanings specified in RCRA; provided,
however,
that
(i) in the event either OPA, CERCLA or RCRA is amended so as to broaden the
meaning of any term defined thereby, such broader meaning shall apply subsequent
to the effective date of such amendment and (ii) to the extent the laws of
the
state in which any Property of any Obligor or any Subsidiary is located
establish a meaning for “oil,”
“hazardous
substance,”
“release,”
“solid
waste”
or
“disposal”
which
is broader than that specified in either OPA, CERCLA or RCRA, such broader
meaning shall apply.
ERISA
shall
mean the Employee Retirement Income Security Act of 1974, as amended from time
to time and any successor statute.
ERISA
Affiliate
shall
mean each trade or business (whether or not incorporated) which together with
the Borrower or any Subsidiary would be deemed to be a “single
employer”
within
the meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or
(o)
of section 414 of the Code.
ERISA
Event
shall
mean (i) a “Reportable
Event”
described in Section 4043 of ERISA and the regulations issued thereunder, (ii)
the withdrawal of the Borrower, any Subsidiary or any ERISA Affiliate from
a
Plan during a plan year in which it was a “substantial
employer”
as
defined in Section 4001(a)(2) of ERISA, (iii) the filing of a notice of intent
to terminate a Plan or the treatment of a Plan amendment as a termination under
Section 4041 of ERISA, (iv) the institution of proceedings to terminate a Plan
by the PBGC or (v) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
Event
of Default
shall
have the meaning assigned such term in Section
10.01.
Excepted
Liens
shall
mean: (i) Liens for taxes, assessments or other governmental charges or levies
not yet due or which are being contested in good faith by appropriate action
and
for which adequate reserves have been maintained; (ii) Liens in connection
with
worker’s compensation, unemployment insurance or other social security, old age
pension or public liability obligations not yet due or which are being contested
in good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (iii) operators’ Liens in favor of Persons
other than Obligors, Subsidiaries and their Affiliates, vendors’, carriers’,
warehousemen’s, repairmen’s, mechanics’, workmen’s, materialmen’s, construction
or other like Liens arising by operation of law in the ordinary course of
business or incident to the exploration, development, operation and maintenance
of Oil and Gas Properties or statutory landlord’s liens, each of which is in
respect of obligations that have not been outstanding more than 90 days or
which
are being contested in good faith by appropriate proceedings and for which
adequate reserves have been maintained in accordance with GAAP; (iv) any Liens
reserved in leases by lessors or farmout agreements by farmors for royalties
and
for compliance with the terms of the farmout agreements or leases in the case
of
leasehold estates, to the extent that any such Lien referred to in this clause
does not materially impair the use of the Property covered by such Lien for
the
purposes for which such Property is held by any Obligor or any Subsidiary or
materially impair the value of such Property subject thereto; (v) encumbrances
(other than to secure the payment of borrowed money or the deferred purchase
price of Property or services), easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any rights of way or other
Property of any Obligor or any Subsidiary for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the
transportation of gas, oil,
or
timber, and other like purposes, or for the joint or common use of real estate,
rights of way, facilities and equipment, and defects, irregularities, zoning
restrictions and deficiencies in title of any rights of way or other Property
which in the aggregate do not materially impair the use of such rights of way
or
other Property for the purposes of which such rights of way and other Property
are held by any Obligor or any Subsidiary or materially impair the value of
such
Property subject thereto; (vi) deposits of cash or securities to secure the
performance of bids, trade contracts, leases, statutory obligations and other
obligations of a like nature incurred in the ordinary course of business; and
(vii) Liens permitted by the Security Instruments.
Federal
Funds Rate
shall
mean, for any day, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) equal to the weighted average of the rates on overnight
federal funds transactions with a member of the Federal Reserve System arranged
by federal funds brokers on such day, as published by the Federal Reserve Bank
of New York on the Business Day next succeeding such- day, provided that (i)
if
the date for which such rate is to be determined is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on
the
next preceding Business Day as so published on the next succeeding Business
Day,
and (ii) if such rate is not so published for any day, the Federal Funds Rate
for such day shall be the average rate charged to the Administrative Agent
on
such day on such transactions as determined by the Administrative Agent.
Fee
Letter
shall
mean that certain letter agreement from Wachovia Bank, National Association
and
Wachovia Capital Markets, LLC to the Borrower dated October 26, 2006, concerning
certain fees in connection with this Agreement and any agreements or instruments
executed in connection therewith, as the same may be amended or replaced from
time to time.
Financial
Statements shall
mean: (i) from the Closing Date until financial statements and reports have
been
delivered pursuant to
Section 8.1(a) or
Section
8.1(b),
as
applicable, the audited balance sheet of AER at July 14, 2006, and the unaudited
consolidated statements of income, stockholders’ equity and cash flow of Atlas
America E&P Operations for the nine months ended September 30, 2006; or (ii)
thereafter, the most-recently available financial statements and reports
described in Section
8.1(a) and
Section
8.1(b).
Funded
Debt
shall
mean, for any Person the sum of the following (without duplication): (i) all
obligations of such Person for borrowed money or evidenced by bonds, debentures,
notes or other similar instruments (including principal, interest, fees and
charges); (ii) all obligations of such Person (whether contingent or otherwise)
in respect of bankers’ acceptances, letters of credit, surety or other bonds and
similar instruments; (iii) all obligations of such Person to pay the deferred
purchase price of Property or services (other than for borrowed money); (iv)
all
obligations under leases which shall have been, or should have been, in
accordance with GAAP, recorded as capital leases in respect of which such Person
is liable (whether contingent or otherwise); (v) obligations to pay for goods
or
services whether or not such goods or services are actually received or utilized
by such Person; (vi) any capital stock of such Person in which such Person
has a
mandatory obligation to redeem such stock; (vii) the undischarged balance of
any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment; and (viii) all obligations
of
such Person under Hedging Agreements.
GAAP
shall
mean generally accepted accounting principles in the United States of America
in
effect from time to time.
Governmental
Authority
shall
include the country, the state, county, city and political subdivisions in
which
any Person or such Person’s Property is located or which exercises valid
jurisdiction over any such Person or such Person’s Property, and any court,
agency, department, commission, board, bureau or instrumentality of any of
them
including monetary authorities which exercises valid
jurisdiction over any such Person or such Person’s Property. Unless otherwise
specified, all references to Governmental Authority herein shall mean a
Governmental Authority having jurisdiction over, where applicable, any Obligor,
their Subsidiaries or any of their Property or the Administrative Agent, any
Lender or any Applicable Lending Office.
Governmental
Requirement
shall
mean any law, statute, code, ordinance, order, determination, rule, regulation,
judgment, decree, injunction, franchise, permit, certificate, license,
authorization or other directive or requirement (whether or not having the
force
of law), including, without limitation, Environmental Laws, energy regulations
and occupational, safety and health standards or controls, of any Governmental
Authority.
Guarantor
shall
mean each of the parties named as “Guarantors”
in
the
opening paragraph of this Agreement and each of the parties that from time
to
time become a party to a Guaranty Agreement pursuant to the terms of this
Agreement.
Guaranty
Agreement
shall
mean, collectively, (i) an agreement executed by a Guarantor substantially
in
the form of Exhibit
G (or
such
other agreement in form and substance satisfactory to the Administrative Agent)
guarantying, unconditionally, payment of the Indebtedness, together with (ii)
any amendment, modification, supplement, restatement, ratification, or
reaffirmation of any Guaranty Agreement made in accordance with the Loan
Documents.
Hedging
Agreements
shall
mean any commodity, interest rate or currency swap, cap, floor, collar, forward
agreement or other exchange or protection agreements or any option with respect
to any such transaction.
Highest
Lawful Rate
means,
as of a particular date, the highest non-usurious rate of interest, if any,
permitted from day to day by applicable law. To the extent Texas law is
applicable, the Lenders hereby notify and disclose to the Borrower that, for
purposes of Texas Finance Code §303.001, as it may from time to time be amended,
the “applicable
ceiling”
shall
be the “weekly
ceiling”
from
time to time in effect as limited by Texas Finance Code §303.009; provided,
however,
that to
the extent permitted by applicable law, the Lender reserves the right to change
the “applicable
ceiling”
from
time to time by further notice and disclosure to the Borrower.
Hydrocarbon
Interests
shall
mean all rights, titles, interests and estates now or hereafter acquired in
and
to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous
hydrocarbon leases, mineral fee interests, overriding royalty and royalty
interests, net profit interests and production payment interests, including
any
reserved or residual interests of whatever nature.
Hydrocarbons
shall
mean oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined
or separated therefrom.
Indebtedness
shall
mean any and all amounts owing or to be owing by the Borrower or any Obligor
to
the Administrative Agent, the Issuing Bank and/or the Lenders or any Affiliates
of Lenders in connection with the Loan Documents, any Letter of Credit
Agreements, any Hedging Agreements now or hereafter arising between the Borrower
or any Obligor and the Administrative Agent, the Issuing Bank, any Lender or
its
Affiliate and permitted by the terms of this Agreement, and all renewals,
extensions and/or rearrangements of any of the foregoing.
Indemnified
Parties
shall
have the meaning assigned such term in Section
12.03(a)(ii).
Indemnity
Matters
shall
mean any and all actions, suits, proceedings (including any investigations,
litigation or inquiries), claims, demands and causes of action made or
threatened against a Person and, in connection therewith, all losses,
liabilities, damages
(including, without limitation, consequential damages) or reasonable costs
and
expenses of any kind or nature whatsoever incurred by such Person whether caused
by the sole or concurrent negligence of such Person seeking indemnification.
Initial
Borrowing Base
shall
have the meaning assigned such term in Section
2.08(a).
Initial
Funding
shall
mean the funding of the initial Loans or issuance of the initial Letters of
Credit upon satisfaction of the conditions set forth in Sections
6.01
and
6.02.
Initial
Public Offering
shall
mean the initial offering or issuance of equity interests by AER pursuant to
the
Registration Statement.
Initial
Reserve Report
shall
mean collectively the reports prepared by Borrower, copies of which have been
delivered to the Administrative Agent, dated as of September 30, 2006, based
on
the reports dated as of March 31, 2006, prepared by Wright & Company, Inc.
in connection with the AAI Credit Agreement.
Intercompany
Debt
shall
mean Funded Debt that is owed by an Obligor to another Obligor.
Intercompany
Notes shall
mean the promissory notes executed to evidence the Intercompany Debt.
Interest
Period
shall
mean, with respect to any LIBOR Loan, the period commencing on the date such
LIBOR Loan is made and ending on the numerically corresponding day in the first,
second, third, or sixth calendar month thereafter, as the Borrower may select
as
provided in Section
2.02,
except
that each Interest Period which commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in
the
appropriate subsequent calendar month) shall end on the last Business Day of
the
appropriate subsequent calendar month. Notwithstanding the foregoing: (i) no
Interest Period may end after the Revolving Credit Termination Date; (ii) no
Interest Period for any LIBOR Loan may end after the due date of any
installment, if any, provided for in Section
3.01
to the
extent that such LIBOR Loan would need to be prepaid prior to the end of such
Interest Period in order for such installment to be paid when due; (iii) each
Interest Period which would otherwise end on a day which is not a Business
Day
shall end on the next succeeding Business Day (or, if such next succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day); and (iv) no Interest Period shall have a duration of less than
one month and, if the Interest Period for any LIBOR Loans would otherwise be
for
a shorter period, such Loans shall not be available hereunder.
Issuing
Bank
shall
have the meaning assigned to such term in the introductory paragraph to this
Agreement, or any other Lender agreed to between the Borrower and the
Administrative Agent to issue Letters of Credit.
LC
Commitment
at any
time shall mean $50,000,000.
LC
Exposure
at any
time shall mean the difference between (i) the aggregate face amount of all
undrawn and uncancelled Letters of Credit plus
(ii) the
aggregate of all amounts drawn under all Letters of Credit and not yet
reimbursed.
Letter
of Credit Agreements
shall
mean the written agreements with the Issuing Bank, as issuing lender for any
Letter of Credit, executed in connection with the issuance by the Issuing Bank
of the Letters of Credit, such agreements to be on the Issuing Bank’s customary
form for letters of credit of comparable amount and purpose as from time to
time
in effect or as otherwise agreed to by the Borrower and the Issuing Bank.
Letters
of Credit
shall
mean the stand-by letters of credit issued pursuant to Section
2.01(b)
and all
reimbursement obligations pertaining to any such letters of credit, and
“Letter
of Credit”
shall
mean any one of the Letters of Credit and the reimbursement obligations
pertaining thereto.
LIBOR
shall
mean the rate per annum (rounded upwards, if necessary, to the nearest 1/100
of
1%) of interest determined on the basis of the rate for deposits in Dollars
for
a period equal to the applicable Interest Period commencing on the first day
of
such Interest Period appearing on Dow Jones Market Service Page 3750 as of
11:00
a.m. (London time) two (2) Business Days prior to the first day of the
applicable Interest Period. In the event that such rate does not appear on
Dow
Jones Market Service Page 3750, “LIBOR”
shall
be determined by the Administrative Agent to be the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) at which deposits in Dollars
are offered by leading reference banks in the London interbank market to the
Administrative Agent at approximately 11:00 a.m. (London time) two Business
Days
prior to the first day of the applicable Interest Period for a period equal
to
such Interest Period and in an amount substantially equal to the amount of
the
applicable Loan.
LIBOR
Loans
shall
mean Loans the interest rates on which are determined on the basis of rates
referred to in the definition of “Adjusted
LIBOR”.
Lien
shall
mean any interest in Property securing an obligation owed to, or a claim by,
a
Person other than the owner of the Property, whether such interest is based
on
the common law, statute or contract, and whether such obligation or claim is
fixed or contingent, and including but not limited to (i) the lien or security
interest arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes or (ii) production payments and the like payable out of Oil
and Gas Properties. The term “Lien”
shall
include reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purposes of this Agreement, each
Obligor or any Subsidiary shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement, or leases
under a financing lease or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person in a transaction
intended to create a financing.
Loan
Documents
shall
mean this Agreement, the Notes, all Letters of Credit, all Letter of Credit
Agreements, the Fee Letter, the Security Instruments, and the Guaranty
Agreements.
Loans
shall
mean the loans as provided for by Section
2.01(a)
or any
Continuations or Conversions thereof.
Majority
Lenders
shall
mean, at any time while no Loans are outstanding, Lenders having at least
sixty-six and two-thirds percent (66 2/3%) of the Aggregate Revolving Credit
Commitments and, at any time while Loans are outstanding, Lenders holding at
least sixty-six and two-thirds percent (66 2/3%) of the outstanding aggregate
principal amount of the Loans (without regard to any sale by a Lender of a
participation in any Loan under Section
12.06(c)).
Management
Agreement
shall
mean the Management Agreement dated of even date herewith between AER and AEM.
Material
Adverse Effect
shall
mean any material and adverse effect on (i) the assets, liabilities, financial
condition, business, operations or affairs of the Borrower and the Guarantors
taken as a whole, or (ii) the ability of the Borrower or any Guarantor to carry
out its business as at the Closing Date (excluding the dissolution or
liquidation of any Guarantor pursuant to a merger to the extent permitted
under Section
9.09)
or meet
its obligations under the Loan Documents on a timely basis, or (iii) the
Administrative Agent’s and the Lenders’ interests in the collateral securing the
Indebtedness, or the Administrative Agents’ or the Lenders’ ability to enforce
their rights and remedies under this Agreement or any other Loan Document,
at
law or in equity.
Material
Agreements
shall
have the meaning assigned to such term in Section
7.23.
Maximum
Revolving Credit Amount
shall
mean, as to each Lender, the dollar amount of such Lender’s Percentage Share of
the Aggregate Maximum Revolving Credit Amount (as the same may be reduced
pursuant to Section
2.03(d)
pro rata
to each Lender based on its Percentage Share), as modified from time to time
to
reflect any assignments permitted by Section
12.06(b).
Mortgage
shall
mean any one of the mortgages listed on Exhibit
D
hereto,
and Mortgages
means
all of them.
Mortgaged
Property
shall
mean the Property owned by the Obligors and which is subject to the Liens
existing and to exist under the terms of the Security Instruments.
Multiemployer
Plan
shall
mean a Plan defined as such in Section 3(37) or 4001(a)(3) of ERISA.
Notes
shall
mean the Notes provided for by Section
2.06,
together with any and all renewals, extensions for any period, increases,
rearrangements, substitutions or modifications thereof.
Oil
and Gas Properties
shall
mean 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) which may affect all or
any
portion of the Hydrocarbon Interests; all operating agreements, contracts and
other agreements which relate to any of the Hydrocarbon Interests or the
production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests; all Hydrocarbons in and under and
which may be produced and saved or attributable to the Hydrocarbon Interests,
including all oil in tanks, the lands covered thereby 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 manner appertaining, belonging, affixed or incidental to
the
Hydrocarbon Interests; and all Properties, rights, titles, interests and estates
described or referred to above, including any and all Property, real or
personal, now owned or hereinafter acquired and situated upon, used, held for
use or useful in connection with the operating, working or development of any
of
such Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment or other personal property which may be on such premises for the
purpose of drilling a well or for other similar temporary uses) and including
any and all oil wells, gas wells, injection wells or other wells, buildings,
structures, fuel separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, tanks and tank batteries, fixtures,
valves, fittings, machinery and parts, engines, boilers, meters, apparatus,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, surface leases, rights-of-way, easements and servitudes together
with
all additions, substitutions, replacements, accessions and attachments to any
and all of the foregoing.
Oil
and Gas Properties Collateral Value shall
mean the collateral value of the Oil and Gas Properties as determined by the
Lenders in accordance with the procedures set forth under
Section 2.08.
Other
Taxes
shall
have the meaning assigned such term in Section
4.06(b).
Ownership
Report
shall
mean a report prepared by the Borrower on a well by well basis reflecting the
working and net revenue interests for each Obligor, and the gross working
interest and gross revenue interests for each Partnership and such other
information reasonably requested by Lender in form attached hereto as
Schedule
7.10.
Partnerships
shall
mean such partnerships listed on Schedule
7.14
and such
other partnerships which are principally engaged in the acquisition and
development of Oil and Gas Properties as may be wholly or partially owned
directly or indirectly by any Obligor from time to time hereafter.
PBGC
shall
mean the Pension Benefit Guaranty Corporation or any entity succeeding to any
or
all of its functions.
Percentage
Share
shall
mean the percentage of the Aggregate Revolving Credit Commitment to be provided
by a Lender under this Agreement, as modified from time to time to reflect
any
assignments permitted by Section
12.06(b).
Permitted
Merger shall
mean such merger or consolidation as is permitted under Section
9.09.
Person
shall
mean any individual, corporation, company, voluntary association, partnership,
joint venture, trust, unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of entity.
Plan
shall
mean any employee pension benefit plan, as defined in Section 3(2) of ERISA,
which (i) is currently or hereafter sponsored, maintained or contributed to
by
the Borrower, any Subsidiary or an ERISA Affiliate or (ii) was at any time
during the preceding six calendar years sponsored, maintained or contributed
to,
by the Borrower, any Subsidiary or an ERISA Affiliate.
Post-Default
Rate
shall
mean, in respect of any principal of any Loan or any other amount payable by
the
Borrower under this Agreement or any other Loan Document, a rate per annum
equal
to two percent (2%) per annum above the Base Rate as in effect from time to
time
plus the Applicable Margin (if any), but in no event to exceed the Highest
Lawful Rate.
Prime
Rate
shall
mean the rate of interest from time to time announced publicly by the
Administrative Agent as its prime commercial lending rate. Such rate is set
by
the Administrative Agent as a general reference rate of interest, taking into
account such factors as the Administrative Agent may deem appropriate, it being
understood that many of the Administrative Agent’s commercial or other loans are
priced in relation to such rate, that it is not necessarily the lowest or best
rate actually charged to any customer and that the Administrative Agent may
make
various commercial or other loans at rates of interest having no relationship
to
such rate.
Principal
Office
shall
mean the principal office of the Administrative Agent, presently located at
1001
Fannin, Suite 2255, Houston, Texas77002-6709.
Property
shall
mean any interest in any kind of property or asset, whether real, personal
or
mixed, moveable or immoveable, tangible or intangible.
Quarterly
Dates
shall
mean the first day of each January, April, July, and October in each year,
the
first of which shall be April 1, 2007; provided,
however,
that if
any such day is not a Business Day, such Quarterly Date shall be the next
succeeding Business Day.
RAI
shall
mean Resource America, Inc., a Delaware corporation.
Redetermination
Date
shall
mean the date that the redetermined Borrowing Base becomes effective subject
to
the notice requirements specified in Section
2.08(b)
both for
scheduled redeterminations and unscheduled redeterminations.
Registration
Statement
means
the Form S-1 Registration Statement filed by AER with the SEC as Registration
No. 333-136094, as amended.
Regulation
D
shall
mean Regulation D of the Board of Governors of the Federal Reserve System (or
any successor), as the same may be amended or supplemented from time to time.
Regulatory
Change
shall
mean, with respect to any Lender, any change after the Closing Date in any
Governmental Requirement (including Regulation D) or the adoption or making
after such date of any interpretations, directives or requests applying to
a
class of lenders (including such Lender or its Applicable Lending Office) of
or
under any Governmental Requirement (whether or not having the force of law)
by
any Governmental Authority charged with the interpretation or administration
thereof.
Required
Payment
shall
have the meaning assigned such term in Section
4.04.
Reserve
Report
shall
mean a report, in form and substance satisfactory to the Administrative Agent,
setting forth, as of each July 1 or January 1, immediately prior to the
commencement of each Borrowing Base Period, as applicable (or such other date
in
the event of an unscheduled redetermination); (i) the oil and gas reserves
attributable to all of the Obligors’ Oil and Gas Properties whether owned
directly or indirectly by such Person and expressly including such reserves
attributable to each Obligor’s net ownership in the Partnerships’ Oil and Gas
Properties 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, based upon the pricing assumptions consistent with SEC
reporting requirements at the time and (ii) such other information as the
Administrative Agent may reasonably request.
Reserve
Requirement
shall
mean, for any Interest Period for any LIBOR Loan, the average maximum rate
at
which reserves (including any marginal, supplemental or emergency reserves)
are
required to be maintained during such Interest Period under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against “Eurocurrency
liabilities”
(as
such term is used in Regulation D). Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves required
to
be maintained by such member banks by reason of any Regulatory Change against
(i) any category of liabilities which includes deposits by reference to which
LIBOR is to be determined as provided in the definition of “LIBOR”
or
(ii)
any category of extensions of credit or other assets which include a LIBOR
Loan.
Responsible
Officer
shall
mean, as to any Person, the Chief Executive Officer, the President or any Vice
President of such Person and, with respect to financial matters, the term
“Responsible
Officer”
shall
include the Chief Financial Officer of such Person. Unless otherwise specified,
all references to a Responsible Officer herein shall mean a Responsible Officer
of the Borrower.
Revolving
Credit Commitment
shall
mean, for any Lender, its obligation to make Loans and participate in the
issuance of Letters of Credit as provided in Section
2.01(b)
up to
the lesser of (i) such Lender’s Maximum Revolving Credit Amount and (ii) such
Lender’s Percentage Share of the then effective Borrowing Base.
Revolving
Credit Termination Date
shall
mean the earliest to occur of (i) the fifth anniversary date of the Closing
Date, (ii) the date that the Commitments are terminated pursuant to Section
10.02,
and
(iii) the date that the Commitments are fully terminated pursuant to
Section
2.03(d).
Scheduled
Redetermination Date
shall
have the meaning assigned such term in Section
2.08(b).
SEC
shall
mean the Securities and Exchange Commission or any successor Governmental
Authority.
Security
Agreement
shall
mean, collectively, (i) an agreement executed by an Obligor substantially in
the
form of Exhibit
H
(or such
other agreement in form and substance satisfactory to the Administrative Agent)
pursuant to which such Obligor pledges and assigns the collateral named therein
as security for repayment of the Indebtedness, together with (ii) any amendment,
modification, supplement, restatement, ratification, or reaffirmation of any
Security Agreement made in accordance with the Loan Documents.
Security
Instruments
shall
mean the agreements or instruments described or referred to in Exhibit
D,
and any
and all other agreements or instruments now or hereafter executed and delivered
by the Obligors or any other Person (other than participation or similar
agreements between any Lender and any other lender or creditor with respect
to
any Indebtedness pursuant to this Agreement) in connection with, or as security
for the payment or performance of, the Notes, the Guarantees, the Hedge
Agreements, this Agreement, or reimbursement obligations under the Letters
of
Credit, as such agreements may be amended, supplemented or restated from time
to
time.
Special
Entity
shall
mean any joint venture, limited liability company or partnership, general or
limited partnership or any other type of partnership or company other than
a
corporation in which the Borrower or one or more of its other Subsidiaries
is a
member, owner, partner or joint venturer and owns, directly or indirectly,
at
least a majority of the equity of such entity or controls such entity, but
excluding any tax partnerships that are not classified as partnerships under
state law. For purposes of this definition, any Person which owns directly
or
indirectly an equity investment in another Person which allows the first Person
to manage or elect managers who manage the normal activities of such second
Person will be deemed to “control”
such
second Person (e.g.
a sole
general partner controls a limited partnership).
Subsidiary
shall
mean (i) any corporation of which at least a majority of the outstanding shares
of stock having by the terms thereof ordinary voting power to elect a majority
of the board of directors of such corporation (irrespective of whether or not
at
the time stock of any other class or classes of such corporation shall have
or
might have voting power by reason of the happening of any contingency) is at
the
time directly or indirectly owned or controlled by the Borrower or one or more
of its Subsidiaries or by the Borrower and one or more of its Subsidiaries
and
(ii) any Special Entity.
Taxes
shall
have the meaning assigned such term in Section
4.06(a).
Transfer
shall
mean any sale, assignment, farm-out, conveyance or other transfer of any Oil
and
Gas Property, or any interest in any Oil and Gas Property (including, without
limitation, any working interest, overriding royalty interest, production
payments, net profits interest, royalty interest, or mineral fee interest)
or in
any Partnership, except for (i) the sale of Hydrocarbons in the ordinary course
of business on a current basis, or (ii) the sale or transfer of equipment in
the
ordinary course of business that is no longer necessary for the business of
any
Obligor or is contemporaneously replaced by equipment of at least comparable
value and use.
Type
shall
mean, with respect to any Loan, a Base Rate Loan or a LIBOR Loan.
Unrestricted
Entities
shall
mean Subsidiaries of the Borrower designated as Unrestricted
Entities
by the
Borrower and approved by Majority Lenders. As of the Closing Date, the
Unrestricted Entities are each of the Subsidiaries marked with an asterisk
on
Schedule
7.15
hereto.
Wholly
Owned Subsidiary
shall
mean a Subsidiary for which all of the outstanding shares of stock or other
equity of such entity is owned directly or indirectly by Borrower or one of
Borrower’s Wholly Owned Subsidiaries.
Section
1.03 Accounting
Terms and Determinations.
Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as
to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a
basis
consistent with the audited financial statements of the Borrower referred to
in
Section
7.02
(except
for changes concurred with by the Borrower’s independent public accountants).
ARTICLE
II
Commitments
Section
2.01 Loans
and Letters of Credit.
(a)
Loans.
Each
Lender severally agrees, on the terms and conditions of this Agreement, to
make
loans to the Borrower during the period from and including (i) the Closing
Date
or (ii) such later date that such Lender becomes a party to this Agreement
as
provided in Section
12.06(b),
to and
up to, but excluding, the Revolving Credit Termination Date in an aggregate
principal amount at any one time outstanding up to, but not exceeding, the
amount of such Lender’s Revolving Credit Commitment as then in effect;
provided,
however,
that
the aggregate principal amount of all such Loans by all Lenders hereunder at
any
one time outstanding together with the LC Exposure shall not exceed the lesser
of (i) the Borrowing Base and (ii) the Aggregate Maximum Revolving Credit
Amounts. Subject to the terms of this Agreement, during the period from the
Closing Date to and up to, but excluding, the Revolving Credit Termination
Date,
the Borrower may borrow, repay and reborrow the amount described in this
Section
2.01(a).
(b)
Letters
of Credit.
During
the period from and including the Closing Date to, but excluding, five (5)
Business Days prior to the Revolving Credit Termination Date, the Issuing Bank,
as issuing bank for the Lenders, agrees to extend credit for the account of
any
Obligor at any time and from time to time by issuing, renewing, extending or
reissuing Letters of Credit; provided
however,
the LC
Exposure at any one time outstanding shall not exceed the lesser of (i) the
LC
Commitment or (ii) the Aggregate Revolving Credit Commitments, as then in
effect, minus the aggregate principal amount of all Loans then outstanding.
The
Lenders shall participate in such Letters of Credit according to their
respective Percentage Shares. Each of the Letters of Credit shall (i) be issued
by the Issuing Bank, (ii) contain such terms and provisions as are reasonably
required by the Issuing Bank, (iii) be for the account of such Obligor, and
(iv)
expire not later than the earlier of (A) twelve months from the date of issuance
of such Letter of Credit and (B) five (5) Business Days before the Revolving
Credit Termination Date.
(c)
Limitation
on Types of Loans.
Subject
to the other terms and provisions of this Agreement, at the option of the
Borrower, the Loans may be Base Rate Loans or LIBOR Loans; provided
that,
without
the prior written consent of the Majority Lenders, no more than eight LIBOR
Loans may be outstanding at any time.
Section
2.02 Borrowings,
Continuations and Conversions, Letters of Credit.
(a)
Borrowings.
The
Borrower shall give the Administrative Agent (which shall promptly notify the
Lenders) advance notice as hereinafter provided of each borrowing hereunder,
which shall specify (i) the aggregate amount of such borrowing, (ii) the Type
and (iii)
the
date (which shall be a Business Day) of the Loans to be borrowed, and (iv)
(in
the case of LIBOR Loans) the duration of the Interest Period therefor.
(b)
Minimum
Amounts.
If a
borrowing consists in whole or in part of LIBOR Loans, such LIBOR Loans shall
be
in amounts of at least $500,000 or any whole multiple of $250,000 in excess
thereof. If a borrowing consists in whole or in part of Base Rate Loans, such
Base Rate Loans shall be in amounts of at least $500,000 or integral multiples
of $250,000 in excess thereof.
(c)
Notices.
All
borrowings, continuations and conversions shall require advance written notice
to the Administrative Agent (which shall promptly notify the Lenders) in the
form of Exhibit
B
(or
telephonic notice promptly confirmed by such a written notice), which in each
case shall be irrevocable, from the Borrower to be received by the
Administrative Agent not later than 12:00 p.m. Charlotte, North Carolina time
at
least one Business Day prior to the date of each Base Rate Loan borrowing and
three Business Days prior to the date of each LIBOR Loan borrowing, continuation
or conversion. Without in any way limiting the Borrower’s obligation to confirm
in writing any telephonic notice, the Administrative Agent may act without
liability upon the basis of telephonic notice believed by the Administrative
Agent in good faith to be from the Borrower prior to receipt of written
confirmation. In each such case, the Borrower hereby waives the right to dispute
the Administrative Agent’s record of the terms of such telephonic notice except
in the case of gross negligence or willful misconduct by the Administrative
Agent.
(d)
Continuation
Options.
Subject
to the provisions made in this Section
2.02(d),
the
Borrower may elect to continue all or any part of any LIBOR Loan beyond the
expiration of the then current Interest Period relating thereto by giving
advance notice as provided in Section
2.02(c)
to the
Administrative Agent (which shall promptly notify the Lenders) of such election,
specifying the amount of such Loan to be continued and the Interest Period
therefor. In the absence of such a timely and proper election, the Borrower
shall be deemed to have elected to convert such LIBOR Loan to a Base Rate Loan
pursuant to Section
2.02(e).
All or
any part of any LIBOR Loan may be continued as provided herein, provided that
(i) any continuation of any such Loan shall be (as to each Loan as continued
for
an applicable Interest Period) in amounts of at least $500,000 or any whole
multiple of $250,000 in excess thereof and (ii) no Default shall have occurred
and be continuing. If a Default shall have occurred and be continuing, each
LIBOR Loan shall be converted to a Base Rate Loan on the last day of the
Interest Period applicable thereto.
(e)
Conversion
Options.
The
Borrower may elect to convert all or any part of any LIBOR Loan on the last
day
of the then current Interest Period relating thereto to a Base Rate Loan by
giving advance notice to the Administrative Agent (which shall promptly notify
the Lenders) of such election. Subject to the provisions made in this
Section
2.02(e),
the
Borrower may elect to convert all or any part of any Base Rate Loan at any
time
and from time to time to a LIBOR Loan by giving advance notice as provided
in
Section
2.02(c)
to the
Administrative Agent (which shall promptly notify the Lenders) of such election.
All or any part of any outstanding Loan may be converted as provided herein,
provided that (i) any conversion of any Base Rate Loan into a LIBOR Loan shall
be (as to each such Loan into which there is a conversion for an applicable
Interest Period) in amounts of at least $500,000 or any whole multiple of
$250,000 in excess thereof and (ii) no Default shall have occurred and be
continuing. If a Default shall have occurred and be continuing, no Base Rate
Loan may be converted into a LIBOR Loan.
(f)
Advances.
Not
later than 12:00 p.m. Charlotte, North Carolina time on the date specified
for
each the borrowing hereunder, each Lender shall make available the amount of
the
Loan to be made by it on such date to the Administrative Agent, to an account
which the Administrative Agent shall specify, in immediately available funds,
for the account of the Borrower. The amounts so received
by the Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower by depositing the same, in
immediately available funds, in an account of the Borrower, designated by the
Borrower and maintained at the Principal Office.
(g)
Letters
of Credit.
The
Borrower shall give the Issuing Bank (which shall promptly notify the Lenders
of
such request and their Percentage Share of such Letter of Credit) advance notice
to be received by the Issuing Bank not later than 12:00 p.m. Charlotte, North
Carolina time not less than three Business Days prior thereto of each request
for the issuance, and at least ten Business Days prior to the date of the
renewal or extension, of a Letter of Credit hereunder which request shall
specify (i) the amount of such Letter of Credit, (ii) the date (which shall
be a
Business Day) such Letter of Credit is to be issued, renewed or extended, (iii)
the duration thereof, (iv) the name and address of the beneficiary thereof,
and
(v) such other information as the Issuing Bank may reasonably request, all
of
which shall be reasonably satisfactory to the Issuing Bank. Subject to the
terms
and conditions of this Agreement, on the date specified for the issuance,
renewal or extension of a Letter of Credit, the Administrative Agent shall
issue, renew or extend such Letter of Credit to the beneficiary thereof.
In
conjunction with the issuance of each Letter of Credit, the Borrower shall
execute a Letter of Credit Agreement. In the event of any conflict between
any
provision of a Letter of Credit Agreement and this Agreement, the Borrower,
the
Issuing Bank, the Administrative Agent and the Lenders hereby agree that the
provisions of this Agreement shall govern.
The
Issuing Bank will send to the Borrower and each Lender, immediately upon
issuance of any Letter of Credit, or an amendment thereto, a true and complete
copy of such Letter of Credit, or such amendment thereto.
Section
2.03 Commitments;
Changes of Commitments.
(a)
Commitments.
The
initial amount of the Aggregate Revolving Credit Commitments shall be
$155,000,000. The Aggregate Revolving Credit Commitments may be increased from
time to time in accordance with subsection
(b) of
this
section, or reduced from time to time in accordance with subsection
(c)
of this
section.
(b)
Increase
in Revolving Credit Commitments.
(i)
Provided there exists no Default or Event of Default and subject to the
conditions set forth under clause
(v) below,
upon notice to the Administrative Agent (which shall promptly notify the
Lenders), Borrower may from time to time request an increase in the Revolving
Credit Commitments; provided,
that
(A)
the
Aggregate Revolving Credit Commitments shall not at any time exceed the lesser
of (1) the Aggregate Maximum Revolving Credit Amounts after adjustments
resulting from reductions thereof pursuant to Section
2.03(d)
and (2)
the then effective Borrowing Base, and (B) such increase of the Revolving Credit
Commitments shall be in a minimum amount of $5,000,000, or integral multiples
of
$1,000,000 in excess thereof. At the time of sending such notice, Borrower
(in
consultation with the Administrative Agent) shall specify the time period within
which each Lender is requested to respond (which shall in no event be less
than
ten (10) Business Days from the date of delivery of such notice to the Lenders).
(ii)
Each
Lender shall notify the Administrative Agent within such time period whether
or
not it agrees to increase its Revolving Credit Commitment and, if so, whether
by
an amount equal to, greater than, or less than its Percentage Share of such
requested increase. Any Lender not responding within such time period shall
be
deemed to have declined to increase its Revolving Credit Commitment.
(iii)
The
Administrative Agent shall notify Borrower of the Lenders’ responses to the
request made hereunder. To achieve the full amount of a requested increase
and
subject to the approval of the Administrative Agent and the Issuing Bank (which
approvals shall not be unreasonably withheld), Borrower may also invite
additional Persons to become Lenders pursuant to a joinder agreement in form
and
substance satisfactory to the Administrative Agent and its counsel.
(iv)
If
the Aggregate Revolving Credit Commitments are increased in accordance with
this
Section, the Administrative Agent and Borrower shall determine the effective
date (such date, the “Increase
Effective Date”)
and
the final allocation of such increase. The Administrative Agent shall promptly
(i) notify Borrower of the final allocation of such increase in the Revolving
Credit Commitment and the Increase Effective Date, and (ii) notify each Lender
of its Revolving Credit Commitment as of the Increase Effective Date.
(v)
As a
condition precedent to such increase, Borrower shall deliver to the
Administrative Agent a certificate of each Obligor dated as of the Increase
Effective Date signed by a Responsible Officer of such Obligor (i) certifying
and attaching the resolutions adopted by such Obligor approving or consenting
to
such increase, and (ii) in the case of Borrower, certifying that, before and
after giving effect to such increase, (A) the representations and warranties
contained in Article
VII
and the
other Loan Documents are true and correct on and as of the Increase Effective
Date, except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they are true and correct as of such
earlier date, and except that for purposes of this Section
2.03(b),
the
representations and warranties contained in Section
7.02
shall be
deemed to refer to the most recent statements furnished pursuant to clauses
(a)
and
(b),
respectively, of Section
8.01,
(B) no
Default or Event of Default exists, and (C) no Material Adverse Effect shall
have occurred. To the extent necessary to keep the outstanding Loans ratable
with any revised Percentage Shares of the Lenders arising from any nonratable
increase in the Revolving Credit Commitment under this Section, Borrower shall
prepay Loans outstanding on the Increase Effective Date and/or Lenders shall
make assignments pursuant to arrangements satisfactory to the Administrative
Agent (provided,
that
in each
case, Borrower shall pay any additional amounts required pursuant to
Section
5.05).
(vi)
This
Section shall supersede any provisions in Sections
4.05
or
12.04
to the
contrary.
(c)
Reduction
in Aggregate Revolving Credit Commitments.
The
Borrower shall have the right to reduce the amount of the Aggregate Revolving
Credit Commitments at any time, or from time to time, upon not less than three
(3) Business Days’ prior notice to the Administrative Agent (who shall promptly
notify the Lenders) of each such reduction, which notice shall specify the
effective date thereof and the amount of any such reduction (which shall not
be
less than $10,000,000 or any whole multiple of $10,000,000 in excess thereof;
and no more than an amount by which the Aggregate Revolving Credit Commitments
would be less than the aggregate outstanding principal amount of the Loans
plus
the LC Exposure, after giving effect to any concurrent prepayment pursuant
to
Section
2.07)
and
shall be irrevocable and effective only upon receipt by the Administrative
Agent.
(d)
Reduction
in Aggregate Maximum Revolving Credit Amounts.
The
Borrower shall have the right to terminate or to reduce the amount of the
Aggregate Maximum Revolving Credit Amounts at any time, or from time to time,
upon not less than three (3) Business Days’ prior notice to the Administrative
Agent (who shall promptly notify the Lenders) of each such termination or
reduction, which notice shall specify the effective date thereof and the amount
of any such reduction (which shall not be less than $10,000,000
or any whole multiple of $10,000,000 in excess thereof; and no more than an
amount by which the Aggregate Maximum Revolving Credit Amounts would be less
than the Aggregate Revolving Credit Commitments) and shall be irrevocable and
effective only upon receipt by the Administrative Agent. The Aggregate Maximum
Revolving Credit Amounts once terminated or reduced may not be reinstated.
(a)
Commitment
Fee.
The
Borrower shall pay to the Administrative Agent for the account of each Lender
a
commitment fee on the daily average unused amount of the Aggregate Revolving
Credit Commitments up to, but excluding, the earlier of the date the Aggregate
Revolving Credit Commitments are terminated or the Revolving Credit Termination
Date at the Applicable Commitment Fee Rate. Accrued commitment fees shall be
payable quarterly in arrears on each Quarterly Date and on the earlier of the
date the Aggregate Revolving Credit Commitments are terminated or the Revolving
Credit Termination Date. Borrower and Lenders acknowledge and agree that the
unused commitment fees payable hereunder are bona
fide
unused
commitment fees and are intended as reasonable compensation to Lenders for
committing to make funds available to Borrower as described herein and for
no
other purposes.
(b)
Letter
of Credit Fees.
(i)
The
Borrower agrees to pay the Administrative Agent, for the account of each Lender,
commissions for issuing the Letters of Credit on the daily average outstanding
of the maximum liability of the Issuing Bank existing from time to time under
such Letter of Credit (calculated separately for each Letter of Credit) at
the
rate per annum equal to the Applicable Margin in effect from time to time for
LIBOR Loans, provided that each Letter of Credit shall bear a minimum commission
of $500 and further provided, during any period commencing on the date of an
Event of Default until the same is paid in full or all Events of Default are
cured and waived, equal to the Post-Default Rate. Each Letter of Credit shall
be
deemed to be outstanding up to the full face amount of the Letter of Credit
until the Issuing Bank has received the canceled Letter of Credit or a written
cancellation of the Letter of Credit from the beneficiary of such Letter of
Credit in form and substance acceptable to the Issuing Bank, or for any
reductions in the amount of the Letter of Credit (other than from a drawing),
written notification from the beneficiary of such Letter of Credit. Such
commissions are payable in advance at issuance of the Letter of Credit for
the
first year thereof and thereafter, quarterly in arrears on each Quarterly Date
and upon cancellation or expiration of each such Letter of Credit.
(ii)
The
Borrower agrees to pay the Administrative Agent, for the account of the Issuing
Bank, commissions for issuing the Letters of Credit (calculated separately
for
each Letter of Credit) equal to 0.125% of the face amount of each Letter of
Credit, payable upon issuance of such Letter of Credit.
(c)
Fee
Letter.
The
Borrower shall pay to Administrative Agent for its account such other fees
as
are set forth in the Fee Letter on the dates specified therein to the extent
not
paid prior to the Closing Date.
Section
2.05 Several
Obligations.
The
failure of any Lender to make any Loan to be made by it or to provide funds
for
disbursements or reimbursements under Letters of Credit on the date specified
therefor shall not relieve any other Lender of its obligation to make its Loan
or provide funds on such date, but no Lender shall be responsible for the
failure of any other Lender to make a Loan to be made by such other Lender
or to
provide funds to be provided by such other Lender.
Section
2.06 Notes.
The
Loans made by each Lender shall be evidenced by a single promissory note of
the
Borrower in substantially the form of Exhibit
A
dated
(i) the Closing Date or (ii) the effective date of an Assignment pursuant to
Section
12.06(b),
payable
to the order of such Lender in a principal amount equal to its Maximum Revolving
Credit Amount as originally in effect and otherwise duly completed and such
substitute Notes as required by Section
12.06(b).
The
date, amount, Type, interest rate and Interest Period of each Loan made by
each
Lender, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Note, and, prior to any transfer
may be endorsed by such Lender on the schedule attached to such Note or any
continuation thereof or on any separate record maintained by such Lender.
Failure to make any such notation or to attach a schedule shall not affect
any
Lender’s or the Borrower’s rights or obligations in respect of such Loans or
affect the validity of such transfer by any Lender of its Note.
Section
2.07 Prepayments
(a)
Voluntary
Prepayments.
The
Borrower may prepay the Base Rate Loans upon not less than one (1) Business
Day’s prior notice to the Administrative Agent (which shall promptly notify the
Lenders), which notice shall specify the prepayment date (which shall be a
Business Day) and the amount of the prepayment (which shall be at least $100,000
or the remaining aggregate principal balance outstanding on the Notes) and
shall
be irrevocable and effective only upon receipt by the Administrative Agent,
provided that interest on the principal prepaid, accrued to the prepayment
date,
shall be paid on the prepayment date. The Borrower may prepay LIBOR Loans on
the
same conditions as for Base Rate Loans (except that prior notice to the
Administrative Agent shall be not less than three (3) Business Days for LIBOR
Loans) and in addition such prepayments of LIBOR Loans shall be subject to
the
terms of Section
5.05
and
shall be in an amount equal to all of the LIBOR Loans for the Interest Period
prepaid. In the event of a voluntary prepayment pursuant to this Section
2.07(a),
Borrower shall be entitled to reborrow such amounts pursuant to Section
2.01.
(b)
Mandatory
Prepayments.
If a
Borrowing Base Deficiency results from the redetermination of the Borrowing
Base
pursuant to Section
2.08(b) or
(d),
then
the Borrower shall, within thirty (30) days notify Administrative Agent of
Borrower’s election to, (i) prepay the Loans in two equal installments equal to
one half of the aggregate principal amount sufficient to eliminate such
Borrowing Base Deficiency, together with interest on the principal amount paid
accrued to the date of each such prepayment due ninety (90) days and one hundred
and eighty (180) days from the date of such redetermination, (ii) pledge, or
cause any Subsidiary to pledge, additional unencumbered collateral of sufficient
value and character (as determined by the Administrative Agent and the Lenders
in their sole discretion) that when added to the existing collateral shall
cause
the Borrowing Base to equal or exceed the aggregate outstanding Loans plus
the
LC Exposure, or (iii) any combination of (i) and (ii) satisfactory to the
Administrative Agent and all Lenders. If, because of LC Exposure, a Borrowing
Base Deficiency remains after prepaying all of the Loans, the Borrower shall
pay
to the Administrative Agent on behalf of the Lenders an amount equal to such
remaining Borrowing Base Deficiency to be held as cash collateral as provided
in
Section
2.10(b).
(c)
Generally.
Prepayments permitted or required under this Section
2.07
shall be
without premium or penalty, except as required under Section
5.05
for
prepayment of LIBOR Loans. Any prepayments on the Loans may be reborrowed
subject to the then effective Aggregate Revolving Credit Commitments.
Section
2.08 Borrowing
Base.
(a)
The
Borrowing Base shall be determined in accordance with Section
2.08(b)
by the
Administrative Agent with the concurrence of the Lenders and is subject to
redetermination in accordance with Section
2.08(d).
Upon
any redetermination of the Borrowing
Base, such redetermination shall remain in effect until the next Redetermination
Date. So long as any of the Commitments are in effect or any LC Exposure or
Loans are outstanding hereunder, this facility shall be governed by the then
effective Borrowing Base. During the period from and after the Closing Date
until the first redetermination or reduction pursuant to Section
2.08,
the
amount of the Borrowing Base shall be $155,000,000 (the “Initial
Borrowing Base”)
which
amount is comprised of the Oil and Gas Properties Collateral Value.
(b)
Upon
receipt of the reports required by Section
8.07
and such
other reports, data and supplemental information as may from time to time be
reasonably requested by the Administrative Agent (the “Engineering
Reports”),
the
Borrowing Base shall be redetermined for each Borrowing Base Period and each
such redetermination shall be effective as of the date set forth in such notice
of redetermination delivered by the Administrative Agent to Borrower (the
“Scheduled
Redetermination Date”).
The
Oil and Gas Properties Collateral Value shall be determined based upon the
loan
collateral value assigned to the Mortgaged Properties. The Borrowing Base shall
be equal to the sum of the Oil and Gas Properties Collateral Value and such
other credit factors (including without limitation the assets, liabilities,
cash
flow, business, properties, prospects, management and ownership of the Borrower
and its Subsidiaries) which the Lenders deem significant. The Lenders’
determination of the Borrowing Base shall be in their sole discretion and shall
not be subject to review or challenge. Upon each redetermination of the
Borrowing Base, the Administrative Agent shall recommend to the Lenders a new
Borrowing Base and the Lenders in accordance with their customary policies
and
procedures for extending credit to oil and gas reserve-based customers shall
establish the redetermined Borrowing Base by unanimous agreement in the event
of
any increase in the Borrowing Base and by agreement of at least the Majority
Lenders in the event of any redetermination to maintain or reduce the Borrowing
Base. If a redetermined Borrowing Base is not approved by the Administrative
Agent and the applicable Lenders within twenty (20) days of the submission
to
the Lenders by the Administrative Agent of its recommended Borrowing Base,
the
Administrative Agent shall notify each Lender that the recommended Borrowing
Base has not been approved and request that each Lender submit to the
Administrative Agent within ten (10) days thereafter its proposed Borrowing
Base. Promptly following the 10th
day
after such request, the Administrative Agent shall determine the Borrowing
Base
for such Redetermination by calculating the highest Borrowing Base then
acceptable to the Administrative Agent and a number of Lenders sufficient to
constitute Majority Lenders (or all Lenders in the case of an increase). If
the
Borrower does not furnish the Engineering Reports by the date required, the
Lenders may nonetheless determine a new Borrowing Base. It is expressly
understood that the Lenders shall have no obligation to determine the Borrowing
Base at any particular amount, either in relation to the Maximum Revolving
Credit Amount or otherwise.
(c)
The
Borrower shall have the right to reduce the amount of the Borrowing Base upon
not less than thirty (30) days’ prior written notice to the Administrative Agent
(who shall promptly notify the Lenders) of the reduction, which shall specify
the effective date thereof and the amount of such reduction (which shall not
be
less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof,
no
more than an amount which would cause a Borrowing Base Deficiency) and shall
be
irrevocable and effective only upon receipt by the Administrative Agent. The
Borrowing Base once reduced at Borrower’s election may not be reinstated by
Borrower, nor shall Lenders be obligated to determine the Borrowing Base at
any
subsequent Scheduled Redetermination Date or other Special Borrowing Base
Determination at any particular amount, either in relation to the Borrowing
Base
prior or subsequent to any such optional reduction by Borrower.
(d)
In
addition to “Scheduled
Redeterminations”
pursuant to Section
2.08(b),
the
Borrower and the Majority Lenders may each request one (1) additional
redetermination of the Borrowing Base during each Borrowing Base Period. In
the
event the Borrower or Majority Lenders request a “Special
Borrowing Base Determination”
pursuant to this Section
2.08(d),
the
Borrower shall deliver written notice of such request to the Administrative
Agent which shall include: (i) Engineering Report(s) prepared as of a date
not more
than
thirty (30) calendar days prior to the date of such request, and (ii) such
other
information as Administrative Agent and the Lenders shall request prepared
as of
a date not more than thirty (30) calendar days prior to the date of such
request. Likewise, in the event the Lenders exercise their option for a Special
Borrowing Base Determination, the Administrative Agent shall give the Borrower
notice of the redetermined Borrowing Base which shall state the effective date
of the redetermination.
Section
2.09 Assumption
of Risks.
The
Borrower assumes all risks of the acts or omissions of any beneficiary of any
Letter of Credit or any transferee thereof with respect to its use of such
Letter of Credit. Neither the Issuing Bank (except in the case of gross
negligence or willful misconduct on the part of the Issuing Bank or any of
its
employees), its correspondents nor any Lender shall be responsible for the
validity, sufficiency or genuineness of certificates or other documents or
any
endorsements thereon, even if such certificates or other documents should in
fact prove to be invalid, insufficient, fraudulent or forged; for errors,
omissions, interruptions or delays in transmissions or delivery of any messages
by mail, telex, or otherwise, whether or not they be in code; for errors in
translation or for errors in interpretation of technical terms; the validity
or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder
or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; the failure of any beneficiary or any transferee
of
any Letter of Credit to comply fully with conditions required in order to draw
upon any Letter of Credit; or for any other consequences arising from causes
beyond the Issuing Bank’s control or the control of the Issuing Bank’s
correspondents. In addition, neither the Issuing Bank, the Administrative Agent
nor any Lender shall be responsible for any error, neglect, or default of any
of
the Issuing Bank’s correspondents; and none of the above shall affect, impair or
prevent the vesting of any of the Issuing Bank’s, the Administrative Agent’s or
any Lender’s rights or powers hereunder or under the Letter of Credit
Agreements, all of which rights shall be cumulative. The Issuing Bank and its
correspondents may accept certificates or other documents that appear on their
face to be in order, without responsibility for further investigation of any
matter contained therein regardless of any notice or information to the
contrary. In furtherance and not in limitation of the foregoing provisions,
the
Borrower agrees that any action, inaction or omission taken or not taken by
the
Issuing Bank or by any correspondent for the Issuing Bank in good faith in
connection with any Letter of Credit, or any related drafts, certificates,
documents or instruments, shall be binding on the Borrower and shall not put
the
Issuing Bank or its correspondents under any resulting liability to the
Borrower.
Section
2.10 Obligation
to Reimburse and to Prepay.
(a)
If a
disbursement by the Issuing Bank is made under any Letter of Credit, the
Borrower shall pay to the Administrative Agent within two (2) Business Days
after notice of any such disbursement is received by the Borrower, the amount
of
each such disbursement made by the Issuing Bank under the Letter of Credit
(if
such payment is not sooner effected as may be required under this Section
2.10
or under
other provisions of the Letter of Credit), together with interest on the amount
disbursed from and including the date of disbursement until payment in full
of
such disbursed amount at a varying rate per annum equal to (i) the then
applicable interest rate for Base Rate Loans through the second Business Day
after notice of such disbursement is received by the Borrower and (ii)
thereafter, the Post-Default Rate for Base Rate Loans (but in no event to exceed
the Highest Lawful Rate) for the period from and including the third Business
Day following the date of such disbursement to and including the date of
repayment in full of such disbursed amount. The obligations of the Borrower
under this Agreement with respect to each Letter of Credit shall be absolute,
unconditional and irrevocable and shall be paid or performed strictly in
accordance with the terms of this Agreement under all circumstances whatsoever,
including, without limitation, but only to the fullest extent permitted by
applicable law, the following circumstances: (i) any lack of validity or
enforceability of this Agreement, any Letter of Credit or any of the Security
Instruments; (ii) any amendment or waiver of (including any default), or any
consent to departure from this Agreement (except to the extent permitted by
any
amendment or waiver), any Letter of Credit or any of the Security Instruments;
(iii) the existence of any claim, set-off,
defense or other rights which the Borrower may have at any time against the
beneficiary of any Letter of Credit or any transferee of any Letter of Credit
(or any Persons for whom any such beneficiary or any such transferee may be
acting), the Issuing Bank, the Administrative Agent, any Lender or any other
Person, whether in connection with this Agreement, any Letter of Credit, the
Security Instruments, the transactions contemplated hereby or any unrelated
transaction; (iv) any statement, certificate, draft, notice or any other
document presented under any Letter of Credit proves to have been forged,
fraudulent, insufficient or invalid in any respect or any statement therein
proves to have been untrue or inaccurate in any respect whatsoever; (v) payment
by the Issuing Bank under any Letter of Credit against presentation of a draft
certificate which appears on its face to comply, but does not comply, with
the
terms of such Letter of Credit; and (vi) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.
Notwithstanding
anything in this Agreement to the contrary, the Borrower will not be liable
for
payment or performance that results from the gross negligence or willful
misconduct of the Issuing Bank, except (i) where the Borrower or any Subsidiary
actually recovers the proceeds for itself or the Issuing Bank of any payment
made by the Issuing Bank in connection with such gross negligence or willful
misconduct or (ii) in cases where the Administrative Agent makes payment to
the
named beneficiary of a Letter of Credit.
(b)
In
the event of the occurrence of any Event of Default, a payment or prepayment
pursuant to Section
2.07(b) or
the
maturity of the Notes, whether by acceleration or otherwise, an amount equal
to
the LC Exposure (or the excess in the case of Section
2.07(b))
shall
be deemed to be forthwith due and owing by the Borrower to the Issuing Bank,
the
Administrative Agent and the Lenders as of the date of any such occurrence;
and
the Borrower’s obligation to pay such amount shall be absolute and
unconditional, without regard to whether any beneficiary of any such Letter
of
Credit has attempted to draw down all or a portion of such amount under the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower may now or hereafter have against
any such beneficiary, the Issuing Bank, the Administrative Agent, the Lenders
or
any other Person for any reason whatsoever. Such payments shall be held by
the
Issuing Bank on behalf of the Lenders as cash collateral securing the LC
Exposure in an account or accounts at the Principal Office; and the Borrower
hereby grants to and by its deposit with the Administrative Agent grants to
the
Administrative Agent a security interest in such cash collateral. In the event
of any such payment by the Borrower of amounts contingently owing under
outstanding Letters of Credit and in the event that thereafter drafts or other
demands for payment complying with the terms of such Letters of Credit are
not
made prior to the respective expiration dates thereof, the Administrative Agent
agrees, if no Event of Default has occurred and is continuing or if no other
amounts are outstanding under this Agreement, the Notes or the Security
Instruments, to remit to the Borrower amounts for which the contingent
obligations evidenced by the Letters of Credit have ceased.
(c)
Each
Lender severally and unconditionally agrees that it shall promptly reimburse
the
Issuing Bank an amount equal to such Lender’s Percentage Share of any
disbursement made by the Issuing Bank under any Letter of Credit that is not
reimbursed according to this Section
2.10.
(d)
Notwithstanding anything to the contrary contained herein, if no Default exists
and subject to availability under the Aggregate Revolving Credit Commitments
(after reduction for LC Exposure), to the extent the Borrower has not reimbursed
the Issuing Bank for any drawn upon Letter of Credit within one (1) Business
Days after notice of such disbursement has been received by the Borrower, the
amount of such Letter of Credit reimbursement obligation shall automatically
be
funded by the Lenders as a Loan
hereunder
and used
by the Lenders to pay such Letter of Credit reimbursement obligation. If an
Event of Default has occurred and is continuing, or if the funding of such
Letter of Credit reimbursement obligation as a Loan would cause the aggregate
amount of all Loans outstanding to exceed the Aggregate Revolving Credit
Commitments (after reduction for LC Exposure), such Letter of Credit
reimbursement obligation shall not be funded as a Loan, but instead shall accrue
interest as provided in Section
2.10(a).
Section
2.11 Lending
Offices.
The
Loans of each Type made by each Lender shall be made and maintained at such
Lender’s Applicable Lending Office for Loans of such Type.
ARTICLE
III
Payments
of Principal and Interest
Section
3.01 Repayment
of Loans.
(a)
Loans.
On the
Revolving Credit Termination Date the Borrower shall repay the outstanding
aggregate principal of the Notes.
(b)
Generally.
The
Borrower will pay to the Administrative Agent, for the account of each Lender,
the principal payments required by this Section
3.01.
Section
3.02 Interest.
(a)
Interest
Rates.
The
Borrower will pay to the Administrative Agent, for the account of each Lender,
interest on the unpaid principal amount of each Loan made by such Lender for
the
period commencing on the date such Loan is made to, but excluding, the date
such
Loan shall be paid in full, at the following rates per annum:
(i)
if
such a Loan is a Base Rate Loan, the Base Rate (as in effect from time to time)
plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate;
and
(ii)
if
such a Loan is a LIBOR Loan, for each Interest Period relating thereto, the
Adjusted LIBOR for such Loan plus the Applicable Margin (as in effect from
time
to time), but in no event to exceed the Highest Lawful Rate.
(b)
Post-Default
Rate.
Notwithstanding the foregoing, the Borrower will pay to the Administrative
Agent, for the account of each Lender interest at the applicable Post-Default
Rate on any Loan made by such Lender, and (to the fullest extent permitted
by
law) on any other amount payable by the Borrower hereunder, under any Loan
Document or under any Note held by such Lender to or for account of such Lender,
for the period commencing on the date of an Event of Default until the same
is
paid in full or all Events of Default are cured or waived.
(c)
Due
Dates.
Accrued
interest on Base Rate Loans shall be payable on each Quarterly Date commencing
on the first Quarterly Date, and accrued interest on each LIBOR Loan shall
be
payable on the last day of the Interest Period therefor and, if such Interest
Period is longer than three months, at three-month intervals following the
first
day of such Interest Period, except that interest payable at the Post-Default
Rate shall be payable from time to time on demand and interest on any LIBOR
Loan
that is converted into a Base Rate Loan (pursuant to Section
5.04)
shall
be payable on the date of conversion (but only to the extent so converted).
Any
accrued and unpaid interest on the Loans on the Revolving Credit Termination
Date shall be paid on such date.
(d)
Determination
of Rates.
Promptly after the determination of any interest rate provided for herein or
any
change therein, the Administrative Agent shall notify the Lenders to which
such
interest is payable and the Borrower thereof. Each determination by
the Administrative
Agent of an interest rate or fee hereunder shall, except in cases of manifest
error, be final, conclusive and binding on the parties.
Section
4.01 Payments.
Except
to the extent otherwise provided herein, all payments of principal, interest
and
other amounts to be made by the Borrower under this Agreement, the Notes,
Letters of Credit, and the Letter of Credit Agreements shall be made in Dollars,
in immediately available funds, to the Administrative Agent at such account
as
the Administrative Agent shall specify by notice to the Borrower from time
to
time, not later than 12:00 p.m. Charlotte, North Carolina time on the date
on
which such payments shall become due (each such payment made after such time
on
such due date to be deemed to have been made on the next succeeding Business
Day). Such payments shall be made without (to the fullest extent permitted
by
applicable law) defense, set-off or counterclaim. Each payment received by
the
Administrative Agent under this Agreement or any Note for account of a Lender
shall be paid promptly to such Lender in immediately available funds. Except
as
otherwise provided in the definition of “Interest
Period”,
if the
due date of any payment under this Agreement or any Note would otherwise fall
on
a day which is not a Business Day such date shall be extended to the next
succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension. At the time of each payment to the
Administrative Agent of any principal of or interest on any borrowing, the
Borrower shall notify the Administrative Agent of the Loans to which such
payment shall apply. In the absence of such notice the Administrative Agent
may
specify the Loans to which such payment shall apply, but to the extent possible
such payment or prepayment will be applied first to the Loans comprised of
Base
Rate Loans.
Section
4.02 Pro
Rata Treatment.
Except
to the extent otherwise provided herein each Lender agrees that: (i) each
borrowing from the Lenders under Section
2.01 and
each
continuation and conversion under Section
2.02
shall be
made from the Lenders pro rata in accordance with their Percentage Share, each
payment of fees under Sections
2.04(a)
and
2.04(b)(i)
shall be
made for account of the Lenders pro rata in accordance with their Percentage
Share, and each termination or reduction of the amount of the Aggregate
Revolving Credit Commitments or the Aggregate Maximum Revolving Credit Amounts
under Section
2.03
shall be
applied to the Commitment of each Lender, pro rata according to the amounts
of
its respective Commitment; (ii) each payment of principal of Loans by the
Borrower shall be made for account of the Lenders pro rata in accordance with
the respective unpaid principal amount of the Loans held by the Lenders; and
(iii) each payment of interest on Loans by the Borrower shall be made for
account of the Lenders pro rata in accordance with the amounts of interest
due
and payable to the respective Lenders; and (iv) each reimbursement by the
Borrower of disbursements under Letters of Credit shall be made for account
of
the Issuing Bank or, if funded by the Lenders, pro rata for the account of
the
Lenders, in accordance with the amounts of reimbursement obligations due and
payable to each respective Lender.
Section
4.03 Computations.
Interest
on LIBOR Loans and fees shall be computed on the basis of a year of 360 days
and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which such interest is payable, unless such
calculation would exceed the Highest Lawful Rate, in which case interest shall
be calculated on the per annum basis of a year of 365 or 366 days, as the case
may be. Interest on Base Rate Loans shall be computed on the basis of a year
of
365 or 366 days, as the case may be, and actual days elapsed (including the
first day but excluding the last day) occurring in the period for which such
interest is payable.
Section
4.04 Non-receipt
of Funds by the Administrative Agent.
Unless
the Administrative Agent shall have been notified by a Lender or the Borrower
prior to the date on which such notifying party is scheduled to make payment
to
the Administrative Agent (in
the
case of a Lender) of the proceeds of a Loan or a payment under a Letter of
Credit to be made by it hereunder or (in the case of the Borrower) a payment
to
the Administrative Agent for account of one or more of the Lenders hereunder
(such payment being herein called the “Required
Payment”),
which
notice shall be effective upon receipt, that it does not intend to make the
Required Payment to the Administrative Agent, the Administrative Agent may
assume that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available
to
the intended recipient(s) on such date and, if such Lender or the Borrower
(as
the case may be) has not in fact made the Required Payment to the Administrative
Agent, the recipient(s) of such payment shall, on demand, repay to the
Administrative Agent the amount so made available together with interest thereon
in respect of each day during the period commencing on the date such amount
was
so made available by the Administrative Agent until, but excluding, the date
the
Administrative Agent recovers such amount at a rate per annum which, for any
Lender as recipient, will be equal to the Federal Funds Rate, and for the
Borrower as recipient, will be equal to the Base Rate plus the Applicable
Margin.
(a)
The
Borrower agrees that, in addition to (and without limitation of) any right
of
set-off, bankers’ lien or counterclaim a Lender may otherwise have, each Lender
shall have the right and be entitled (after consultation with the Administrative
Agent), at its option, to offset balances held by it or by any of its Affiliates
for account of the Borrower or any Subsidiary at any of its offices, in Dollars
or in any other currency, against any principal of or interest on any of such
Lender’s Loans, or any other amount payable to such Lender hereunder, which is
not paid when due (regardless of whether such balances are then due to the
Borrower), in which case it shall promptly notify the Borrower and the
Administrative Agent thereof, provided that such Lender’s failure to give such
notice shall not affect the validity thereof.
(b)
If
any Lender shall obtain payment of any principal of or interest on any Loan
made
by it to the Borrower under this Agreement (or reimbursement as to any Letter
of
Credit) through the exercise of any right of set-off, banker’s lien or
counterclaim or similar right or otherwise, and, as a result of such payment,
such Lender shall have received a greater percentage of the principal or
interest (or reimbursement) then due hereunder by the Borrower to such Lender
than the percentage received by any other Lenders, it shall promptly (i) notify
the Administrative Agent and each other Lender thereof and (ii) purchase from
such other Lenders participations in (or, if and to the extent specified by
such
Lender, direct interests in) the Loans (or participations in Letters of Credit)
made by such other Lenders (or in interest due thereon, as the case may be)
in
such amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal and/or interest on the Loans held by each of the Lenders (or
reimbursements of Letters of Credit). To such end all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Loans made by other Lenders (or in interest due thereon, as
the
case may be) may exercise all rights of set-off, banker’s lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans (or Letters of Credit) in the amount of such
participation. Nothing contained herein shall require any Lender to exercise
any
such right or shall affect the right of any Lender to exercise, and retain
the
benefits of exercising, any such right with respect to any other indebtedness
or
obligation of the Borrower. If under any applicable bankruptcy, insolvency
or
other similar law, any Lender receives a secured claim in lieu of a set-off
to
which this Section
4.05
applies,
such Lender shall, to the extent practicable, exercise its rights in
respect of
such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section
4.05
to share
the benefits of any recovery on such secured claim.
(a)
Payments
Free and Clear.
Any and
all payments by the Borrower hereunder shall be made, in accordance with
Section
4.01,
free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding,
in the
case of each Lender, the Issuing Bank and the Administrative Agent, taxes
imposed on its income, and franchise or similar taxes imposed on it, by (i)
any
jurisdiction (or political subdivision thereof) of which the Administrative
Agent, the Issuing Bank or such Lender, as the case may be, is a citizen or
resident or in which such Lender has an Applicable Lending Office, (ii) the
jurisdiction (or any political subdivision thereof) in which the Administrative
Agent, the Issuing Bank or such Lender is organized, or (iii) any jurisdiction
(or political subdivision thereof) in which such Lender, the Issuing Bank or
the
Administrative Agent is presently doing business which taxes are imposed solely
as a result of doing business in such jurisdiction (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as “Taxes”).
If
the Borrower shall be required by law to deduct any Taxes from or in respect
of
any sum payable hereunder to the Lenders, the Issuing Bank or the Administrative
Agent (i) the sum payable shall be increased by the amount necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section
4.06)
such
Lender, the Issuing Bank or the Administrative Agent (as the case may be) shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant taxing authority or other
Governmental Authority in accordance with applicable law.
(b)
Other
Taxes.
In
addition, to the fullest extent permitted by applicable law, the Borrower agrees
to pay any present or future stamp or documentary taxes or any other excise
or
property taxes, charges or similar levies that arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise
with
respect to, this Agreement, any Assignment or any Security Instrument
(hereinafter referred to as “Other
Taxes”).
(c)
INDEMNIFICATION.
TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER WILL INDEMNIFY EACH
LENDER AND THE ISSUING BANK AND THE ADMINISTRATIVE AGENT FOR THE FULL AMOUNT
OF
TAXES AND OTHER TAXES (INCLUDING, BUT NOT LIMITED TO, ANY TAXES OR OTHER TAXES
IMPOSED BY ANY GOVERNMENTAL AUTHORITY ON AMOUNTS PAYABLE UNDER THIS SECTION
4.06)
PAID BY
SUCH LENDER, THE ISSUING BANK OR THE ADMINISTRATIVE AGENT (ON THEIR BEHALF
OR ON
BEHALF OF ANY LENDER), AS THE CASE MAY BE, AND ANY LIABILITY (INCLUDING
PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM
OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY
OR LEGALLY ASSERTED UNLESS THE PAYMENT OF SUCH TAXES WAS NOT CORRECTLY OR
LEGALLY ASSERTED AND SUCH LENDER’S PAYMENT OF SUCH TAXES OR OTHER TAXES WAS THE
RESULT OF ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. ANY PAYMENT PURSUANT
TO
SUCH INDEMNIFICATION SHALL BE MADE WITHIN THIRTY (30) DAYS AFTER THE DATE ANY
LENDER, THE ISSUING BANK OR THE ADMINISTRATIVE AGENT, AS THE CASE MAY BE, MAKES
WRITTEN DEMAND THEREFOR. IF ANY LENDER, ISSUING BANK OR THE ADMINISTRATIVE
AGENT
RECEIVES A REFUND OR CREDIT IN RESPECT OF ANY TAXES OR OTHER TAXES FOR WHICH
SUCH LENDER, ISSUING BANK OR THE ADMINISTRATIVE AGENT HAS RECEIVED PAYMENT
FROM
THE BORROWER IT SHALL PROMPTLY NOTIFY THE BORROWER OF SUCH REFUND OR CREDIT
AND
SHALL, IF NO DEFAULT HAS OCCURRED AND IS CONTINUING, WITHIN THIRTY (30) DAYS
AFTER RECEIPT OF A REQUEST BY THE
BORROWER (OR PROMPTLY UPON RECEIPT, IF THE BORROWER HAS REQUESTED APPLICATION
FOR SUCH REFUND OR CREDIT PURSUANT HERETO), PAY AN AMOUNT EQUAL TO SUCH REFUND
OR CREDIT TO THE BORROWER WITHOUT INTEREST (BUT WITH ANY INTEREST SO REFUNDED
OR
CREDITED) PROVIDED THAT THE BORROWER, UPON THE REQUEST OF SUCH LENDER, THE
ISSUING BANK OR THE ADMINISTRATIVE AGENT, AGREES TO RETURN SUCH REFUND OR CREDIT
(PLUS PENALTIES, INTEREST OR OTHER CHARGES) TO SUCH LENDER OR THE ADMINISTRATIVE
AGENT IN THE EVENT SUCH LENDER OR THE ADMINISTRATIVE AGENT IS REQUIRED TO REPAY
SUCH REFUND OR CREDIT.
(i)
Each
Lender represents that it is either (1) a banking association or corporation
organized under the laws of the United States of America or any state thereof
or
(2) it is entitled to complete exemption from United States withholding tax
imposed on or with respect to any payments, including fees, to be made to it
pursuant to this Agreement (A) under an applicable provision of a tax convention
to which the United States of America is a party or (B) because it is acting
through a branch, agency or office in the United States of America and any
payment to be received by it hereunder is effectively connected with a trade
or
business in the United States of America. Each Lender that is not a banking
association or corporation organized under the laws of the United States of
America or any state thereof agrees to provide to the Borrower and the
Administrative Agent on the Closing Date, or on the date of its delivery of
the
Assignment pursuant to which it becomes a Lender, and at such other times as
required by United States law or as the Borrower or the Administrative Agent
shall reasonably request, two accurate and complete original signed copies
of
either (A) Internal Revenue Service Form W-8ECI (or successor form) certifying
that all payments to be made to it hereunder will be effectively connected
to a
United States trade or business (the “Form
W-8ECI Certification”)
or (B)
Internal Revenue Service Form W-8BEN (or successor form) certifying that it
is
entitled to the benefit of a provision of a tax convention to which the United
States of America is a party which completely exempts from United States
withholding tax all payments to be made to it hereunder (the “Form
W-8BEN Certification”).
In
addition, each Lender agrees that if it previously filed a Form W-8ECI
Certification, it will deliver to the Borrower and the Administrative Agent
a
new Form W-8ECI Certification prior to the first payment date occurring in
each
of its subsequent taxable years; and if it previously filed a Form W8BEN
Certification, it will deliver to the Borrower and the Administrative Agent
a
new certification prior to the first payment date falling in the third year
following the previous filing of such certification. Each Lender also agrees
to
deliver to the Borrower and the Administrative Agent such other or supplemental
forms as may at any time be required as a result of changes in applicable law
or
regulation in order to confirm or maintain in effect its entitlement to
exemption from United States withholding tax on any payments hereunder, provided
that the circumstances of such Lender at the relevant time and applicable laws
permit it to do so. If a Lender determines, as a result of any change in either
(i) a Governmental Requirement or (ii) its circumstances, that it is unable
to
submit any form or certificate that it is obligated to submit pursuant to this
Section
4.06,
or that
it is required to withdraw or cancel any such form or certificate previously
submitted, it shall promptly notify the Borrower and the Administrative Agent
of
such fact. If a Lender is organized under the laws of a jurisdiction outside
the
United States of America,
unless the Borrower and the Administrative Agent have received a Form W-8BEN
Certification or Form W-8ECI Certification satisfactory to them indicating
that
all payments to be made to such Lender hereunder are not subject to United
States withholding tax, the Borrower shall withhold taxes from such payments
at
the applicable statutory rate. Each Lender agrees to indemnify and hold harmless
the Borrower or Administrative Agent, as applicable, from any United States
taxes, penalties, interest and other expenses, costs and losses incurred or
payable by (i) the Administrative Agent as a result of such Lender’s failure to
submit any form or certificate that it is required to provide pursuant to this
Section
4.06
or (ii)
the Borrower or the Administrative Agent as a result of their reliance on any
such form or certificate which such Lender has provided to them pursuant to
this
Section
4.06.
(ii)
For
any period with respect to which a Lender has failed to provide the Borrower
with the form required pursuant to this Section
4.06,
if any
(other than if such failure is due to a change in a Governmental Requirement
occurring subsequent to the date on which a form originally was required to
be
provided), such Lender shall not be entitled to indemnification under
Section
4.06
with
respect to taxes imposed by the United States which taxes would not have been
imposed but for such failure to provide such forms; provided, however, that
if a
Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to taxes because of its failure to deliver
a
form required hereunder, the Borrower shall take such steps as such Lender
shall
reasonably request to assist such Lender to recover such taxes.
(iii)
Any
Lender claiming any additional amounts payable pursuant to this Section
4.06
shall
use reasonable efforts (consistent with legal and regulatory restrictions)
to
file any certificate or document requested by the Borrower or the Administrative
Agent or to change the jurisdiction of its Applicable Lending Office or to
contest any tax imposed if the making of such a filing or change or contesting
such tax would avoid the need for or reduce the amount of any such additional
amounts that may thereafter accrue and would not, in the sole determination
of
such Lender, be otherwise disadvantageous to such Lender.
ARTICLE
V
Capital
Adequacy
Section
5.01 Additional
Costs.
(a)
LIBOR
Regulations, etc.
The
Borrower shall pay directly to each Lender from time to time such amounts as
such Lender may determine to be necessary to compensate such Lender for any
costs which it determines are attributable to its making or maintaining of
any
LIBOR Loans or issuing or participating in Letters of Credit hereunder or its
obligation to make any LIBOR Loans or issue or participate in any Letters of
Credit hereunder, or any reduction in any amount receivable by such Lender
hereunder in respect of any of such LIBOR Loans, Letters of Credit (such
increases in costs and reductions in amounts receivable being herein called
“Additional
Costs”),
resulting from any Regulatory Change which: (i) changes the basis of taxation
of
any amounts payable to such Lender under this Agreement or any Note in respect
of any of such LIBOR Loans or Letters of Credit (other than taxes imposed on
the
overall net income of such Lender or of its Applicable Lending Office for any
of
such LIBOR Loans by the jurisdiction in which such Lender has its principal
office or Applicable Lending Office); or (ii) imposes or modifies any reserve,
special deposit, minimum capital, capital ratio or similar requirements relating
to any extensions of credit or other assets of, or any deposits with or other
liabilities of such Lender, or the Commitment or Loans of such Lender or the
London interbank market; or (iii) imposes any other condition affecting this
Agreement or any Note (or any of such extensions of credit or liabilities)
or
such Lender’s Commitment or Loans. Each Lender will notify the Administrative
Agent and the Borrower of any event occurring after the Closing Date which
will
entitle such Lender to compensation pursuant to this Section
5.01(a)
as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation, and will designate a different Applicable Lending
Office for the Loans of such Lender affected by such event if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole opinion of such Lender, be disadvantageous to such Lender,
provided that such Lender shall have no obligation to so designate an
Applicable Lending Office located in the United States. If any Lender requests
compensation from the Borrower under this Section
5.01(a),
the
Borrower may, by notice to such Lender, suspend the obligation of such Lender
to
make additional Loans of the Type with respect to which such compensation is
requested until the Regulatory Change giving rise to such request ceases to
be
in effect (in which case the provisions of Section
5.04
shall be
applicable).
(b)
Regulatory
Change.
Without
limiting the effect of the provisions of Section
5.01(a),
in the
event that at any time (by reason of any Regulatory Change or any other
circumstances arising after the Closing Date affecting (A) any Lender, (B)
the
London interbank market or (C) such Lender’s position in such market), the
Adjusted LIBOR, as determined in good faith by such Lender, will not adequately
and fairly reflect the cost to such Lender of funding its LIBOR Loans, then,
if
such Lender so elects, by notice to the Borrower and the Administrative Agent,
the obligation of such Lender to make additional LIBOR Loans shall be suspended
until such Regulatory Change or other circumstances ceases to be in effect
(in
which case the provisions of Section
5.04
shall be
applicable).
(c)
Capital
Adequacy.
Without
limiting the effect of the foregoing provisions of this Section
5.01
(but
without duplication), the Borrower shall pay directly to any Lender from time
to
time on request such amounts as such Lender may reasonably determine to be
necessary to compensate such Lender or its parent or holding company for any
costs which it determines are attributable to the maintenance by such Lender
or
its parent or holding company (or any Applicable Lending Office), pursuant
to
any Governmental Requirement following any Regulatory Change, of capital in
respect of its Commitment, its Note, or its Loans or any interest held by it
in
any Letter of Credit, such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of
such
Lender or its parent or holding company (or any Applicable Lending Office)
to a
level below that which such Lender or its parent or holding company (or any
Applicable Lending Office) could have achieved but for such Governmental
Requirement. Such Lender will notify the Borrower that it is entitled to
compensation pursuant to this Section
5.01(c)
as
promptly as practicable after it determines to request such compensation.
(d)
Compensation
Procedure.
Any
Lender notifying the Borrower of the incurrence of Additional Costs under this
Section
5.01
shall in
such notice to the Borrower and the Administrative Agent set forth in reasonable
detail the basis and amount of its request for compensation. Determinations
and
allocations by each Lender for purposes of this Section
5.01
of the
effect of any Regulatory Change pursuant to Section
5.01(a)
or
(b),
or of
the effect of capital maintained pursuant to Section
5.01(c),
on its
costs or rate of return of maintaining Loans or its obligation to make Loans
or
issue Letters of Credit, or on amounts receivable by it in respect of Loans
or
Letters of Credit, and of the amounts required to compensate such Lender under
this Section
5.01,
shall
be conclusive and binding for all purposes, provided that such determinations
and allocations are made on a reasonable basis. Any request for additional
compensation under this Section
5.01
shall be
paid by the Borrower within thirty (30) days of the receipt by the Borrower
of
the notice described in this Section
5.01(d).
Section
5.02 Limitation
on LIBOR Loans.
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Adjusted LIBOR for any Interest Period:
(i)
the
Administrative Agent determines (which determination shall be conclusive, absent
manifest error) that quotations of interest rates for the relevant deposits
referred to in the definition of “Adjusted
LIBOR”
in
Section
1.02
are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for LIBOR Loans as provided herein;
or
(ii)
the
Administrative Agent determines (which determination shall be conclusive, absent
manifest error) that the relevant rates of interest referred to in the
definition of “Adjusted
LIBOR”
in
Section
1.02
upon the
basis of which the rate of interest for LIBOR Loans for such Interest Period
is
to be determined are not sufficient to adequately cover the cost to the Lenders
of making or maintaining LIBOR Loans; then the Administrative Agent shall give
the Borrower prompt notice thereof, and so long as such condition remains in
effect, the Lenders shall be under no obligation to make additional LIBOR Loans.
Section
5.03 Illegality.
Notwithstanding any other provision of this Agreement, in the event that it
becomes unlawful for any Lender or its Applicable Lending Office to honor its
obligation to make or maintain LIBOR Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender’s obligation to make LIBOR
Loans shall be suspended until such time as such Lender may again make and
maintain LIBOR Loans (in which case the provisions of Section
5.04
shall be
applicable).
Section
5.04 Base
Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03.
If the
obligation of any Lender to make LIBOR Loans shall be suspended pursuant to
Sections
5.01,
5.02
or
5.03
(“Affected
Loans”),
all
Affected Loans which would otherwise be made by such Lender shall be made
instead as Base Rate Loans (and, if an event referred to in Section
5.01(b)
or
Section
5.03
has
occurred and such Lender so requests by notice to the Borrower, all Affected
Loans of such Lender then outstanding shall be automatically converted into
Base
Rate Loans on the date specified by such Lender in such notice) and, to the
extent that Affected Loans are so made as (or converted into) Base Rate Loans,
all payments of principal which would otherwise be applied to such Lender’s
Affected Loans shall be applied instead to its Base Rate Loans.
Section
5.05 Compensation.
The
Borrower shall pay to each Lender within thirty (30) days of receipt of written
request of such Lender (which request shall set forth, in reasonable detail,
the
basis for requesting such amounts and which shall be conclusive and binding
for
all purposes provided that such determinations are made on a reasonable basis),
such amount or amounts as shall compensate it for any loss, cost, expense or
liability which such Lender determines are attributable to:
(i)
any
payment, prepayment or conversion of a LIBOR Loan properly made by such Lender
or the Borrower for any reason (including, without limitation, the acceleration
of the Loans pursuant to Section
10.01)
on a
date other than the last day of the Interest Period for such Loan; or
(ii)
any
failure by the Borrower for any reason (including but not limited to, the
failure of any of the conditions precedent specified in Article
VI
to be
satisfied) to borrow, continue or convert a LIBOR Loan from such Lender on
the
date for such borrowing, continuation or conversion specified in the relevant
notice given pursuant to Section
2.02(c).
Without
limiting the effect of the preceding sentence, such compensation shall include
an amount equal to the excess, if any, of (i) the amount of interest which
would
have accrued on the principal amount so paid, prepaid or converted or not
borrowed for the period from the date of such payment, prepayment or conversion
or failure to borrow to the last day of the Interest Period for such Loan (or,
in the case of a failure to borrow, the Interest Period for such Loan which
would have commenced on the date specified for such borrowing) at the applicable
rate of interest for such Loan provided for herein over (ii) the interest
component of the amount such Lender would have bid in the London interbank
market for Dollar deposits of leading banks in amounts comparable to such
principal amount and with maturities comparable to such period (as reasonably
determined by such Lender).
Section
6.01 Initial
Funding.
The
obligation of the Lenders to make the Initial Funding and of any Issuing Bank
to
issue any Letters of Credit hereunder is subject to the receipt by the
Administrative Agent and the Lenders of all fees payable pursuant to
Section
2.04
on or
before the Closing Date and the receipt by the Administrative Agent of the
following documents and satisfaction of the other conditions provided in this
Section
6.01,
each of
which shall be satisfactory to the Administrative Agent in form and substance:
(a)
A
certificate of the Secretary or an Assistant Secretary of the Borrower setting
forth (i) resolutions of its sole member with respect to the authorization
of
the Borrower to execute and deliver the Loan Documents to which it is a party
and to enter into the transactions contemplated in those documents, (ii) the
officers of the Borrower or its sole member (y) who are authorized to sign
the
Loan Documents to which Borrower is a party and (z) who will, until replaced
by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers,
and
(iv) the certificate of formation and operating agreement of the Borrower,
certified as being true and complete. The Administrative Agent and the Lenders
may conclusively rely on such certificate until the Administrative Agent
receives notice in writing from the Borrower to the contrary.
(b)
A
certificate of the Secretary or an Assistant Secretary of each Guarantor setting
forth (i) resolutions with respect to the authorization of such Guarantor to
execute and deliver the Loan Documents to which it is a party and to enter
into
the transactions contemplated in those documents, (ii) the officers (y) who
are
authorized to sign the Loan Documents to which such Guarantor is a party and
(z)
who will, until replaced by another officer or officers duly authorized for
that
purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this Agreement and
the transactions contemplated hereby, (iii) specimen signatures of the
authorized officers, and (iv) the certificate of formation and operating
agreement (or equivalent constituent documents) of such Guarantor, certified
as
being true and complete. The Administrative Agent and the Lenders may
conclusively rely on such certificates until they receive notice in writing
from
any Guarantor to the contrary.
(c)
Certificates of the appropriate state agencies with respect to the existence,
qualification and good standing of the Obligors.
(d)
A
compliance certificate which shall be substantially in the form of Exhibit
C,
duly
and properly executed by a Responsible Officer and dated as of the date of
the
Initial Funding.
(e)
The
Notes, duly completed and executed.
(f)
The
Security Instruments, including those described on Exhibit
D,
duly
completed and executed by the respective parties thereto in sufficient number
of
counterparts for recording, if necessary including delivery of all original
stock certificates, blank stock powers, and Intercompany Notes duly endorsed
as
required under such Security Instruments.
(g)
Review of Obligors’ financial condition satisfactory to Lenders.
(h)
An
opinion of Ledgewood, counsel to the Obligors and from other local counsel
acceptable to the Administrative Agent with respect to enforceability of the
Security Instruments under the laws of the states wherein the Oil and Gas
Properties are located, each in form and substance satisfactory to the
Administrative Agent, as to such matters incident to the transactions herein
contemplated as the Administrative Agent may reasonably request.
(i)
A
certificate of insurance coverage of the Borrower and each Guarantor evidencing
that the Borrower and each Guarantor are carrying insurance in accordance with
Section
7.20 and Section 8.03(b).
(j)
Title
information as the Administrative Agent may require setting forth the status
of
title acceptable to the Administrative Agent to at least 80% of the value of
the
Oil and Gas Properties of the Obligors, including the Obligors’ pro rata
interest in the Partnerships’ Oil and Gas Properties included in the Initial
Reserve Report.
(k)
The
Administrative Agent shall have been furnished with appropriate UCC search
certificates and other evidence satisfactory to the Administrative Agent with
respect to Obligors’ and the Partnerships’ Oil and Gas Properties reflecting no
prior Liens other than Excepted Liens.
(l)
Environmental assessments and other reports to the extent maintained by Obligors
covering Obligors’ and the Partnerships’ Oil and Gas Properties reporting on the
current environmental condition of such Properties satisfactory to Lenders.
(m)
All
authorizations, approvals or consents as may be necessary for the execution,
delivery and performance by any Obligor under this Agreement.
(n)
The
Guaranty Agreements duly completed and executed by the Guarantors.
(o)
Consummation of the Initial Public Offering on or prior to January 31, 2007,
on
substantially the same terms as contained in the Registration Statement.
(p)
(A)
The Borrower shall have received all governmental, shareholder and third party
consents and approvals necessary to consummate the Initial Public Offering,
which consents and approvals are in full force and effect, (B) no order, decree,
judgment, ruling or injunction exists which restrains the consummation of the
Initial Public Offering or the transactions contemplated by this Agreement,
and
(C) there is no pending, or to the knowledge of the Borrower, threatened,
action, suit, investigation or proceeding which seeks to restrain or affect
the
Initial Public Offering, or which, if adversely determined, could materially
and
adversely affect the ability of AER to consummate the Initial Public Offering.
(q)
Evidence that the AAI Credit Agreement has been, or concurrently with the
Closing Date is being, terminated and all Liens securing obligations under
the
AAI Credit Agreement have been, or concurrently with the Closing Date are being
released.
(r)
Such
other assurances, certificates, documents, consents or opinions as the
Administrative Agent or any Lender or special counsel to the Administrative
Agent may reasonably request.
Section
6.02 Initial
and Subsequent Loans and Letters of Credit.
The
obligation of the Lenders to make Loans to the Borrower upon the occasion of
each borrowing hereunder and to issue, renew, extend or reissue Letters of
Credit (including the Initial Funding) is subject to the further conditions
precedent that, as of the date of such Loans and after giving effect
thereto:
(a)
no
Default shall have occurred and be continuing;
(b)
no
Material Adverse Effect shall have occurred; and
(c)
the
representations and warranties made by the Borrower in Article
VII
and in
the Security Instruments shall be true on and as of the date of the making
of
such Loans or issuance, renewal, extension or reissuance of a Letter of Credit
with the same force and effect as if made on and as of such date and following
such new borrowing, except to the extent such representations and warranties
are
expressly limited to an earlier date.
Each
request for a borrowing or issuance, renewal, extension or reissuance of a
Letter of Credit by the Borrower hereunder shall constitute a certification
by
the Borrower to the effect set forth in Section
6.02(c)
(both as
of the date of such notice and, unless the Borrower otherwise notifies the
Administrative Agent prior to the date of and immediately following such
borrowing or issuance, renewal, extension or reissuance of a Letter of Credit
as
of the date thereof).
Section
6.03 Conditions
Precedent for the Benefit of Lenders.
All
conditions precedent to the obligations of the Lenders to make any Loan are
imposed hereby solely for the benefit of the Lenders, and no other Person may
require satisfaction of any such condition precedent or be entitled to assume
that the Lenders will refuse to make any Loan in the absence of strict
compliance with such conditions precedent.
Section
6.04 No
Waiver.
No
waiver of any condition precedent shall preclude the Administrative Agent or
the
Lenders from requiring such condition to be met prior to making any subsequent
Loan or preclude the Lenders from thereafter declaring that the failure of
the
Borrower to satisfy such condition precedent constitutes a Default.
ARTICLE
VII
Representations
and Warranties
Each
of
the Obligors represents and warrants to the Administrative Agent and the Lenders
that (each representation and warranty herein is given as of the Closing Date
and shall be deemed repeated and reaffirmed on the dates of each borrowing
and
issuance, renewal, extension or reissuance of a Letter of Credit as provided
in
Section
6.02):
Section
7.01 Corporate
Existence.
Each of
the Obligors: (i) is a corporation, or limited partnership or limited liability
company duly organized, formed, legally existing and in good standing under
the
laws of the jurisdiction of its incorporation or formation, as applicable;
(ii)
has all requisite corporate, partnership, or limited liability company power,
as
applicable, and has all material governmental licenses, authorizations, consents
and approvals necessary to own its assets and carry on its business as now
being
or as proposed to be conducted; and (iii) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would have a Material
Adverse Effect.
Section
7.02 Financial
Condition.
The
Financial Statements are complete and correct and fairly present the
consolidated financial condition of the AER and its Consolidated Subsidiaries
as
of the applicable dates and the results of its operations for the applicable
period, all in accordance with GAAP, as applied on a consistent basis (subject,
in the case of the interim financial statements, to normal year-end adjustments,
and in the case of the historical financial statements of Atlas America E&P
Operations, to the matters described in the Registration Statement under the
heading, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations - Comparability of Financial Statements”). Neither the
Borrower nor any Guarantor has on the Closing Date any material Debt, contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments
or
unrealized or anticipated losses from any unfavorable commitments. Since
December 31, 2005, there has been no change or event having a Material Adverse
Effect.
Section
7.03 Litigation.
Except
as disclosed to the Lenders in Schedule
7.03 hereto,
there is no litigation, legal, administrative or arbitral proceeding,
investigation or other action of any nature pending or, to the knowledge of
the
Obligors threatened against or affecting the Obligors or any Subsidiary which
involves the possibility of any judgment or liability against any Obligor or
any
Subsidiary not fully covered by insurance (except for normal deductibles),
and
which would have a Material Adverse Effect. Schedule
7.03 attached
hereto is a list of all litigation in which any Obligor is a party under which
the amount in controversy including all expenses, fees and costs is greater
than
$250,000.
Section
7.04 No
Breach.
Neither
the execution and delivery of the Loan Documents, nor compliance with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent which has not been obtained as of the Closing Date under, the
respective charter or by-laws of the Obligors, or any Governmental Requirement,
or any agreement or instrument to which any Obligor is a party or by which
it is
bound or to which it or its Properties are subject, or constitute a default
under any such agreement or instrument, or result in the creation or imposition
of any Lien upon any of the revenues or assets of the Obligor pursuant to the
terms of any such agreement or instrument other than the Liens created by the
Loan Documents.
Section
7.05 Authority.
Each
Obligor has all necessary corporate, limited liability company, or partnership
power and authority, as applicable, to execute, deliver and perform its
obligations under the Loan Documents to which it is a party; and the execution,
delivery and performance by each Obligor of the Loan Documents to which it
is a
party, have been duly authorized by all necessary corporate, limited liability
company, or partnership action, as applicable, on its part; and the Loan
Documents constitute the legal, valid and binding obligations of each Obligor,
enforceable in accordance with their terms.
Section
7.06 Approvals.
No
authorizations, approvals or consents of, and no filings or registrations with,
any Governmental Authority or any other Person are necessary for the execution,
delivery or performance by any Obligor of the Loan Documents to which it is
a
party or for the validity or enforceability thereof, except for the recording
and filing of the Security Instruments as required by this Agreement.
Section
7.07 Use
of Loans.
The
proceeds of the Loans shall be used (i) to repay on the Closing Date advances
from AAI relating to the AAI Credit Agreement, (ii) for the development of
the
Obligors’ Oil and Gas Properties and the acquisition of Oil and Gas Properties
and related assets by the Obligors, (iii) to fund Obligors’ capital
contributions under the Partnerships, provided such capital contributions may
not be used for the purpose of funding partnership distributions, (iv) as
working capital, (v) for Letters of Credit to support the obligations of the
Borrower and its Subsidiaries, and (vi) for general company purposes of the
Borrower and its Subsidiaries. Neither the Borrower nor any other Obligor is
engaged principally, or as one of its important activities, in the business
of
extending credit for the purpose, whether immediate, incidental or ultimate,
of
buying or carrying margin stock (within the meaning of Regulation T, U or X
of
the Board of Governors of the Federal Reserve System) and no part of the
proceeds of any Loan hereunder will be used to buy or carry any margin stock.
Section
7.08 ERISA.
(a)
Each
Obligor, each Subsidiary and each ERISA Affiliate have complied in all material
respects with ERISA and, where applicable, the Code regarding each Plan.
(b)
Each
Plan is, and has been, maintained in substantial compliance with ERISA and,
where applicable, the Code.
(c)
No
act, omission or transaction has occurred which could result in imposition
on
any Obligor, any Subsidiary or any ERISA Affiliate (whether directly or
indirectly) of (i) either a civil penalty assessed pursuant to section 502(c),
(i) or (1) of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of
the
Code or (ii) breach of fiduciary duty liability damages under section 409 of
ERISA.
(d)
No
contingent obligations remain due to the termination of any Plan (other than
a
defined contribution plan) or any trust created under any such Plan since
September 2, 1974. The only Plan that has been terminated was for The Atlas
Group, Inc. No liability to the PBGC (other than for the payment of current
premiums which are not past due) by any Obligor, any Subsidiary or any ERISA
Affiliate has been or is expected by any Obligor, any Subsidiary or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with respect
to any Plan has occurred.
(e)
Full
payment when due has been made of all amounts which any Obligor, any Subsidiary
or any ERISA Affiliate is required under the terms of each Plan or applicable
law to have paid as contributions to such Plan, and no accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, exists with respect to any Plan.
(f)
The
actuarial present value of the benefit liabilities under each Plan which is
subject to Title IV of ERISA does not, as of the end of each Obligor’s most
recently ended fiscal year, exceed the current value of the assets (computed
on
a plan termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities. The term “actuarial
present value of the benefit liabilities”
shall
have the meaning specified in section 4041 of ERISA.
(g)
None
of the Obligors, any Subsidiary or any ERISA Affiliate sponsors, maintains,
or
contributes to an employee welfare benefit plan, as defined in section 3(l)
of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
an
Obligor, a Subsidiary or any ERISA Affiliate in its sole discretion at any
time
without any material liability.
(h)
None
of the Obligors, any Subsidiary or any ERISA Affiliate sponsors, maintains
or
contributes to, or has at any time in the preceding six calendar years,
sponsored, maintained or contributed to, any Multiemployer Plan.
(i)
None
of the Obligors, any Subsidiary or any ERISA Affiliate is required to provide
security under section 401 (a)(29) of the Code due to a Plan amendment that
results in an increase in current liability for the Plan.
Section
7.09 Taxes.
Each
Obligor and its Subsidiaries has filed all United States federal income tax
returns and all other tax returns which are required to be filed by them, or
otherwise obtained appropriate extensions to file, and have paid all material
taxes due pursuant to such returns or pursuant to any assessment received by
any
Obligor or any Subsidiary except such taxes that are being contested in good
faith by appropriate proceedings and for which such Obligor, as applicable,
has
set aside on its books adequate reserves in accordance with GAAP. The charges,
accruals and reserves on the books of each Obligor and its Subsidiaries in
respect of taxes and other governmental charges are, in the opinion of the
Borrower, adequate. No tax lien has been filed and, to the knowledge of the
Obligors, no claim is being asserted with respect to any such tax, fee or other
charge.
Section
7.10 Titles,
etc.
(a)
Each
of the Obligors has good and marketable title to its Oil and Gas Properties,
free and clear of all Liens, except Excepted Liens. After giving full effect
to
the Excepted Liens, each Obligor owns either directly in its own name, or
indirectly through its percentage
ownership interest in the Partnerships, the net interests in production
attributable to its Hydrocarbon Interests reflected in the most recently
delivered Ownership Report and the ownership of such Oil and Gas Properties
shall not in any material respect obligate such Obligor to bear the costs and
expenses relating to the maintenance, development and operations of each such
Oil and Gas Property in an amount in excess of the working interest of each
Oil
and Gas Property set forth in the most recently delivered Reserve Report;
provided that to the extent an Obligor is a general partner of a Partnership,
such Obligor is liable for all of the costs and expenses attributable to such
Partnership’s interest, but only entitled to such Obligor’s percentage interest
in such Partnership’s net revenues. In the event an Obligor, as a general
partner, pays more than its partnership share of such Partnership’s costs and
expenses, such Obligor is entitled to reimbursement of such excess amount out
of
the future income of such Partnership. All information contained in the most
recently delivered Ownership Report and Reserve Report is true and correct
in
all material respects as of the date thereof.
(b)
All
leases and agreements necessary for the conduct of the business of the Obligors
are valid and subsisting, in full force and effect and there exists no default
or event or circumstance which with the giving of notice or the passage of
time
or both would give rise to a default under any such lease or leases, which
would
affect in any material respect the conduct of the business of any Obligor.
(c)
The
rights, Properties and other assets presently owned, leased or licensed by
the
Obligors including, without limitation, all easements and rights of way, include
all rights, Properties and other assets necessary to permit each Obligor to
conduct its business in all material respects in the same manner as its business
has been conducted prior to the Closing Date.
(d)
All
of the assets and Properties of any Obligor which are reasonably necessary
for
the operation of its business are in good working condition and are maintained
in accordance with prudent business standards.
Section
7.11 No
Material Misstatements.
No
written information, statement, exhibit, certificate, document or report
furnished to the Administrative Agent and the Lenders (or any of them) by any
Obligor in connection with the negotiation of this Agreement contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statement contained therein not materially misleading
in
the light of the circumstances in which made; provided
that,
with
respect to financial projections concerning the Borrower and its Subsidiaries,
the Borrower represents only that such information was prepared in good faith
based on assumptions believed to be reasonable at the time. There is no fact
peculiar to any Obligor which has a Material Adverse Effect or in the future
is
reasonably likely to have a Material Adverse Effect and which has not been
set
forth in this Agreement or the other documents, certificates and statements
furnished to the Administrative Agent by or on behalf of the Obligors prior
to,
or on, the Closing Date in connection with the transactions contemplated hereby.
Section
7.12 Investment
Company Act.
None of
the Obligors nor any Subsidiary is an “investment
company”
or
a
company “controlled”
by
an
“investment
company,”
within
the meaning of the Investment Company Act of 1940, as amended.
Section
7.13 [Intentionally Deleted]
Section
7.14 Partnership
Interests.
Obligors own the percentage general partner and limited partner interests in
the
Partnerships set forth on Schedule
7.14.
None of
the Obligors own any interest in any partnership or other Special Entity other
than the Special Entities listed on Schedule
7.15
and the
Partnerships. The Obligors’ ownership interests in the Partnerships are free and
clear of any and all liens, claims and encumbrances including any preferential
rights to purchase and consents to assignments.
Section
7.15 Capitalization
and Subsidiaries.
The
amount and type of the authorized securities of each of the entities listed
on
Schedule
7.15
are
accurately described thereon, and all such securities that are issued and
outstanding have been validly issued and are fully paid and nonassessable and
are owned by and issued to the Person listed as their owner on Schedule
7.15.
Except
for the Persons set forth on Schedule
7.15,
neither
Borrower nor any Guarantor owns directly or indirectly any capital stock of
any
other Person other than the Partnerships. Borrower and each Guarantor has good
and marketable title to all the securities of the Subsidiaries (except for
the
Unrestricted Entities) issued to it, free and clear of all liens and
encumbrances, and all such securities have been duly and validly issued and
are
fully paid and nonassessable.
Section
7.16 Location
of Business and Offices.
Each
Obligor’s principal place of business and chief executive offices are located at
the address stated on the signature page of this Agreement.
Section
7.17 Defaults.
None of
the Obligors is in default nor has any event or circumstance occurred which,
but
for the expiration of any applicable grace period or the giving of notice,
or
both, would constitute a default under any Material Agreement or instrument
to
which any Obligor is a party or by which any Obligor is bound. No Default
hereunder has occurred and is continuing.
Section
7.18 Environmental
Matters.
Except
as would not have a Material Adverse Effect (or with respect to (c),
(d)
and
(e)
below,
where the failure to take such actions would not have a Material Adverse
Effect):
(a)
Neither any Property of Borrower or any Subsidiary nor the operations conducted
thereon violate any order or requirement of any court or Governmental Authority
or any Environmental Laws;
(b)
Without limitation of clause
(a)
above,
no Property of Borrower or any Subsidiary nor the operations currently conducted
thereon or, to the best knowledge of the Obligors, by any prior owner or
operator of such Property or operation, are in violation of or Subject to any
existing, pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or Governmental Authority or to any remedial
obligations under Environmental Laws;
(c)
All
notices, permits, licenses or similar authorizations, if any, required to be
obtained or filed in connection with the operation or use of any and all
Property of Borrower and each Subsidiary, including without limitation past
or
present treatment, storage, disposal or release of a hazardous substance or
solid waste into the environment, have been duly obtained or filed, and Borrower
and each Subsidiary are in compliance with the terms and conditions of all
such
notices, permits, licenses and similar authorizations;
(d)
All
hazardous substances, solid waste, and oil and gas exploration and production
wastes, if any, generated at any and all Property of Borrower or any Subsidiary
have in the past been transported, treated and disposed of in accordance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and, to the best
knowledge of the Obligors, all such transport carriers and treatment and
disposal facilities have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment, and are not the subject of any existing,
pending or threatened action, investigation or inquiry by any Governmental
Authority in connection with any Environmental Laws;
(e)
Borrower has taken all steps reasonably necessary to determine and have
determined that no hazardous substances, solid waste, or oil and gas exploration
and production wastes, have been disposed of or otherwise released and there
has
been no threatened release
of any hazardous substances on or to any Property of Borrower or any Subsidiary
except in compliance with Environmental Laws and so as not to pose an imminent
and substantial endangerment to public health or welfare or the
environment;
(f)
To
the extent applicable, all Property of Borrower and each Subsidiary currently
satisfies all design, operation, and equipment requirements imposed by the
OPA
or scheduled as of the Closing Date to be imposed by OPA during the term of
this
Agreement, and Borrower does not have any reason to believe that such Property,
to the extent subject to OPA, will not be able to maintain compliance with
the
OPA requirements during the term of this Agreement; and
(g)
Neither Borrower nor any Subsidiary has any known contingent liability in
connection with any release or threatened release of any oil, hazardous
substance or solid waste into the environment.
Section
7.19 Compliance
with the Law.
None of
the Obligors has violated any Governmental Requirement or failed to obtain
any
license, permit, franchise or other governmental authorization necessary for
the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
Except for such acts or failures to act as would not have a Material Adverse
Effect, the Oil and Gas Properties of the Obligors (and properties unitized
therewith) have been maintained, operated and developed in a good and
workmanlike manner and in conformity with all applicable laws and all rules,
regulations and orders of all duly constituted authorities having jurisdiction
and in conformity with the provisions of all leases, subleases or other
contracts comprising a part of the Hydrocarbon Interests and other contracts
and
agreements forming a part of such Oil and Gas Properties; specifically in this
connection, (i) after the Closing Date, no Oil and Gas Property of any Obligor
is subject to having allowable production reduced below the full and regular
allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) prior
to
the Closing Date and (ii) none of the wells comprising a part of the Oil and
Gas
Properties of any Obligor (or properties unitized therewith) are deviated from
the vertical more than the maximum permitted by applicable laws, regulations,
rules and orders, and such wells are, in fact, bottomed under and are producing
from, and the well bores are wholly within, such Oil and Gas Properties (or
in
the case of wells located on properties unitized therewith, such unitized
properties).
Section
7.20 Insurance.
Schedule
7.20
attached
hereto contains an accurate and complete description of all material policies
of
fire, liability, workers’ compensation and other forms of insurance owned or
held by the Obligors. All such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the
date
of the closing have been paid, and no notice of cancellation or termination
has
been received with respect to any such policy. Such policies are sufficient
for
compliance with all requirements of law and of all agreements to which any
Obligor is a party; are valid, outstanding and enforceable policies; provide
adequate insurance coverage in at least such amounts and against at least such
risks (but including in any event public liability) as are usually insured
against in the same general area by companies engaged in the same or a similar
business for the assets and operations of the Obligors; will remain in full
force and effect through the respective dates set forth in Schedule
7.20
without
the payment of additional premiums; and will not in any way be affected by,
or
terminate or lapse by reason of, the transactions contemplated by this
Agreement. Schedule
7.20
identifies all material risks, if any, which each Obligor and their respective
Board of Directors or officers have designated as being self insured. None
of
the Obligors has been refused any insurance with respect to its assets or
operations, nor has its coverage been limited below usual and customary policy
limits, by an insurance carrier to which it has applied for any such insurance
or with which it has carried insurance during the last three years.
Section
7.21 Hedging
Agreements.
Schedule
7.21
sets
forth, as of the Closing Date, a true and complete list of all Hedging
Agreements (including commodity price swap agreements, forward agreements or
contracts of sale which provide for prepayment for
deferred shipment or delivery of oil, gas or other commodities) of the Obligors,
the material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), the net mark to market value
thereof, all credit support agreements relating thereto (including any margin
required or supplied), and the counter party to each such agreement. Borrower
is
the only Person authorized to enter into Hedging Agreements on behalf of the
Obligors and the Partnerships, and no other Obligor or Partnership currently
does (or will in the future) enter into any Hedging Agreement on its own behalf.
Section
7.22 Restriction
on Liens.
Neither
the Borrower nor any Guarantor is a party to any agreement or arrangement (other
than this Agreement and the Security Instruments), or subject to any order,
judgment, writ or decree, which either restricts or purports to restrict its
ability to grant Liens to other Persons on or in respect of their respective
assets or Properties.
Section
7.23 Material
Agreements.
Set
forth on Schedule
7.23 is
a
complete list of all agreements, indentures, purchase agreements, obligations
in
respect of letters of credit, guarantees, partnership agreements, exploration
and development agreements, joint venture agreements, and other instruments
which are material to each Obligor’s business, activities, and operation or
ownership of such Obligors’ Property (the “Material
Agreements”)
in
effect or to be in effect as of the Closing Date (other than the Partnership
Agreements set forth on Schedule
7.14
and
Hedging Agreements set forth on Schedule
7.21)
providing for, evidencing, securing or otherwise relating to any Debt of any
such Obligor or any of its Subsidiaries, and all obligations of Borrower or
any
of the Guarantors to issuers of surety or appeal bonds issued for account of
any
such Obligor. The Borrower shall also make available to Administrative Agent
and
Lenders all Material Agreements and other agreements and instruments (excluding
any such agreements and other instruments that are cancelable upon 60 or less
days notice) of Borrower and each of the Obligors relating to the purchase,
transportation by pipeline, gas processing, marketing, sale and supply of
natural gas and other Hydrocarbons, but in any event, any such agreement or
other instrument that will account for more than 10% of the sales of any such
Obligor during the Borrower’s current fiscal year. Upon request by
Administrative Agent, the Borrower shall deliver, or caused to be delivered,
to
the Administrative Agent and the Lenders a complete and correct copy of all
such
Material Agreements.
Section
7.24 Gas
Imbalances.
As of
the Closing Date, except as set forth on Schedule
7.24
or on
the most recent certificate delivered pursuant to Section
8.07(c),
on a
net basis there are no gas imbalances, take or pay or other prepayments with
respect to any of the Obligors’ Oil and Gas Properties which would require any
such Obligors to deliver, in the aggregate, five percent (5%) or more of the
monthly production of Hydrocarbons produced from their Oil and Gas Properties
at
some future time without then or thereafter receiving fall payment therefor.
Section
7.25 Relationship
of Obligors.
The
Obligors are engaged in related businesses and each Obligor is directly and
indirectly dependent upon each other Obligor for and in connection with their
business activities and their financial resources; and each Obligor has
determined, reasonably and in good faith, that such Obligor will receive
substantial direct and indirect economic and financial benefits from the
extensions of credit made under this Agreement, and such extensions of credit
are in the best interests of such Obligor, having regard to all relevant facts
and circumstances.
Section
7.26 Solvency.
The
Borrower and its Subsidiaries individually and on a consolidated basis are
not
insolvent as such term is used and defined in the United States Bankruptcy
Code.
Each
of
the Obligors covenants and agrees that, so long as any of the Commitments are
in
effect and until payment in full of all Loans hereunder, all interest thereon
and all other amounts payable by the Obligors hereunder:
Section
8.01 Reporting
Requirements.
The
Obligors shall deliver, or shall cause to be delivered, to the Administrative
Agent with sufficient copies of each for the Lenders:
(a)
Annual
Financial Statements.
As soon
as available and in any event within one hundred (100) days after the end of
each of its fiscal year, the audited consolidated and unaudited consolidating
statements of income, stockholders’ equity, changes in financial position and
cash flow for AER and its Consolidated Subsidiaries for such fiscal year, and
the related consolidated and consolidating balance sheets of AER and its
Consolidated Subsidiaries as at the end of such fiscal year, and setting forth
in each case in comparative form the corresponding figures for the preceding
fiscal year, and accompanied by the related opinion of independent public
accountants of recognized national standing acceptable to the Administrative
Agent which opinion shall state that said financial statements fairly present
the consolidated and consolidating financial condition and results of operations
of such Person and its Consolidated Subsidiaries as at the end of, and for,
such
fiscal year and that such financial statements have been prepared in accordance
with GAAP, except for such changes in such principles with which the independent
public accountants shall have concurred and such opinion shall not contain
a
“going
concern”
or
like
qualification or exception, and a certificate of such accountants stating that,
in making the examination necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any Default.
(b)
Quarterly
Financial Statements.
As soon
as available and in any event within fifty-five (55) days after the end of
each
of the first three fiscal quarterly periods of each of its fiscal year for
each
of AER, consolidated and consolidating statements of income, stockholders’
equity, changes in financial position and cash flow of AER and its Consolidated
Subsidiaries for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related consolidated
and consolidating balance sheets as at the end of such period, and setting
forth
in each case in comparative form the corresponding figures for the corresponding
period in the preceding fiscal year, accompanied by the certificate of a
Responsible Officer, which certificate shall state that said financial
statements fairly present the consolidated and consolidating financial condition
and results of operations of such Person and its Consolidated Subsidiaries
in
accordance with GAAP, as at the end of, and for, such period (subject to normal
year-end audit adjustments).
(c)
Notice
of Default, Etc.
Promptly after any Obligor knows that any Default, Event of Default, labor
dispute, or any Material Adverse Effect has occurred, a notice of such Default
or Material Adverse Effect, describing the same in reasonable detail and the
action the Borrower or any Guarantor proposes to take with respect thereto.
(d)
Other
Accounting Reports.
Promptly upon receipt thereof, a copy of each other report or letter submitted
to the Obligor or any Subsidiary by independent accountants in connection with
any annual, interim or special audit made by them of the books of the Obligor
and its Subsidiaries, and a copy of any response by the Obligor or any
Subsidiary, or the board of directors or comparable governing body of the
Obligor or such Subsidiary, to such letter or report.
(e)
SEC
Filings, Etc.
Promptly upon its becoming available, each financial statement, report, notice
or proxy statement sent by AER and its Subsidiaries to stockholders generally
and each regular or periodic report and any registration statement, prospectus
or written communication (other than transmittal letters) in respect thereof
filed by AER and its Subsidiaries with or received by AER and its Subsidiaries
in connection therewith from any securities exchange or the SEC or any successor
agency.
Documents
required to be delivered pursuant to this Section
8.01(e)
may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date on which AER posts such documents to EDGAR (or such other
free, publicly-accessible internet database that may be established and
maintained by the SEC as a substitute for or successor to EDGAR); provided
that:
(i) the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender; and (ii) the Borrower shall notify
the Administrative Agent and each Lender (by telecopier or electronic mail)
of
the posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e.,
soft
copies) of such documents.
(f)
Notices
Under Other Loan Agreements.
Promptly after the furnishing thereof, copies of any statement, report or notice
furnished by AER, Borrower or any of its Subsidiaries to any Person pursuant
to
the terms of any indenture, loan or credit or other similar agreement, other
than this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section
8.01.
(g)
Other
Matters.
From
time to time such other information regarding the business, affairs or financial
condition of any Obligor or any Subsidiary (including, without limitation,
any
Plan or Multiemployer Plan and any reports or other information required to
be
filed under ERISA) as any Lender or the Administrative Agent may reasonably
request.
(h)
Hedging
Agreements.
As soon
as available and in any event within fifteen Business Days after the last day
of
each fiscal quarter, (i) a report, in form and substance satisfactory to the
Administrative Agent, setting forth as of the last Business Day of such fiscal
quarter a true and complete list of all Hedging Agreements (including commodity
price swap agreements, forward agreements or contracts of sale which provide
for
prepayment for deferred shipment or delivery of oil, gas or other commodities)
of the Obligors, the material terms thereof (including the type, term, effective
date, termination date and notional amounts or volumes), the net mark to market
value therefor, any new credit support agreements relating thereto not listed
on
Schedule
7.21,
any
margin required or supplied under any credit support document, and the counter
party to each such agreement, and (ii) a hedging compliance report substantially
in the form attached hereto as Exhibit
I.
The
Borrower will furnish to the Administrative Agent, at the time it furnishes
each
set of financial statements pursuant to paragraph
(a)
or
(b)
above, a
certificate substantially in the form of Exhibit
C executed
by a Responsible Officer (i) certifying as to the matters set forth therein
and
stating that no Default has occurred and is continuing (or, if any Default
has
occurred and is continuing, describing the same in reasonable detail), and
(ii)
setting forth in reasonable detail the computations necessary to determine
whether the Borrower is in compliance with Sections
9.13, 9.14,
and
9.15
as of
the end of Borrower’s fiscal quarter or fiscal year.
Section
8.02 Litigation.
Borrower and its Subsidiaries shall promptly give to the Administrative Agent
notice of any litigation or proceeding against or adversely affecting Borrower
or any Subsidiary in which the amount claimed exceeds $1,000,000 or an aggregate
of claims in excess of $5,000,000 and is not otherwise covered in full by
insurance (subject to normal and customary deductibles and for which the insurer
has not assumed the defense), or in which injunctive or similar relief is
sought. Borrower will, and will cause each of its Subsidiaries to, promptly
notify the Administrative Agent and each of the Lenders of any claim, judgment,
Lien or other encumbrance affecting any Property of Borrower or any Subsidiary
if the value of the claim, judgment, Lien, or other encumbrance affecting such
Property shall exceed $1,000,000 or an aggregate of such claims in excess of
$5,000,000.
(a)
Generally.
Except
as permitted under Section
9.09,
each
Obligor shall and shall cause each of its Subsidiaries to: preserve and maintain
its organization, existence and all of its material rights, privileges and
franchises; keep books of record and account in which full, true and correct
entries will be made of all dealings or transactions in relation to its business
and activities; comply with all Governmental Requirements if failure to comply
with such requirements will have a Material Adverse Effect; pay and discharge
all taxes, assessments and governmental charges or levies imposed on it or
on
its income or profits or on any of its Property prior to the date on which
penalties attach thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained; upon reasonable
notice, permit representatives of the Administrative Agent or any Lender, during
normal business hours, to examine, copy and make extracts from its books and
records, to inspect its Properties, and to discuss its business and affairs
with
its officers, all to the extent reasonably requested by such Lender or the
Administrative Agent (as the case may be); and keep, or cause to be kept,
insured by financially sound and reputable insurers all Property of a character
usually insured by Persons engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such Persons and carry such other insurance as is usually
carried by such Persons including, without limitation, environmental risk
insurance to the extent reasonably available.
(b)
Proof
of Insurance.
Contemporaneously with the delivery of the financial statements required by
Section
8.01(a)
to be
delivered for each year, the Borrower will furnish or cause to be furnished
to
the Administrative Agent and the Lenders a certificate of insurance coverage
from the insurer in form and substance satisfactory to the Administrative Agent
listing Administrative Agent as “loss payee” and, if requested, will furnish the
Administrative Agent and the Lenders copies of the applicable policies.
(c)
Oil
and Gas Properties.
Borrower will and will cause each of its Subsidiaries to, do or cause to be
done
all things reasonably necessary to preserve and keep in good repair, working
order and efficiency all of its Oil and Gas Properties and other material
Properties including, without limitation, all equipment, machinery and
facilities, and from time to time will make all the reasonably necessary
repairs, renewals and replacements so that at all times the state and condition
of its Oil and Gas Properties and other material Properties will be fully
preserved and maintained, except to the extent a portion of such Properties
is
no longer capable of producing Hydrocarbons in economically reasonable amounts.
Borrower will and will cause each of its Subsidiaries to promptly: (i) pay
and
discharge, or make reasonable and customary efforts to cause to be paid and
discharged, all delay rentals, royalties, expenses and indebtedness accruing
under the leases or other agreements affecting or pertaining to its Oil and
Gas
Properties, (ii) perform or make reasonable and customary efforts to cause
to be
performed, in accordance with industry standards, the obligations required
by
each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas Properties and other
material Properties, (iii) will and will cause each Subsidiary to do all other
things necessary to keep unimpaired, except for Liens described in Section
9.03,
its
rights with respect to its Oil and Gas Properties and other material Properties
and prevent any forfeiture thereof or a default thereunder, except to the extent
a portion of such Properties is no longer capable of producing Hydrocarbons
in
economically reasonable amounts and except for Transfers permitted by
Section
9.16.
Borrower will and will cause each of its Subsidiaries to operate its Oil and
Gas
Properties and other material Properties or cause or make reasonable and
customary efforts to cause such Oil and Gas Properties and other material
Properties to be operated in a careful and efficient manner in accordance with
the practices of the industry and in compliance with all applicable contracts
and agreements and in compliance in all material respects with all Governmental
Requirements.
(a)
Establishment
of Procedures.
The
Obligors will and will cause each of their Subsidiaries to establish and
implement such procedures as may be reasonably necessary to continuously
determine and assure that any failure of the following does not have a Material
Adverse Effect: (i) all Property of the Obligors and their Subsidiaries and
the
operations conducted thereon and other activities of the Obligors and their
Subsidiaries are in compliance with and do not violate the requirements of
any
Environmental Laws, (ii) no oil, hazardous substances or solid wastes are
disposed of or otherwise released on or to any Property owned by any such party
except in compliance with Environmental Laws, (iii) no hazardous substance
will
be released on or to any such Property in a quantity equal to or exceeding
that
quantity which requires reporting pursuant to Section 103 of CERCLA, and (iv)
no
oil, oil and gas exploration and production wastes or hazardous substance is
released on or to any such Property so as to pose an imminent and substantial
endangerment to public health or welfare or the environment.
(b)
Notice
of Action.
The
Obligors will promptly notify the Administrative Agent and the Lenders in
writing of any threatened action, investigation or inquiry by any Governmental
Authority of which any Obligor has knowledge in connection with any
Environmental Laws, excluding routine testing and corrective action.
(c)
Future
Acquisitions.
The
Obligors will and will cause each of their Subsidiaries to provide environmental
audits and tests in accordance with American Society for Testing and Materials
standards as reasonably requested by the Administrative Agent and the Lenders
(or as otherwise required to be obtained by the Administrative Agent or the
Lenders by any Governmental Authority) in connection with any future
acquisitions of Oil and Gas Properties or other material Properties.
Section
8.05 Further
Assurances.
The
Obligors will and will cause each of their Subsidiaries to cure promptly any
defects in the creation and issuance of the Notes and the execution and delivery
of the Security Instruments and this Agreement. The Obligors at their expense
will and will cause each Subsidiary to promptly execute and deliver to the
Administrative Agent upon request all such other documents, agreements and
instruments to comply with or accomplish the covenants and agreements of the
Obligors or any Subsidiary, as the case may be, in any Loan Document, or to
further evidence and more fully describe the collateral intended as security
for
the Notes, or to correct any omissions in any Loan Document, or to state more
fully the security obligations set out herein or in any Loan Document, or to
perfect, protect or preserve any Liens created pursuant to any of the Security
Instruments, or to make any recordings, to file any notices or obtain any
consents, all as may be necessary or appropriate in connection therewith.
Section
8.06 Performance
of Obligations.
The
Borrower will pay the Notes according to the reading, tenor and effect thereof;
the Guarantors will pay under the Guarantees according to the terms thereof,
and
the Obligors will and will cause each of their Subsidiaries to do and perform
every act and discharge all of the obligations to be performed and discharged
by
them under this Agreement and any other Loan Document, at the time or times
and
in the manner specified.
Section
8.07 Engineering
Reports.
(a)
Not
less than 30 days prior to each Scheduled Borrowing Base Redetermination Date,
commencing with the Scheduled Borrowing Base Redetermination to occur on or
around March 15, 2007, the Borrower shall furnish to the Administrative Agent
and the Lenders a Reserve Report. The Reserve Reports delivered in connection
with each March 15 Scheduled Borrowing Base Redetermination, commencing March15, 2007, shall be prepared by certified independent petroleum engineers or
other independent petroleum consultant(s) acceptable to the Administrative
Agent. The Reserve Reports delivered in connection with each September 15
Scheduled Borrowing Base Redetermination, commencing September 15, 2007, shall
be prepared by or under the supervision
of the chief engineer of the Borrower and a Responsible Officer shall certify
such Reserve Report to be true and accurate and to have been prepared in
accordance with the procedures used in the immediately preceding Scheduled
Borrowing Base Redetermination Reserve Report.
(b)
In
the event of an unscheduled redetermination, the Borrower shall furnish to
the
Administrative Agent and the Lenders a Reserve Report prepared by or under
the
supervision of the chief engineer of the Obligors together with the certificate
of a Responsible Officer who shall certify such Reserve Report to be true and
accurate and to have been prepared in accordance with the procedures used in
the
immediately preceding Reserve Report. For any unscheduled redetermination
requested by the Lenders or the Borrower pursuant to Section
2.08(d),
the
Borrower shall provide such Reserve Report with an “as
of”
date as
required by the Lenders as soon as possible, but in any event no later than
30
days following the receipt of the request by the Administrative Agent.
(c)
With
the delivery of each Reserve Report, the Borrower shall provide, or cause to
be
provided, to the Administrative Agent and the Lenders, a certificate from a
Responsible Officer certifying that, to the best of his knowledge and in all
material respects: (i) the information contained in the Reserve Report and
any
other information delivered in connection therewith is true and correct, (ii)
the Obligors and the Partnerships own good and marketable title to the Oil
and
Gas Properties evaluated in such Reserve Report and such Properties are free
of
all Liens except for Liens permitted by Section
9.03,
(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 any Obligor
to deliver Hydrocarbons produced from such Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor, (iv) none
of
Obligor’s or and the Partnerships’ Oil and Gas Properties have been sold since
the date of the last Borrowing Base determination except as set forth on an
exhibit to the certificate, which certificate shall list all of its Oil and
Gas
Properties sold and in such detail as reasonably required by the Administrative
Agent, (v) attached to the certificate is a list of its Oil and Gas Properties
added to and deleted from the immediately prior Reserve Report and a list
showing any change in working interest or net revenue interest in its Oil and
Gas Properties occurring and the reason for such change, (vi) attached to the
certificate is a list of all Persons disbursing proceeds to the Obligors from
their Oil and Gas Properties, and (vii) all of the Oil and Gas Properties
evaluated by such Reserve Report are Mortgaged Property except as set forth
on a
schedule attached to the certificate.
Section
8.08 Title
Curative.
Borrower shall cure, and shall cause its Subsidiaries to cure or cause to be
cured, any title defects or exceptions which are not Excepted Liens raised
by
such information, or substitute acceptable Mortgaged Properties with no title
defects or exceptions except for Excepted Liens covering Mortgaged Properties
of
an equivalent value, within 30 days after a request by the Administrative Agent
to cure such defects or exceptions.
Section
8.09 Additional
Collateral.
(a)
Lien
in Oil and Gas Properties.
At all
times hereunder that the Obligations remain unpaid, including whenever any
Obligor acquires any additional Oil and Gas Properties or additional interests
in existing Oil and Gas Properties, Obligors shall grant to the Administrative
Agent for the benefit of the Lenders as security for the Indebtedness a
first-priority Lien interest (subject only to Excepted Liens) covering at least
80% of the total value (based upon the most recent Reserve Report plus the
value
of Oil and Gas Properties acquired after the date of such Reserve Report
determined on a basis consistent with the Reserve Report) of the Obligors’ Oil
and Gas Properties either directly under the Mortgages or indirectly under
the
pledge of their interests in the Partnerships. Such Lien will be created and
perfected by and in accordance with the provisions of mortgages, deeds of trust,
security agreements and financing statements, or other Security Instruments,
all
in form and substance satisfactory to the Administrative Agent in its sole
discretion and in sufficient executed (and acknowledged where necessary or
appropriate) counterparts for recording purposes.
(b)
Title
Information.
Concurrently with the granting of the Lien or other action referred to in
Section
8.09(a)
above,
the Borrower or its Subsidiaries will provide to the Administrative Agent title
information in form and substance satisfactory to the Administrative Agent
in
its sole discretion with respect to such Obligor’s interests in such Oil and Gas
Properties.
(c)
Legal
Opinions.
Promptly after the filing of any new Security Instrument in any state, upon
the
request of the Administrative Agent, Borrower will provide, or cause to be
provided, to the Administrative Agent an opinion addressed to the Administrative
Agent for the benefit of the Lenders in form and substance satisfactory to
the
Administrative Agent in its sole discretion from counsel acceptable to
Administrative Agent, stating that the Security Instrument is valid, binding
and
enforceable in accordance with its terms and in legally sufficient form for
such
jurisdiction.
(d)
Letters
in Lieu.
(i)
Upon
request by Administrative Agent and Majority Lenders, Borrower shall, and shall
cause its Subsidiaries to, provide to Administrative Agent undated letters,
in
form of Exhibit
F
attached
hereto, from Borrower or such Subsidiary to each purchaser of production and
disburser of proceeds of production from or attributable to the Mortgaged
Properties, along with sufficient copies of additional executed letters with
the
addressees left blank, authorizing and directing the addressees to make future
payments attributable to production from the Mortgaged Properties directly
to
Administrative Agent for the ratable benefit of the Lenders.
(ii)
Borrower and each of its Subsidiaries hereby designates Administrative Agent
as
its agent and attorney-in-fact, to act in their name, place, and stead for
the
purpose of completing and delivering any and all of the letters in lieu of
division orders delivered by Borrower and such Subsidiaries to Administrative
Agent, including, without limitation, completing any blanks contained in such
letter and attaching exhibits thereto describing the relevant Collateral. The
Borrower and each of its Subsidiaries hereby ratifies and confirms all that
Administrative Agent shall lawfully do or cause to be done by virtue of this
power of attorney and the rights granted with respect to such power of attorney.
This power of attorney is coupled with the interest of Administrative Agent
in
the Collateral, shall commence and be in full force and effect as of the Closing
Date and shall remain in full force and effect and shall be irrevocable so
long
as any Obligation remains outstanding or unpaid or any Commitment exists. The
powers conferred on Administrative Agent by this appointment are solely to
protect the interests of Administrative Agent and each of the Lenders under
the
Loan Documents and shall not impose any duty upon Administrative Agent to
exercise any such powers. Administrative Agent shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers
and
shall not be responsible to Borrower, its Subsidiaries, or any other Person
for
any act or failure to act with respect to such powers, except for gross
negligence or willful misconduct.
(iii)
Until such time as Administrative Agent shall notify Borrower and its
Subsidiaries to the contrary, Borrower and its Subsidiaries shall be entitled
to
receive from the purchasers or disbursers of production all such proceeds of
runs, subject however to the liens created under the Security Instruments.
Upon
the occurrence and during the continuance of a Default or such other time as
Administrative Agent shall in its discretion so elect, Administrative Agent
may
deliver to the addressees the letters-in-lieu described in Subsection
8.09(d)(i) above
and
may exercise all rights and remedies granted under the Security Instruments,
including the right to obtain possession of all proceeds of runs then held
by
Borrower and its Subsidiaries or to receive directly from the purchaser or
disburser of production all other proceeds of runs.
(iv)
In
no case shall any failure, whether purposed or inadvertent, by Administrative
Agent to collect directly any such proceeds of runs constitute in any way a
waiver, remission or release of any of its rights under the Security
Instruments, nor shall any release of any other proceeds of runs or of any
rights of Administrative Agent to collect other proceeds of runs thereafter.
(e)
Subordination
of Obligor’s Liens.
(i)
Each
Obligor hereby subordinates and assigns in favor of Administrative Agent for
the
benefit of the Lenders any and all liens, statutory or otherwise and any rights
of offset contractual or otherwise it has or may have in the future against
such
Obligors’ interests in the Mortgaged Properties or in the Oil and Gas Properties
and revenues attributable to its interest therein, including the Contracts
and
Records (defined below).
(ii)
Any
officer or employee of Administrative Agent is expressly granted the right
at
its option upon not less than one (1) Business Day’s notice, to visit and
inspect (a) each Obligors’ offices, including all books and records, farmout
agreements, area of mutual interest agreements, development agreements, geologic
and geophysical survey agreements, operating agreements, contracts and other
agreements that relate to any of the Mortgaged Properties or in the Oil and
Gas
Properties, seismic, geological and geophysical, drilling and production data
and records, all accounting records, joint interest billing records, division
order records, land files, and contracts and records referring to the
production, sale, purchase, exchange or processing of Hydrocarbons whether
such
data, information or agreements are in written form or electronic format (the
“Contracts
and Records”),
and
to examine, take copies and extracts therefrom, and (b) any of the Mortgaged
Properties.
(iii)
Following the occurrence and during the continuance of an Event of Default,
each
Obligor acknowledges that the Administrative Agent is expressly granted the
right to exercise any and all liens, statutory or otherwise, rights of offset
or
recoupment it has and to receive the monies, income, proceeds, or benefits
attributable to the sale of Oil and Gas produced from or attributable to the
Mortgaged Properties, to hold the same as security for the Indebtedness and
to
apply it on the principal and interest or other amounts owing on any of the
Indebtedness, whether or not then due, in such order or manner as Administrative
Agent may elect.
(iv)
In
the event of a foreclosure, deed in lieu, or other transfer of record or
beneficial ownership or operations of the Mortgaged Properties, each Obligor,
as
bailee, agrees to cooperate and assist Administrative Agent and its officers,
agents and counsel in the peaceful transfer and delivery of such Contracts
and
Records to such party or parties as Administrative Agent may in writing direct.
(v)
Following the occurrence and during the continuance of a Default or Event of
Default and within thirty (30) days after receipt of notice from Administrative
Agent, Obligors will relinquish their respective rights to operate the
Properties of Obligors to the Administrative Agent or its designee.
(f)
Pledge
of Partnerships.
Borrower shall and shall cause each of its Wholly Owned Subsidiaries that are
not Unrestricted Entities to pledge all of its interest in any Partnership
and
to provide such information about such Partnership as Lenders may reasonably
request.
(g)
Subordination
of Intercompany Debt.
Any
Intercompany Notes or advances of any Obligor howsoever evidenced by journal
entries or otherwise now or hereafter owed to or held by any other Obligor
are
hereby subordinated to the Indebtedness of such other Obligor to the Lenders,
and any document or instrument evidencing such loans or advances shall contain
a
legend giving notice of such subordination. Any Intercompany Notes or advances
of any other Obligor due to such Obligor, if the Administrative Agent so
requests, shall be collected, enforced and received by such Obligor as trustee
for the Lenders and be paid over to the Administrative Agent for the account
of
the Lenders on account of the Indebtedness but without affecting in any manner
the liability of such Obligor under the other provisions of this Agreement
or
any other Loan Document. Any Lien, claim, right or other encumbrance on any
property of any Obligor in favor of any other Obligor is hereby subordinated
in
all respects to the Liens granted to the Administrative Agent for the benefit
of
the Lenders.
Section
8.10 ERISA
Information and Compliance.
The
Obligors will promptly furnish and will cause the Subsidiaries and any ERISA
Affiliate to promptly furnish to the Administrative Agent with sufficient copies
to the Lenders (i) promptly after the filing thereof with the United States
Secretary of Labor, the Internal Revenue Service or the PBGC, copies of each
annual and other report with respect to each Plan or any trust created
thereunder, (ii) immediately upon becoming aware of the occurrence of any ERISA
Event or of any “prohibited
transaction,”
as
described in section 406 of ERISA or in section 4975 of the Code, in connection
with any Plan or any trust created thereunder, a written notice signed by a
Responsible Officer specifying the nature thereof, what action the Obligors,
the
Subsidiary or the ERISA Affiliate is taking or proposes to take with respect
thereto, and, when known, any action taken or proposed by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto, and (iii)
immediately upon receipt thereof, copies of any notice of the PBGCs intention
to
terminate or to have a trustee appointed to administer any Plan. With respect
to
each Plan (other than a Multiemployer Plan), the Obligors will, and will cause
each Subsidiary and ERISA Affiliate to, (i) satisfy in full and in a timely
manner, without incurring any late payment or underpayment charge or penalty
and
without giving rise to any lien, all of the contribution and funding
requirements of section 412 of the Code (determined without regard to
subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii)
pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any
late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
ARTICLE
IX
Negative
Covenants
The
Obligors covenant and agree that, so long as any of the Commitments are in
effect and until payment in full of Loans hereunder, all interest thereon and
all other amounts payable by the Obligors hereunder, without the prior written
consent of the Majority Lenders:
Section
9.01 Debt.
None of
the Obligors or their Subsidiaries (other than Unrestricted Entities) and none
of the Partnerships will incur, create, assume or permit to exist any Debt,
except:
(a)
the
Notes or other Indebtedness or any guaranty of or suretyship arrangement for
the
Notes or other Indebtedness;
(b)
Debt
of the Borrower disclosed in Schedule
9.01,
and any
renewals or extensions (but not increases) thereof;
(c)
accounts payable (for the deferred purchase price of Property or services)
from
time to time incurred in the ordinary course of business which, if greater
than
90 days past the invoice or billing date, are being contested in good faith
by
appropriate proceedings if reserves adequate under GAAP shall have been
established therefor;
(d)
Debt
under leases permitted under Section
9.08;
(e)
Debt
associated with bonds or surety obligations pursuant to Governmental
Requirements in connection with the operation of any Obligor’s Oil and Gas
Properties;
(f)
Debt
of the Obligors under Hedging Agreements permitted under Section
9.02;
(g)
Debt
to AAI not to exceed $15,000,000 in the aggregate; provided, that, all
such debt shall be unsecured and subordinated to the Obligations on terms and
conditions satisfactory to the Administrative Agent;
(h)
Intercompany Debt; provided, that, (i) any such Intercompany Debt shall
be subordinated to the Obligations upon terms and conditions satisfactory to
the
Administrative Agent, and (ii) such Intercompany Debt in excess of $250,000
shall be evidenced by an Intercompany Note pledged to secure the Obligations
and
in the possession of the Administrative Agent; and
(i)
Debt
of the Borrower and its Subsidiaries not otherwise described under subparagraphs
(a)
through
(h)
above
not to exceed $5,000,000 in the aggregate.
Section
9.02 Hedging
Agreements.
Borrower shall not and shall not permit any Guarantor to enter into or in any
manner be liable on any Hedging Agreement except:
(a)
Hedging Agreements entered into by the Borrower with the purpose and effect
of
fixing prices on oil and/or gas expected to be produced by the Obligors and
the
Partnerships,
provided that
at all
times: (i) no such contract shall be for speculative purposes; (ii) no such
contract shall be entered into by the Borrower on behalf of another Person,
except where Borrower has the contractual authority to enter into such Hedging
Agreement on behalf of such Person and the obligations under such Hedging
Agreement are fully recourse to such Person, (iii) no such contract when
aggregated with all Hedging Agreements entered into by the Borrower, shall
be
for nominal volumes in excess of 85% of the total Oil and Gas attributable
to
the Obligors and Partnerships estimated to be produced in any month from the
Oil
and Gas Properties classified as proved reserves on the most recent Reserve
Report(s) covering such Properties; (iv) the agreements documenting such Hedging
Agreements do not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party; and (v) each such contract shall be with the Administrative
Agent, or any of the Lenders or their Affiliates, or with a counterparty or
have
a guarantor of the obligation of the counterparty who, at the time the contract
is made, has long-term obligations rated AA or Aa2 or better, respectively,
by
Standard & Poor’s Corporation or Moody’s Investors Services, Inc. (or a
successor credit rating agency).
(b)
Hedging Agreements entered into with the purpose and effect of fixing interest
rates on a principal amount of the Notes of the Borrower that is accruing
interest at a variable rate, provided
that
(1) no
such contract shall be for speculative purposes; (2) the floating rate index
of
each such contract generally matches the index used to determine the floating
rates of interest on the corresponding Indebtedness of the Borrower to be hedged
by such contract; (3) the aggregate notional amount of such Hedging Agreements
shall not exceed seventy-five percent (75%) of the principal outstanding under
the Notes; (4) the tenor of each such contract shall not extend beyond the
Revolving Credit Termination Date; and (5) each such contract shall be with
a
Lender or with a counterparty or have a guarantor of the obligation of the
counterparty who, at the time the contract is made, has long-term obligations
rated AA or Aa2 or better, respectively, by Standard & Poor’s Corporation or
Moody’s Investors Services, Inc. (or a successor credit rating agency).
(c)
In
the event the Borrower enters into a Hedging Agreement with any of the Lenders,
the Contingent Obligation evidenced under such Hedging Agreement shall not
be
applied against such Lender’s Commitment nor against the Borrowing Base
Utilization. Any Indebtedness incurred under any Hedging Agreement with any
Lender shall be treated as an Obligation pari
passu
with all
Obligations otherwise incurred hereunder or under the other Loan Documents
and
shall be secured under the Security Instruments.
Section
9.03 Liens.
None of
the Borrower nor any of its Subsidiaries will create, incur, assume or permit
to
exist any Lien on any of its Properties (now owned or hereafter acquired),
except:
(a)
Liens
securing the payment of any Indebtedness;
(b)
Excepted Liens;
(c)
Liens
securing leases allowed under Section
9.08,
but
only on the Property under lease;
(d)
Liens
on cash or securities of an Obligor securing the Debt described in Section
9.01(f)
and
(i);
and
(e)
Liens
on the assets of Unrestricted Entities securing Debt of such Unrestricted
Entities.
Section
9.04 Investments,
Loans and Advances.
Borrower will not and will not permit any Guarantor to make or permit to remain
outstanding any loans or advances to or investments in any Person, except that
the foregoing restriction shall not apply to:
(a)
accounts receivable arising in the ordinary course of business;
(b)
direct obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, in each case maturing
within one year from the date of creation thereof;
(c)
commercial paper maturing within one year from the date of creation thereof
rated in the highest grade by Standard & Poor’s Corporation or Moody’s
Investors Service, Inc.;
(d)
deposits maturing within one year from the date of creation thereof with,
including certificates of deposit issued by, any Lender or any office located
in
the United States of any other bank or trust company which is organized under
the laws of the United States or any state thereof, has capital, surplus and
undivided profits aggregating at least $100,000,000.00 (as of the date of such
Lender’s or bank or trust company’s most recent financial reports) and has a
short term deposit rating of no lower than A2 or P2, as such rating is set
forth
from time to time, by Standard & Poor’s Corporation or Moody’s Investors
Service, Inc., respectively;
(e)
deposits in money market funds investing exclusively in investments described
in
Section
9.04(c), or
9.04(d);
(f)
investments, loans or advances in or to the Borrower or any Subsidiary permitted
under Section
9.01(g);
and
(g)
advances to fund Borrower’s and its Wholly Owned Subsidiaries’ capital
contributions under Partnerships as provided under Section
7.07(iii);
(h)
Non-hostile acquisitions of equity securities, or assets constituting a business
unit, of any Person, provided
that: (i)
immediately prior to and after giving effect to such acquisition, no Default
or
Event of Default exists or would result therefrom; (ii) if such acquisition
is
of equity securities of a Person (other than an Unrestricted Entity), such
person becomes a Guarantor; (iii) such Person is principally engaged in the
same
business as the Obligors; (iv) the Borrower shall be in pro forma compliance
with the covenants set forth in Sections
9.13,
9.14
and
9.15
based on
the trailing 12 quarters and as adjusted for such acquisition; (v) such acquired
Person or assets shall not be subject to any material liabilities except as
permitted by this Agreement; and (vi) a first priority perfected lien and
security interest shall be granted to the Administrative Agent for the benefit
of the Lenders in such acquired assets; provided
however,
that
nothing herein shall require any Unrestricted Entity to grant a first priority
lien in its assets; and
(i)
other
investments, loans or advances not to exceed in the aggregate $7,500,000.
Section
9.05 Dividends,
Distributions and Redemptions.
The
Borrower will not declare or pay any dividend, purchase, redeem or otherwise
acquire for value any of its stock now or hereafter outstanding, return any
capital to its stockholders or make any distribution of its assets to its
stockholders if an Event of Default has occurred and is continuing or would
occur as a result of such distribution.
Section
9.06 Sales
and Leasebacks.
Borrower shall not and shall not permit any Guarantor to enter into any
arrangement, directly or indirectly, with any Person whereby any such Obligor
shall sell or transfer any of its Property, whether now owned or hereafter
acquired, and whereby such shall then or thereafter rent or lease as lessee
such
Property or any part thereof or other Property which such Obligor intends to
use
for substantially the same purpose or purposes as the Property sold or
transferred.
Section
9.07 Nature
of Business.
Borrower shall not and shall not permit any Guarantor to allow any material
change to be made in the character of its business or the business of the
Partnerships as an independent oil and gas exploration and production company.
Borrower shall not and shall not permit any Guarantor to materially amend,
waive
or modify any of their Material Agreements or Partnership Agreements in any
manner that could reasonably be expected to cause any material and adverse
effect on the Administrative Agent’s and the Lenders’ interests in the
collateral securing the Indebtedness, or the Administrative Agents’ or the
Lenders’ ability to enforce their rights and remedies under this Agreement or
any other Loan Document, at law or in equity.
Section
9.08 Limitation
on Leases.
Borrower shall not and shall not permit any Guarantor to create, incur, assume
or permit to exist any obligation for the payment of rent or hire of Property
of
any kind whatsoever (real or personal including capital leases, but excluding
leases of Hydrocarbon Interests), under leases or lease agreements which would
cause the aggregate amount of all payments made by Borrower and the Guarantors
pursuant to all such leases or lease agreements to exceed $3,000,000 in any
period of twelve consecutive calendar months during the life of such leases.
Section
9.09 Mergers,
Etc.
Borrower
shall not and shall not permit any Guarantor to merge into or with or
consolidate with any other Person, or liquidate, sell, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all
or
substantially all of its Property or assets (whether now owned or hereafter
acquired) to or in favor of any other Person, except, so long as no Default
exists or would result therefrom, (i) any Guarantor may merge with (A) the
Borrower, provided the Borrower shall be the continuing or surviving Person,
or
(B) any one or more other Subsidiaries, provided that when any Guarantor is
merging with another Subsidiary that is not a Guarantor, the continuing or
surviving Person shall be a Guarantor, and (ii) any Guarantor
may dispose
of all or substantially all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or to another Subsidiary; provided if the transferor
in such a transaction is a Guarantor, then the transferee must either be the
Borrower or a Guarantor.
Section
9.10 Proceeds
of Notes and Letters of Credit.
The
Borrower will not permit the proceeds of the Notes or Letters of Credit to
be
used for any purpose other than those permitted by Section
7.07.
Neither
the Borrower nor any Person acting on behalf of the Borrower has taken or will
take any action which might cause any of the Loan Documents to violate
Regulation T, U or X or any other regulation of the Board of Governors of the
Federal Reserve System or to violate Section 7 of the Securities Exchange Act
of
1934 or any rule or regulation thereunder, in each case as now in effect or
as
the same may hereinafter be in effect.
Section
9.11 ERISA
Compliance.
The
Borrower shall not, and shall not permit any of its Subsidiaries at any time
to:
(a)
Engage in, or permit any Subsidiary or ERISA Affiliate to engage in, any
transaction in connection with which any Obligor, any Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
section 502(c), (i) or (1) of ERISA or a tax imposed by Chapter 43 of Subtitle
D
of the Code;
(b)
Terminate, or permit any Subsidiary or ERISA Affiliate to terminate, any Plan
in
a manner, or take any other action with respect to any Plan, which could result
in any liability to any Obligor, any Subsidiary or any ERISA Affiliate to the
PBGC;
(c)
Fail
to make, or permit any Subsidiary or ERISA Affiliate to fail to make, full
payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, any Obligor, a Subsidiary or
any
ERISA Affiliate is required to pay as contributions thereto;
(d)
Permit to exist, or allow any Subsidiary or ERISA Affiliate to permit to exist,
any accumulated funding deficiency within the meaning of Section 302 of ERISA
or
section 412 of the Code, whether or not waived, with respect to any Plan;
(e)
Permit, or allow any Subsidiary or ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities under any Plan maintained by any
Obligor, any Subsidiary or any ERISA Affiliate which is regulated under Title
IV
of ERISA to exceed the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term “actuarial
present value of the benefit liabilities”
shall
have the meaning specified in section 4041 of ERISA;
(f)
Contribute to or assume an obligation to contribute to, or permit any Subsidiary
or ERISA Affiliate to contribute to or assume an obligation to contribute to,
any Multiemployer Plan;
(g)
Acquire, or permit any Subsidiary or ERISA Affiliate to acquire, an interest
in
any Person that causes such Person to become an ERISA Affiliate with respect
to
any Obligor, any Subsidiary or any ERISA Affiliate if such Person sponsors,
maintains or contributes to, or at any time in the six-year period preceding
such acquisition has sponsored, maintained, or contributed to, (1) any
Multiemployer Plan, or (2) any other Plan that is subject to Title IV of ERISA
under which the actuarial present value of the benefit liabilities under such
Plan exceeds the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities;
(h)
Incur, or permit any Subsidiary or ERISA Affiliate to incur, a liability to
or
on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA;
(i)
Contribute to or assume an obligation to contribute to, or permit any Subsidiary
or ERISA Affiliate to contribute to or assume an obligation to contribute to,
any employee welfare benefit plan, as defined in section 3(l) of ERISA,
including, without limitation, any such plan maintained to provide benefits
to
former employees of such entities, that may not be terminated by such entities
in their sole discretion at any time without any material liability; or
(j)
Amend
or permit any Subsidiary or ERISA Affiliate to amend, a Plan resulting in an
increase in current liability such that any Obligor, any Subsidiary or any
ERISA
Affiliate is required to provide security to such Plan under section 401 (a)(29)
of the Code.
Section
9.12 Sale
or Discount of Receivables.
Borrower shall not, and shall not permit any Guarantor to discount or sell
(with
or without recourse) any of its notes receivable or accounts receivable.
Section
9.13 Current
Ratio.
The
Borrower will not permit the ratio of its (i) current assets (including any
unused amount under the Borrowing Base but excluding assets under Hedging
Agreements.) to (ii) current liabilities (excluding liabilities under Hedging
Agreements, current maturities of the Notes and those portions of the advance
payments received by the Borrower for the drilling and completion of oil and
gas
wells that exceed the cost to Borrower of such drilling and completion and
are
classified as current liabilities), to be less than 1.0 to 1.0 at the end of
any
quarter. For the purposes of calculating the Borrower’s current ratio, the
current assets and current liabilities attributable to the Unrestricted Entities
shall be excluded.
Section
9.14 Funded
Debt to EBITDA.
The
Borrower will not permit the ratio of Funded Debt to EBITDA of the Borrower
as
of the end of any fiscal quarter of the Borrower (on a consolidated basis
calculated quarterly based upon the four most recently completed quarters)
to be
more than 3.50 to 1.00. For the purposes of calculating the ratio of Borrower’s
Funded Debt to EBITDA, (i) the EBITDA and Funded Debt attributable to the
Unrestricted Entities (except for cash distributions from Anthem Securities,
Inc. paid to Borrower or Guarantors) shall be excluded, and (ii) Funded Debt
shall not include: (a) “asset
retirement obligations,”
as
such
term is used in FASB Statement 143, to the extent such asset retirement
obligations relate to the plugging and abandonment of wells; or (b) liabilities
under Hedging Agreements.
Section
9.15 Consolidated
Interest Coverage Ratio.
Borrower will not permit its Consolidated Interest Coverage Ratio as of the
end
of any fiscal quarter of Borrower beginning December 31, 2006 (calculated upon
the four most recently completed fiscal quarters, quarterly at the end of each
fiscal quarter) to be less than 2.50 to 1.00. For the purposes of calculating
the Consolidated Interest Coverage Ratio, the EBITDA and interest payments
attributable to the Unrestricted Entities shall be excluded.
Section
9.16 Sale
of Oil and Gas Properties.
The
Obligors will not Transfer any Oil and Gas Property or any interest in any
Oil
and Gas Property for which value was given in the most recent Borrowing Base
redetermination to any Person other than Obligors, provided, for so long as
no
Default exists, Obligors may Transfer Oil and Gas Property assets with a market
value of up to $2,000,000 in the aggregate during any Borrowing Base Period.
Upon any Transfer of Oil and Gas Properties as permitted herein, the Borrowing
Base shall be automatically reduced by the current Oil and Gas Collateral Value
attributable to such Oil and Gas Properties under current Borrowing Base
determination.
Section
9.17 Environmental
Matters.
None of
the Obligors nor any Subsidiary will cause or permit any of its Property to
be
in violation of, or do anything or permit anything to be done which will subject
any such Property to any remedial obligations under any
Environmental Laws, assuming disclosure to the applicable Governmental Authority
of all relevant facts, conditions and circumstances, if any, pertaining to
such
Property where such violations or remedial obligations would have a Material
Adverse Effect.
Section
9.18 Transactions
with Affiliates.
Except
for the Management Agreement, the Borrower shall not, and shall not permit
any
Guarantor to enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate unless such transactions are otherwise permitted under this
Agreement, are in the ordinary course of its business and are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm’s length transaction with a Person not an Affiliate.
Section
9.19 Subsidiaries.
The
Borrower shall not, and shall not permit any Subsidiary to create or acquire
any
additional Subsidiaries (other than Unrestricted Entities) that do not become
Guarantors and deliver Security Agreements hereunder within fifteen (15)
Business Days of their creation or acquisition. Borrower shall not and shall
not
permit any Guarantor to sell or to issue any stock or ownership interest of
a
Subsidiary, except to Borrower or any of its Wholly Owned Subsidiaries and
except in compliance with Section
9.04,
Borrower shall not, and shall not permit any Guarantor to, create any new
Partnerships other than drilling fund limited partnerships on terms
substantially similar to the Partnerships set forth on Schedule
7.14.
Section
9.20 Negative
Pledge Agreements.
The
Borrower shall not and shall not permit any of Guarantor to create, incur,
assume or permit to exist any contract, agreement or understanding (other than
this Agreement and the Security Instruments) which in any way prohibits or
restricts the granting, conveying, creation or imposition of any Lien on any
of
its Property or restricts any Guarantor from paying dividends to the Borrower,
or which requires the consent of or notice to other Persons in connection
therewith.
Section
9.21 Gas
Imbalances, Take-or-Pay or Other Prepayments.
The
Borrower will not and will not permit any Guarantor to allow gas imbalances,
take-or-pay or other prepayments with respect to the Oil and Gas Properties
of
the Guarantors which would require the Guarantors to deliver in the aggregate
five percent (5%) or more of their Hydrocarbons produced on a monthly basis
from
such Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor.
Section
9.22 Accounting
Changes.
Borrower shall not and shall not permit any Subsidiary to make any significant
change in accounting treatment or reporting practices except as required by
GAAP, or change the fiscal year of the Borrower or any Subsidiary.
ARTICLE
X
Events
of Default; Remedies
Section
10.01 Events
of Default.
One or
more of the following events shall constitute an “Event
of Default”:
(a)
the
Borrower shall default in the payment or prepayment when due of any principal
of
or interest on any Loan, or any reimbursement obligation for a disbursement
made
under any Letter of Credit, or any fees or other amount payable by it hereunder
or under any Security Instrument; or
(b)
any
Obligor shall default in the payment when due of any principal of or interest
on
any of its other Debt aggregating $2,500,000 or more, or any event specified
in
any note, agreement, indenture or other document evidencing or relating to
any
such Debt shall occur if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder or
holders of such Debt (or a trustee or agent on behalf of such holder or holders)
to cause, such Debt to become due prior to its stated maturity; or
(c)
any
representation, warranty or certification made or deemed made herein or in
any
Loan Document by any Obligor or any Subsidiary, or any certificate furnished
to
any Lender or the Administrative Agent pursuant to the provisions hereof or
any
Security Instrument, shall prove to have been false or misleading as of the
time
made or furnished in any material respect; or
(d)
any
Obligor shall default in the performance of any of its obligations under
Article
IX
or any
other Article of this Agreement other than under Article
VIII;
or any
Obligor shall default in the performance of any of its obligations under
Article
VIII
or under
any Loan Document to which it is a party (other than the payment of amounts
due
which shall be governed by Section
10.01(a))
and
such default shall continue unremedied for a period of thirty (30) days
following the occurrence thereof; or
(e)
any
Obligor shall admit in writing its inability to, or be generally unable to,
pay
its debts as such debts become due; or
(f)
any
Obligor shall (i) apply for or consent to the appointment of, or the taking
of
possession by, a receiver, custodian, trustee or liquidator of itself or of
all
or a substantial part of its property, (ii) make a general assignment for the
benefit of its creditors, (iii) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking
to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, liquidation or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Federal Bankruptcy Code, or (vi) take any corporate action for the purpose
of
effecting any of the foregoing; or
(g)
a
proceeding or case shall be commenced, without the application or consent of
any
Obligor, in any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment
of
its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator
or
the like of such Obligor of all or any substantial part of its assets, or (iii)
similar relief in respect of such Obligor under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of debts,
and such proceeding or case shall continue undismissed, or an order, judgment
or
decree approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 days; or (iv) an order for relief
against any Obligor shall be entered in an involuntary case under the Federal
Bankruptcy Code; or
(h)
a
judgment or judgments for the payment of money in excess of $2,500,000 in the
aggregate shall be rendered by a court against any Obligor and the same shall
not be discharged (or provision shall not be made for such discharge), or a
stay
of execution thereof shall not be procured, within the period of time prescribed
by applicable rules of civil procedure in which to perfect an appeal thereof
and
such Obligor shall not, within said period, or such longer period during which
execution of the same shall have been stayed, or an appeal therefrom shall
cause
the execution thereof to be stayed during such appeal; or
(i)
the
Loan Documents after delivery thereof shall for any reason, except to the extent
permitted by the terms thereof, cease to be in full force and effect and valid,
binding and enforceable in accordance with their terms, or, with respect to
the
Security Instruments, cease to create a valid and perfected Lien of the priority
required thereby on any of the collateral purported to be covered thereby,
except to the extent permitted by the terms of this Agreement, or any Obligor
shall so state in writing; or
(j)
an
event having a Material Adverse Effect shall occur; or
(k)
a
Change of Control occurs; provided,
any
Change of Control that occurs as a result of a Permitted Merger shall not
constitute a Default; or
(l)
any
Obligor conceals any of its Property with the intent to hinder, delay or defraud
any Lender, the Issuing Bank, or the Administrative Agent with respect to their
rights in the Mortgaged Property or any other Property of the Obligors.
Section
10.02 Remedies.
(a)
In
the case of an Event of Default other than one referred to in clauses
(e),
(f)
or
(g)
of
Section
10.01,
the
Administrative Agent, upon request of the Majority Lenders, shall, by notice
to
the Borrower, cancel the Commitments (in whole or part) and/or declare the
principal amount then outstanding of, and the accrued interest on, the Loans
and
all other amounts payable by the Borrower hereunder and under the Notes
(including without limitation the payment of cash collateral to secure the
LC
Exposure as provided in Section
2.10(b))
to be
forthwith due and payable, whereupon such amounts shall be immediately due
and
payable without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other formalities of any kind, all of which are hereby
expressly waived by the Borrower.
(b)
In
the case of the occurrence of an Event of Default referred to in clauses
(e),
(f)
or
(g)
of
Section
10.01,
the
Commitments shall be automatically canceled and the principal amount then
outstanding of, and the accrued interest on, the Loans and all other amounts
payable by the Borrower hereunder and under the Notes (including without
limitation the payment of cash collateral to secure the LC Exposure as provided
in Section
2.10(b))
shall
become automatically immediately due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower.
(c)
All
proceeds received after maturity of the Notes, whether by acceleration or
otherwise shall be applied first to reimbursement of expenses and indemnities
provided for in this Agreement and the Security Instruments; second to accrued
interest on the Notes; third to fees; fourth pro rata to principal outstanding
on the Notes and other Indebtedness; fifth to serve as cash collateral to be
held by the Administrative Agent to secure the LC Exposure; and any excess
shall
be paid to the Borrower or as otherwise required by any Governmental
Requirement.
Section
10.03 Present
Assignment of Interests.
(a)
Notwithstanding that, under Article
III
of the
Mortgages, the Obligors thereto have unconditionally assigned to Administrative
Agent for the ratable benefit of the Lenders all of the proceeds of runs
accruing to the Mortgaged Properties covered thereby:
(i)
Until
such time as Administrative Agent shall notify such Obligors to the contrary,
Obligors shall be entitled to receive from the purchasers or disbursers of
production all such proceeds of runs, subject however to the liens created
under
the Mortgages, which liens are hereby affirmed and ratified. Automatically
upon
an Event of Default under Section
10.01(e), (f)
or
(g)
and upon
the occurrence and during the continuance of any other Event of Default,
Administrative Agent may exercise all rights and remedies granted under the
Mortgages, including the right to obtain possession of all proceeds of runs
then
held by Obligors or to receive directly from the purchasers or disbursers of
production all other proceeds of runs.
(ii)
In
no case shall any failure, whether purposed or inadvertent, by Administrative
Agent to collect directly any such proceeds of runs constitute in any way a
waiver, remission or release of any of its rights under the Mortgages, nor
shall
any release of any other proceeds of runs or of any rights of Administrative
Agent to collect other proceeds of runs thereafter.
(iii)
Obligors will upon the instruction of Administrative Agent join with
Administrative Agent in notifying, in writing and accompanied (if necessary)
by
certified copies of the Mortgages, the purchasers or disbursers of production,
produced from the Mortgaged Properties, of the existence of the Mortgages,
and
instructing that all proceeds of runs be paid directly to Administrative Agent
for the ratable benefit of the Lenders.
(b)
Notwithstanding that, under Article
VIII
of the
Pledge, Assignment and Security Agreement executed by each of the Obligors,
as
“Debtor” thereto (herein collectively the “Pledges”),
such
parties have unconditionally assigned to Administrative Agent for the ratable
benefit of the Lenders all of the dividends, interest, or other “Distributions”
(as defined therein) paid or payable in respect of the Collateral covered
thereby:
(i)
Until
such time as Administrative Agent shall notify such Obligors to the contrary,
Obligors shall be entitled to receive and retain all such Distributions, subject
however to the security interests created under the Pledges, which liens are
hereby affirmed and ratified. Automatically upon an Event of Default under
Section
10.01(f)
or
(g)
and upon
the occurrence and during the continuance of any other Event of Default,
Administrative Agent may exercise all rights and remedies granted under the
Pledges, including the right to obtain possession of all Distributions then
held
by Obligors or to receive directly from the Subsidiaries and Partnerships making
such payments all future Distributions attributable to the Collateral.
(ii)
In
no case shall any failure, whether purposed or inadvertent, by Administrative
Agent to collect directly any such Distributions constitute in any way a waiver,
remission or release of any of its rights under the Pledges, nor shall any
release of any other Distributions or of any rights of Administrative Agent
to
collect other Distributions thereafter.
(iii)
Obligors will upon the instruction of Administrative Agent join with
Administrative Agent in notifying in writing to the entities responsible for
making such Distributions of the existence of the Pledges, and instructing
that
all Distributions be paid directly to Administrative Agent for the ratable
benefit of the Lenders.
ARTICLE
XI
The
Administrative Agent
Section
11.01 Appointment,
Powers and Immunities.
Each
Lender hereby irrevocably appoints and authorizes the Administrative Agent
to
act as its agent hereunder and under the Security Instruments with such powers
as are specifically delegated to the Administrative Agent by the terms of this
Agreement and the Security Instruments, together with such other powers as
are
reasonably incidental thereto. The Administrative Agent (which term as used
in
this sentence and in Section
11.05
and the
first sentence of Section
11.06
shall
include reference to its Affiliates and its and its Affiliates’ officers,
directors, employees, attorneys, accountants, experts and agents): (i) shall
have no duties or responsibilities except those expressly set forth in the
Loan
Documents, and shall not by reason of the Loan Documents be a trustee or
fiduciary for any Lender; (ii) makes no representation or warranty to any Lender
and shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement, or in any certificate
or other document referred to or provided for in, or received by any of them
under, this Agreement, or for the value, validity, effectiveness, genuineness,
execution, effectiveness, legality, enforceability or sufficiency of this
Agreement, any Note or any other document referred to or provided for herein
or
for any failure by any of the Obligors or any other
Person (other than the Administrative Agent) to perform any of its obligations
hereunder or thereunder or for the existence, value, perfection or priority
of
any collateral security or the financial or other condition of the Borrower,
its
Subsidiaries or any other obligor or guarantor; (iii) except pursuant to
Section
11.07
shall
not be required to initiate or conduct any litigation of collection proceedings
hereunder; and (iv) shall not be responsible for any action taken or omitted
to
be taken by it hereunder or under any other document or instrument referred
to
or provided for herein or in connection herewith including its own ordinary
negligence, except for its own gross negligence or willful misconduct. The
Administrative Agent may employ agents, accountants, attorneys and experts
and
shall not be responsible for the negligence or misconduct of any such agents,
accountants, attorneys or experts selected by it in good faith or any action
taken or omitted to be taken in good faith by it in accordance with the advice
of such agents, accountants, attorneys or experts. The Administrative Agent
may
deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Administrative Agent. The
Administrative Agent is authorized to release any collateral that is permitted
to be sold or released pursuant to the terms of the Loan Documents.
Section
11.02 Reliance
by Administrative Agent.
The
Administrative Agent shall be entitled to rely upon any certification, notice
or
other communication (including any thereof by telephone, telex, telecopier,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent.
Section
11.03 Defaults.
The
Administrative Agent shall not be deemed to have knowledge of the occurrence
of
a Default (other than the non-payment of principal of or interest on Loans
or of
fees or failure to reimburse for Letter of Credit drawings) unless the
Administrative Agent has received notice from a Lender or the Borrower
specifying such Default and stating that such notice is a “Notice
of Default”.
In the
event that the Administrative Agent receives such a notice of the occurrence
of
a Default, the Administrative Agent shall give prompt notice thereof to the
Lenders. In the event of a payment Default, the Administrative Agent shall
give
each Lender prompt notice of each such payment Default.
Section
11.04 Rights
as a Lender.
With
respect to its Commitments and the Loans made by it and its participation in
the
issuance of Letters of Credit, Wachovia Bank, National Association (and any
successor acting as Administrative Agent) in its capacity as a Lender hereunder
shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not acting as the Administrative Agent,
and
the term “Lender”
or
“Lenders”
shall,
unless the context otherwise indicates, include the Administrative Agent in
its
individual capacity. Wachovia Bank, National Association (and any successor
acting as Administrative Agent) and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with the
Obligors (and any of their Affiliates) as if it were not acting as the
Administrative Agent, and Wachovia Bank, National Association and its Affiliates
may accept fees and other consideration from the Obligors for services in
connection with this Agreement or otherwise without having to account for the
same to the Lenders.
Section
11.05 Indemnification.
The
Lenders agree to indemnify the Administrative Agent and the Issuing Bank ratably
in accordance with their Percentage Shares for the indemnity matters as
described in Section
12.03
to the
extent not indemnified or reimbursed by the Obligors under Section
12.03,
but
without limiting the obligations of the Obligors under said Section
12.03 and
for
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent or the Issuing Bank in any way relating to or arising
out
of: (1) this Agreement, the Security Instruments or any other documents
contemplated by or referred
to herein or the transactions contemplated hereby, but excluding, unless a
Default has occurred and is continuing, normal administrative costs and expenses
incident to the performance of its agency duties hereunder or (ii) the
enforcement of any of the terms of this Agreement, any Security Instrument
or of
any such other documents; WHETHER OR NOT ANY OF THE FOREGOING SPECIFIED IN
THIS
SECTION
11.05
ARISES
FROM THE SOLE OR CONCURRENT NEGLIGENCE OF THE ADMINISTRATIVE AGENT OR THE
ISSUING BANK, provided that no Lender shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of
the
Administrative Agent.
Section
11.06 Non-Reliance
on Administrative Agent and other Lenders.
Each
Lender acknowledges and agrees that it has, independently and without reliance
on the Administrative Agent or any other Lender, and based on such documents
and
information as it has deemed appropriate, made its own credit analysis of the
Obligors and its decision to enter into this Agreement, and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement. The Administrative Agent shall not be
required to keep itself informed as to the performance or observance by the
Obligors of this Agreement, the Notes, the Security Instruments or any other
document referred to or provided for herein or to inspect the properties or
books of the Obligors. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any
duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Obligors (or
any
of their Affiliates) which may come into the possession of the Administrative
Agent or any of its Affiliates. In this regard, each Lender acknowledges that
Haynes and Boone, LLP is acting in this transaction as special counsel to the
Administrative Agent only, except to the extent otherwise expressly stated
in
any legal opinion or any Loan Document. Each Lender will consult with its own
legal counsel to the extent that it deems necessary in connection with the
Loan
Documents and the matters contemplated therein.
Section
11.07 Action
by Administrative Agent.
Except
for action or other matters expressly required of the Administrative Agent
hereunder, the Administrative Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall (i) receive written
instructions from the Majority Lenders (or all of the Lenders as expressly
required by Section
12.04)
specifying the action to be taken, and (ii) be indemnified to its satisfaction
by the Lenders against any and all liability and expenses which may be incurred
by it by reason of taking or continuing to take any such action. The
instructions of the Majority Lenders (or all of the Lenders as expressly
required by Section
12.04)
and any
action taken or failure to act pursuant thereto by the Administrative Agent
shall be binding on all of the Lenders. If a Default has occurred and is
continuing, the Administrative Agent shall take such action with respect to
such
Default as shall be directed by the Majority Lenders (or all of the Lenders
as
required by Section
12.04)
in the
written instructions (with indemnities) described in this Section
11.07,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders. In
no
event, however, shall the Administrative Agent be required to take any action
which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement and the Security Instruments or applicable law.
Section
11.08 Resignation
or Removal of Administrative Agent.
Subject
to the appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by giving notice
thereof to the Lenders and the Borrower, and the Administrative Agent may be
removed at any time with or without cause by the Majority Lenders. Upon any
such
resignation or removal, the Majority Lenders shall have the right to appoint
a
successor Administrative Agent. If no successor Administrative Agent shall
have
been so appointed by the Majority Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent’s
giving of notice of resignation or the Majority Lenders’ removal
of the
retiring Administrative Agent, then the retiring Administrative Agent may,
on
behalf of the Lenders, appoint a successor Administrative Agent. Upon the
acceptance of such appointment hereunder by a successor Administrative Agent,
such successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent’s resignation or removal hereunder as Administrative Agent, the provisions
of this Article
XI
and
Section
12.03
shall
continue in effect for its benefit in respect of any actions taken or omitted
to
be taken by it while it was acting as the Administrative Agent.
Section
12.01 Waiver.
No
failure on the part of the Administrative Agent or any Lender to exercise and
no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any of the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any of the Loan Documents preclude any other or further exercise thereof or
the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.
Section
12.02 Notices.
All
notices and other communications provided for herein and in the other Loan
Documents (including, without limitation, any modifications of, or waivers
or
consents under, this Agreement or the other Loan Documents) shall be given
or
made by telex, telecopy, courier or U.S. Mail or in writing and telexed,
telecopied, mailed or delivered to the intended recipient at the “Address
for Notices”
specified below its name on the signature pages hereof or in the Loan Documents
or, as to any party, at such other address as shall be designated by such party
in a notice to each other party. Except as otherwise provided in this Agreement
or in the other Loan Documents, all such communications shall be deemed to
have
been duly given when transmitted, if transmitted before 1:00 p.m. local time
on
a Business Day (otherwise on the next succeeding Business Day) by telex or
telecopier and evidence or confirmation of receipt is obtained, or personally
delivered or, in the case of a mailed notice, three (3) Business Days after
the
date deposited in the mails, postage prepaid, in each case given or addressed
as
aforesaid.
Section
12.03 Payment
of Expenses, Indemnities, etc.
(a)
The
Obligors agree:
(i)
whether or not the transactions hereby contemplated are consummated, to pay
all
reasonable expenses of the Administrative Agent in the administration (both
before and after the execution hereof and including advice of counsel as to
the
rights and duties of the Administrative Agent and the Lenders with respect
thereto) of, and in connection with the negotiation, syndication, investigation,
preparation, execution and delivery of, recording or filing of, preservation
of
rights under, enforcement of, and refinancing, renegotiation or restructuring
of, the Loan Documents and any amendment, waiver or consent relating thereto
(including, without limitation, travel, photocopy, mailing, courier, telephone
and other similar expenses of the Administrative Agent, the cost of
environmental audits, surveys and appraisals at reasonable intervals, the
reasonable fees and disbursements of counsel and other outside consultants
for
the Administrative Agent and, in the case of preservation or enforcement of
rights (including restructurings and workouts), the reasonable fees and
disbursements of counsel for the Administrative Agent and any of the Lenders);
and promptly reimburse the Administrative Agent for all amounts expended,
advanced or incurred by the Administrative Agent or the Lenders to satisfy
any
obligation of the Obligors under this Agreement or any Security Instrument,
including without limitation, all costs and expenses of foreclosure;
(ii)
To
indemnify the Administrative Agent and each Lender and each of their affiliates
and each of their officers, directors, employees, representatives, agents,
attorneys, accountants and experts (“Indemnified
Parties”)
from,
hold each of them harmless against and promptly upon demand pay or reimburse
each of them for, the indemnity matters which may be incurred by or asserted
against or involve any of them (whether or not any of them is designated a
party
thereto) as a result of, arising out of or in any way related to (i) any actual
or proposed use by the Borrower or any Guarantor of the proceeds of any of
the
loans or letters of credit, (ii) the execution, delivery and performance of
the
loan documents, (iii) the operations of the business of the Obligors and their
Subsidiaries, (iv) the failure of the Obligors or any Subsidiary to comply
with
the terms of any loan document, or with any governmental requirement, (v) any
inaccuracy of any representation or any breach of any warranty of the Obligors
set forth in any of the loan documents, (vi) the issuance, execution and
delivery or transfer of or payment or failure to pay under any letter of credit,
or (vii) the payment of a drawing under any letter of credit notwithstanding
the
non-compliance, non-delivery or other improper presentation of the manually
executed draft(s) and certification(s), (viii) any assertion that the Lenders
were not entitled to receive the proceeds received pursuant to the Security
Instruments, or (ix) any other aspect of the loan documents, including, without
limitation, the reasonable fees and disbursements of counsel and all other
expenses incurred in connection with investigating, defending or preparing
to
defend any such action, suit, proceeding (including any investigations,
litigation or inquiries) or claim and
INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE ORDINARY NEGLIGENCE
OF
ANY INDEMNIFIED PARTY, but
excluding all indemnity matters arising solely by reason of claims between
the
Lenders or any Lender and the Administrative Agent or a Lender’s shareholders
against the Administrative Agent or Lender or by reason of the gross negligence
or willful misconduct on the part of the Indemnified Party; and
(iii)
TO
INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE INDEMNIFIED PARTIES FROM
AND
AGAINST ANY AND ALL LOSSES, CLAIMS, COST RECOVERY ACTIONS, ADMINISTRATIVE ORDERS
OR PROCEEDINGS, DAMAGES AND LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME
SUBJECT (I) UNDER ANY ENVIRONMENTAL LAW APPLICABLE TO THE OBLIGORS OR ANY
SUBSIDIARY OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE
TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (II)
AS A RESULT OF THE BREACH OR NON-COMPLIANCE BY ANY OBLIGOR OR ANY SUBSIDIARY
WITH ANY ENVIRONMENTAL LAW APPLICABLE TO ANY OBLIGOR OR ANY SUBSIDIARY, (III)
DUE TO PAST OWNERSHIP BY ANY OBLIGOR OR ANY SUBSIDIARY OF ANY OF THEIR
PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL
AND
FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (IV) THE
PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES
ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY ANY OBLIGOR OR ANY
SUBSIDIARY, OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN
CONNECTION WITH THE LOAN DOCUMENTS.
(b)
No
Indemnified Party may settle any claim to be indemnified without the consent
of
the indemnitor, such consent not to be unreasonably withheld; provided,
that
the indemnitor may not reasonably withhold consent to any settlement that an
Indemnified Party proposes, if the indemnitor does not have the financial
ability to pay all its obligations outstanding and asserted against the
indemnitor at that time, including the maximum potential claims against the
Indemnified Party to be indemnified pursuant to this Section
12.03.
(c)
In
the case of any indemnification hereunder, the Administrative Agent or Lender,
as appropriate shall give notice to the Obligors of any such claim or demand
being made against the Indemnified Party and the Obligors shall have the
non-exclusive right to join in the defense against any such claim or demand
provided that if any Obligor provides a defense, the Indemnified Party shall
bear its own cost of defense unless there is a conflict between the Obligors
and
such Indemnified Party.
(d)
THE
FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES NOTWITHSTANDING
THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER
ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT
LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT
(SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNIFIED PARTIES OR BY REASON OF
STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED
PARTIES. To the extent that an Indemnified Party is found to have committed
an
act of gross negligence or willful misconduct, this contractual obligation
of
indemnification shall continue but shall only extend to the portion of the
claim
that is deemed to have occurred by reason of events other than the gross
negligence or willful misconduct of the Indemnified Party.
(e)
The
Obligors’ obligations under this Section
12.03
shall
survive any termination of this Agreement and the payment of the Notes and
shall
continue thereafter in full force and effect.
(f)
The
Obligors shall pay any amounts due under this Section
12.03
within
thirty (30) days of the receipt by the Obligors of notice of the amount due.
Section
12.04 Amendments,
Etc.
Any
provision of this Agreement or any other Loan Document may be amended, modified
or waived with the Obligors’ and the Majority Lenders’ prior written consent;
provided that (i) no amendment, modification or waiver which extends the final
maturity of the Loans, increases the Aggregate Maximum Revolving Credit Amounts,
increases the Borrowing Base, reduces or forgives the principal amount of any
Indebtedness outstanding under this Agreement (including any principal due
pursuant to a mandatory prepayment required pursuant to Section
2.07(b)),
postpones any date scheduled for any payment of principal or interest under
this
Agreement (including any principal due pursuant to a mandatory prepayment
required pursuant to Section
2.07 (b)),
releases any Guarantor, of the Indebtedness, or releases Security Instruments
which in the aggregate cover a material portion of the Mortgaged Property (as
reflected on the most recent Reserve Report delivered under Section
8.07)
during
each Borrowing Base Period, reduces the interest rate applicable to the Loans
or
the fees payable to the Lenders generally, affects Section
2.03(a),
this
Section
12.04,
Section
12.06(a),
any
provision of Section
4.05(b)
that
would alter the pro rata sharing of payments required thereby, or modifies
the
definitions of “Majority
Lenders”
or
“Percentage
Share”
shall
be effective without consent of all Lenders; (ii) no amendment, modification
or
waiver which increases the Maximum Revolving Credit Amount or the Commitment
of
any Lender shall be effective without the consent of such Lender; and (iii)
no
amendment, modification or waiver which modifies the rights, duties or
obligations of the Administrative Agent shall be effective without the consent
of the Administrative Agent.
Section
12.05 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
(a)
The
Borrower may not assign its rights or obligations hereunder or under the Notes
or any Letters of Credit without the prior consent of all of the Lenders and
the
Administrative Agent.
(b)
Any
Lender may, upon the written consent of the Administrative Agent and, if no
Default exists, with consent of the Borrower (which consent will not be
unreasonably withheld or delayed), assign to one or more assignees all or a
portion of its rights and obligations under this Agreement pursuant to an
Assignment Agreement substantially in the form of Exhibit
E
(an
“Assignment”);
provided,
however,
that
(i) any such assignment shall be in the amount of the lesser of (A) at least
$5,000,000 or (B) the total amount of a Lender’s rights and obligations under
this Agreement and (ii) the assignee or assignor shall pay to the Administrative
Agent a processing and recordation fee of $3,500 for each assignment. Any such
assignment will become effective upon the execution and delivery to the
Administrative Agent of the Assignment and the consent of the Administrative
Agent. Promptly after receipt of an executed Assignment, the Administrative
Agent shall send to the Borrower a copy of such executed Assignment. Upon
receipt of such executed Assignment, the Borrower, will, at its own expense,
execute and deliver new Notes to the assignor and/or assignee, as appropriate,
in accordance with their respective interests as they appear. Upon the
effectiveness of any assignment pursuant to this Section
12.06(b),
the
assignee will become a “Lender,”
if
not
already a “Lender,”
for
all purposes of this Agreement and the Security Instruments. The assignor shall
be relieved of its obligations hereunder to the extent of such assignment (and
if the assigning Lender no longer holds any rights or obligations under this
Agreement, such assigning Lender shall cease to be a “Lender”
hereunder except that its rights under Sections
4.06, 5.01, 5.05
and
12.03
shall
not be affected).
(c)
Each
Lender may transfer, grant or assign participations in all or any part of such
Lender’s interests hereunder pursuant to this Section
12.06(c)
to any
Person, provided
that:
(i) such Lender shall remain a “Lender”
for
all
purposes of this Agreement and the transferee of such participation shall not
constitute a “Lender”
hereunder; and (ii) no participant under any such participation shall have
rights to approve any amendment to or waiver of any of the Loan Documents except
to the extent such amendment or waiver would (w) modify the definition of
“Majority
Lenders,”
(x)
forgive any principal owing on any Indebtedness or extend the final maturity
of
the Loans, (y) reduce the interest rate (other than as a result of waiving
the
applicability of any post-default increases in interest rates) or fees
applicable to any of the Commitments or Loans or Letters of Credit in which
such
participant is participating, or postpone the payment of any thereof, or (z)
release any guarantor of the Indebtedness or release Security Instruments which
in the aggregate cover more than five percent (5%) by value of the Mortgaged
Property (as reflected on the most recent Reserve Report delivered under
Section
8.07)
during
each Borrowing Base Period supporting any of the Commitments or Loans or Letters
of Credit in which such participant is participating. In the case of any such
participation, the participant shall not have any rights under this Agreement
or
any of the Security Instruments (the participant’s rights against the granting
Lender in respect of such participation to be those set forth in the agreement
with such Lender creating such participation), and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not sold such
participation, provided
that
such participant shall be entitled to receive additional amounts under
Article
V
on the
same basis as if it were a Lender and be indemnified under Section
12.03
as if it
were a Lender. In addition, each agreement creating any participation must
include an agreement by the participant to be bound by the provisions of
Section
12.15.
(d)
The
Lenders may furnish any information concerning the Borrower in the possession
of
the Lenders from time to time to assignees and participants (including
prospective assignees and participants); provided
that,
such Persons agree to be bound by the provisions of Section
12.15.
(e)
Notwithstanding anything in this Section
12.06
to the
contrary, any Lender may assign and pledge its Note to any Federal Reserve
Bank.
No such assignment and/or pledge shall release the assigning and/or pledging
Lender from its obligations hereunder.
(f)
Notwithstanding any other provisions of this Section
12.06,
no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower to file a registration statement with the
SEC or to qualify the Loans under the “Blue
Sky”
laws
of
any state.
Section
12.07 Invalidity.
In the
event that any one or more of the provisions contained in any of the Loan
Documents shall, for any reason, be held invalid, illegal or unenforceable
in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of the Notes, this Agreement or any other Loan Document.
Section
12.08 Counterparts.
This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such counterpart.
Section
12.09 References,
Use of Word “Including”.
The
words “herein,”
“hereof,”
“hereunder”
and
other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section or Article shall be deemed to refer to the
applicable Section or Article of this Agreement unless otherwise stated herein.
Any reference herein to an exhibit, schedule, or other attachment shall be
deemed to refer to the applicable exhibit, schedule, or other attachment
attached hereto unless otherwise stated herein. The words “including,”
“includes”
and
words of similar import mean “including,
without limitation.”
Section
12.10 Survival.
The
obligations of the parties under Section
4.06,
Article
V,
and
Sections
11.05
and
12.03
shall
survive the repayment of the Loans and the termination of the Commitments.
To
the extent that any payments on the Indebtedness or proceeds of any collateral
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver
or
other Person under any bankruptcy law, common law or equitable cause, then
to
such extent, the Indebtedness so satisfied shall be revived and continue as
if
such payment or proceeds had not been received and the Administrative Agent’s
and the Lenders’ Liens, security interests, rights, powers and remedies under
this Agreement and each Security Instrument shall continue in full force and
effect. In such event, each Security Instrument shall be automatically
reinstated and the Obligors shall take such action as may be reasonably
requested by the Administrative Agent and the Lenders to effect such
reinstatement.
Section
12.11 Captions.
Captions and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation
of
any provision of this Agreement.
Section
12.12 NO
ORAL AGREEMENTS.
THE
LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES
AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THE LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section
12.13 GOVERNING
LAW, SUBMISSION TO JURISDICTION.
(a)
THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL
LAW PERMITS ANY
LENDER TO CHARGE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE
SUCH LENDER IS LOCATED. CH. 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL
NOT APPLY TO THIS AGREEMENT OR THE NOTES.
(b)
ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER AND EACH GUARANTOR HEREBY ACCEPTS FOR ITSELF AND (TO
THE
EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER AND
EACH
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM
NON CONVENIENS, WHICH
IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
IN
SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE
AND DOES NOT PRECLUDE THE ADMINISTRATIVE AGENT OR ANY LENDER FROM OBTAINING
JURISDICTION OVER THE BORROWER OR ANY GUARANTOR IN ANY COURT OTHERWISE HAVING
JURISDICTION.
(c)
THE
BORROWER AND EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM
LOCATED AT 111 EIGHTH AVENUE, 13th
FLOOR,
NEW YORK, NEW YORK, 10011, AS THE DESIGNEE, APPOINTEE AND ADMINISTRATIVE AGENT
OF THE BORROWER AND EACH GUARANTOR TO RECEIVE, FOR AND ON BEHALF OF THE BORROWER
AND EACH GUARANTOR, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN
ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS. IT IS UNDERSTOOD
THAT A COPY OF SUCH PROCESS SERVED ON SUCH ADMINISTRATIVE AGENT WILL BE PROMPTLY
FORWARDED BY OVERNIGHT COURIER TO THE BORROWER AND THE RELEVANT GUARANTOR AT
THEIR ADDRESSES SET FORTH UNDER ITS SIGNATURE BELOW, BUT THE FAILURE OF THE
BORROWER OR SUCH GUARANTOR TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY
THE
SERVICE OF SUCH PROCESS. THE BORROWER AND EACH GUARANTOR FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AND ANY GUARANTOR AT ITS SAID
ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.
(d)
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER
OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER OR
ANY
GUARANTOR IN ANY OTHER JURISDICTION.
(e)
THE
BORROWER, EACH GUARANTOR AND EACH LENDER HEREBY (I) IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY
IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY SECURITY
INSTRUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF ADMINISTRATIVE AGENT
OR COUNSEL
FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE SECURITY INSTRUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY
AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION
12.13.
Section
12.14 Interest.
It is
the intention of the parties hereto to conform strictly to Applicable Usury
Laws
regarding the use, forbearance or detention of the indebtedness evidenced by
this Agreement, the Notes and the other Loan Documents, whether such laws are
now or hereafter in effect, including the laws of the United States of America
or any other jurisdiction whose laws are applicable, and including any
subsequent revisions to or judicial interpretations of those laws, in each
case
to the extent they are applicable to this Agreement, the Notes and the other
Loan Documents (the “Applicable
Usury Laws”).
Accordingly, if any acceleration of the maturity of the Notes or any payment
by
Borrower or any other Person produces a rate in excess of the Highest Lawful
Rate or otherwise results in Borrower or such other Person being deemed to
have
paid any interest in excess of the Maximum Amount, as hereinafter defined,
or if
any Lender shall for any reason receive any unearned interest in violation
of
any Applicable Usury Laws, or if any transaction contemplated hereby would
otherwise be usurious under any Applicable Usury Laws, then, in that event,
regardless of any provision contained in this Agreement or any other Loan
Document or other agreement or instrument executed or delivered in connection
herewith, the provisions of this Section
12.14
shall
govern and control, and neither Borrower nor any other Person shall be obligated
to pay, or apply in any manner to, any amount that would be excessive interest.
No Lender shall ever be deemed to have contracted for or be entitled to receive,
collect, charge, reserve or apply as interest on any Loan (whether termed
interest therein or deemed to be interest by judicial determination or operation
of law), any amount in excess of the Highest Lawful Rate, and, in the event
that
such Lender ever receives, collects, or applies as interest any such excess,
such amount which would be excessive interest shall be applied as a partial
prepayment of principal and treated hereunder as such, and, if the principal
amount of the applicable Loans are paid in full, any remaining excess shall
forthwith be paid to Borrower. In determining whether or not the interest
contracted for, received, collected, charged, reserved, paid or payable,
including under any specific contingency, exceeds the Highest Lawful Rate,
Borrower and each Lender shall, to the maximum extent permitted under applicable
law, (a) characterize any non-principal payment (other than payments which
are
expressly designated as interest payments hereunder) as an expense or fee rather
than as interest, (b) exclude voluntary prepayments and the effect thereof,
and
(c) amortize and spread the total amount of interest throughout the entire
stated term of the Loans so that the interest rate is uniform throughout such
term; provided
that
if
the Loans are paid in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of existence thereof
exceeds the Highest Lawful Rate, if any, then the Lenders shall refund to
Borrower the amount of such excess, or credit the amount of such excess against
the aggregate unpaid principal balance of all Loans made by Lender. As used
herein, the term “Maximum
Amount”
means
the maximum nonusurious amount of interest which may be lawfully contracted
for,
reserved, charged, collected or received by Lender in connection with the
indebtedness evidenced by this Agreement, the Notes and other Loan Documents
under all Applicable Usury Laws. Texas Finance Code, Chapter 346, which
regulates certain revolving loan accounts and revolving tri-party accounts,
shall not apply to any revolving loan accounts created under, or apply in any
manner to, the Note, this Agreement or the other Loan Documents.
Section
12.15 Confidentiality.
Subject
to provisions under Section
12.16
below,
in the event that the Borrower provides to the Administrative Agent or the
Lenders written confidential information belonging to the Borrower, if the
Borrower shall denominate such information in writing as “confidential,”
the
Administrative Agent and the Lenders shall thereafter maintain such information
in confidence
in accordance with the standards of care and diligence that each utilizes in
maintaining its own confidential information. This obligation of confidence
shall not apply to such portions of the information which (i) are in the public
domain, (ii) hereafter become part of the public domain without the
Administrative Agent or the Lenders breaching their obligation of confidence
to
the Borrower, (iii) are previously known by the Administrative Agent or the
Lenders from some source other than the Borrower, (iv) are hereafter developed
by the Administrative Agent or the Lenders without using the Borrower’s
information, (v) are hereafter obtained by or available to the Administrative
Agent or the Lenders from a third party who owes no obligation of confidence
to
the Borrower with respect to such information or through any other means other
than through disclosure by the Borrower, (vi) are disclosed with the Borrower’s
consent, (vii) must be disclosed either pursuant to any Governmental Requirement
or to Persons regulating the activities of the Administrative Agent or the
Lenders provided, Administrative Agent and Lenders shall endeavor to provide
notice to the Borrower as soon as practicable in the event Borrower desires
to
enjoin the disclosure of such information, however, failure of Administrative
Agent or Lenders to provide such prior notice to Borrower shall not give rise
to
any claim or cause of action by Borrower or any Obligor against Administrative
Agent or such Lenders, (viii) as may be required by law or regulation or order
of any Governmental Authority in any judicial, arbitration or governmental
proceeding, or (ix) are disclosed to any actual or prospective counterparty
(or
its advisors) to any swap or derivative transaction relating to the Borrower
and
its obligations. Further, the Administrative Agent or a Lender may disclose
any
such information to any other Lender, any independent petroleum engineers or
consultants, any independent certified public accountants, any legal counsel
employed by such Person in connection with this Agreement or any Security
Instrument, including without limitation, the enforcement or exercise of all
rights and remedies thereunder, or any assignee or participant (including
prospective assignees and participants) in the Loans; provided, however, that
the Administrative Agent or the Lenders shall receive a confidentiality
agreement from the Person to whom such information is disclosed such that said
Person shall have the same obligation to maintain the confidentiality of such
information as is imposed upon the Administrative Agent or the Lenders
hereunder. Notwithstanding anything to the contrary provided herein, this
obligation of confidence shall cease three (3) years from the date the
information was furnished, unless the Borrower requests in writing at least
thirty (30) days prior to the expiration of such three year period, to maintain
the confidentiality of such information for an additional three year period.
The
Borrower waives any and all other rights it may have to confidentiality as
against the Administrative Agent and the Lenders arising by contract, agreement,
statute or law except as expressly stated in this Section
12.15.
Section
12.16 USA
Patriot Act Notice.
Each
Lender hereby notifies the Borrower that pursuant to the requirements of the
USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”),
it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Act.
[The
remainder of this page intentionally left blank. Signatures begin on the next
page.]
FOR
VALUE
RECEIVED, ATLAS
ENERGY OPERATING COMPANY, LLC, a
Delaware limited liability company (the “Borrower”)
hereby
promises to pay to the order of __________________, a national banking
association (the “Lender”),
at
the Principal Office of Wachovia Bank, National Association (the “Administrative
Agent”),
at
301 South College Street, Charlotte, North Carolina28288, the principal sum
of
____________________ DOLLARS ($_____________) or such lesser amount as shall
equal the aggregate unpaid principal amount of the Loans made by the Lender
to
the Borrower under the Credit Agreement as hereinafter defined), in lawful
money
of the United States of America and in immediately available funds, on the
dates
and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such office,
in
like money and funds, for the period commencing on the date of such Loan until
such Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
The
date,
amount, Type, interest rate, Interest Period and maturity of each Loan made
by
the Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of this Note, endorsed by the Lender on the schedules attached hereto or any
continuation thereof.
This
Note
is one of the Notes referred to in the Revolving Credit Agreement dated as
of
December 18, 2006, among the Borrower, the Lenders which are or become parties
thereto (including the Lender) and the Administrative Agent (as the same may
be
amended or supplemented from time to time, the “Credit
Agreement”),
and
evidences Loans made by the Lender thereunder. Capitalized terms used in this
Note have the respective meanings assigned to them in the Credit Agreement.
This
Note
is issued pursuant to the Credit Agreement and is entitled to the benefits
provided for in the Credit Agreement and the Security Instruments. The Credit
Agreement provides for the acceleration of the maturity of this Note upon the
occurrence of certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.
THIS
NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS.
FORM
OF BORROWING, CONTINUATION AND CONVERSION REQUEST
____________,
200_____
ATLAS
ENERGY OPERATING COMPANY, LLC, a Delaware limited liability company (the
“Borrower”),
pursuant to the Revolving Credit Agreement dated as of December 18, 2006, among
the Borrower, certain Affiliates of the Borrower, Wachovia Bank, National
Association, as Administrative Agent for the lenders (the “Lenders”)
which
are or become parties thereto, and such Lenders (together with all amendments
or
supplements thereto, the “Credit
Agreement”),
hereby makes the requests indicated below (unless otherwise defined herein,
capitalized terms are defined in the Credit Agreement):
1.
Loans:
(a)
Aggregate
amount of new Loans to be $
_______________;
(b)
Requested
funding date is ________________, 200__;
(c)
$
__________ of such borrowings are to be LIBOR Loans; $ __________of
such borrowings are to be Base Rate Loans; and
(d)
Length
of Interest Period for LIBOR Loans is: ____________________________________.
2.
LIBOR
Loan Continuation for LIBOR Loans maturing on :
(a)
Aggregate
amount to be continued as LIBOR Loans is $
_______________;
(b)
Aggregate
amount to be converted to Base Rate Loans is $
_________________;
(c)
Length
of Interest Period for continued LIBOR Loans is .
3.
Conversion
of Outstanding Base Rate Loans to LIBOR Loans:
Convert
$ ______________ of the outstanding Base Rate Loans
to LIBOR Loans on
_________ with an Interest Period of _______________.
4.
Conversion
of outstanding LIBOR Loans to Base Rate Loans: Convert $
_____________of the outstanding LIBOR Loans with
Interest Period maturing
on______________, 200_ , to Base Rate Loans.
The
undersigned certifies that he is the ____________ of the Borrower, and that
as
such he is authorized to execute this certificate on behalf of the Borrower.
The
undersigned further certifies, represents and warrants on behalf of the Borrower
that the Borrower is entitled to receive the requested borrowing, continuation
or conversion under the terms and conditions of the Credit Agreement.
The
undersigned hereby certifies that he is the __________________ of ATLAS ENERGY
OPERATING COMPANY, LLC, a Delaware limited liability company (the “Borrower”)
and
that as such he is authorized to execute this certificate on behalf of the
Borrower. With reference to the Revolving Credit Agreement dated as of December18, 2006, among the Borrower, the guarantors party thereto (each an “Obligor”
and
collectively, the “Obligors”),
Wachovia Bank, National Association, as Administrative Agent for the lenders
(the “Lenders”)
which
are or become a party thereto, and such Lenders (together with all amendments
or
supplements thereto being the “Credit
Agreement”),
the
undersigned represents and warrants as follows (each capitalized term used
herein having the same meaning given to it in the Credit Agreement unless
otherwise specified):
(a)
The
representations and warranties of the Obligors contained in Article
VII
of the
Credit Agreement and in the Security Instruments and otherwise made in writing
by or on behalf of the Obligors pursuant to the Credit Agreement and the
Security Instruments were true and correct when made, and are repeated at and
as
of the time of delivery hereof and are true and correct at and as of the time
of
delivery hereof, except as such representations and warranties are modified
to
give effect to the transactions expressly permitted by the Credit Agreement.
(b)
The
Obligors have performed and complied with all agreements and conditions
contained in the Credit Agreement and in the Security Instruments required
to be
performed or complied with by it prior to or at the time of delivery hereof.
(c)
None
of the Obligors nor any Subsidiary has incurred any material liabilities, direct
or contingent, since _______________, except those set forth in Schedule
9.01
to the
Credit Agreement and except those allowed by the terms of the Credit Agreement
or consented to by the Lenders in writing.
(d)
Since
_____________, no change has occurred, either in any case or in the aggregate,
in the condition, financial or otherwise, of the Obligors or any Subsidiary
which would have a Material Adverse Effect.
(e)
There
exists, and, after giving effect to the loan or loans with respect to which
this
certificate is being delivered, will exist, no Default under the Credit
Agreement or any event or circumstance which constitutes, or with notice or
lapse of time (or both) would constitute, an event of default under any loan
or
credit agreement, indenture, deed of trust, security agreement or other
agreement or instrument evidencing or pertaining to any Debt of the Obligors
or
any Subsidiary, or under any material agreement or instrument to which any
Obligor or any Subsidiary is a party or by which any Obligor or any Subsidiary
is bound.
(f)
The
financial statements furnished to the Administrative Agent with this certificate
fairly present the consolidated financial condition and results of operations
of
the Borrower and its Consolidated Subsidiaries as at the end of, and for, the
[fiscal quarter] [fiscal year] ending __________ and such financial statements
have been approved in accordance with the accounting procedures specified in
the
Credit Agreement.
(g)
Attached hereto are the detailed computations necessary to determine whether
the
Borrower and its Consolidated Subsidiaries are in compliance with Sections
9.13, 9.14
and
9.15
of the
Credit Agreement as of the end of the [fiscal quarter] [fiscal year] ending
______________.
EXECUTED
AND DELIVERED this ______________ day of 200__.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, and REI-NY, LLC, to Wachovia Bank, National Association,
Administrative Agent, covering properties in Chautauqua County, New
York.
2.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, and Viking Resources, LLC to Wachovia Bank, National Association,
Administrative Agent, covering properties in Columbiana County, Ohio.
3.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, and Atlas Noble, LLC to Wachovia Bank, National Association,
Administrative Agent, covering properties in Coshocton County, Ohio.
4.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Viking Resources,
LLC to Wachovia Bank, National Association, Administrative Agent,
covering
properties in Geuga County, Ohio.
5.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, Viking Resources, LLC and Atlas Noble, LLC to Wachovia Bank,
National
Association, Administrative Agent, covering properties in Guernsey
County,
Ohio.
6.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC to Wachovia Bank, National Association, Administrative Agent,
covering
properties in Holmes County, Ohio.
7.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, and Viking Resources, LLC to Wachovia Bank, National Association,
Administrative Agent, covering properties in Mahoning County, Ohio.
8.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Atlas Noble,
LLC to
Wachovia Bank, National Association, Administrative Agent, covering
properties in Muskingum County, Ohio.
9.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Atlas Noble,
LLC
and Atlas America, LLC, to Wachovia Bank, National Association,
Administrative Agent, covering properties in Noble County, Ohio.
10.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Viking Resources,
LLC to Wachovia Bank, National Association, Administrative Agent,
covering
properties in Portage County, Ohio.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, and Viking Resources, LLC to Wachovia Bank, National Association,
Administrative Agent, covering properties in Stark County, Ohio.
12.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, and Viking Resources, LLC to Wachovia Bank, National Association,
Administrative Agent, covering properties in Summit County, Ohio.
13.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, and Viking Resources, LLC to Wachovia Bank, National Association,
Administrative Agent, covering properties in Trumbull County, Ohio.
14.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, and Viking Resources, LLC to Wachovia Bank, National Association,
Administrative Agent, covering properties in Tuscarwas County, Ohio.
15.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, and Atlas America, LLC, to Wachovia Bank, National Association,
Administrative Agent, covering properties in Washington County, Ohio.
16.
Open-End
Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated December 18, 2006, from Resource Energy,
LLC, and Viking Resources, LLC to Wachovia Bank, National Association,
Administrative Agent, covering properties in Wayne County, Ohio.
17.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas Resources, LLC, Atlas
America, LLC, and Viking Resources, LLC to Wachovia Bank, National
Association, Administrative Agent, covering properties in Armstrong
County, Pennsylvania.
18.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas Resources, LLC to
Wachovia
Bank, National Association, Administrative Agent, covering properties
in
Butler County, Pennsylvania.
19.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas Resources, LLC, Atlas
America, LLC, and Viking Resources, LLC to Wachovia Bank, National
Association, Administrative Agent, covering properties in Clearfield
County, Pennsylvania.
20.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas Resources, LLC, and
Atlas
America, LLC, to Wachovia Bank, National Association, Administrative
Agent, covering properties in Crawford County, Pennsylvania.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Viking Resources, LLC to
Wachovia
Bank, National Association, Administrative Agent, covering properties
in
Elk County, Pennsylvania.
22.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas America, LLC, Atlas
Resources, LLC, and Viking Resources, LLC to Wachovia Bank, National
Association, Administrative Agent, covering properties in Fayette
County,
Pennsylvania.
23.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas America, LLC, and
Viking
Resources, LLC to Wachovia Bank, National Association, Administrative
Agent, covering properties in Greene County, Pennsylvania.
24.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas America, LLC, Atlas
Resources, LLC, and Viking Resources, LLC to Wachovia Bank, National
Association, Administrative Agent, covering properties in Indiana
County,
Pennsylvania.
25.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas Resources, LLC, and
Atlas
America, LLC, to Wachovia Bank, National Association, Administrative
Agent, covering properties in Lawrence County, Pennsylvania.
26.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas America, LLC, Atlas
Resources, LLC, and Viking Resources, LLC to Wachovia Bank, National
Association, Administrative Agent, covering properties in Mercer
County,
Pennsylvania.
27.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas Resources, LLC, to
Wachovia
Bank, National Association, Administrative Agent, covering properties
in
Venango County, Pennsylvania.
28.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Atlas Resources, LLC, and
Resource Energy, LLC, to Wachovia Bank, National Association,
Administrative Agent, covering properties in Warren County, Pennsylvania.
29.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Viking Resources, LLC to
Wachovia
Bank, National Association, Administrative Agent, covering properties
in
Washington County, Pennsylvania.
30.
Open-End
Mortgage, Security Agreement, Financing Statement and Assignment
of
Production dated December 18, 2006, from Viking Resources, LLC to
Wachovia
Bank, National Association, Administrative Agent, covering properties
in
Westmoreland County, Pennsylvania.
31.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
AER Pipeline Construction, Inc., to Wachovia Bank, National Association,
Administrative Agent.
32.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
Atlas Energy Ohio, LLC, to Wachovia Bank, National Association,
Administrative Agent.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
Resource Well Services, LLC, to Wachovia Bank, National Association,
Administrative Agent.
34.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
AIC, LLC, to Wachovia Bank, National Association, Administrative
Agent.
35.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
Atlas America, LLC, to Wachovia Bank, National Association, Administrative
Agent.
36.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
Atlas Energy Resources, LLC to Wachovia Bank, National Association,
Administrative Agent.
37.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
Atlas Noble, LLC to Wachovia Bank, National Association, Administrative
Agent.
38.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
Atlas Resources, LLC to Wachovia Bank, National Association,
Administrative Agent.
39.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
REI-NY, LLC, to Wachovia Bank, National Association, Administrative
Agent.
40.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
Resource Energy, LLC, to Wachovia Bank, National Association,
Administrative Agent.
41.
Pledge
Agreement, Assignment and Security Agreement dated December 18, 2006,
from
Viking Resources, LLC to Wachovia Bank, National Association,
Administrative Agent.
This
Assignment and Assumption (this “Assignment
and Assumption”)
is
dated as of the Effective Date set forth below and is entered into by and
between ______________________________ (the “Assignor”)
and
__________________ (the “Assignee”).
Capitalized terms used but not defined herein shall have the meanings given
to
them in the Credit Agreement identified below (the “Credit
Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee. The Standard
Terms and Conditions set forth in Annex
1
attached
hereto are hereby agreed to and incorporated herein by reference and made a
part
of this Assignment and Assumption as if set forth herein in full.
For
an
agreed consideration, the Assignor hereby irrevocably sells and assigns to
the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations as a Lender under the Credit Agreement and any other documents
or
instruments delivered pursuant thereto to the extent related to the amount
and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including, without limitation, the Letters of Credit included in such
facilities) and (ii) to the extent permitted to be assigned under applicable
law, all claims, suits, causes of action and any other right of the Assignor
(in
its capacity as a Lender) against any Person, whether known or unknown, arising
under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed thereby
or in any way based on or related to any of the foregoing, including, but not
limited to, contract claims, tort claims, malpractice claims, statutory claims
and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations
sold
and assigned pursuant to clauses
(i)
and
(ii)
above
being referred to herein collectively as, the “Assigned
Interest”).
Such
sale and assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty
by the Assignor.
1.
Assignor:
_____________________________
2.
Assignee:
_____________________________
[Assignee
is an Affiliate/Approved Fund of [identify Lender]1
3.
Borrower:
Atlas
Energy Operating Company, LLC
4.
Administrative Agent:
Wachovia
Bank, National Association, as the administrative agent under the Credit
Agreement
5.
Credit Agreement:
Revolving
Credit Agreement dated as of December 18, 2006, among Atlas Energy
Operating Company, LLC, the Lenders from time to time party thereto,
and
Wachovia Bank, National Association, as Administrative
Agent
Effective
Date: _______, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL
BE
THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
The
terms
set forth in this Assignment and Assumption are hereby agreed to:
1.1.
Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii)
it
has full power and authority, and has taken all action necessary, to execute
and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i)
any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated
in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any
of
their respective obligations under any Loan Document.
1.2.
Assignee.
The
Assignee (a) represents and warrants that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment
and
Assumption and to consummate the transactions contemplated hereby and to become
a Lender under the Credit Agreement, (ii) it meets all requirements of an
Eligible Assignee under the Credit Agreement (subject to receipt of such
consents as may be required under the Credit Agreement), (iii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder, (iv) it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered pursuant to Section
8.01
thereof,
as applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis
of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender, attached hereto is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed
by
the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.
2.
Payments.
From and
after the Effective Date, the Administrative Agent shall make all payments
in
respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date.
3.
General
Provisions.
This
Assignment and Assumption shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns. This Assignment
and Assumption may be executed in any number of counterparts, which together
shall constitute one instrument. Delivery of an executed counterpart of a
signature page of this Assignment and Assumption by telecopy shall be effective
as delivery of a manually executed counterpart of this Assignment and
Assumption. This Assignment and Assumption shall be governed by, and construed
in accordance with, the law of the State of New York.
[____________________],
as Mortgagor, has executed the mortgages and financing statements described
on
Exhibit
A attached
hereto (the “Mortgage”)
for
the benefit of Wachovia Bank, National Association, as administrative agent
(“Lender”),
granting a mortgage on and pledging those certain properties (the “Pledged
Properties”)
described in the Mortgage to secure certain obligations also described in the
Mortgage. Enclosed is a copy of the Mortgage covering the Pledged Properties.
Exhibit
B
attached
hereto lists the properties which are subject to the Mortgage for which you
are
accounting to Mortgagor and the decimal interest in production heretofore paid
to Mortgagor with respect to its interest in each given property.
Pursuant
to the assignment of production provision in the Mortgage, Mortgagor transferred
and assigned all of its interests in the Pledged Properties to Lender.
Therefore, Mortgagor hereby authorizes and instructs you that all future
payments attributable to the Pledged Properties, which would otherwise be paid
to Mortgagor, should be made to:
if
by wire transfer:
Wachovia
Bank, National Association
______________________________________________
______________________________________________
______________________________________________
Account
No. _____________________
if
by check, check made payable to:
______________________________________________
______________________________________________
until
notified in writing by Lender to discontinue such payments. Also, Mortgagor
hereby requests that you change your records to reflect that Lender is entitled
to the proceeds of production attributable to the Pledged Properties.
In
consideration of your acceptance of this Letter-in-Lieu of Transfer Order,
Lender and Mortgagor agree as follows:
1.
Mortgagor has heretofore executed Transfer or Division Orders to you covering
each of the properties referred to in Exhibit
B
attached
to this letter. This letter is being executed by the undersigned in lieu of
execution of separate Transfer or Division Orders. With respect to proceeds
from
the sale of oil, gas and other hydrocarbons as to which you account hereunder,
Lender agrees that it will be bound by the terms, conditions, warranties and
covenants of all such Transfer or Division Orders heretofore executed by
Mortgagor now in force, with the same effect as though it had executed the
originals thereof; provided,
however,
the
aggregate liability of Lender with respect to any warranty, representation,
covenant or indemnification contained therein or in this letter shall be limited
to an amount equal to the amounts disbursed by you to Lender hereunder.
2.
Mortgagor hereby agrees that you are relieved of any responsibility in
connection with the application of the proceeds paid by you to Lender as
hereinabove specified and payment made by you to Lender shall be binding and
conclusive as between you and Mortgagor.
In
the
absence of a question about the enclosed schedule, you are respectfully
requested to make disbursement to Lender as instructed herein and NOT TO SUSPEND
OR DELAY any payments by virtue of the assignment of production from Mortgagor
to Lender. Should you require additional documentation prior to implementing
the
manner of disbursement requested herein, notwithstanding the warranties and
indemnifications contained hereinabove, please suspend disbursements to
Mortgagor, pending execution of such additional documentation as you may
reasonably require.
In
order
that we may have a record evidencing your acceptance of this Letter-in-Lieu
of
Transfer Order, we request that you execute one copy of this letter in the
space
provided below and return the same to Lender in the enclosed self-addressed
envelope.
THIS
CONTINUING GUARANTY AGREEMENT (this “Guaranty
Agreement”),
dated
as of December 18, 2006, is made by , a corporation (the “Guarantor”),
in
favor of WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent for the
Lenders (the “Administrative
Agent”).
WITNESSETH:
WHEREAS,
the Lenders have made extensions of credit including but not limited to Loans
and Letters of Credit in the maximum aggregate principal amount not to exceed
$250,000,000 at any one time outstanding to Atlas Energy Operating Company,
LLC,
a Delaware limited liability company (the “Borrower”),
pursuant to that certain Revolving Credit Agreement dated as of December 18,2006, by and among the Borrower, the financial institutions (the “Lenders”)
party
thereto, and Wachovia Bank, National Association, in its capacity of the issuer
of certain letters of credit and as the Administrative Agent for the Lenders
thereunder (the Credit Agreement together with the exhibits and schedules
thereto and all extensions, renewals, amendments, substitutions and replacements
thereto and thereof is herein referred to as the “Credit
Agreement”);
WHEREAS,
(i) the Letters of Credit may be issued under the Credit Agreement for the
account of one or more of the Guarantors, (ii) the proceeds of the Loans under
the Credit Agreement may be used by the Borrower to make loans to one or more
of
the Guarantors and for other general corporate purposes of the Borrower and
the
Guarantors, and (iii) Hedging Agreements may be entered into by one or more
of
the Guarantors and any Lender or its Affiliate, all as permitted pursuant to
the
Credit Agreement and all of which will directly and indirectly benefit the
Borrower and the Guarantors;
WHEREAS,
as a condition precedent to extending credit to the Borrower pursuant to the
Credit Agreement, the Lenders have required that, inter
alia,
each of
the Guarantors execute and deliver to the Administrative Agent, for and on
behalf of the Lenders, a guaranty agreement;
WHEREAS,
the Guarantor has determined, reasonably and in good faith, that (i) it has
adequate capital to conduct its business as presently conducted and as proposed
to be conducted, (ii) it will be able to meet its obligations hereunder and
in
respect of its existing and future indebtedness and liabilities (contingent
or
otherwise) as and when the same shall become due and payable, including those
under this Guaranty Agreement, (iii) it is otherwise solvent and (iv) the
execution and delivery of this Guaranty Agreement and the consummation of the
transactions contemplated hereby will not render it insolvent;
WHEREAS,
the Guarantor has determined that the execution and delivery of this Guaranty
Agreement is in furtherance of its corporate purposes and in its best interest
and that it will derive substantial benefit, whether directly or indirectly,
from the making of this Guaranty Agreement, having regard for all relevant
facts
and circumstances; and
WHEREAS,
the Guarantor has agreed to execute and deliver this Guaranty Agreement to
the
Administrative Agent, for the benefit of the Lenders.
NOW
THEREFORE, for good and valuable consideration the receipt of which is hereby
acknowledged, and in order to induce the Lenders to make Loans to the Borrower
pursuant to the Credit Agreement by fulfilling the requirements of the Credit
Agreement, the Guarantor agrees, for the benefit of each Lender, as follows:
ARTICLE
I
DEFINITIONS
SECTION
1.1 Certain
Terms.
The
following capitalized terms when used in this Guaranty Agreement, including
its
preamble and recitals, shall have the following meanings (such definitions
to be
equally applicable to the singular and plural forms thereof):
“Administrative
Agent”
is
defined in the preamble.
“Borrower”
is
defined in the first recital.
“Commitments”
means
each Commitment as defined in the Credit Agreement.
“Credit
Agreement”
is
defined in the first recital.
“Guarantor”
is
defined in the preamble.
“Guaranty
Agreement”
is
defined in the preamble.
“Lenders”
is
defined in the first recital.
“Taxes”
is
defined in clause (1) of Section
2.7.
“U.C.C.”
means
the Uniform Commercial Code as in effect in the State of Texas.
SECTION
1.2 Credit
Agreement Definitions.
Unless
otherwise defined herein or the context otherwise requires, capitalized terms
used in this Guaranty Agreement, including its preamble and recitals, have
the
meanings provided in the Credit Agreement.
SECTION
1.3 U.C.C.
Definitions.
Unless
otherwise defined herein or the context otherwise requires, terms for which
meanings are provided in the U.C.C. are used in this Guaranty Agreement,
including its preamble and recitals, with such meanings.
ARTICLE
II
GUARANTY
PROVISIONS
SECTION
2.1 Guaranty
Agreement.
The
Guarantor hereby absolutely, unconditionally, and irrevocably (1) guarantees
the
full and punctual payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, of all Indebtedness
of the Borrower and each other Obligor now or hereafter existing under each
of
the Credit Agreement, the Notes and each other Loan Document to which the
Borrower or such other Obligor is or may become a party, whether for principal,
interest, fees, expenses or otherwise (including all such amounts which would
become due but for the operation of the automatic stay under Section 362(a)
of
the United States Bankruptcy Code, 11 U.S.C. §362(a), and the operation of
Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C.
§502(b) and §506(b)), and (2) indemnifies and holds harmless each Lender and
each holder of a Note for any and all costs and expenses (including reasonable
attorney’s fees and expenses) incurred by such
Lender or such holder, as the case may be, in enforcing any rights under this
Guaranty Agreement; provided,
however,
that
the Guarantor shall be liable under this Guaranty Agreement for the maximum
amount of such liability that can be hereby incurred without rendering this
Guaranty Agreement, as it relates to the Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount. This Guaranty Agreement constitutes a guaranty of payment when
due and not of collection, and the Guarantor specifically agrees that it shall
not be necessary or required that any Lender or any holder of any Note exercise
any right, assert any claim or demand or enforce any remedy whatsoever against
the Borrower or any other Obligor (or any other Person) before or as a condition
to the obligations of the Guarantor hereunder.
SECTION
2.2 Acceleration
of Guaranty Agreement.
The
Guarantor agrees that, in the event of the occurrence of any event of the type
described in Section
10.01(e), (f) or (g)
of the
Credit Agreement, with respect to the Borrower, any other Obligor or the
Guarantor, and if such event shall occur at a time when any of the Indebtedness
may not then be due and payable by the Borrower due to any automatic stay or
other debtor relief laws, the Guarantor will pay to the Lenders forthwith the
full amount which would be payable hereunder by the Guarantor if all such
Indebtedness were then due and payable.
SECTION
2.3 Guaranty
Agreement Absolute, etc.
This
Guaranty Agreement shall in all respects be a continuing, absolute,
unconditional and irrevocable guaranty of payment, and shall remain in full
force and effect until all Indebtedness of the Borrower and each other Obligor
has been paid in full, all obligations of the Guarantor hereunder shall have
been paid in full, all Commitments shall have terminated and all Lender Hedging
Agreements have terminated. Guarantor may not rescind or revoke its obligations
hereunder. The Guarantor guarantees that the Indebtedness of the Borrower and
each other Obligor will be paid strictly in accordance with the terms of the
Credit Agreement and each other Loan Document under which they arise, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of any Lender or any holder of any
Note with respect thereto. The liability of the Guarantor under this Guaranty
Agreement shall be absolute, unconditional and irrevocable irrespective of:
(1)
any lack of validity, legality or enforceability of the Credit Agreement, any
Note or any other Loan Document; (2) the failure of any Lender or any holder
of
any Note (a) to assert any claim or demand or to enforce any right or remedy
against the Borrower, any other Obligor or any other Person (including any
other
guarantor) under the provisions of the Credit Agreement, any Note, any other
Loan Document or otherwise, or (b) to exercise any right or remedy against
any
other guarantor of, or collateral securing, any Indebtedness of the Borrower
or
any other Obligor; (3) any change in the time, manner or place of payment of,
or
in any other term of, all or any of the Indebtedness of the Borrower or any
other Obligor, or any other extension, compromise or renewal of any Indebtedness
of the Borrower or any other Obligor; (4) any reduction, limitation, impairment
or termination of any Indebtedness of the Borrower or any other Obligor for
any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and the Guarantor hereby waives any
right to or claim of) any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, any Indebtedness of the Borrower, any other Obligor or otherwise;
(5)
any amendment to, rescission, waiver, or other modification of, or any consent
to departure from, any of the terms of the Credit Agreement, any Note or any
other Loan Document; (6) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or release
or
addition of, or consent to departure from, any other guaranty, held by any
Lender or any holder of any Note securing any of the Indebtedness of the
Borrower or any other Obligor; (7) the insolvency or bankruptcy of, or similar
event affecting, the Borrower or any other Obligor; or (8) any other
circumstance which might otherwise constitute a defense available to, or a
legal
or equitable discharge of, the Borrower, any other Obligor, any surety or any
guarantor. Guarantor waives all rights and defenses which may arise with respect
to any of the foregoing, and Guarantor waives any right to revoke this Guaranty
Agreement with respect to future indebtedness. Guarantor
waives all rights or defenses under (1) Section
34.01 etseq.
of
the Texas Business and Commerce Code,
as
amended, (2) Section
17.001 of the Texas Civil Practice and Remedies Code,
as
amended, (3) Rule
31 of the Texas Rules of Civil Procedure,
as
amended, or (4) common law, in equity, under contract, by statute, or
otherwise.
SECTION
2.4 Reinstatement.
The
Guarantor agrees that this Guaranty Agreement shall continue to be effective
or
be reinstated, as the case may be, if at any time any payment (in whole or
in
part) of any of the Indebtedness is rescinded or must otherwise be restored
by
any Lender or any holder of any Note, upon the insolvency, bankruptcy or
reorganization of the Borrower, any other Obligor or otherwise, all as though
such payment had not been made.
SECTION
2.5 Waiver,
etc.
The
Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Indebtedness of the Borrower or any
other Obligor and this Guaranty Agreement and any requirement that the
Administrative Agent, any other Lender or any holder of any Note protect,
secure, perfect or insure any security interest or Lien, or any property subject
thereto, or exhaust any right or take any action against the Borrower, any
other
Obligor or any other Person (including any other guarantor) or entity or any
collateral securing the Indebtedness of the Borrower or any other Obligor,
as
the case may be.
SECTION
2.6 Waiver
of Subrogation.
Until
the Indebtedness is paid in full, all Commitments have terminated and all Lender
Hedging Agreements have terminated, the Guarantor shall not enforce or exercise
any claim or other rights which it may now or hereafter acquire against the
Borrower or any other Obligor that arise from the existence, payment,
performance or enforcement of the Guarantor’s obligations under this Guaranty
Agreement or any other Loan Document, including any right of subrogation,
reimbursement, exoneration, or indemnification, any right to participate in
any
claim or remedy of the Lenders against the Borrower or any other Obligor or
any
collateral which the Administrative Agent now has or hereafter acquires, whether
or not such claim, remedy or right arises in equity, or under contract, statute
or common law, including the right to take or receive from the Borrower or
any
other Obligor, directly or indirectly, in cash or other property or by set-off
or in any manner, payment or security on account of such claim or other rights.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence, such amount shall be deemed to have been paid to the Guarantor for
the
benefit of, and held in trust for, the Lenders, and shall forthwith be paid
to
the Lenders to be credited and applied upon the Indebtedness, whether matured
or
unmatured. The Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Credit Agreement
and that the waiver set forth in this Section is knowingly made in contemplation
of such benefits.
SECTION
2.7 Payments
Free and Clear of Taxes, etc.
The
Guarantor hereby agrees that:
(a)
All
payments by the Guarantor hereunder shall be made in accordance with
Section
4.06
of the
Credit Agreement free and clear of and without deduction for any present or
future income, excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding franchise taxes and taxes imposed on or measured by
any
Lender’s net income or receipts (such non-excluded items being called
“Taxes”).
In
the event that any withholding or deduction from any payment to be made by
the
Guarantor hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Guarantor will (i) pay directly
to
the relevant authority the full amount required to be so withheld or deducted;
(ii) promptly forward to such Lender an official receipt or other documentation
satisfactory to such Lender evidencing such payment to such authority; and
(iii)
pay to such Lender such additional amount or amounts as is necessary to ensure
that the net amount actually received by such Lender will equal the full amount
such Lender would
have received had no such withholding or deduction been required. Moreover,
if
any Taxes are directly asserted against any Lender with respect to any payment
received by such Lender hereunder, such Lender may pay such Taxes and the
Guarantor will promptly pay such additional amounts (including, if incurred
as a
result of Guarantor’s or the Borrower’s action, omission or delay, any
penalties, interest or expenses) as is necessary in order that the net amount
received by such Lender after the payment of such Taxes (including any Taxes
on
such additional amount) shall equal the amount such Lender would have received
had such Taxes not been asserted.
(b)
If
the Guarantor fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to any Lender the required receipts or other
required documentary evidence, the Guarantor shall indemnify such Lender for
any
incremental Taxes, interest or penalties that may become payable by such Lender
as a result of any such failure.
(c)
Without prejudice to the survival of any other agreement of the Guarantor
hereunder, the agreements and obligations of the Guarantor contained in this
Section
2.7
shall
survive the payment in full of the principal of and interest on the Loans.
SECTION
2.8 Contribution
Agreement.
Upon
full and final payment of the Indebtedness, Guarantor and all other Guarantors
which have made payments upon all or any part of the Indebtedness shall be
entitled to contribution from all of the other Guarantors, to the end that
all
such payments upon the Indebtedness shall be shared among all Guarantors who
guaranteed such Indebtedness in proportion to their respective Net Worths
(defined below), provided that the contribution obligations of each of the
Guarantors shall be limited to the maximum amount that it can pay at such time
without rendering its contribution obligations voidable under applicable law
relating to fraudulent conveyances or fraudulent transfers. As used in this
subsection, the “Net Worth” of each of the Guarantors means, at any time, the
remainder of (i) the fair value of such Guarantor’s assets (other than such
right of contribution), minus (ii) the fair value of such Guarantor’s
liabilities (other than its liabilities under its guaranty of the Indebtedness).
SECTION
2.9 Subordination.
Guarantor hereby subordinates and makes inferior to the Indebtedness any and
all
Intercompany Debt now or at any time hereafter owed by the Borrower or other
Obligor to the Guarantor. Guarantor agrees that after the occurrence of any
Default or Event of Default under the Credit Agreement, it will not permit
the
Borrower to repay such Intercompany Debt or any part thereof and it will not
accept payment from the Borrower of such Intercompany Debt or any part thereof
without the prior written consent of the Majority Lenders as defined in the
Credit Agreement. If Guarantor receives any such payment without the prior
required written consent, the amount so paid shall be held in trust for the
benefit of the Lenders, shall be segregated from the other funds of such
Guarantor, and shall forthwith be paid over to the Administrative Agent to
be
held by the Administrative Agent as collateral for, or then or at any time
thereafter applied in whole or in part by the Administrative Agent against,
all
or any portions of the Indebtedness, whether matured or unmatured, in such
order
as the Administrative Agent shall elect.
ARTICLE
III
REPRESENTATIONS,
WARRANTIES AND COVENANTS
SECTION
3.1 Representations,
Warranties and Covenants.
By
execution hereof, Guarantor covenants and agrees that certain representations,
warranties, terms, covenants, and conditions set forth in the Credit Agreement
and other Loan Documents are applicable to Guarantor and shall be imposed upon
Guarantor, and Guarantor reaffirms that each such representation and warranty
is
true and correct and covenants and agrees to promptly and properly perform,
observe, and comply with each such term, covenant, or
condition. Moreover, Guarantor acknowledges and agrees that this Guaranty
Agreement is subject to the offset provisions of the Credit Agreement in favor
of the Administrative Agent and the Lenders
SECTION
4.1 Loan
Document.
This
Guaranty Agreement is a Loan Document executed pursuant to the Credit Agreement
and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and provisions thereof.
SECTION
4.2 Releases.
At such
time as the Loans shall have been paid in full, the Commitments have been
terminated and no Lender Hedging Agreements are outstanding, the Administrative
Agent shall, at the request and expense of the Guarantor following such
termination, promptly execute and deliver to the Guarantor such documents and
instruments as the Guarantor shall reasonably request to evidence termination
and release of this Guaranty Agreement.
SECTION
4.3 Administrative
Agent and Lenders; Successors and Assigns.
(a)
The
Administrative Agent is Administrative Agent for each Lender under the Credit
Agreement. All rights granted to Administrative Agent under or in connection
with this Guaranty Agreement are for each Lender’s ratable benefit. The
Administrative Agent may, without the joinder of any Lender, exercise any rights
in Administrative Agent’s or Lenders’ favor under or in connection with this
Guaranty Agreement. The Administrative Agent’s and each Lender’s rights and
obligations vis-a-vis
each
other may be subject to one or more separate agreements between those parties.
However, the Guarantor is not required to inquire about any such agreement
and
is not subject to any terms of it unless the Guarantor specifically enters
into
such agreement. Therefore, neither Guarantor nor its successors or assigns
is
entitled to any benefits or provisions of any such separate agreement nor is
it
entitled to rely upon or raise as a defense any party’s failure or refusal to
comply with the provisions of any such agreement.
(b)
This
Guaranty Agreement benefits the Administrative Agent, the Lenders, and their
respective successors and assigns and binds Guarantor and its successors and
assigns. Upon appointment of any successor Administrative Agent under the Credit
Agreement, all of the rights of Administrative Agent under this Guaranty
Agreement automatically vests in that new Administrative Agent as successor
Administrative Agent on behalf of Lenders without any further act, deed,
conveyance, or other formality other
than
that
appointment. The rights of the Administrative Agent and the Lenders under this
Guaranty Agreement may be transferred with any assignment of the obligations
hereby guaranteed pursuant to and in accordance with the terms of the Credit
Agreement. The Credit Agreement contains provisions governing assignments of
the
obligations guaranteed under this Guaranty Agreement.
SECTION
4.4 Amendments,
etc.
No
amendment to or waiver of any provision of this Guaranty Agreement, nor consent
to any departure by the Guarantor herefrom, shall in any event be effective
unless the same shall be in writing and signed by or on behalf of the party
against whom it is sought to be enforced and is in conformity with the
requirements of Section
12.04
of the
Credit Agreement. Each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION
4.5 Addresses
for Notices to the Guarantor.
All
notices and other communications hereunder to the Guarantor shall be in writing
and mailed or delivered to it, addressed to it at the address set forth
below or at such other address as shall be designated by the Guarantor in a
written notice to the Administrative Agent at the address specified in the
Credit Agreement complying as to delivery with the terms of this Section. All
such notices and other communications shall, when mailed, be effective when
deposited in the mails, addressed as aforesaid. Address for notices:
Attn:
Facsimile:
Telephone:
SECTION
4.6 No
Waiver; Remedies.
In
addition to, and not in limitation of, Section
2.3
and
Section
2.5,
no
failure on the part of any Lender or any holder of a Note to exercise, and
no
delay in exercising, any right hereunder shall operate as a waiver thereof,
nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION
4.7 Section
Captions.
Section
captions used in this Guaranty Agreement are for convenience of reference only,
and shall not affect the construction of this Guaranty Agreement.
SECTION
4.8 Setoff.
In
addition to, and not in limitation of, any rights of any Lender or any holder
of
a Note under applicable law, upon the occurrence of an Event of Default under
or
as defined in the Credit Agreement, each Lender and each such holder shall
be
entitled to exercise any right of offset or banker’s lien against each and every
account and other property or interest that the Guarantor may now or hereafter
have with, or which is now or hereafter in the possession of, any such Lender,
to the extent of the full amount of the Indebtedness.
SECTION
4.9 Severability.
Wherever possible each provision of this Guaranty Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty Agreement.
SECTION
4.10 Governing
Law.
THIS GUARANTY AGREEMENT SHALL BE DEEMED TO BE A CONTRACT UNDER AND GOVERNED
BY
THE INTERNAL LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW. THIS
GUARANTY AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE
ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION
4.11 Forum
Selection and Consent to Jurisdiction.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS GUARANTY AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDERS OR THE GUARANTOR MAY
BE
BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE GUARANTOR
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR
THE
SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO
BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
THE
GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF TEXAS. THE GUARANTOR HEREBY EXPRESSLY
AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY HAVE OR HEREAFTER MAY HAVE TO THE 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.
SECTION
4.12 Waiver of Jury Trial. THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS GUARANTY AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDERS OR THE GUARANTOR. THE
GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT AGREEMENT.
SECTION
4.13 Entire
Agreement.
THIS GUARANTY AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Remainder
of Page Intentionally Blank. Signature Page to
Follow.
IN
WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement to be duly
executed and delivered by an officer duly authorized as of the date first
written above.
FORM
OF PLEDGE, ASSIGNMENT, AND SECURITY AGREEMENT
THIS
PLEDGE, ASSIGNMENT, AND SECURITY AGREEMENT (this “Security
Agreement”)
is
executed as of December 18, 2006, by [____________], a [__________]
(“Debtor”),
whose
address is __________________________, and WACHOVIA BANK, NATIONAL ASSOCIATION,
a national banking association (in its capacity as “Administrative
Agent”
for
Lenders (hereafter defined)), as “Secured
Party,”
whose
address is 1001 Fannin, Suite 4300, Houston, Texas77002.
RECITALS
A.
Debtor, Wachovia Bank, National Association, as Administrative Agent (including
its permitted successors and assigns in such capacity, the “Administrative
Agent”),
and
Lenders now or hereafter party to the Credit Agreement (including their
respective permitted successors and assigns, the “Lenders”)
have
entered into a Revolving Credit Agreement dated as of December 18, 2006 (as
amended, modified, supplemented, or restated from time to time, the “Credit
Agreement”);
B.
This
Security Agreement is integral to the transactions contemplated by the Loan
Documents (as defined in the Credit Agreement), and the execution and delivery
hereof, is a condition precedent to Lenders’ Indebtedness to extend credit under
the Loan Documents.
ACCORDINGLY,
for valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor and Secured Party hereby agree as follows:
1.
REFERENCE
TO CREDIT AGREEMENT.
The
terms, conditions, and provisions of the Credit Agreement are incorporated
herein by reference, the same as if set forth herein verbatim, which terms,
conditions, and provisions shall continue to be in full force and effect
hereunder so long as Lenders are obligated to lend under the Credit Agreement
and thereafter until the Indebtedness is paid and performed in full.
2.
CERTAIN
DEFINITIONS.
Unless
otherwise defined herein, or the context hereof otherwise requires, each
term
defined in either of the Credit Agreement or in the UCC is used in this Security
Agreement with the same meaning; provided
that,
if the
definition given to such term in the Credit Agreement conflicts with the
definition given to such term in the UCC, the Credit Agreement definition
shall
control to the extent legally allowable; and if any definition given to such
term in Chapter
9
of the
UCC conflicts with the definition given to such term in any other chapter
of the
UCC, the Chapter
9
definition shall prevail. As used herein, the following terms have the meanings
indicated:
Collateral
has the
meaning set forth in Paragraph
4
hereof.
Collateral
Notes has
the
meaning set forth in Paragraph
4
hereof.
Collateral
Note Security has
the
meaning set forth in Paragraph
4
hereof.
Collateral
Obligor
means
any Person obligated with respect to any of the Collateral, whether as an
account debtor, obligor on an instrument, issuer of securities, or otherwise.
Control
Agreement
means,
with respect to any Collateral consisting of investment property, Deposit
Accounts, electronic chattel paper, and letter-of-credit rights, an agreement
evidencing that Secured Party has “control”
(as
defined in the UCC) of such Collateral.
Indebtedness
means,
collectively, (a) the “Indebtedness”
as
defined in the Credit Agreement, and (b) all Indebtedness, liabilities, and
Indebtedness of Debtor arising under this Security Agreement or any Guaranty
Agreement assuring payment of the Indebtedness; it being the intention and
contemplation of Debtor and Secured Party that future advances will be made
by
Secured Party or one or more Lenders to Debtor for a variety of purposes,
that
Debtor may guarantee (or otherwise become directly or contingently obligated
with respect to) the Indebtedness of others to Secured Party or to one or
more
Lenders, that from time to time overdrafts of Debtor’s accounts with Secured
Party or with other Lenders may occur, and that Secured Party or one or more
Lenders may from time to time acquire from others Indebtedness of Debtor
to such
others, and that payment and repayment of all of the foregoing are intended
to
and shall be part of the Indebtedness secured hereby. The Indebtedness shall
include, without limitation, future, as
well as
existing, advances, Indebtedness, liabilities, and Indebtedness owed by Debtor
to Secured Party or to any Lender arising under the Loan Documents or otherwise.
Lender
means,
individually, or Lenders
means,
collectively, on any date of determination, Administrative Agent and Lenders
and
their permitted successors and assigns.
Material
Agreements has
the
meaning set forth in Paragraph
4
hereof.
Partnerships
shall
mean (a) those partnerships and limited liability companies listed on
Annex
B
attached
hereto and incorporated herein by reference, as such partnerships or limited
liability companies exist or may hereinafter be restated, amended, or
restructured, (b) any partnership, joint venture, or limited liability company
in which Debtor shall, at any time, become a limited or general partner,
venturer, or member, or (c) any partnership, joint venture, or corporation
formed as a result of the restructure, reorganization, or amendment of the
Partnerships.
Partnership
Agreements
shall
mean (a) those agreements listed on Annex
B
attached
hereto and incorporated herein by reference (together with any modifications,
amendments, or restatements thereof), and (b) partnership agreements, joint
venture agreements, or organizational agreements for any of the partnerships,
joint ventures, or limited liability companies described in clause
(b)
of the
definition of “Partnerships”
above
(together with any modifications, amendments or restatements thereof), and
“Partnership
Agreement”
means
any one of the Partnership Agreements.
Partnership
Interests
shall
mean all of Debtor’s Right, title and interest now or hereafter accruing under
the Partnership Agreements with respect to all distributions, allocations,
proceeds, fees, preferences, payments, or other benefits, which Debtor now
is or
may hereafter become entitled to receive with respect to such interests in
the
Partnerships and with respect to the repayment of all loans now or hereafter
made by Debtor to the Partnerships.
Pledged
Securities means,
collectively, the Pledged Shares and any other Collateral constituting
securities.
Pledged
Shares has
the
meaning set forth in Paragraph
4
hereof.
Security
Interest
means
the security interest granted and the pledge and assignment made under
Paragraph
3
hereof.
UCC
means
the Uniform Commercial Code, including each such provision as it may
subsequently be renumbered, as enacted in the State of Texas or other applicable
jurisdiction, as amended at the time in question.
3.SECURITY
INTEREST.
In order
to secure the full and complete payment and performance of the Indebtedness
when
due, Debtor hereby grants to Secured Party a Security Interest in all of
Debtor’s rights, titles, and interests in and to the Collateral and pledges,
collaterally transfers, and assigns the Collateral to Secured Party, all
upon
and subject to the terms and conditions of this Security Agreement. Such
Security Interest is granted and pledge and assignment are made as security
only
and shall not subject Secured Party to, or transfer or in any way affect
or
modify, any obligation of Debtor with respect to any of the Collateral or
any
transaction involving or giving rise thereto. If the grant, pledge, or
collateral transfer or assignment of any specific item of the Collateral
is
expressly prohibited by any contract, then the Security Interest created
hereby
nonetheless remains effective to the extent allowed by the UCC or other
applicable law, but is otherwise limited by that prohibition.
4.
COLLATERAL.
As used
herein, the term “Collateral”
means
the following items and types of property, wherever located, now owned or
in the
future existing or acquired by Debtor, and all proceeds and products thereof,
and any substitutes or replacements therefor:
(a)
All
accounts, inventory, and any accessions thereto, and general intangibles
(including payment intangibles);
(b)
All
rights, titles, and interests of Debtor in and to all outstanding stock,
equity,
or other investment securities owned by Debtor, including, without limitation,
all capital stock of any Subsidiary of the Debtor set forth on Annex
B
(the
“Pledged
Shares”);
(c)
All
rights, titles, and interests of Debtor in and to all promissory notes and
other
instruments payable to Debtor, including, without limitation, all inter-company
notes from Subsidiaries and those set forth on Annex
B
(“Collateral
Notes”)
and all
rights, titles, interests, and Liens Debtor may have, be, or become entitled
to
under all present and future loan agreements, security agreements, pledge
agreements, deeds of trust, mortgages, guarantees, or other documents assuring
or securing payment of or otherwise evidencing the Collateral Notes, including,
without limitation, those set forth on Annex
B
(“Collateral
Note Security”);
(d)
The
Partnership Interests and all rights of Debtor with respect thereto, including,
without limitation, all Partnership Interests set forth on Annex
B
and all
of Debtor’s distribution rights, income rights, liquidation interest, accounts,
contract rights, general intangibles, notes, instruments, drafts, and documents
relating to the Partnership Interests;
(e)
All
of Debtor’s rights, titles, and interests in other proprietary rights whether
now owned or hereafter acquired by Debtor (collectively, the “Proprietary
Rights”),
including without limitation: (i) any knowledge or information that is material
to Debtor’s business and that enables Debtor to operate its business with the
accuracy, efficiency, or precision necessary for commercial success, or
otherwise affords Debtor a commercial advantage for the possession or knowledge
thereof including, without limitation, all geological, geophysical, engineering,
accounting, title, legal, and other technical or business data, customer
lists,
credit files, computer records, computer programs, storage media, and computer
software; (ii) any new and useful process, machine, manufacture, or composition
of matter, or any new and useful improvement thereof that is material to
the
operation of Debtor’s business and developed by Debtor, its
employees, or agents; and (iii) all information or other items recognized
as
“trade
secrets”
under
state or federal law and all comparable rights recognized in foreign
jurisdictions or conventions or by treaty;
(f)
(i)
All of Debtor’s rights, titles, and interests in, to, and under those contracts
listed on Annex
B
(the
“Material
Agreements”),
including, without limitation, all rights of Debtor to receive moneys due
and to
become due under or pursuant to the Material Agreements, (ii) all rights
of
Debtor to receive proceeds of any insurance, indemnity, warranty, or guaranty
with respect to the Material Agreements, (iii) all claims of Debtor for damages
arising out of or for breach of or default under the Material Agreements,
and
(iv) all rights of Debtor to compel performance and otherwise exercise all
rights and remedies under the Material Agreements;
(g)
All
present and future distributions, income, increases, profits, combinations,
reclassifications, improvements, and products of, accessions, attachments,
and
other additions to, tools, parts, and equipment used in connection with,
and
substitutes and replacements for, all or part of the Collateral described
above;
(h)
All
present and future accounts, contract rights, general intangibles, cash and
noncash proceeds, and other rights arising from or by virtue of, or from
the
voluntary or involuntary sale or other disposition of, or collections with
respect to, or insurance proceeds payable with respect to, or proceeds payable
by virtue of warranty or other claims against the manufacturer of, or claims
against any other Person with respect to, all or any part of the Collateral
heretofore described in this clause or otherwise; and
(i)
All
present and future security for the payment to any Obligor of any of the
Collateral described above and goods which gave or will give rise to any
such
Collateral or are evidenced, identified, or represented therein or thereby.
The
description of the Collateral contained in this Paragraph
4
shall
not be deemed to permit any action prohibited by this Security Agreement
or by
the terms incorporated in this Security Agreement.
5.
REPRESENTATIONS
AND WARRANTIES.
Debtor
represents and warrants to Secured Party that:
(a)
Credit
Agreement.
To the
extent certain representations and warranties in the Credit Agreement are
applicable to it or its assets or operations, each such representation and
warranty is true and correct.
(b)
Binding
Indebtedness/Perfection.
This
Security Agreement creates a legal, valid, and binding Lien in and to the
Collateral in favor of Secured Party and enforceable against Debtor. For
Collateral in which the Security Interest may be perfected by the filing
of
Financing Statements, once those Financing Statements have been properly
filed
in the jurisdictions described on Annex
A hereto,
the Security Interest in that Collateral will be fully perfected and the
Security Interest will constitute a first-priority Lien on such Collateral,
subject only to Excepted Liens or, to the extent Financing Statements have
already been filed in the jurisdictions described on Annex
A
hereto,
and such Financing Statements have not lapsed, the Security Interest in that
Collateral is currently perfected and constitutes a first-priority Lien on
such
Collateral, subject only to Excepted Liens. With respect to Collateral
consisting of investment property (other
than
Pledged
Securities covered by Paragraph
5(j)),
upon
the delivery of such Collateral to Secured Party or delivery of an executed
Control Agreement with respect to such Collateral, the
Security Interest in that Collateral will be fully perfected and the Security
Interest will constitute a first-priority Lien on such Collateral, subject
only
to Excepted Liens. None of the Collateral has been delivered nor control
with
respect thereto given to any other Person. Other than the Financing Statements
and Control Agreements with respect to this Security Agreement, there are
no
other financing statements or control agreements covering any Collateral,
other
than those evidencing Excepted Liens. The creation of the Security Interest
does
not require the consent of any Person that has not been obtained.
(c)
Debtor
Information.
Debtor’s exact legal name, mailing address, jurisdiction of organization, type
of entity, and state issued organizational identification number are as set
forth on Annex
A
hereto.
(d)
Location.Annex
A
sets
forth (i) Debtor’s place of business and chief executive office, (ii) the
location of Debtor’s books and records concerning its accounts, and (iii) the
location of all other Collateral (other than Collateral to the extent located
on
the Mortgaged Properties). All such books, records, and Collateral are in
Debtor’s possession.
(e)
Governmental
Authority.
No
Authorization, approval, or other action by, and no notice to or filing with,
any Governmental Authority is required either (i) for the pledge by Debtor
of
the Collateral pursuant to this Security Agreement or for the execution,
delivery, or performance of this Security Agreement by Debtor, or (ii) for
the
exercise by Secured Party of the voting or other rights provided for in this
Security Agreement or the remedies in respect of the Collateral pursuant
to this
Security Agreement (except
as may
be required in connection with the disposition of the Pledged Securities
by laws
affecting the offering and sale of securities generally).
(f)
Maintenance
of Collateral.
All
tangible Collateral which is useful in and necessary to Debtor’s business is in
good repair and condition, ordinary wear and tear excepted.
(g)
Liens.
Debtor
owns all presently existing Collateral, and will acquire all hereafter-acquired
Collateral, free and clear of all liens, except
Excepted
Liens.
(h)
Collateral.
Annex
B
accurately lists all Collateral Notes, Collateral Note Security, Pledged
Shares,
Partnership Interests, and Material Agreements in which Debtor has any rights,
titles, or interest (but such failure of such description to be accurate
or
complete shall not impair the Security Interest in such Collateral).
(i)
Instruments,
Chattel Paper, Collateral Notes, and Collateral Note Security.
All
instruments and chattel paper, including, without limitation, the Collateral
Notes, have been delivered to Secured Party, together
with
corresponding endorsements duly executed by Debtor in favor of Secured Party,
and such endorsements have been duly and validly executed and are binding
and
enforceable against Debtor in accordance with their terms. Each Collateral
Note
and the documents evidencing the Collateral Note Security are in full force
and
effect; there have been no renewals or extensions of, or amendments,
modifications, or supplements to, any thereof about which the Secured Party
has
not been advised in writing; and no “default”
or
“event
of default”
has
occurred and is continuing under any such Collateral Note or documents
evidencing the Collateral Note Security. Debtor has good title to the Collateral
Notes and Collateral Note Security, and such Collateral Notes and Collateral
Note Security are free from any claim for credit, deduction, or allowance
of a
Collateral Obligor and free from any defense, condition, dispute, setoff,
or
counterclaim, and there is no extension or indulgence with respect thereto.
(j)
Pledged
Securities; Pledged Shares.
All
Collateral that is Pledged Shares is duly authorized, validly issued, fully
paid, and non-assessable, and the transfer thereof is not subject to any
restrictions, other than restrictions imposed by applicable securities and
corporate laws. The Pledged Securities include 100% of the issued and
outstanding common stock or other equity interests of each Subsidiary owned
by
Debtor. As of the date hereof, no shares of capital stock or other equity
securities are issued, reserved for issuance or outstanding, and there are
no
other options, warrants or other rights presently outstanding to purchase
or
otherwise acquire any authorized but unissued, unauthorized or treasury shares
of capital stock of any subsidiary. None of the Pledged Shares is subject
to
preemptive rights. Debtor has good title to the Pledged Securities, free
and
clear of all Liens and encumbrances thereon (except
for the
Security Interest created hereby), and has delivered to Secured Party (i)
all
stock certificates, or other instruments or documents representing or evidencing
the Pledged Securities, together
with
corresponding assignment or transfer powers duly executed in blank by Debtor,
and such powers have been duly and validly executed and are binding and
enforceable against Debtor in accordance with their terms or (ii) to the
extent
such Pledged Securities are uncertificated, an executed Control Agreement
with
respect to such Pledged Securities. The pledge of the Pledged Securities
in
accordance with the terms hereof creates a valid and perfected first priority
security interest in the Pledged Securities securing payment of the
Indebtedness.
(k)
Partnership
Interests.
Each
Partnership issuing a Partnership Interest, is duly organized, currently
existing, and in good standing under all applicable laws; there have been
no
amendments, modifications, or supplements to any agreement or certificate
creating any Partnership or any material contract relating to the Partnerships,
of which Secured Party has not been advised in writing; no default or breach
or
event of default or breach has occurred and is continuing under any Partnership
Agreement; and no approval or consent of the partners of any Partnership
is
required as a condition to the validity and enforceability of the Security
Interest created hereby or the consummation of the transactions contemplated
hereby which has not been duly obtained by Debtor. Debtor has good title
to the
Partnership Interests free and clear of all Liens and encumbrances (except
for the
Security Interest granted hereby). The Partnership Interests are validly
issued,
fully paid, and nonassessable and are not subject to statutory, contractual,
or
other restrictions governing their transfer, ownership, or control, which
would
materially adversely affect the rights of the Lenders hereunder or the ability
of the Secured Party to exercise its rights or remedies with respect to the
Partnership Interests, except
as set
forth on Annex
C or
applicable securities laws. None of the Partnership Interests is subject
to
preemptive rights. All capital contributions required to be made by the terms
of
the Partnership Agreements for each Partnership have been made.
(l)
Accounts;
General Intangibles.
All
Collateral that is accounts or general intangibles is free from any claim
for
credit, deduction, or allowance of a Collateral Obligor and free from any
defense, condition, dispute, setoff, or counterclaim, and there is no extension
or indulgence with respect thereto.
(m)
Material
Agreements.
All
Material Agreements to which Debtor is a party are set forth on Schedule
7.23 to
the
Credit Agreement. Each Material Agreement is in full force and effect; there
have been no amendments, modifications, or supplements to any Material Agreement
of which Secured Party has not been advised in writing; and no default or
breach
or event of default or breach has occurred and is continuing under any Material
Agreement.
The
foregoing representations and warranties will be true and correct in all
respects with respect to any additional Collateral or additional specific
descriptions of certain Collateral delivered to Secured Party in the future
by
Debtor. The failure of any of these representations or warranties or any
description of Collateral therein to be accurate or complete shall not impair
the Security Interest in any such Collateral.
6.
COVENANTS.
So long
as Lenders are committed to extend credit to Debtor under the Credit Agreement
and thereafter until the Indebtedness is paid and performed in full, Debtor
covenants and agrees with Secured Party that Debtor will:
(a)
Credit
Agreement.
(i)
Comply with, perform, and be bound by all covenants and agreements in the
Credit
Agreement that are applicable to it, its assets, or its operations, each
of
which is hereby ratified and confirmed (INCLUDING,
WITHOUT LIMITATION, THE INDEMNIFICATION AND RELATED PROVISIONS IN
SECTION
12.03
OF THE CREDIT AGREEMENT);
AND
(ii) CONSENT TO AND APPROVE THE VENUE, SERVICE OF PROCESS, AND WAIVER OF
JURY
TRIAL PROVISIONS OF SECTION
12.13
OF THE CREDIT AGREEMENT.
(b)
Information/Record
of Collateral.
Maintain, at the place where Debtor is entitled to receive notices under
the
Loan Documents, a current record of where all Collateral is located, permit
representatives of Secured Party at any time during normal business hours
to
inspect and make abstracts from such records, and furnish to Secured Party,
at
such intervals as Secured Party may request, such documents, lists,
descriptions, certificates, and other information as may be necessary or
proper
to keep Secured Party informed with respect to the identity, location, status,
condition, and value of the Collateral. In addition, from time to time at
the
request of Secured Party deliver to Secured Party such information regarding
Debtor as Secured Party may reasonably request.
(c)
Annexes.
Immediately update all annexes hereto if any information therein shall become
inaccurate or incomplete. Notwithstanding any other provision herein, Debtor’s
failure to describe any Collateral required to be listed on any annex hereto
shall not impair Secured Party’s Security Interest in the Collateral.
(d)
Perform
Indebtedness.
Fully
perform all of Debtor’s duties under and in connection with each transaction to
which the Collateral, or any part thereof, relates, so that the amounts thereof
shall actually become payable in their entirety to Secured Party. Furthermore,
notwithstanding anything to the contrary contained herein, (i) Debtor shall
remain liable under the contracts, agreements, documents, and instruments
included in the Collateral to the extent set forth therein to perform all
of its
duties and obligations thereunder to the same extent as if this Security
Agreement had not been executed, (ii) the exercise by Secured Party of any
of
its rights or remedies hereunder shall not release Debtor from any of its
duties
or obligations under the contracts, agreements, documents, and instruments
included in the Collateral, and (iii) Secured Party shall not have any
indebtedness, liability, or obligation under any of the contracts, agreements,
documents, and instruments included in the Collateral by reason of this Security
Agreement, and Secured Party shall not be obligated to perform any of the
obligations or duties of Debtor thereunder or to take any action to collect
or
enforce any claim for payment assigned hereunder.
(e)
Notices.
(i)
Except as may be otherwise expressly permitted under the terms of the Credit
Agreement, promptly notify Secured Party of (A) any change in any fact or
circumstances represented or warranted by Debtor with respect to any of the
Collateral or Indebtedness, (B) any claim, action, or proceeding affecting
title
to all or any of the Collateral or the Security Interest and, at the request
of
Secured Party, appear in and defend, at Debtor’s expense, any such action or
proceeding, (C) any material change in the nature of the Collateral, (D)
any
material damage to or loss of Collateral, and (E) the occurrence of any
other event or condition (including, without limitation,
matters as to Lien priority) that could have a material adverse effect on
the
Collateral (taken as a whole) or the Security Interest created hereunder;
and
(ii) give Secured Party thirty (30) days written notice before any proposed
(A)
relocation of its principal place of business or chief executive office,
(B)
change of its name, identity, or corporate structure, (C) relocation of the
place where its books and records concerning its accounts are kept, (D)
relocation of any Collateral (other
than
delivery
of inventory in the ordinary course of business to third party contractors
for
processing and sales of inventory in the ordinary course of business or as
permitted by the Credit Agreement) to a location not described on the attached
Annex
A,
and (E)
change of its jurisdiction of organization or organizational identification
number, as applicable. Prior to making any of the changes contemplated in
clause
(ii)
preceding, Debtor shall execute and deliver all such additional documents
and
perform all additional acts as Secured Party, in its sole discretion, may
request in order to continue or maintain the existence and priority of the
Security Interests in all of the Collateral.
(f)
Collateral
in Trust.
Hold in
trust (and not commingle with other assets of Debtor) for Secured Party all
Collateral that is Collateral Notes or Pledged Securities, at any time received
by Debtor, and promptly deliver same to Secured Party, unless
Secured
Party at its option (which may be evidenced only by a writing signed by Secured
Party stating that Secured Party elects to permit Debtor to so retain) permits
Debtor to retain the same, but any Collateral Notes or Pledged Securities,
so
retained shall be marked to state that they are assigned to Secured Party;
each
such instrument shall be endorsed to the order of Secured Party (but the
failure
of same to be so marked or endorsed shall not impair the Security Interest
thereon).
(g)
Control.
Execute
all documents and take any action required by Secured Party in order for
Secured
Party to obtain “control”
(as
defined in the UCC) with respect to Collateral consisting of uncertificated
Pledged Securities. If Debtor at any time holds or acquires an interest in
any
electronic chattel paper or any “transferable
record,”
as that
term is defined in the federal Electronic
Signatures in Global and National Commerce Act,
or in
the Uniform
Electronic Transactions Act
as in
effect in any relevant jurisdiction, promptly notify Secured Party thereof
and,
at the request of Secured Party, take such action as Secured Party may
reasonably request to vest in Secured Party control under the UCC of such
electronic chattel paper or control under the federal Electronic
Signatures in Global and National Commerce Act
or, as
the case may be, the Uniform
Electronic Transactions Act,
as so
in effect in such jurisdiction, of such transferable record.
(h)
Further
Assurances.
At
Debtor’s expense and Secured Party’s request, before or after a Default or Event
of Default, (i) file or cause to be filed such applications and take such
other
actions as Secured Party may request to obtain the consent or approval of
any
Governmental Authority to Secured Party’s rights hereunder, including, without
limitation, the Right to sell all the Collateral upon a Default or Event
of
Default without additional consent or approval from such Governmental Authority
(and, because Debtor agrees that Secured Party’s remedies at law for failure of
Debtor to comply with this provision would be inadequate and that such failure
would not be adequately compensable in damages, Debtor agrees that its covenants
in this provision may be specifically enforced); (ii) from time to time promptly
execute and deliver to Secured Party all such other assignments, certificates,
supplemental documents, and financing statements, and do all other acts or
things as Secured Party may reasonably request in order to more fully create,
evidence, perfect, continue, and preserve the priority of the Security Interest
and to carry out the provisions of this Security Agreement; and (iii) pay
all
filing fees in connection with any financing, continuation, or termination
statement or other instrument with respect to the Security Interests.
(i)
Encumbrances.
Not
create, permit, or suffer to exist, and shall defend the Collateral against,
any
Lien or other encumbrance on the Collateral, and shall defend Debtor’s rights in
the Collateral and Secured Party’s Security Interest in, the Collateral against
the claims and demands of all Persons except those holding or claiming Excepted
Liens. Debtor shall do nothing to impair the rights of Secured Party in the
Collateral.
(j)
Estoppel
and Other Agreements and Matters.
Upon
the reasonable request of Secured Party, either (i) use commercially reasonable
efforts to cause the landlord or lessor for each location where any of its
inventory or equipment is maintained to execute and deliver to Secured Party
an
estoppel and subordination agreement in such form as may be reasonably
acceptable to Secured Party and its counsel, or
(ii)
deliver to Secured Party a legal opinion or other evidence (in each case
that is
reasonably satisfactory to Secured Party and it counsel) that neither the
applicable lease nor the laws of the jurisdiction in which that location
is
situated provide for contractual, common law, or statutory landlord’s Liens that
is senior to or pari
passu
with the
Security Interest.
(k)
Impairment
of Collateral.
Not use
any of the Collateral, or permit the same to be used, for any unlawful purpose,
in any manner that is reasonably likely to adversely impair the value or
usefulness of the Collateral, or in any manner inconsistent with the provisions
or requirements of any policy of insurance thereon nor affix or install any
accessories, equipment, or device on the Collateral or on any component thereof
if such addition will impair the original intended function or use of the
Collateral or such component.
(l)
Collateral
Notes and Collateral Note Security.
Without
the prior written consent of Secured Party not (i) modify or substitute,
or
permit the modification or substitution of, any Collateral Note or any document
evidencing the Collateral Note Security or (ii) release any Collateral Note
Security unless specifically required by the terms thereof.
(m)
Securities.
Except
as permitted by the Credit Agreement, not sell, exchange, or otherwise dispose
of, or grant any option, warrant, or other right with respect to, any of
the
Pledged Securities; to the extent any issuer of any Pledged Securities is
controlled by Debtor and/or its Affiliates, not permit such issuer to issue
any
additional shares of stock or other securities in addition to or in substitution
for the Pledged Securities, except issuances to Debtor on terms acceptable
to
Secured Party; pledge hereunder, immediately upon Debtor’s acquisition (directly
or indirectly) thereof, any and all additional shares of stock or other
securities of each Subsidiary of Debtor; and take any action necessary,
required, or requested by Secured Party to allow Secured Party to fully enforce
its Security Interest in the Pledged Securities, including, without limitation,
the filing of any claims with any court, liquidator, trustee, custodian,
receiver, or other like person or party.
(n)
Partnerships
and Partnership Interests.
(i)
Promptly perform, observe, and otherwise comply with each and every covenant,
agreement, requirement, and condition set forth in the contracts and agreements
creating or relating to any Partnership; (ii) do or cause to be done all
things
necessary or appropriate to keep the Partnerships in full force and effect
and
the rights of Debtor and Secured Party thereunder unimpaired; (iii) except
as
expressly permitted by the Credit Agreement, not consent to any Partnership
selling, leasing, or disposing of substantially all of its assets in a single
transaction or a series of transactions; (iv) notify Secured Party of the
occurrence of any default or breach or event of default or breach under any
contract or agreement creating or relating to the Partnerships; (v) not consent
to the amendment, modification, surrender, impairment, forfeiture, cancellation,
dissolution, or termination of any Partnership, or material agreement relating
thereto; (vi) except as permitted by the Credit Agreement, not transfer,
sell,
or assign any of the Partnership Interests or any part thereof; (vii) pledge
hereunder, immediately upon Debtor’s acquisition (directly or indirectly)
thereof, any and all additional Partnership Interests of any Partnership
granted
to Debtor; and any and all additional shares of stock or other securities
of
each; (viii) deliver to Secured Party a fully-executed Acknowledgment of
Pledge,
substantially in the form of Annex
D,
for
each Partnership Interest; and (ix) take any action necessary, required,
or
requested by Secured Party to allow Secured Party to fully enforce its Security
Interest in the Partnership Interests, including, without limitation, the
filing
of any claims with any court, liquidator, trustee, custodian, receiver, or
other
like person or party.
(o)
Material
Agreements.
(i)
Promptly perform, observe, and otherwise comply with each and every covenant,
agreement, requirement, and condition set forth in the Material Agreements;
(ii)
do or cause to be done all things necessary or appropriate to keep the Material
Agreements in full force and effect and the rights of Debtor and Secured
Party
thereunder unimpaired; (iii) notify Secured Party of the occurrence of any
default or breach or event of default or breach under any Material Agreement;
and (iv) without the prior written consent of Secured Party, not consent
to the
amendment, modification, surrender, impairment, forfeiture, cancellation,
dissolution, or termination of any Material Agreement.
(p)
Modification
of Accounts.
In
accordance with prudent business practices, endeavor to collect or cause
to be
collected from each account debtor under its accounts, as and when due, any
and
all amounts owing under such accounts. Except in the ordinary course of business
consistent with prudent business practices and industry standards, without
the
prior written consent of Secured Party, Debtor shall not (i) grant any extension
of time for any payment with respect to any of the accounts, (ii) compromise,
compound, or settle any of the accounts for less than the full amount thereof,
(iii) release, in whole or in part, any Person liable for payment of any
of the
accounts, (iv) allow any credit or discount for payment with respect to any
account other than trade discounts granted in the ordinary course of business,
(v) release any Lien or guaranty securing any account, (vi) modify or
substitute, or permit the modification or substitution of, any contract to
which
any of the Collateral which is accounts relates.
7.
DEFAULT;
REMEDIES.
If an
Event of Default exists, Secured Party may, at its election (but subject
to the
terms and conditions of the Credit Agreement), exercise any and all rights
available to a secured party under the UCC, in addition to any and all other
rights afforded by the Loan Documents, at law, in equity, or otherwise,
including, without limitation, (a) requiring Debtor to assemble all or part
of
the Collateral and make it available to Secured Party at a place to be
designated by Secured Party which is reasonably convenient to Debtor and
Secured
Party, (b) surrendering any policies of insurance on all or part of the
Collateral and receiving and applying the unearned premiums as a credit on
the
Indebtedness, (c) applying by appropriate judicial proceedings for appointment
of a receiver for all or part of the Collateral (and Debtor hereby consents
to
any such appointment), and (d) applying to the Indebtedness any cash held
by
Secured Party under this Security Agreement, including, without limitation,
any
cash in the Cash Collateral Account (defined in Section
8(h)).
(a)
Notice.
Reasonable notification of the time and place of any public sale of the
Collateral, or reasonable notification of the time after which any private
sale
or other intended disposition of the Collateral is to be made, shall be sent
to
Debtor and to any other Person entitled to notice under the UCC; provided
that,
if any
of the Collateral threatens to decline speedily in value or is of the type
customarily sold on a recognized market, Secured Party may sell or otherwise
dispose of the Collateral without notification, advertisement, or other notice
of any kind. It is agreed that notice sent or given not less than ten days
prior
to the taking of the action to which the notice relates is reasonable
notification and notice for the purposes of this subparagraph.
(b)
Condition
of Collateral; Warranties.
Secured
Party has no obligation to clean-up or otherwise prepare the Collateral for
sale. Secured Party may sell the Collateral without giving any warranties
as to
the Collateral. Secured Party may specifically disclaim any warranties of
title
or the like. This procedure will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral.
(c)
Compliance
with Other Laws.
Secured
Party may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered to adversely affect the commercial reasonableness of any sale
of the
Collateral.
(d)
Sales
of Pledged Securities.
(i)
Debtor agrees that, because of the Securities Act of 1933, as amended, or
the
rules and regulations promulgated thereunder (collectively, the “Securities
Act”),
or any
other laws or regulations, and for other reasons, there may be legal or
practical restrictions or limitations affecting Secured Party in any attempts
to
dispose of certain portions of the Pledged Securities and for the enforcement
of
its rights. For these reasons, Secured Party is hereby authorized by Debtor,
but
not obligated, upon the occurrence and during the continuation of an Event
of
Default, to sell all or any part of the Pledged Securities at private sale,
subject to investment letter or in any other manner which will not require
the
Pledged Securities, or any part thereof, to be registered in accordance with
the
Securities Act or any other laws or regulations, at a reasonable price at
such
private sale or other distribution in the manner mentioned above. Debtor
understands that Secured Party may in its discretion approach a limited number
of potential purchasers and that a sale under such circumstances may yield
a
lower price for the Pledged Securities, or any part thereof, than would
otherwise be obtainable if such Collateral were either afforded to a larger
number or potential purchasers, registered under the Securities Act, or sold
in
the open market. Debtor agrees that any such private sale made under this
Paragraph
7(d)
shall be
deemed to have been made in a commercially reasonable manner, and that Secured
Party has no obligation to delay the sale of any Pledged Securities to permit
the issuer thereof to register it for public sale under any applicable federal
or state securities laws.
(ii)
Secured Party is authorized, in connection with any such sale, (A) to restrict
the prospective bidders on or purchasers of any of the Pledged Securities
to a
limited number of sophisticated investors who will represent and agree that
they
are purchasing for their own account for investment and not with a view to
the
distribution or sale of any of such Pledged Securities, and (B) to impose
such
other limitations or conditions in connection with any such sale as Secured
Party reasonably deems necessary in order to comply with applicable law.
Debtor
covenants and agrees that it will execute and deliver such documents and
take
such other action as Secured Party reasonably deems necessary in order that
any
such sale may be made in compliance with applicable law. Upon any such sale
Secured Party shall have the right to deliver, assign, and transfer to the
purchaser thereof the Pledged Securities so sold. Each purchaser at any such
sale shall hold the Pledged Securities so sold absolutely free from any claim
or
right of Debtor of whatsoever kind, including any equity or right of redemption
of Debtor. Debtor, to the extent permitted by applicable law, hereby
specifically waives all rights of redemption, stay, or appraisal which it
has or
may have under any law now existing or hereafter enacted.
(iii)
Debtor agrees that ten days’ written notice from Secured Party to Debtor of
Secured Party’s intention to make any such public or private sale or sale at a
broker’s board or on a securities exchange shall constitute reasonable notice
under the UCC. Such notice shall (A) in case of a public sale, state the
time
and place fixed for such sale, (B) in case of sale at a broker’s board or on a
securities exchange, state the board or exchange at which such a sale is
to be
made and the day on which the Pledged Securities, or the portion thereof
so
being sold, will first be offered for sale at such board or exchange, and
(C) in
the case of a private sale, state the day after which such sale may be
consummated. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as Secured Party may
fix in
the notice of such sale. At any such sale, the Pledged Securities may be
sold in
one lot as an entirety or in separate parcels, as Secured Party may reasonably
determine. Secured Party shall not be obligated to make any such sale pursuant
to any such notice. Secured Party may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time to
time
by announcement at the time and place fixed for the sale, and such sale may
be
made at any time or place to which the same may be so adjourned.
(iv)
In
case of any sale of all or any part of the Pledged Securities on credit or
for
future delivery, the Pledged Securities so sold may be retained by Secured
Party
until the selling price is paid by the purchaser thereof, but Secured Party
shall not incur any liability in case of the failure of such purchaser to
take
up and pay for the Pledged Securities so sold and in case of any such failure,
such Pledged Securities may again be sold upon like notice. Secured Party,
instead of exercising the power of sale herein conferred upon it, may proceed
by
a suit or suits at law or in equity to foreclose the Security Interests and
sell
the Pledged Securities, or any portion thereof, under a judgment or decree
of a
court or courts of competent jurisdiction.
(v)
Without limiting the foregoing, or imposing upon Secured Party any obligations
or duties not required by applicable law, Debtor acknowledges and agrees
that,
in foreclosing upon any of the Pledged Securities, or exercising any other
rights or remedies provided Secured Party hereunder or under applicable law,
Secured Party may, but shall not be required to, (A) qualify or restrict
prospective purchasers of the Pledged Securities by requiring evidence of
sophistication or creditworthiness, and requiring the execution and delivery
of
confidentiality agreements or other documents and agreements as a condition
to
such prospective purchasers’ receipt of information regarding the Pledged
Securities or participation in any public or private foreclosure sale process,
(B) provide to prospective purchasers business and financial information
regarding Debtor or the Companies available in the files of Secured Party
at the
time of commencing the foreclosure process, without the requirement that
Secured
Party obtain, or seek to obtain, any updated business or financial information
or verify, or certify to prospective purchasers, the accuracy of any such
business or financial information, or (C) offer for sale and sell the Pledged
Securities with, or without, first employing an appraiser, investment banker,
or
broker with respect to the evaluation of the Pledged Securities, the
solicitation of purchasers for Pledged Securities, or the manner of sale
of
Pledged Securities.
(e)
Application
of Proceeds.
Secured
Party shall apply the proceeds of any sale or other disposition of the
Collateral under this Paragraph
7
in the
following order: first,
to the
payment of all expenses incurred in retaking, holding, and preparing any
of the
Collateral for sale(s) or other disposition, in arranging for such sale(s)
or
other disposition, and in actually selling or disposing of the same (all
of
which are part of the Indebtedness); second,
toward
repayment of amounts expended by Secured Party under Paragraph
8;
and
third, toward
payment of the balance of the Indebtedness in the order and manner specified
in
the Credit Agreement. Any surplus remaining shall be delivered to Debtor
or as a
court of competent jurisdiction may direct. If the proceeds are insufficient
to
pay the Indebtedness in full, Debtor shall remain liable for any deficiency.
(f)
Sales
on Credit.
If
Secured Party sells any of the Collateral upon credit, Debtor will be credited
only with payments actually made by the purchaser, received by the Secured
Party, and applied to the indebtedness of the purchaser. In the event the
purchaser fails to pay for the Collateral, Secured Party may resell the
Collateral and Debtor shall be credited with the proceeds of the sale.
8.
OTHER
RIGHTS OF SECURED PARTY.
(a)
Performance.
If
Debtor fails to keep the Collateral in good repair, working order, and
condition, as required by the Loan Documents, or fails to pay when due all
Taxes
on any of the Collateral in the manner required by the Loan Documents, or
fails
to preserve the priority of the Security Interest in any of the Collateral,
or
fails to keep the Collateral insured as required by the Loan Documents, or
otherwise fails to perform any of its obligations under the Loan Documents
with
respect to the Collateral, then Secured Party may, at its option, but without
being required to do so, make such repairs, pay such Taxes, prosecute or
defend
any suits in relation to the Collateral, or insure and keep insured the
Collateral in any amount deemed appropriate by Secured Party, or take all
other
action which Debtor is required, but has failed or refused, to take under
the
Loan Documents. Any sum which may be expended or paid by Secured Party under
this subparagraph (including, without limitation, court costs and reasonable
attorneys’ fees) shall bear interest from the dates of expenditure or payment at
the Post-Default Rate until paid and, together
with
such
interest, shall be payable by Debtor to Secured Party upon demand and shall
be
part of the Indebtedness.
(b)
Collection.
If an
Event of Default exists and upon notice from Secured Party, each Collateral
Obligor with respect to any payments on any of the Collateral (including,
without limitation, dividends and other Distributions with respect to the
Pledged Securities and Partnership Interests, payments on Collateral Notes,
insurance proceeds payable by reason of loss or damage to any of the Collateral,
or payments or distributions with respect to Deposit Accounts) is hereby
authorized and directed by Debtor to make payment directly to Secured Party,
regardless of whether Debtor was previously making collections thereon. Subject
to Paragraph
8(f)
hereof,
until such notice is given, Debtor is authorized to retain and expend all
payments made on Collateral. If an Event of Default exists, Secured Party
shall
have the Right in its own name or in the name of Debtor to compromise or
extend
time of payment with respect to all or any portion of the Collateral for
such
amounts and upon such terms as Secured Party may determine; to demand, collect,
receive, receipt for, sue for, compound, and give acquittances for any and
all
amounts due or to become due with respect to Collateral; to take control
of cash
and other proceeds of any Collateral; to endorse the name of Debtor on any
notes, acceptances, checks, drafts, money orders, or other evidences of payment
on Collateral that may come into the possession of Secured Party; to sign
the
name of Debtor on any invoice or bill of lading relating to any Collateral,
on
any drafts against Collateral Obligors or other Persons making payment with
respect to Collateral, on assignments and verifications of accounts or other
Collateral and on notices to Collateral Obligors making payment with respect
to
Collateral; to send requests for verification of obligations to any Collateral
Obligor; and to do all other acts and things necessary to carry out the intent
of this Security Agreement. If an Event of Default exists and any Collateral
Obligor fails or refuses to make payment on any Collateral when due, Secured Party is authorized, in its sole
discretion, either in
its own name or in the name of Debtor, to take such action as Secured Party
shall deem appropriate for the collection of any amounts owed with respect
to
Collateral or upon which a delinquency exists. Regardless of any other provision
hereof, however, Secured Party shall never be liable for its failure to collect,
or for its failure to exercise diligence in the collection of, any amounts
owed
with respect to Collateral, nor shall it be under any duty whatsoever to
anyone
except
Debtor
to account for funds that it shall actually receive hereunder. Without limiting
the generality of the foregoing, Secured Party shall have no responsibility
for
ascertaining any maturities, calls, conversions, exchanges, offers, tenders,
or
similar matters relating to any Collateral, or for informing Debtor with
respect
to any of such matters (irrespective of whether Secured Party actually has,
or
may be deemed to have, knowledge thereof). The receipt of Secured Party to
any
Collateral Obligor shall be a full and complete release, discharge, and
acquittance to such Collateral Obligor, to the extent of any amount so paid
to
Secured Party.
(c)
Proprietary
Rights.
For
purposes of enabling Secured Party to exercise its rights and remedies under
this Security Agreement and enabling Secured Party and its successors and
assigns to enjoy the full benefits of the Collateral, Debtor hereby grants
to
Secured Party an irrevocable, nonexclusive license (exercisable without payment
of royalty or other compensation to Debtor) to make, have made, use, sell,
import, reproduce, distribute, display and perform publicly, create derivative
works, perform by means of digital transmission, license, or sublicense any
of
the Proprietary Rights. Debtor shall provide Secured Party with reasonable
access to all media in which any of the Proprietary Rights may be recorded
or
stored and all computer programs used for the completion or printout thereof.
This license shall also inure to the benefit of all successors, assigns,
and
transferees of Secured Party. Upon the occurrence of a Event of Default,
Secured
Party may require that Debtor assign all of its right, title, and interest
in
and to the Proprietary Rights or any part thereof to Secured Party or such
other
Person as Secured Party may designate pursuant to documents satisfactory
to
Secured Party. If no Default or Event of Default exists, Debtor shall have
the
exclusive, non-transferable right and license to use the Proprietary Rights
in
the ordinary course of business and the exclusive right to grant to other
Persons licenses and sublicenses with respect to the Proprietary Rights for
full
and fair consideration.
(d)
Record
Ownership of Securities.
If a
Default or Event of Default exists, Secured Party at any time may have any
Collateral that is Pledged Securities and that is in the possession of Secured
Party, or its nominee or nominees, registered in its name, or in the name
of its
nominee or nominees, as Secured Party; and, as to any Collateral that is
Pledged
Securities so registered, Secured Party shall execute and deliver (or cause
to
be executed and delivered) to Debtor all such proxies, powers of attorney,
dividend coupons or orders, and other documents as Debtor may reasonably
request
for the purpose of enabling Debtor to exercise the voting rights and powers
which it is entitled to exercise under this Security Agreement or to receive
the
dividends and other Distributions and payments in respect of such Collateral
that is Pledged Securities or proceeds thereof which it is authorized to
receive
and retain under this Security Agreement.
(e)
Voting
of Securities.
As long
as no Default exists, Debtor is entitled to exercise all voting rights
pertaining to any Pledged Securities and Partnership Interests; provided,
however,
that no
vote shall be cast or consent, waiver, or ratification given or action taken
without the prior written consent of Secured Party which would (x) be
inconsistent with or violate any provision of this Security Agreement or
any
other Loan Document or (y) amend, modify, or waive any term, provision or
condition of the certificate of incorporation, bylaws, certificate of formation,
or other charter document, or other agreement relating to, evidencing, providing
for the issuance of, or securing any Collateral; and provided
further
that
Debtor shall give Secured Party at least five Business Days’
prior written notice in the form of an officers’ certificate of the manner in
which it intends to exercise, or the reasons for refraining from exercising,
any
voting or other consensual rights pertaining to the Collateral or any part
thereof which might have a material adverse effect on the value of the
Collateral or any part thereof. If an Event of Default exists and if Secured
Party elects to exercise such right, the right to vote any Pledged Securities
shall be vested exclusively in Secured Party. To this end, Debtor hereby
irrevocably constitutes and appoints Secured Party the proxy and
attorney-in-fact of Debtor, with full power of substitution, to vote, and
to act
with respect to, any and all Collateral that is Pledged Securities standing
in
the name of Debtor or with respect to which Debtor is entitled to vote and
act,
subject to the understanding that such proxy may not be exercised unless
an
Event of Default exists. The proxy herein granted is coupled with an interest,
is irrevocable, and shall continue until the Indebtedness has been paid and
performed in full.
(f)
Certain
Proceeds.
Notwithstanding any contrary provision herein, any and all
(i)
dividends, interest, or other Distributions paid or payable other than in
cash
in respect of, and instruments and other property received, receivable, or
otherwise distributed in respect of, or in exchange for, any Collateral;
(ii)
dividends, interest, or other Distributions hereafter paid or payable in
cash in
respect of any Collateral in connection with a partial or total liquidation
or
dissolution, or in connection with a reduction of capital, capital surplus,
or
paid-in-surplus;
(iii)
cash paid, payable, or otherwise distributed in redemption of, or in exchange
for, any Collateral; and
(iv)
dividends, interest, or other Distributions paid or payable in violation
of the
Loan Documents,
shall
be
part of the Collateral hereunder, and shall, if received by Debtor, be held
in
trust for the benefit of Secured Party, and shall forthwith be delivered
to
Secured Party (accompanied by proper instruments of assignment and/or stock
and/or bond powers executed by Debtor in accordance with Secured Party’s
instructions) to be held subject to the terms of this Security Agreement.
Any
cash proceeds of Collateral which come into the possession of Secured Party
on
and after the occurrence of an Event of Default (including, without limitation,
insurance proceeds) may, at Secured Party’s option, be applied in whole or in
part to the Indebtedness (to the extent then due), be released in whole or
in
part to or on the written instructions of Debtor for any general or specific
purpose, or be retained in whole or in part by Secured Party as additional
Collateral. Any cash Collateral in the possession of Secured Party may be
invested by Secured Party in certificates of deposit issued by Secured Party
(if
Secured Party issues such certificates) or by any state or national bank
having
combined capital and surplus greater than $100,000,000 with a rating from
Moody’s and S&P of P-1
and
A-1+,
respectively, or in securities issued or guaranteed by the United States
of
America or any agency thereof. Secured Party shall never be obligated to
make
any such investment and shall never have any liability to Debtor for any
loss
which may result therefrom. All interest and other amounts earned from any
investment of Collateral may be dealt with by Secured Party in the same manner
as other cash Collateral. The provisions of this subparagraph are applicable
whether or not a Default or Event of Default exists.
(g)
Use
and Operation of Collateral.
Should
any Collateral come into the possession of Secured Party, Secured Party may
use
or operate such Collateral for the purpose of preserving it or its value
pursuant to the order of a court of appropriate jurisdiction or in accordance
with any other rights held by Secured Party in respect of such Collateral.
Debtor covenants to promptly reimburse and pay to Secured Party, at Secured
Party’s request, the amount of all reasonable expenses (including, without
limitation, the cost of any insurance and payment of Taxes or other charges)
incurred by Secured Party in connection with its custody and preservation
of
Collateral, and all such expenses, costs, Taxes, and other charges shall
bear
interest at the Post-Default Rate until repaid and, together
with
such
interest, shall be payable by Debtor to Secured Party upon demand and shall
become part of the Indebtedness. However, the risk of accidental loss or
damage
to, or diminution in value of, Collateral is on Debtor, and Secured Party
shall
have no liability whatever for failure to obtain or maintain insurance, nor
to
determine whether any insurance ever in force is adequate as to amount or
as to
the risks insured. With respect to Collateral that is in the possession of
Secured Party, Secured Party shall have no duty to fix or preserve rights
against prior parties to such Collateral and shall never be liable for any
failure to use diligence to collect any amount payable in respect of such
Collateral, but shall be liable only to account to Debtor for what it may
actually collect or receive thereon. The provisions of this subparagraph
are
applicable whether or not an Event of Default exists.
(h)
Power
of Attorney.
Debtor
hereby irrevocably constitutes and appoints Secured Party and any officer
or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the name of
Debtor
or in its own name, to take after the occurrence and during the continuance
of
an Event of Default and from time to time thereafter, any and all action
and to
execute any and all documents and instruments which Secured Party at any
time
and from time to time deems necessary or desirable to accomplish the purposes
of
this Security Agreement and, without limiting the generality of the foregoing,
Debtor hereby gives Secured Party the power and right on behalf of Debtor
and in
its own name to do any of the following after the occurrence and during the
continuance of an Event of Default and from time to time thereafter, without
notice to or the consent of Debtor:
(i)
to
receive, endorse, and collect any drafts or other instruments or documents
in
connection with clause
(b)
above
and this clause
(i);
(ii)
to
demand, sue for, collect, or receive, in the name of Debtor or in its own
name,
any money or property at any time payable or receivable on account of or
in
exchange for any of the Collateral and, in connection therewith, endorse
checks,
notes, drafts, acceptances, money orders, documents of title or any other
instruments for the payment of money under the Collateral or any policy of
insurance;
(iii)
to
pay or discharge taxes, Liens, or other encumbrances levied or placed on
or
threatened against the Collateral;
(iv)
to
notify post office authorities to change the address for delivery of Debtor
to
an address designated by Secured Party and to receive, open, and dispose
of mail
addressed to Debtor; and
(v)
(A)
to direct account debtors and any other parties liable for any payment under
any
of the Collateral to make payment of any and all monies due and to become
due
thereunder directly to Secured Party or as Secured Party shall direct; (B)
to
receive payment of and receipt for any and all monies, claims, and other
amounts
due and to become due at any time in respect of or arising out of any
Collateral; (C) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, proxies, stock powers, verifications, and notices in connection
with accounts and other documents relating to the Collateral; (D) to commence
and prosecute any suit, action, or proceeding at law or in equity in any
court
of competent jurisdiction to collect the Collateral or any part thereof and
to
enforce any other right in respect of any Collateral; (E) to defend any suit,
action, or proceeding brought against Debtor with respect to any Collateral;
(F)
to settle, compromise, or adjust any suit, action, or proceeding described
above
and, in connection therewith, to give such discharges or releases as Secured
Party may deem appropriate; (G) to exchange any of the Collateral for other
property upon any merger, consolidation, reorganization, recapitalization,
or
other readjustment of the issuer thereof and, in connection therewith, deposit
any of the Collateral with any committee, depositary, transfer agent, registrar,
or other designated agency upon such terms as Secured Party may determine;
(H)
to add or release any guarantor, indorser, surety, or other party to any
of the
Collateral; (I) to renew, extend, or otherwise change the terms and conditions
of any of the Collateral; (J) to make, settle, compromise or adjust any claims
under or pertaining to any of the Collateral (including claims under any
policy
of insurance); (K) to execute on behalf of Debtor any financing statements
or
continuation statements with respect to the Security Interests created hereby,
and to do any and all acts and things to protect and preserve the Collateral,
including, without limitation, the protection and prosecution of all rights
included in the Collateral; and (L) to sell, transfer, pledge, convey, make
any
agreement with respect to or otherwise deal with any of the Collateral as
fully
and completely as though Secured Party were the absolute owner thereof for
all
purposes, and to do, at Secured Party’s option and Debtor’s expense, at any
time, or from time to time, all acts and things which Secured Party deems
necessary to protect, preserve, maintain, or realize upon the Collateral
and
Secured Party’s security interest therein.
This
power of attorney is a power coupled with an interest and shall be irrevocable.
Secured Party shall be under no duty to exercise or withhold the exercise
of any
of the rights, powers, privileges, and options expressly or implicitly granted
to Secured Party in this Security Agreement, and shall not be liable for
any
failure to do so or any delay in doing so. Neither Secured Party nor any
Person
designated by Secured Party shall be liable for any act or omission or for
any
error of judgment or any mistake of fact or law. This power of attorney is
conferred on Secured Party solely to protect, preserve, maintain, and realize
upon its Security Interest in the Collateral. Secured Party shall not be
responsible for any decline in the value of the Collateral and shall not
be
required to take any steps to preserve rights against prior parties or to
protect, preserve, or maintain any Lien given to secure the Collateral.
(i)
Purchase
Money Collateral.
To the
extent that Secured Party or any Lender has advanced or will advance funds
to or
for the account of Debtor to enable Debtor to purchase or otherwise acquire
rights in Collateral, Secured Party or such Lender, at its option, may pay
such
funds (i) directly to the Person from whom Debtor will make such purchase
or
acquire such rights, or (ii) to Debtor, in which case Debtor covenants to
promptly pay the same to such Person, and forthwith furnish to Secured Party
evidence satisfactory to Secured Party that such payment has been made from
the
funds so provided.
(j)
Subrogation.
If any
of the Indebtedness is given in renewal or extension or applied toward the
payment of indebtedness secured by any Lien, Secured Party shall be, and
is
hereby, subrogated to all of the rights, titles, interests, and Liens securing
the indebtedness so renewed, extended, or paid.
(k)
Indemnification.
Debtor
hereby assumes all liability for the Collateral, for the Security Interest,
and
for any use, possession, maintenance, and management of, all or any of the
Collateral, including, without limitation, any Taxes arising as a result
of, or
in connection with, the transactions contemplated herein, and agrees to assume
liability for, and to indemnify and hold Secured Party and each Lender harmless
from and against, any and all claims, causes of action, or liability, for
injuries to or deaths of Persons and damage to property, howsoever arising
from
or incident to such use, possession, maintenance, and management, whether
such
Persons be agents or employees of Debtor or of third parties, or such damage
be
to property of Debtor or of others. Debtor agrees to indemnify, save, and
hold
Secured Party and each Lender harmless from and against, and covenants to
defend
Secured Party and each Lender against, any and all losses, damages, claims,
costs, penalties, liabilities, and expenses (collectively, “Claims”),
including, without limitation, court costs and attorneys’ fees, AND
ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF SECURED PARTY OR ANY
LENDER,
OR ANY OF THEIR RESPECTIVE OFFICERS, EMPLOYEES, AGENTS, ADVISORS, EMPLOYEES,
OR
REPRESENTATIVES,
howsoever arising or incurred because of, incident to, or with respect to
Collateral or any use, possession, maintenance, or management thereof;
provided,
however,
that the
indemnity set forth in this Paragraph
8(l)
will not
apply to Claims caused by the gross negligence or willful misconduct of Secured
Party or any Lender.
(l)
Continuing
Liability.
Notwithstanding anything to the contrary contained in this Security Agreement,
(i) Debtor shall remain liable under the contracts, agreements, documents,
and
instruments included in the Collateral to the extent set forth therein to
perform all of its duties and obligation thereunder to the same extent as
if
this Security Agreement had not been executed, (ii) the exercise by Secured
Party of any of its rights or remedies hereunder shall not release Debtor
from
any of its duties or obligations under the contracts, agreements, documents,
and
instruments included in the Collateral, and (iii) Secured Party shall not
have
any indebtedness, liability, or obligation under any of the contracts,
agreements, documents, and instruments included in the Collateral by reason
of
this Security Agreement, and Secured Party shall not be obligated to perform
any
of the obligations or duties of Debtor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
9.
MISCELLANEOUS.
(a)
Continuing
Security Interest.
This
Security Agreement creates a continuing security interest in the Collateral
and
shall (i) remain in full force and effect until the termination of the
obligations of Lenders to advance Borrowings or issue Letters of Credit under
the Loan Documents, the payment in full of the Indebtedness, and the expiration
of all Letters of Credit and all Hedging Agreements issued by any Lender
or any
Affiliate of any Lender to any Obligor; and (ii) inure to the benefit of
and be
enforceable by Secured Party, Lenders, and their respective successors,
transferees, and assigns. Without limiting the generality of the foregoing
clause
(ii),
Secured
Party and Lenders may assign or otherwise transfer any of their respective
rights under this Security Agreement to any other Person in accordance with
the
terms and provisions of Section
12.06
of the
Credit Agreement, and to the extent of such assignment or transfer such Person
shall thereupon become vested with all the rights and benefits in respect
thereof granted herein or otherwise to Secured Party or Lenders, as the case
may
be. Upon payment in full of the Indebtedness, the termination of the commitment
of Lenders to extend credit or issue Letters of Credit under the Loan Documents,
and the expiration and termination of all Letters of Credit and Hedging
Agreements issued by any Lender or any Affiliate of any Lender to any Obligor,
Debtor shall be entitled to the return, upon its request and at its expense,
of
such of the Collateral as shall not have been sold or otherwise applied pursuant
to the terms hereof.
(b)
Reference
to Miscellaneous Provisions.
This
Security Agreement is one of the “Loan
Documents”
referred
to in the Credit Agreement, and all provisions relating to Loan Documents
set
forth in Section
12
of the
Credit Agreement, other than the provisions relating to governing law, are
incorporated herein by reference, the same as if set forth herein verbatim.
(c)
Term.
Upon
the later of (i) the termination of Lenders’ commitments to fund Loans and issue
Letters of Credit under the Credit Agreement and (ii) the full and final
payment
and performance of the Indebtedness (including expiration of any Hedging
Agreements between Debtor and by Lender or its Affiliate), this Security
Agreement shall thereafter terminate upon receipt by Secured Party of Debtor’s
written notice of such termination; provided
that
no
Collateral Obligor, if any, on any of the Collateral shall ever be obligated
to
make inquiry as to the termination of this Security Agreement, but shall
be
fully protected in making payment directly to Secured Party until actual
notice
of such total payment of the Indebtedness is received by such Collateral
Obligor.
(d)
Actions
Not Releases.
The
Security Interest and Debtor’s obligations and Secured Party’s rights hereunder
shall not be released, diminished, impaired, or adversely affected by the
occurrence of any one or more of the following events: (i) the taking or
accepting of any other security or assurance for any or all of the Indebtedness;
(ii) any release, surrender, exchange, subordination, or loss of any security
or
assurance at any time existing in connection with any or all of the
Indebtedness; (iii) the modification of, amendment to, or waiver of compliance
with any terms of any of the other Loan Documents without the notification
or
consent of Debtor, except
as
required therein (the right to such notification or consent being herein
specifically waived by Debtor); (iv) the insolvency, bankruptcy, or lack
of
corporate or trust power of any party at any time liable for the payment
of any
or all of the Indebtedness, whether now existing or hereafter occurring;
(v) any
renewal, extension, or rearrangement of the payment of any or all of the
Indebtedness, either with or without notice to or consent of Debtor, or any
adjustment, indulgence, forbearance, or compromise that may be granted or
given
by Secured Party or any Lender to Debtor; (vi) any neglect, delay, omission,
failure, or refusal of Secured Party or any Lender to take or prosecute any
action in connection with any other agreement, document, guaranty, or instrument
evidencing, securing, or assuring the payment of all or any of the Indebtedness;
(vii) any failure of Secured Party or any Lender to notify Debtor of any
renewal, extension, or assignment of the Indebtedness or any part thereof,
or
the release of any Collateral or other security, or of any other action taken
or
refrained from being taken by Secured Party or any Lender against Debtor
or any
new agreement between or among Secured Party or one or more Lenders and Debtor,
it
being understood that
except
as expressly provided herein, neither Secured Party nor any Lender shall
be
required to give Debtor any notice of any kind under any circumstances
whatsoever with respect to or in connection with the Indebtedness, including,
without limitation, notice of acceptance of this Security Agreement or any
Collateral ever delivered to or for the account of Secured Party hereunder;
(viii) the illegality, invalidity, or unenforceability of all or any part
of the
Indebtedness against any party obligated with respect thereto by reason of
the
fact that the Indebtedness, or the interest paid or payable with respect
thereto, exceeds the amount permitted by law, the act of creating the
Indebtedness, or any part thereof, is ultra
vires,
or the
officers, partners, or trustees creating same acted in excess of their
authority, or for any other reason; or (ix) if any payment by any party
obligated with respect thereto is held to constitute a preference under
applicable laws or for any other reason Secured Party or any Lender is required
to refund such payment or pay the amount thereof to someone else.
(e)
Waivers.
Except
to the
extent expressly otherwise provided herein or in other Loan Documents and
to the
fullest extent permitted by applicable law, Debtor waives (i) any right to
require Secured Party or any Lender to proceed against any other Person,
to
exhaust its rights in Collateral, or to pursue any other right which Secured
Party or any Lender may have; (ii) with respect to the Indebtedness, presentment
and demand for payment, protest, notice of protest and nonpayment, and notice
of
the intention to accelerate; and (iii) all rights of marshaling in respect
of
any and all of the Collateral.
(f)
Financing
Statement; Authorization.
Secured
Party shall be entitled at any time to file this Security Agreement or a
carbon,
photographic, or other reproduction of this Security Agreement, as a financing
statement, but the failure of Secured Party to do so shall not impair the
validity or enforceability of this Security Agreement. Debtor hereby irrevocably
authorizes Secured Party at any time and from time to time to file in any
UCC
jurisdiction any initial financing statements and amendments thereto (without
the requirement for Debtor’s signature thereon) that (i) describe the Collateral
(A) as “all assets of Debtor” or words of similar effect, regardless of whether
any particular asset comprised in the Collateral falls within the scope of
Article 9 of the UCC of the state or such jurisdiction or whether such assets
are included in the Collateral hereunder, or (B) as being of an equal or
lesser
scope or with greater detail, and (ii) contain any other information required
by
Article 9 of the UCC of the state or such jurisdiction for the sufficiency
or
filing office acceptance of any financing statement or amendment, including
whether the Debtor is an organization, the type of organization, and any
organization identification number issued to Debtor. Debtor agrees to furnish
any such information to Secured Party promptly upon request.
(g)
Amendments.
This
Security Agreement may be amended only by an instrument in writing executed
jointly by Debtor and Secured Party, and supplemented only by documents
delivered or to be delivered in accordance with the express terms hereof.
(h)
Multiple
Counterparts.
This
Security Agreement has been executed in a number of identical counterparts,
each
of which shall be deemed an original for all purposes and all of which
constitute, collectively, one agreement; but, in making proof of this Security
Agreement, it shall not be necessary to produce or account for more than
one
such counterpart. Signatures transmitted by facsimile shall be binding and
deemed original until such original signatures are received from the parties
hereto by the Secured Party.
(i)
Parties
Bound; Assignment.
This
Security Agreement shall be binding on Debtor and Debtor’s heirs, legal
representatives, successors, and assigns and shall inure to the benefit of
Secured Party and Secured Party’s successors and assigns.
(i)
Secured Party is the administrative agent for each Lender under the Credit
Agreement, the Security Interest and all rights granted to Secured Party
hereunder or in connection herewith are for the ratable benefit of each Lender,
and Secured Party may, without the joinder of any Lender, exercise any and
all
rights in favor of Secured Party or Lenders hereunder, including, without
limitation, conducting any foreclosure sales hereunder, and executing full
or
partial releases hereof, amendments or modifications hereto, or consents
or
waivers hereunder. The rights of each Lender vis-a-vis
Secured
Party and each other Lender may be subject to one or more separate agreements
between or among such parties, but Debtor need not inquire about any such
agreement or be subject to any terms thereof unless
Debtor
specifically joins therein; and consequently, neither Debtor nor Debtor’s heirs,
personal representatives, successors, and assigns shall be entitled to any
benefits or provisions of any such separate agreements or be entitled to
rely
upon or raise as a defense, in any manner whatsoever, the failure or refusal
of
any party thereto to comply with the provisions thereof.
(ii)
Debtor may not, without the prior written consent of Secured Party, assign
any
rights, duties, or obligations hereunder.
(j)
GOVERNING
LAW.
THE
SUBSTANTIVE LAWS OF THE
STATEOF
TEXAS, EXCEPT TO THE EXTENT THE LAWS OF ANOTHER JURISDICTION GOVERN THE
CREATION, PERFECTION, VALIDITY, OR ENFORCEMENT OF
LIENS
UNDER THIS
SECURITY
AGREEMENT,
AND
THE APPLICABLE FEDERAL LAWS OF THE
UNITED
STATES
OF
AMERICA,
SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF
THIS
SECURITY
AGREEMENTAND
ALL OF THE OTHER
LOAN
DOCUMENTS.
BY
THIS
ACKNOWLEDGMENT OF PLEDGE, dated as of _______, 20___, _______ (the “Partnership”)
hereby
acknowledges the pledge in favor of Wachovia Bank, National Association
(“Pledgee”),
in its
capacity as Administrative Agent for certain Lenders and as Secured Party
under
that certain Pledge, Assignment, and Security Agreement dated as of _______,
______ (as amended, modified, supplemented, or restated from time to time,
the
“Security
Agreement”),
against, and a security interest in favor of Pledgee in, all of __________’s
(the “Interest
Owner”)
rights
in connection with any partnership interest in the Partnership now and
hereafter
owned by the Interest Owner (“Partnership
Interest”).
A.
Pledge
Records.
The
Partnership has identified Pledgee’s interest in all of the Interest Owner’s
Right, title, and interest in and to all of the Interest Owner’s Partnership
Interest as subject to a pledge and security interest in favor of Pledgee
in the
Partnership Records.
B.
Partnership
Distributions, Accounts, and Correspondence.
The
Partnership hereby acknowledges that (i) all proceeds, distributions, and
other
amounts payable to the Interest Owner, including, without limitation, upon
the
termination, liquidation, and dissolution of the Partnership shall be paid
and
remitted to the Pledgee upon demand, (ii) all funds in deposit accounts
shall be
held for the benefit of Pledgee, and (iii) all future correspondence,
accountings of distributions, and tax returns of the Partnership shall
be
provided to the Pledgee. The Partnership acknowledges and accepts such
direction
and hereby agrees that it shall, upon the written demand by the Administrative
Agent, pay directly to the Administrative Agent at such address any and
all
distributions, income, and cash flow arising from the Partnership Interests
whether payable in cash, property or otherwise, subject to and in accordance
with the terms and conditions of the Partnership. The Pledgee may from
time to
time notify the Partnership of any change of address to which such amounts
are
to be paid.
1.
Omnibus Agreement, dated February 2, 2000, among Atlas America, Inc., Resource
Energy, Inc., Viking Resources Corporation, Atlas Pipeline Operating
Partnership, L.P. and Atlas Pipeline Partners, L.P.
2.
Amendment and Joinder to Omnibus Agreement, dated December 18, 2006, among
Atlas
Pipeline Partners, L.P., Atlas Pipeline Operating Partnership, L.P., Atlas
America, Inc., Resource Energy, LLC, Viking Resources LLC, Atlas Energy
Resources, LLC and Atlas Energy Operating Company, LLC.
3.
Master
Natural Gas Gathering Agreement, dated February 2, 2000, among Atlas America,
Inc., Resource Energy, Inc., Viking Resources Corporation, Atlas Pipeline
Operating Partnership, L.P. and Atlas Pipeline Partners, L.P.
4.
Amendment dated October 25, 2005 among Atlas America, Inc., Atlas Pipeline
Operating Partnership, L.P., Atlas Pipeline Partners, L.P., Atlas Resources,
Inc., Atlas Noble Corp., Resource Energy, Inc. and Viking Resources Corporation.
5.
Amendment and Joinder to Gas Gathering Agreements, dated December 18, 2006,
among Atlas Pipeline Operating Partnership, L.P., Atlas Pipeline Partners,
L.P.,
Atlas America, Inc., Resource Energy, LLC, Viking Resources, LLC, Atlas Noble,
LLC, Atlas Resources, LLC, Atlas America, LLC, Atlas Energy Resources, LLC
and
Atlas Energy Operating Company, LLC.
6.
Contribution, Conveyance and Assumption Agreement, dated December 18, 2006,
among Atlas America, Inc., Atlas Energy Resources, LLC and Atlas Energy
Operating Company, LLC.
7.
Management Agreement, dated December 18, 2006, among Atlas Energy Resources,
LLC, Atlas Energy Operating Company, LLC and Atlas Energy Management, Inc.
8.
Drilling and Operating Agreement, dated September 15, 2004, between Atlas
America, Inc. (PA) and Knox Energy, LLC.
9.
Gas
Purchase Agreement, dated March 31, 1999, between Northeast Ohio Gas Marketing,
Inc. and Resource Energy, Inc., as amended by Amendment, dated February 1,2001,
among FirstEnergy Solutions Corp., Atlas Energy Group, Inc. and Resource Energy,
Inc., and by Second Amendment, dated July 16, 2003, among FirstEnergy Solutions
Corp., Atlas Energy Group, Inc. and Resource Energy, Inc., and by Assignment
and
Novation, dated April 1, 2005, among FirstEnergy Solutions Corp., Amerada Hess
Corporation and the other parties named therein.
