UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 17, 2001
COMSTOCK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
STATE OF NEVADA 000-16741 94-1667468
(State or other (Commission of File Number) (I.R.S. Employer
jurisdiction incorporation) Identification Number)
5300 Town And Country Boulevard
Suite 500
Frisco, Texas 75034
(Address of principal executive offices)
(972) 668-8800
(Registrant's Telephone No.)
Item 2. Acquisition or Disposition of Assets.
Pursuant to the Agreement and Plan of Merger dated November 12, 2001 (the
"Merger Agreement"), by and between Comstock Resources, Inc., the Registrant
("Comstock"), Comstock Holdings, Inc. ("Holdings"), a Delaware corporation and
wholly owned subsidiary of Comstock, Comstock Acquisition Inc. (the
"Purchaser"), a Delaware corporation and a wholly owned subsidiary of Holdings,
and DevX Energy, Inc., a Delaware corporation ("DevX"), the Purchaser made an
offer to purchase, through a cash tender offer (the "Offer"), all of the
outstanding shares of common stock of DevX ("Shares") for $7.32 per Share, net
to the seller, without interest. The Offer expired at 12:00 midnight, New York
City time, on Thursday, December 13, 2001. Based on information provided by the
American Stock Transfer and Trust Company, the Depositary of the Offer, as of
the expiration of the Offer, 12,283,728 Shares had been tendered and not
withdrawn representing approximately 97% of the issued and outstanding Shares.
Purchaser has accepted for purchase and payment all shares validly tendered and
not withdrawn pursuant to the Offer. Comstock issued a press release announcing
the acceptance of Shares, a copy of which is filed as Exhibit (a)(1) to the
Schedule TO/A filed by Comstock, Holdings and Purchaser on December 17, 2001.
On December 17, 2001, Comstock completed the acquisition of DevX by
effecting a short-form merger under Section 253 of the Delaware General
Corporation Law, whereby the Purchaser was merged with and into DevX, and each
Share of DevX common stock not previously purchased in the Offer was converted
into the right to receive $7.32 per Share in cash, without interest (subject to
applicable dissenter's rights). DevX was the entity surviving the merger and is
now an indirect wholly owned subsidiary of Comstock. A copy of the Merger
Agreement is filed as Exhibit (d)(1) to the Schedule TO filed by Comstock,
Holdings and Purchaser on November 15, 2001.
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay the fees and expenses related thereto is estimated by
Comstock to have been approximately $93 million. The funds used by Purchaser to
effect these transactions were provided by Comstock to the Purchaser. Comstock
obtained these funds from its new $350 million Senior Secured Revolving Credit
Facility being provided by TD Securities (USA) Inc. (the "Credit Facility").
Please see the disclosure under Item 5 of this Form 8-K for more information
about the Credit Facility.
Item 5. Other Events.
(A) As stated above, Comstock entered into a new $350 million Credit
Facility on December 17, 2001. The Credit Facility is a three year revolving
credit facility and has an initial borrowing base of $270 million. The Credit
Facility will be used to, among other purposes, refinance Comstock's existing
bank debt and to finance the acquisition of the Shares. A copy of the Credit
Agreement by and among Comstock, each lender from time to time party thereto,
Toronto Dominion (Texas), Inc., as administrative agent, and Toronto-Dominion
Bank, as Issuing Bank, dated as of December 17, 2001, is attached hereto as
Exhibit 10.1.
Indebtedness under the Credit Facility is secured by substantially all of
Comstock's and its subsidiaries' assets. The subsidiaries are guarantors of the
indebtedness. The Credit Facility will be subject to borrowing base
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availability, which will be redetermined semiannually based on the banks'
estimates of the future net cash flows of the borrower's oil and gas properties.
The borrowing base may be affected by the performance of the borrower's
properties and changes in oil and gas prices. The determination of the borrowing
base will be at the sole discretion of the administrative agent and the bank
group. The revolving credit line under the Credit Facility will bear interest,
based on the utilization of the borrowing base, at the option of Comstock at
either (i) LIBOR plus 1.5% to 2.375% or (ii) the base rate plus 0.5% to 1.375%.
The Credit Facility will mature January 2, 2005 anniversary of the closing
thereof or such earlier date as Comstock may elect. The Credit Facility contains
covenants that, among other things, restrict the payment of cash dividends,
limit the amount of consolidated debt and limit the borrower's ability to make
certain loans and investments. Financial covenants include the maintenance of a
current ratio, maintenance of tangible net worth and maintenance of an interest
coverage ratio.
(B) On December 19 and 20, 2001, DevX repurchased approximately $49.8
million of the outstanding $50 million of DevX's 12.5% Senior Notes due in 2008
for 110% of the principal amount plus accrued interest.
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The financial statements of the business acquired as required by this Item will
be filed by an amendment to this Current Report on Form 8-K as soon as
practicable, but no later than 60 days after the date that the initial report on
Form 8-K must be filed.
(b) Pro Forma Financial Information.
The pro forma financial information as required by this Item will be filed by an
amendment to this Current Report on Form 8-K as soon as practicable, but no
later than 60 days after the date that the initial report on Form 8-K must be
filed.
(c) Exhibits
2.1 Agreement and Plan of Merger among Comstock Resources, Inc.,
Comstock Holdings, Inc., Comstock Acquisition Inc. and DevX
Energy, Inc. dated as of November 12, 2001 (incorporated herein
by reference to Exhibit (d)(1) to the Tender Offer Statement on
Schedule TO filed by the Company on November 15, 2001)
10.1 Credit Agreement, dated as of December 17, 2001, by and among
Comstock Resources, Inc., as borrower, each lender from time to
time party thereto, Toronto Dominion (Texas), Inc., as
administrative agent, and Toronto-Dominion Bank, as Issuing Bank
99.1 Press Release issued by Comstock Resources, Inc. on December 17,
2001 (incorporated herein by reference to Exhibit (a)(1) to the
Tender Offer Statement on Schedule TO/A filed by the Company on
December 17, 2001)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
COMSTOCK RESOURCES, INC.
Dated: December 21, 2001 By: /s/ M. Jay Allison
-------------------
M. Jay Allison
President and Chief Executive Officer
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EXHIBIT INDEX
Item
Number Description
2.1 Agreement and Plan of Merger among Comstock Resources, Inc.,
Comstock Holdings, Inc., Comstock Acquisition Inc. and DevX
Energy, Inc. dated as of November 12, 2001 (incorporated herein
by reference to Exhibit (d)(1) to the Tender Offer Statement on
Schedule TO filed by the Company on November 15, 2001)
10.1 Credit Agreement, dated as of December 17, 2001, by and among
Comstock Resources, Inc., as borrower, each lender from time to
time party thereto, Toronto Dominion (Texas), Inc., as
administrative agent, and Toronto-Dominion Bank, as Issuing Bank
99.1 Press Release issued by Comstock Resources, Inc. on December 17,
2001 (incorporated herein by reference to Exhibit (a)(1) to the
Tender Offer Statement on Schedule TO filed by the Company on
December 17, 2001)
CREDIT AGREEMENT
Dated as of December 17, 2001
among
COMSTOCK RESOURCES, INC.,
as the Borrower,
TORONTO DOMINION (TEXAS), INC.,
as Administrative Agent,
THE TORONTO-DOMINION BANK,
as Issuing Bank,
The Other Lenders Party Hereto,
TD SECURITIES (USA) INC.
as
Sole Lead Arranger and Sole Book Manager
CREDIT AGREEMENT
This CREDIT AGREEMENT ("Agreement") is entered into as of December 17,
2001, among COMSTOCK RESOURCES, INC., a Nevada corporation ("Borrower"), each
lender from time to time party hereto (collectively, the "Lenders" and each
individually, a "Lender"), TORONTO DOMINION (TEXAS), INC., as Administrative
Agent, and THE TORONTO-DOMINION BANK, as Issuing Bank.
The Borrower has requested that the Lenders provide a borrowing base,
revolving credit facility, and the Lenders are willing to do so on the terms and
conditions set forth herein.
It is in the best interest of each of the Guarantors to execute and deliver
a Guaranty as each Guarantor will receive substantial benefits as a result of
the Borrower entering into the borrowing base, revolving credit facility with
the Lenders.
In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Acquisition" means the purchase by Comstock Acquisition Inc., of shares of
stock of DevX in an amount which, when aggregated with shares owned by Borrower
or any of its Subsidiaries immediately prior to such acquisition, equal the
Required Shares pursuant to the terms and conditions of the Offer and in
compliance with all Governmental Requirements.
"Additional Offer Documents" means all amendments and exhibits to, and
material documents related to, the Offer and filed with the Securities and
Exchange Commission or distributed to stockholders of DevX.
"Adjusted LIBO Rate" means, with respect to each particular Borrowing
comprised of LIBO Rate Loans and the associated LIBO Rate and Reserve
Percentage, the rate per annum calculated by the Administrative Agent (rounded
upwards, if necessary, to the next higher 1/100%) determined on a daily basis
pursuant to the following formula:
Adjusted LIBO Rate = LIBO Rate + LIBOR Spread
------------------------
(1.00% - Reserve Percentage)
"Administrative Agent" means TD in its capacity as administrative agent
under any of the Loan Documents, or any successor administrative agent.
"Administrative Agent's Office" means the Administrative Agent's address
and, as appropriate, account as set forth on Schedule 10.2, or such other
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address or account as the Administrative Agent may from time to time designate
to the Borrower, the Issuing Bank, and the Lenders.
"Affiliate" means, as to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, the power
(a) to vote 10% or more of the securities (on a fully diluted basis) having
ordinary voting power for the election of directors or managing general
partners; or (b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Agent and Arranger Fee Letter" has the meaning set forth in Section
2.10(b).
"Agent-Related Persons" means the Administrative Agent (including any
successor administrative agent), together with its Affiliates (including, in the
case of TD in its capacity as the Administrative Agent, the Issuing Bank and the
Arranger), and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
"Aggregate Commitments" means, as of any date, the sum of the Commitments
of all the Lenders.
"Agreement" means this Credit Agreement.
"Arranger" means TD Securities (USA), Inc. in its capacity as sole lead
arranger and sole book manager.
"Attorney Costs" means and includes all reasonable fees and disbursements
of any law firm or other external counsel.
"Attributable Indebtedness" means, on any date, (a) in respect of any
capital lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.
"Base Rate" means, on any date and with respect to all Base Rate Loans, a
fluctuating rate of interest per annum equal to (a) the higher of (i) the rate
of interest most recently announced by The Toronto-Dominion Bank at its New
York, New York office as its base rate for dollar advances made in the United
States or (ii) the Federal Funds Rate most recently determined by the
Administrative Agent plus 1/2% (0.5%) per annum, plus (b) the Base Rate Spread.
The Base Rate is not necessarily intended to be the lowest rate of interest
determined by The Toronto-Dominion Bank or any Lender in connection with
extensions of credit. Changes in the rate of interest on that portion of any
Loans maintained as Base Rate Loans will take effect simultaneously with each
change in the Base Rate. The Administrative Agent will give notice to the
Borrower of changes in the Base Rate promptly upon receipt of notice of any such
change from The Toronto-Dominion Bank.
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"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"Base Rate Spread" means, with respect to any Base Rate Loan for any time
prior to the Maturity Date, the percentage per annum set forth below under the
caption "Base Rate Spread", determined by reference to the percentage of the
Borrowing Base that the sum of all Loans outstanding plus all L/C Obligations
represents at that time.
Percentage of
Borrowing Base
Usage Base Rate Spread
-------------------- -----------------
> 90% 1.375%
-
-------------------- -----------------
> 75% but <90% 1.000%
-
-------------------- -----------------
>40% but <75% 0.750%
-
-------------------- -----------------
<40% 0.500%
==================== =================
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Borrower" has the meaning set forth in the introductory paragraph hereto.
"Borrowing" means a borrowing consisting of simultaneous Loans of the same
Type and having the same Interest Period made by each of the Lenders pursuant to
Section 2.1.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.7 or the amount determined by the
Administrative Agent in accordance with the provisions of Section 2.8; provided,
however, that in no event shall the Borrowing Base ever exceed the Maximum Loan
Amount.
"Borrowing Base Deficiency" has the meaning set forth in Section 2.4.2(ii).
"Business Day" means any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized to close under the Laws of, or are in fact
closed in, New York, New York or Houston, Texas and, if such day relates to any
LIBO Rate Loan, means any such day on which dealings in Dollar deposits are
conducted by and between banks in the applicable offshore Dollar interbank
market.
"Cash Collateralize" means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the Issuing Bank and the Lenders, as
collateral for the L/C Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to the Administrative Agent and
the Issuing Bank (which documents are hereby consented to by the Lenders).
Derivatives of such term shall have corresponding meaning. The Borrower hereby
grants the Administrative Agent, for the benefit of the Issuing Bank and the
Lenders, a Lien on all such cash and deposit account balances. Cash collateral
shall be maintained in blocked, non-interest bearing deposit accounts at TD or
other institutions satisfactory to TD.
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"Change of Control" means, with respect to any Person, an event or series
of events by which:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such Person or its subsidiaries, or any Person acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan), becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of 50% or more of the equity interests of such Person;
or
(b) during any period of 12 consecutive months, a majority of the members
of the board of directors or other equivalent governing body of such Person
cease to be composed of individuals (i) who were members of that board or
equivalent governing body on the first day of such period, (ii) whose election
or nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body.
"Closing Date" means the first date all the conditions precedent in Section
4.1 are satisfied or waived in accordance with Section 4.1 (or, in the case of
Section 4.1(b), waived by the Person entitled to receive the applicable
payment).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
"COGI" means Comstock Oil & Gas, Inc., a Nevada corporation.
"COGH" means Comstock Oil & Gas Holdings, Inc., a Nevada corporation.
"COGLA" means Comstock Oil & Gas - Louisiana, Inc., a Nevada corporation,
or, after the COGLA Restructuring, Comstock Oil & Gas - Louisiana, LLC, a Nevada
limited liability company.
"COGLA Restructuring" means the conversion of Comstock Oil & Gas -
Louisiana, Inc., a Nevada corporation, into Comstock Oil & Gas - Louisiana, LLC,
a Nevada limited liability company, pursuant to the General Corporation Law of
Nevada.
"COL" means Comstock Offshore, LLC, a Nevada limited liability company.
"Commitment" means, as to each Lender, its obligation to (a) make Loans to
the Borrower pursuant to Section 2.1, and (b) purchase participations in L/C
Obligations, in an aggregate principal amount at any one time outstanding not to
exceed the lesser of (x) the amount set forth opposite such Lender's name on
4
Schedule 2.1, as such amount may be reduced or adjusted from time to time in
accordance with this Agreement and (y) such Lender's Percentage Share of the
Borrowing Base.
"Commitment Fee Rate" means for any time prior to the Maturity Date, the
percentage per annum set forth below under the caption "Commitment Fee Rate",
determined by reference to the percentage of the Borrowing Base that the sum of
all Loans outstanding plus all L/C Obligations represents at that time.
Percentage of
Borrowing Base Commitment
Usage Fee Rate
-------------------- -----------------
> 90% 0.50%
-
-------------------- -----------------
> 75% but <90% 0.50%
-
-------------------- -----------------
> 40% but <75% 0.50%
-
-------------------- -----------------
<40% 0.50%
===================== =================
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C.
"Consolidated EBITDA" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income for such period, (b) Consolidated Interest Expense, (c)
the amount of taxes, based on or measured by income, used or included in the
determination of such Consolidated Net Income, (d) the amount of depreciation,
depletion and amortization expense deducted in determining such Consolidated Net
Income and (e) the amount of exploration expense deducted in determining
Consolidated Net Income, provided that in determining Consolidated Net Income as
used in this definition the following shall be excluded, without duplication:
(a) the income of any Person accrued prior to the date such Person is merged
into or consolidated with a Borrower or such Person's assets are acquired by a
Borrower, (b) the proceeds of any insurance policy, (c) gains or losses from the
sale, exchange, transfer or other disposition of property or assets of the
Borrower or any of its Subsidiaries, to the extent included in the determination
of Consolidated Net Income, and related tax effects in accordance with GAAP, (d)
any extraordinary or non-recurring gains of the Borrower or any of its
Subsidiaries, and related tax effects in accordance with GAAP, (e) any
write-downs or impairments of non-current assets, and (f) compensation expense
paid solely in shares of common stock or options of a Borrower.
"Consolidated Interest Expense" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses of Borrower and its Subsidiaries in
connection with borrowed money (including capitalized interest) or in connection
with the deferred purchase price of assets, in each case to the extent treated
as interest in accordance with GAAP, and (b) the portion of rent expense of
Borrower and its Subsidiaries with respect to such period under capital leases
that is treated as interest in accordance with GAAP.
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"Consolidated Net Income" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the net income of Borrower and its
Subsidiaries from continuing operations after extraordinary items (excluding
gains or losses from Dispositions of assets) for that period.
"Consolidated Tangible Net Worth" means, as of any date of determination,
for Borrower and its Subsidiaries on a consolidated basis, Shareholders' Equity
of Borrower and its Subsidiaries on that date minus the Intangible Assets of
Borrower and its Subsidiaries on that date.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Extension" means each of the following: (a) a Borrowing, and (b) an
L/C Credit Extension.
"Current Assets" and "Current Liabilities" shall mean all assets or
liabilities of Borrower and its Subsidiaries, on a consolidated basis
respectively, which should be classified as current assets and current
liabilities in accordance with GAAP; provided that the calculation of Current
Assets shall not include receivables of the Borrower owing by any Affiliate in
excess of 120 days or subject to any dispute or offset, advances by the Borrower
to any Affiliate or any asset classified as a Current Asset solely because it is
held for sale; and provided further that Current Liabilities shall not include
the current maturities of any Indebtedness of the Borrower for borrowed money
which by its terms has a final maturity more than one year from the date of any
calculation of Current Liabilities.
"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America, and all other liquidation, conservatorship, bankruptcy, assignment for
the benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States of America or
other applicable jurisdictions from time to time in effect and affecting the
rights of creditors generally.
"Default" means any event that, with the giving of any notice, the passage
of time, or both, would be an Event of Default.
"Default Rate" means an interest rate equal to (a) the Base Rate plus (b)
the Base Rate Spread, if any, applicable to Base Rate Loans plus (c) 2% per
annum; provided, however, that with respect to a LIBO Rate Loan, the Default
Rate shall be an interest rate equal to the interest rate (including any LIBOR
Spread) otherwise applicable to such Loan plus 3% per annum, in each case to the
fullest extent permitted by applicable Laws.
"Determination Date" has the meaning set forth in Section 2.8.
"DevX" means DevX Energy, Inc., a Delaware corporation.
"DevX Credit Facility" means that certain Amended and Restated Credit
Agreement, dated October 22, 1999 among DevX Energy, Inc., a Delaware
6
corporation (formerly known as Queen Sand Resources, Inc.), as guarantor, DevX
Energy, Inc., a Nevada corporation (formerly known as Queen Sand Resources,
Inc.), as borrower, Foothill Capital Corporation, as administrative agent,
Ableco Finance LLC, as collateral agent, and the lenders signatory thereto, as
the same has been amended, modified, or restated.
"DevX Indenture" means that certain Indenture dated as of July 1, 1998 by
and among DevX (formerly known as Queen Sand Resources, Inc.), as issuer, the
subsidiary guarantors parties thereto and Harris Trust and Savings Bank, as
Trustee.
"DevX Senior Notes" means those certain Series A and Series B 12 1/2%
Senior Notes due 2008 issued pursuant to the DevX Indenture.
"Disqualified Stock" means any capital stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part.
"Disposition" or "Dispose" means the sale, transfer, license or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.
"Dollar" and "$" means lawful money of the United States of America.
"Eligible Assignee" has the meaning specified in Section 10.7.6.
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 6.2(g).
"Environmental Laws" means all Laws relating to environmental, health,
safety and land use matters applicable to any property.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended from time to time and any regulations issued pursuant thereto.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with the Borrower or any Guarantor within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
7
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate.
"Evaluation Date" means each of the following:
(a) Each date which either the Borrower or the Majority Lenders, at their
respective options, specify as a date as of which the Borrowing Base is to be
redetermined, provided that neither the Borrower nor the Majority Lenders shall
be entitled to request any such redetermination more than once each during any
calendar year; and
(b) May 1 and November 1 of each year occurring prior to the Final Maturity
Date, beginning May 1, 2002.
"Event of Default" means any of the events or circumstances specified in
Article VIII.
"Existing Comstock Indenture" means that certain Indenture among Borrower,
any guarantors and trustee party thereto, dated as of April 29, 1999, as
amended, modified or supplemented from time to time, and relating to the senior
unsecured notes issued by Borrower in the aggregate principal amount of
$150,000,000 due 2007, together with all guarantees and all other documents
executed in connection therewith at any time.
"Existing Credit Facility" means that certain Amended and Restated Credit
Agreement dated as of November 7, 2000 among the Borrower, COGI, COGLA and COL,
as co-borrowers, Bank One, NA, as administrative agent, Toronto Dominion
(Texas), Inc., as syndication agent, BNP Paribas, as documentation agent, Bank
One Capital Markets, Inc., as Lead Arranger, and a syndicate of lenders.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to TD on such day on such transactions as
determined by the Administrative Agent.
"Foreign Lender" has the meaning specified in Section 3.8.
"GAAP" means generally accepted accounting principles and practices which
are recognized as such by the Financial Accounting Standards Board (or any
generally recognized successor). If at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Loan
8
Document, and the Borrower or the Majority Lenders or the Administrative Agent
shall so request, the Administrative Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP; provided that, until so
amended, (a) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (b) the Borrower shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"Governmental Requirements" means all judgment, orders, writs, injunctions,
decrees, awards, laws, ordinances, statutes, regulations, rules, franchises,
permits, certificates, licenses, authorizations and the like and any other
requirements of any government or any commission, board, court, agency,
instrumentality or political subdivision thereof.
"Guarantors" means each of the Subsidiaries listed in Part (b) of Schedule
5.13 and each other Subsidiary of the Borrower that shall have executed and
delivered a Guaranty to the Administrative Agent for the benefit of the Lenders.
"Guaranty" means each Guaranty made by each of the Guarantors in favor of
the Administrative Agent on behalf of the Lenders, substantially in the form of
Exhibit E.
"Guaranty Obligation" means, as to any Person, any (a) any obligation,
contingent or otherwise, of such Person guarantying or having the economic
effect of guarantying any Indebtedness or other obligation payable or
performable by another Person (the "primary obligor") in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or
other obligation, or (iv) entered into for the purpose of assuring in any other
manner the obligees in respect of such Indebtedness or other obligation of the
payment or performance thereof or to protect such obligees against loss in
respect thereof (in whole or in part), or (b) any Lien on any assets of such
Person securing any Indebtedness or other obligation of any other Person,
whether or not such Indebtedness or other obligation is assumed by such Person;
provided, however, that the term "Guaranty Obligation" shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guaranty Obligation shall be deemed to be an amount
9
equal to the stated or determinable amount of the related primary obligation, or
portion thereof, in respect of which such Guaranty Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by the guarantying Person in good faith.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.
"Hedging Termination Value" means, in respect of any one or more Hedging
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Hedging Agreements, (a) for any date on or
after the date such Hedging Agreements have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and (b)
for any date prior to the date referenced in clause (a) the amount(s) determined
as the mark-to-market value(s) for such Hedging Agreements, as determined based
upon one or more mid-market or other readily available quotations provided by
any recognized dealer in such Hedging Agreements (which may include any Lender).
"Highest Lawful Rate" has the meaning given to it in Section 10.10.
"Honor Date" has the meaning set forth in Section 2.3.3(i).
"Hydrocarbon Interest" means 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, operating rights, net profit interests,
production payment interests and other similar types of interests, including any
reserved or residual interest of whatever nature.
10
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.
"ICC" has the meaning set forth in Section 2.3.7.
"Increase Effective Date" has the meaning set forth in Section 2.15(b).
"Indebtedness" means, as to any Person at a particular time, all of the
following:
(a) all obligations of such Person for borrowed money and all obligations
of such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;
(b) any direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial), banker's acceptances, bank
guaranties, surety bonds and similar instruments;
(c) net obligations under any Hedging Agreement in an amount equal to (i)
if such Hedging Agreement has been closed out, the termination value thereof, or
(ii) if such Hedging Agreement has not been closed out, the mark-to-market value
thereof determined on the basis of readily available quotations provided by any
recognized dealer in such Hedging Agreement;
(d) whether or not so included as liabilities in accordance with GAAP, all
obligations of such Person to pay the deferred purchase price of property or
services, and indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or
not such indebtedness shall have been assumed by such Person or is limited in
recourse;
(e) capital leases and Synthetic Lease Obligations; and
(f) all Guaranty Obligations of such Person in respect of any of the
foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer, unless such Indebtedness is expressly made
non-recourse to such Person except for customary exceptions acceptable to the
Majority Lenders. The amount of any capital lease or Synthetic Lease Obligation
as of any date shall be deemed to be the amount of Attributable Indebtedness in
respect thereof as of such date.
"Indemnified Liabilities" has the meaning set forth in Section 10.5.
"Indemnitees" has the meaning set forth in Section 10.5.
"Indenture Debt" means all present and future Indebtedness and other
liabilities owing pursuant to the Indenture Debt Documents.
11
"Indenture Debt Documents" means the Existing Comstock Indenture and any
refinancings, refundings, renewals or extensions of the facilities described in
the Existing Comstock Indenture, provided that the amount of any Indebtedness
outstanding thereunder is not increased at the time of such refinancing,
refunding, renewal or extension except by an amount equal to a reasonable
premium or other reasonable amount paid, and fees and expenses reasonably
incurred, in connection with such refinancing, refunding, renewal or extension.
"Initial Audited Financial Statements" means each of (i) the audited
consolidated balance sheet of the Borrower and its respective Subsidiaries for
the fiscal year ended December 31, 2000, and (ii) the related consolidated
statements of income and cash flows for such fiscal year of the Borrower.
"Initial Engineering Report" means, collectively, the engineering report
dated October 15, 2001 concerning Oil and Gas Properties of the Borrower, COGI,
COGH, COGLA and COL as of July 1, 2001, prepared by the Borrower and the
engineering report dated October 26, 2001 concerning Oil and Gas Properties of
DevX as of July 1, 2001 prepared by the Borrower.
"Intangible Assets" means assets that are considered to be intangible
assets under GAAP, including customer lists, goodwill, computer software,
copyrights, trade names, trade marks, patents, unamortized deferred charges,
unamortized debt discount and capitalized research and development costs.
"Interest Payment Date" means, (a) as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan; provided,
however, that if any Interest Period for a LIBO Rate Loan exceeds three months,
the respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any Base
Rate Loan, the last Business Day of each March, June, September and December and
the Maturity Date.
"Interest Period" means as to each LIBO Rate Loan, the period commencing on
the date such LIBO Rate Loan is disbursed or (in the case of any LIBO Rate Loan)
converted to or continued as a LIBO Rate Loan and ending on the date one, two,
three or six months thereafter, as selected by the Borrower in its Notice of
Advance; provided that:
(i) any Interest Period that would otherwise end on a day that is not
a Business Day shall be extended to the next succeeding Business Day
unless, in the case of a LIBO Rate Loan, such Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Business Day;
(ii) any Interest Period pertaining to a LIBO Rate Loan that begins on
the last Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month
at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the scheduled Maturity
Date.
12
"Investment" means, as to any Person, any acquisition or investment by such
Person, whether by means of (a) the purchase or other acquisition of capital
stock or other securities of another Person, (b) a loan, advance or capital
contribution to, guaranty of debt of, or purchase or other acquisition of any
other debt or equity participation or interest in, another Person, including any
partnership or joint venture interest in such other Person, or (c) the purchase
or other acquisition (in one transaction or a series of transactions) of assets
of another Person that constitute a business unit. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.
"IRS" means the United States Internal Revenue Service. ---
"Issuing Bank" means The Toronto-Dominion Bank in its capacity as issuer of
Letters of Credit hereunder, or any successor issuer of Letters of Credit
hereunder.
"Laws" means, collectively, all international, foreign, Federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
"L/C Advance" means, with respect to each Lender, such Lender's
participation in any L/C Borrowing in accordance with its Percentage Share.
"L/C Borrowing" means an extension of credit resulting from a drawing under
any Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Borrowing.
"L/C Collateral" has the meaning set forth in Section 2.3.11.
"L/C Credit Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.
"L/C Obligations" means, as at any date of determination, the aggregate
undrawn face amount of all outstanding Letters of Credit plus the aggregate of
all Unreimbursed Amounts, including all L/C Borrowings.
"Lender" has the meaning set forth in the introductory paragraph hereto
and, as the context requires, includes the Issuing Bank.
"Lender Assignment" means a Lender Assignment substantially in the form of
Exhibit D.
"Lending Office" means, as to any Lender, the office or offices of such
Lender described as such on Schedule 10.2, or such other office or offices as a
Lender may from time to time designate to the Borrower and the Administrative
Agent.
13
"Letter of Credit" means any standby or commercial letter of credit issued
hereunder, including without limitation that certain Letter of Credit issued as
of December 17, 2001 in favor of Enron North America Corp.
"Letter of Credit Application" means an application and agreement for the
issuance or amendment of a letter of credit in the form from time to time in use
by the Issuing Bank.
"Letter of Credit Availability Expiration Date" means the day that is seven
days prior to the Maturity Date (or, if such day is not a Business Day, the next
preceding Business Day).
"Letter of Credit Sublimit" means an amount equal to the lowest of (x) the
Aggregate Commitments, (y) $20,000,000, and (z) the Borrowing Base. The Letter
of Credit Sublimit is part of, and not in addition to, the Aggregate
Commitments.
"LIBO Rate" shall mean, with respect to any LIBO Rate Loan within a
Borrowing and with respect to the related Interest Period, the rate per annum
determined by the Administrative Agent, at approximately 11:00 a.m. (London
time) on the date which is two Business Days prior to the beginning of the
relevant Interest Period by reference to the British Bankers' Association
Interest Settlement Rate for deposits in U.S. dollars (as set forth by any
service which has been nominated by the British Bankers' Association as an
authorized information vendor for the purpose of displaying such rates) for a
period equal to such Interest Period, provided that, to the extent that an
interest rate is not ascertainable pursuant to the foregoing provision of this
definition, the "LIBO Rate" shall be the interest rate per annum, determined by
the Administrative Agent to be the average of the rates per annum at which
deposits in U.S. dollars are offered for such relevant Interest Period to major
banks in the London interbank market in London, England by the Administrative
Agent at approximately 11:00 a.m. (London time) on the date which is two
Business Days prior to the beginning of such Interest Period.
"LIBO Rate Loan" means a Loan that bears interest at the Adjusted LIBO
Rate.
"LIBOR Spread" means with respect to any LIBO Rate Loan for any time prior
to the Maturity Date, the percentage per annum set forth below under the caption
"LIBOR Spread," determined by reference to the percentage of the Borrowing Base
that the sum of all Loans outstanding plus all L/C Obligations represents at
that time.
Percentage of
Borrowing Base
Usage LIBOR Spread
------------------ -----------------
> 90% 2.375%
-
------------------ -----------------
> 75% but < 90% 2.000%
-
------------------ -----------------
> 40% but < 75% 1.750%
-
------------------ -----------------
< 40% 1.500%
================== =================
14
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable Laws of any jurisdiction), including the
interest of a purchaser of accounts receivable.
"Loan" has the meaning set forth in Section 2.1.
"Loan Documents" means this Agreement, each Note, the Agent and Arranger
Fee Letter, each Notice of Advance, each Letter of Credit Application, each
Letter of Credit, each of the Security Documents, each Compliance Certificate,
each Guaranty and the Subordination Agreement and all other written agreements,
certificates, documents, instruments and writings at any time delivered in
connection herewith or therewith and any Hedging Agreement between the Borrower
or any Guarantor and any Lender or any Affiliate of any Lender now or hereafter
existing.
"Loan Parties" means, collectively, the Borrower and each Guarantor.
"Majority Lenders" means, as of any date of determination, Lenders whose
Voting Percentages aggregate 66-2/3% or more.
"Mandatory Prepayment Amount" has the meaning set forth in Section
2.4.2(ii).
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, or condition
(financial or otherwise) of the Borrower and its Subsidiaries taken as a whole;
(b) a material impairment of the ability of any Loan Party to perform its
obligations under any Loan Document to which it is a party; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against any Loan Party of any Loan Document to which it is a party or upon the
rights and remedies of the Administrative Agent, the Issuing Bank, or any Lender
under any Loan Document.
"Matured L/C Obligations" means all amounts paid by Issuing Bank on drafts
or demands for payment drawn or made under or purported to be under any Letter
of Credit (or under or in connection with any L/C Application) which have not
been repaid to the Issuing Bank (with the proceeds of a Loan or otherwise).
"Maturity Date" means (a) January 2, 2005, or (b) such earlier date upon
which the Commitments may be terminated in accordance with the terms hereof.
"Maximum Loan Amount" means $350,000,000 as such amount may be reduced from
time to time pursuant to Section 2.5.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
November 12, 2001, among Borrower, Comstock Acquisition Inc., Comstock Holdings,
Inc. and DevX.
15
"Mortgage" means (i) each Mortgage, Deed of Trust, Assignment, Security
Agreement, Financing Statement and Fixture Filing dated as of even date herewith
described in the Security Schedule, and (ii) any mortgage, deed of trust or
similar document delivered pursuant to this Agreement, in each case as amended,
supplemented, restated or otherwise modified from time to time.
"Mortgaged Property" has the meaning set forth in the Mortgage.
"Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding three
calendar years, has made or been obligated to make contributions.
"Net Sales Proceeds" means, with respect to any sale, lease, transfer or
other disposition of any asset by the Borrower or any Subsidiary, the aggregate
amount of cash received by or paid to or for the account of the Borrower or such
Subsidiary from time to time (whether as initial consideration or through
payment or disposition of deferred consideration) by or on behalf of such Person
in connection with such transaction after deducting therefrom only (without
duplication) (a) reasonable out-of-pocket costs and fees, (b) the amount of
taxes payable in connection with or as a result of such transaction and (c) the
amount of any Indebtedness permitted by Section 7.3 hereof secured by a Lien on
such asset permitted by Section 7.1 hereof that, by the terms of the agreement
or instrument governing such Indebtedness, is required to be repaid or may be
prepaid upon such disposition, in each case to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of such cash,
actually paid to a Person that is not an Affiliate of the Borrower or such
Subsidiary and are properly attributable to such transaction or to the asset
that is the subject thereof.
"Note" means a promissory note made by the Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit B.
"Notice of Advance" means a notice of (a) a Borrowing, (b) a conversion of
Loans from one Type to the other, or (c) a continuation of Loans as the same
Type, pursuant to Section 2.2(a), which, if in writing, shall be substantially
in the form of Exhibit A.
"Obligations" means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document, whether
direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest that accrues after the commencement by or against any Loan
Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws
naming such Person as the debtor in such proceeding.
"Offer" means the offer by Comstock Acquisition Inc. to purchase all of the
outstanding shares of common stock of DevX, par value $0.234 per share (the
"Shares"), for $7.32 per share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the offer to purchase and in the related
letter of transmittal, copies of which are attached as Exhibits (a)(1) and
(a)(2) to the Tender Offer Statement on Schedule TO, filed initially with the
Securities and Exchange Commission on November 15, 2001, as amended.
16
"Oil and Gas Properties" means 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 have jurisdiction)
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 Interest; all
Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon Interests, the lands covered thereby and all oil in tanks and
all rents, issues, profits, proceeds, products, revenues and other income from
or attributable to the Hydrocarbon Interests; all tenements, hereditaments,
appurtenances and properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests, 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.
"Optional Indenture Payment" has the meaning set forth in Section 7.12.
"Organization Documents" means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws; (b) with respect to any
limited liability company, the articles of formation and operating agreement;
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement of
formation and any agreement, instrument, filing or notice with respect thereto
filed in connection with its formation with the secretary of state or other
department in the state of its formation, in each case as amended from time to
time.
"Outstanding Amount" means (i) with respect to Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
Borrowings and prepayments or repayments of Loans occurring on such date; and
(ii) with respect to any L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements of
outstanding unpaid drawings under any Letters of Credit or any reductions in the
maximum amount available for drawing under Letters of Credit taking effect on
such date.
"Participant" has the meaning set forth in Section 10.7.3.
"PBGC" means the Pension Benefit Guaranty Corporation.
17
"Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer plan
(as described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding five plan years.
"Percentage Share" means, with respect to each Lender, the percentage
(carried out to the ninth decimal place) set forth opposite the name of such
Lender on Schedule 2.1 or on the relevant Lender Assignment, as the case may be,
as such percentage share may be adjusted as provided herein.
"Person" means any individual, trustee, corporation, general partnership,
limited partnership, limited liability company, joint stock company, trust,
unincorporated organization, bank, business association, firm, joint venture or
Governmental Authority.
"Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or any ERISA Affiliate.
"Pledge Agreement" means a Pledge Agreement in favor of the Administrative
Agent for the benefit of the Lenders in the form of Exhibit H.
"Pledged Note" mean each Pledged Note described in a Pledge Agreement
pledged to the Administration Agent for the benefit of the Lenders and the
Issuing Bank.
"Preferred Stock" shall mean the 1,757,310 shares of Series A 1999
Convertible Preferred Stock, Par Value $10.00 of Borrower.
"Preferred Stock Documents" shall mean the Preferred Stock and the stock
purchase agreement and all other agreements and documents executed in connection
therewith at any time.
"Register" has the meaning set forth in Section 10.7.2(b).
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
"Required Shares" means shares of stock of DevX which constitute at least
50%, plus one share, of the outstanding shares of capital stock having ordinary
voting power with respect to the election of the board of directors of DevX
(including all shares issuable upon the exercise of the exercisable outstanding
options or warrants).
"Reserve Percentage" means, on any day with respect to each particular
Borrowing comprised of LIBO Rate Loans, the maximum reserve requirement as
determined by the Administrative Agent (including without limitation any basic,
supplemental, marginal, emergency or similar reserves and taking into account
any transitional adjustments or other scheduled changes in reserve
18
requirements), expressed as a percentage, which would then apply under
Regulation D with respect to "Eurocurrency liabilities" (as such term is defined
in Regulation D) equal in amount to each Lender's LIBO Rate Loan in such
Borrowing, were such Lender to have any such "Eurocurrency liabilities". If such
reserve requirement shall change after the date hereof, the Reserve Percentage
shall be automatically increased or decreased, as the case may be, from time to
time as of the effective time of each such change in such reserve requirement.
"Responsible Officer" means the president, chief financial officer,
treasurer or assistant treasurer of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any capital stock of the
Borrower, any Guarantor or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such capital stock or of any option, warrant or other right
to acquire any such capital stock.
"Security Agreement" means a Security Agreement in favor of the
Administrative Agent for the benefit of the Lenders in the form of Exhibit I.
"Security Documents" means the instruments listed in the Security Schedule
and any other security agreements, deeds of trust, mortgages, chattel mortgages,
pledges, guaranties, financing statements, continuation statements, extension
agreements and other agreements or instruments now, heretofore, or hereafter
delivered by any Person to the Administrative Agent in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of all or any part of the Obligations.
"Security Schedule" means Schedule 4.1 hereto.
"Shareholders' Equity" means, as of any date of determination for the
Borrower and its Subsidiaries on a consolidated basis, shareholders' equity as
of that date determined in accordance with GAAP.
"Subordinated Mortgages" means each Subordinated Mortgage, Deed of Trust,
Assignment, Security Agreement, Financing Statement and Fixture Filing delivered
by a Guarantor in favor of the Borrower to secure any Indebtedness of such
Guarantor owing to the Borrower outstanding from time to time including, without
limitation, any such Indebtedness evidenced by a Pledged Note.
"Subordination Agreement" means the Intercompany Subordination Agreement
dated the date hereof and substantially in the form of Exhibit G, as the same
may be amended, modified, supplemented or restated from time to time.
"Subsidiary" of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
19
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
the Borrower.
"Synthetic Lease Obligation" means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
"TD" means Toronto Dominion (Texas), Inc.
"Type" means with respect to a Loan, its character as a Base Rate Loan or a
LIBO Rate Loan.
"Unfunded Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"Unreimbursed Amount" has the meaning set forth in Section 2.3.3(i).
"Voting Percentage" means, as to any Lender, (a) at any time when the
Commitments are in effect, such Lender's Percentage Share and (b) at any time
after the termination of the Commitments, the percentage (carried out to the
ninth decimal place) which (i) the sum of (A) the Outstanding Amount of such
Lender's Loans, plus (B) such Lender's Percentage Share of the Outstanding
Amount of L/C Obligations, then constitutes of (ii) the sum of Outstanding
Amount of all Loans and L/C Obligations.
SECTION 1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.
(b) (i) The words "herein" and "hereunder" and words of similar import when
used in any Loan Document shall refer to such Loan Document as a whole and not
to any particular provision thereof.
(ii) Unless otherwise specified herein, Article, Section, Exhibit and
Schedule references are to this Agreement.
(iii) The term "including" is by way of example and not limitation.
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(iv) The term "documents" includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced.
(c) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including;" the words "to" and
"until" each mean "to but excluding;" and the word "through" means "to and
including."
(d) Section headings herein and the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.
(e) Pronouns in masculine, feminine and neuter genders shall be construed
to include any other gender, and words in the singular form shall be construed
to include the plural and vice versa, unless the context otherwise requires.
SECTION 1.3 Accounting Terms. All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data required to be submitted pursuant to this Agreement shall be
prepared in conformity with, GAAP applied on a consistent basis, as in effect
from time to time, applied in a manner consistent with that used in preparing
the Initial Audited Financial Statements, except as otherwise specifically
prescribed herein.
SECTION 1.4 Rounding. Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).
SECTION 1.5 References to Agreements and Laws. Unless otherwise expressly
provided herein, (a) references to agreements (including the Loan Documents) and
other contractual instruments shall be deemed to include all subsequent
amendments, restatements, extensions, supplements and other modifications
thereto, but only to the extent that such amendments, restatements, extensions,
supplements and other modifications are not prohibited by any Loan Document; and
(b) references to any Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such Law.
ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS
SECTION 2.1 Loans. Subject to the terms and conditions set forth herein,
each Lender severally agrees to make loans (each such loan, a " Loan") to the
Borrower from time to time on any Business Day during the period from the
Closing Date to the Maturity Date, in an aggregate amount not to exceed at any
time outstanding the lesser of (x) such Lender's Percentage Share of the
aggregate amount of the Loans requested by the Borrower on such day and (y) the
amount of such Lender's Commitment; provided, however, that after giving effect
to any borrowing, (i) the aggregate Outstanding Amount of all Loans and L/C
21
Obligations shall not exceed the lesser of (A) the Aggregate Commitments on such
date and (B) the Borrowing Base then in effect and (ii) the aggregate
Outstanding Amount of the Loans of any Lender, plus such Lender's Percentage
Share of the Outstanding Amount of all L/C Obligations shall not exceed such
Lender's Commitment or such Lender's Percentage Share of the Borrowing Base.
Within the limits of each Lender's Commitment, and subject to the other terms
and conditions hereof, the Borrower may borrow under this Section 2.1, prepay
under Section 2.4 and reborrow under this Section 2.1.
SECTION 2.2 Borrowings, Conversions and Continuations of Loans.
(a) Each Borrowing, each conversion of Loans from one Type to the other,
and each continuation of Loans as the same Type shall be made upon the
Borrower's irrevocable prior written notice to the Administrative Agent in the
form of a Notice of Advance. Each such notice must be received by the
Administrative Agent not later than 12:00 p.m., central time, (i) three Business
Days prior to the requested date of any Borrowing of, conversion to or
continuation of LIBO Rate Loans or of any conversion of LIBO Rate Loans to Base
Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans.
Each Notice of Advance shall be appropriately completed and signed by a
Responsible Officer of the Borrower. Each Borrowing of, conversion to or
continuation of LIBO Rate Loans shall be in a principal amount of $1,000,000 or
a whole multiple of $1,000,000 in excess thereof. Each Borrowing of or
conversion to Base Rate Loans shall be in a principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof. Each Notice of Advance shall
specify (i) whether the Borrower is requesting a Borrowing, a conversion of
Loans from one Type to the other, or a continuation of Loans as the same Type,
(ii) the requested date of the Borrowing, conversion or continuation, as the
case may be (which shall be a Business Day), (iii) the principal amount of Loans
to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or
to which existing Loans are to be converted, and (v) if applicable, the duration
of the Interest Period with respect thereto. If the Borrower fails to specify a
Type of Loan in a Notice of Advance or if the Borrower fails to give a timely
notice requesting a conversion or continuation, then the applicable Loans shall
be made or continued as, or converted to, Base Rate Loans. Any such automatic
conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable LIBO Rate Loans.
If the Borrower requests a Borrowing of, conversion to, or continuation of LIBO
Rate Loans in any such Notice of Advance, but fails to specify an Interest
Period, it will be deemed to have specified an Interest Period of one month.
(b) Following receipt of a Notice of Advance, the Administrative Agent
shall promptly notify each Lender of its Percentage Share of the applicable
Loans, and if no timely notice of a conversion or continuation is provided by
the Borrower, the Administrative Agent shall notify each Lender of the details
of any automatic conversion to Base Rate Loans described in the preceding
subsection. Each Lender shall make the amount of its Loan available to the
Administrative Agent in immediately available funds at the Administrative
Agent's Office not later than 2:00 p.m. central time, on the Business Day
specified in the applicable Notice of Advance. Upon satisfaction of the
applicable conditions set forth in Section 4.2 (and, if such Borrowing is the
22
initial Credit Extension, Section 4.1), the Administrative Agent shall make all
funds so received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of TD with the amount of such funds or (ii) wire transfer of such funds,
in each case in accordance with instructions provided to the Administrative
Agent by the Borrower; provided, however, that if, on the date of the Borrowing
there are L/C Borrowings outstanding, then the proceeds of such Borrowing shall
be applied, first, to the payment in full of any such L/C Borrowings, and
second, to the Borrower as provided above. Unless the Administrative Agent shall
have received prompt notice from a Lender that such Lender will not make
available to the Administrative Agent such Lender's Loans, the Administrative
Agent may in its discretion assume that such Lender has made such Loans
available to the Administrative Agent in accordance with this section and the
Administrative Agent may if it chooses, in reliance upon such assumption, make
such Loan available to the Borrower. If and to the extent such Lender shall not
so make its Loan available to the Administrative Agent, such Lender and the
Borrower severally agree to pay or repay to the Administrative Agent within two
Business Days after demand the amount of such Loan together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is paid or repaid to the Administrative
Agent, to be calculated as to such Lender at the Federal Funds Rate, and to be
calculated as to the Borrower at the interest rate applicable at the time to the
other Loans made on such date. If any Lender fails to make such payment to the
Administrative Agent within such two Business Day period, such Lender shall in
addition to such amount pay interest thereon, for each day from the date such
Loan is made available to the Borrower until the date such amount is paid or
repaid to the Administrative Agent, at the interest rate applicable at the time
to the other Loans made on such date. The failure of any Lender to make any Loan
to be made by it hereunder shall not relieve any other Lender of its obligation
hereunder, if any, to make its Loan, but no Lender shall be responsible for the
failure of any other Lender to make any Loan to be made by such other Lender.
(c) Except as otherwise provided herein, a LIBO Rate Loan may be continued
or converted only on the last day of the Interest Period for such LIBO Rate
Loan. During the existence of a Default, Event of Default or Borrowing Base
Deficiency, no Loans may be requested as, converted to or continued as LIBO Rate
Loans.
(d) The Administrative Agent shall promptly notify the Borrower and the
Lenders of the interest rate applicable to any LIBO Rate Loan upon determination
of such interest rate. The determination of the LIBO Rate by the Administrative
Agent shall be conclusive in the absence of manifest error. The Administrative
Agent shall notify the Borrower and the Lenders of any change in TD's prime rate
used in determining the Base Rate promptly following the public announcement of
such change.
(e) After giving effect to all Borrowings, all conversions of Loans from
one Type to the other, and all continuations of Loans as the same Type, there
shall not be more than ten LIBO Interest Periods in effect with respect to
Loans.
SECTION 2.3 Letters of Credit.
2.3.1 The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, (A) the
Issuing Bank agrees, in reliance upon the agreements of the other Lenders
set forth in this Section 2.3, (1) from time to time on any Business Day
23
during the period from the Closing Date until the Letter of Credit
Availability Expiration Date, to issue Letters of Credit for the account of
the Borrower or certain Subsidiaries, and to amend or renew Letters of
Credit previously issued by it, in accordance with subsection (b) below,
and (2) to honor drafts under the Letters of Credit; and (B) the Lenders
severally agree to participate in Letters of Credit issued for the account
of the Borrower; provided that the Issuing Bank shall not be obligated to
make any L/C Credit Extension with respect to any Letter of Credit, and no
Lender shall be obligated to participate in, any Letter of Credit if as of
the date of such L/C Credit Extension, (x) the Outstanding Amount of all
L/C Obligations and all Loans would exceed the lesser of (A) the Aggregate
Commitments and (B) the Borrowing Base then in effect, (y) the aggregate
Outstanding Amount of the Loans of any Lender, plus such Lender's
Percentage Share of the Outstanding Amount of all L/C Obligations would
exceed the lesser of (A) such Lender's Commitment and (B) such Lender's
Percentage Share of the Borrowing Base then in effect, or (z) the
Outstanding Amount of the L/C Obligations would exceed the Letter of Credit
Sublimit. Within the foregoing limits, and subject to the terms and
conditions hereof, the Borrower's ability to obtain Letters of Credit shall
be fully revolving, and accordingly the Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have
expired or that have been drawn upon and reimbursed.
(ii) The Issuing Bank shall be under no obligation to issue any Letter of
Credit if:
(A) the expiry date of such requested Letter of Credit would
occur more than twelve months after the date of issuance or last
renewal, unless the Majority Lenders acting in their sole discretion,
have approved in writing such expiry date;
(B) the expiry date of such requested Letter of Credit would
occur after the Letter of Credit Availability Expiration Date, unless
all the Lenders acting in their sole discretion, have approved in
writing such expiry date;
(C) the issuance of such Letter of Credit would violate one or
more policies of the Issuing Bank;
(D) such Letter of Credit is in a face amount less than $100,000,
or denominated in a currency other than Dollars; or
(E) such Letter of Credit is to be used directly or indirectly to
assure payment of or otherwise support any Person's Indebtedness for
borrowed money;
(F) the issuance of such Letter of Credit is not in compliance
with all applicable governmental restrictions, policies, and
guidelines (whether or not having the force of law) or it subjects the
Issuing Bank to any cost not anticipated by the Issuing Bank on the
date hereof;
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(G) the form and terms of such Letter of Credit are not
acceptable to the Administrative Agent and Issuing Bank in their sole
and absolute discretion; and
(H) any other conditions in this Agreement to the issuance of
such Letter of Credit has not been satisfied.
(iii) The Issuing Bank shall be under no obligation to amend any Letter of
Credit if (A) the Issuing Bank would have no obligation at such time to issue
such Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.
2.3.2 Procedures for Issuance and Amendment of Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case may be,
upon the request of the Borrower delivered to the Issuing Bank (with a copy to
the Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the Borrower.
Such Letter of Credit Application must be received by the Issuing Bank and the
Administrative Agent not later than 12:00 p.m., central time at least two
Business Days (or such later date and time as the Issuing Bank may agree in a
particular instance in its sole discretion) prior to the proposed issuance date
or date of amendment, as the case may be. In the case of a request for an
initial issuance of a Letter of Credit, such Letter of Credit Application shall
specify in form and detail satisfactory to the Issuing Bank: (A) the proposed
issuance date of the requested Letter of Credit (which shall be a Business Day);
(B) the amount thereof; (C) the expiry date thereof; (D) the name and address of
the beneficiary thereof; (E) the documents to be presented by such beneficiary
in case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the Issuing Bank may require. In the case of a request for an
amendment of any outstanding Letter of Credit, such Letter of Credit Application
shall specify in form and detail satisfactory to the Issuing Bank (A) the Letter
of Credit to be amended; (B) the proposed date of amendment thereof (which shall
be a Business Day); (C) the nature of the proposed amendment; and (D) such other
matters as the Issuing Bank may require.
(ii) Promptly after receipt of any Letter of Credit Application, the
Issuing Bank will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has received a copy of such Letter of
Credit Application from the Borrower and, if not, the Issuing Bank will provide
the Administrative Agent with a copy thereof. Upon receipt by the Issuing Bank
of confirmation from the Administrative Agent that the requested issuance or
amendment is permitted in accordance with the terms hereof, then, subject to the
terms and conditions hereof, the Issuing Bank shall, on the requested date,
issue a Letter of Credit for the account of the Borrower or enter into the
applicable amendment, as the case may be, in each case in accordance with the
Issuing Bank's usual and customary business practices. Immediately upon the
issuance of each Letter of Credit, each Lender shall be deemed to, and hereby
25
irrevocably and unconditionally agrees to and hereby does, purchase from the
Issuing Bank a participation in such Letter of Credit in an amount equal to the
product of such Lender's Percentage Share times the amount of such Letter of
Credit.
2.3.3 Drawings and Reimbursements; Funding of Participations.
(i) Upon any drawing under any Letter of Credit, the Issuing Bank shall
notify the Borrower and the Administrative Agent thereof. Not later than 12:00
p.m., central time, on the date of any payment by the Issuing Bank under a
Letter of Credit (each such date, an "Honor Date"), the Borrower shall reimburse
the Issuing Bank through the Administrative Agent in an amount equal to the
amount of such drawing. If the Borrower fails to so reimburse the Issuing Bank
by such time, the Administrative Agent shall promptly notify each Lender of the
Honor Date, the amount of the unreimbursed drawing (the "Unreimbursed Amount"),
and such Lender's Percentage Share thereof. In such event, the Borrower shall be
deemed to have requested a Borrowing of Base Rate Loans to be disbursed on the
Honor Date in an amount equal to the Unreimbursed Amount, without regard to the
minimum and multiples specified in Section 2.2 for the principal amount of Base
Rate Loans, but subject to the amount of the unutilized portion of the lesser of
(x) the Aggregate Commitments and (y) the Borrowing Base then in effect and the
conditions set forth in Section 4.2 (other than the delivery of a Notice of
Advance). Any notice given by the Issuing Bank or the Administrative Agent
pursuant to this Section 2.3.3(i) may be given by telephone if immediately
confirmed in writing; provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such notice.
(ii) Each Lender (including the Lender acting as Issuing Bank) shall upon
any notice from the Administrative Agent pursuant to Section 2.3.3(i) make funds
available to the Administrative Agent for the account of the Issuing Bank at the
Administrative Agent's Office in an amount equal to such Lender's Percentage
Share of the Unreimbursed Amount not later than 1:00 p.m., central time, on the
Business Day specified in such notice by the Administrative Agent, whereupon,
subject to the provisions of Section 2.3.3(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to the Borrower in such
amount. The Administrative Agent shall remit the funds so received to the
Issuing Bank.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced
by a Borrowing of Base Rate Loans because the conditions set forth in Section
4.2 cannot be satisfied or for any other reason, the Borrower shall be deemed to
have incurred from the Issuing Bank an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Default Rate. In such event, each Lender's payment to the Administrative Agent
for the account of the Issuing Bank pursuant to Section 2.3.3(ii) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Section 2.3.3.
(iv) Until each Lender funds its Loan or L/C Advance pursuant to this
Section 2.3.3 to reimburse the Issuing Bank for any amount drawn under any
26
Letter of Credit, interest in respect of such Lender's Percentage Share of such
amount shall be solely for the account of the Issuing Bank.
(v) Each Lender's obligation to make Loans or L/C Advances to reimburse the
Issuing Bank for amounts drawn under Letters of Credit, as contemplated by this
Section 2.3.3, shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any set-off, counterclaim, recoupment, defense
or other right which such Lender may have against the Issuing Bank, the Borrower
or any other Person for any reason whatsoever; (B) the occurrence or continuance
of a Default or Event of Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing. Any such
reimbursement shall not relieve or otherwise impair the obligation of the
Borrower to reimburse the Issuing Bank for the amount of any payment made by the
Issuing Bank under any Letter of Credit, together with interest as provided
herein.
(vi) If any Lender fails to make available to the Administrative Agent for
the account of the Issuing Bank any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.3.3 by the time specified
in Section 2.3.3(ii), the Issuing Bank shall be entitled to recover from such
Lender (acting through the Administrative Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the Issuing Bank at a
rate per annum equal to (1) for the first two Business Days immediately
following the date such payment is required, the Federal Funds Rate from time to
time in effect, and (2) for each day thereafter, the Base Rate from time to time
in effect. A certificate of the Issuing Bank submitted to any Lender (through
the Administrative Agent) with respect to any amounts owing under this clause
(vi) shall be conclusive absent manifest error.
2.3.4 Repayment of Participations.
(i) At any time after the Issuing Bank has made a payment under any Letter
of Credit and has received from any Lender such Lender's L/C Advance in respect
of such payment in accordance with Section 2.3.3, if the Administrative Agent
receives for the account of the Issuing Bank any payment related to such Letter
of Credit (whether directly from the Borrower or otherwise, including proceeds
of Cash Collateral applied thereto by the Administrative Agent), or any payment
of interest thereon, the Administrative Agent will distribute to such Lender its
Percentage Share thereof in the same funds as those received by the
Administrative Agent.
(ii) If any payment received by the Administrative Agent for the account of
the Issuing Bank pursuant to Section 2.3.3 is required to be returned, each
Lender shall pay to the Administrative Agent for the account of the Issuing Bank
its Percentage Share thereof on demand of the Administrative Agent, plus
interest thereon from the date of such demand to the date such amount is
returned by such Lender, at a rate per annum equal to (1) with respect to the
first two Business Days immediately following such demand, the Federal Funds
Rate from time to time in effect, and (2) with respect to each day thereafter,
the Base Rate from time to time in effect.
27
2.3.5 Obligations Absolute. The obligation of the Borrower to reimburse the
Issuing Bank for each drawing under each Letter of Credit, and to repay each L/C
Borrowing and each drawing under a Letter of Credit that is refinanced by a
Borrowing of Loans, shall be absolute, unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit,
this Agreement, or any other agreement or instrument relating thereto;
(ii) the existence of any claim, counterclaim, set-off, defense or
other right that the Borrower may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or
instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under
such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under such
Letter of Credit;
(iv) any payment by the Issuing Bank under such Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit; or any payment made by the
Issuing Bank under such Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of such Letter of Credit, including any
arising in connection with any proceeding under any Debtor Relief Law; or
(v) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Borrower.
The Borrower shall promptly examine a copy of each Letter of Credit
and each amendment thereto that is delivered to it and, in the event of any
claim of noncompliance with the Borrower's instructions or other
irregularity, the Borrower will promptly notify the Issuing Bank. The
Borrower shall be conclusively deemed to have waived any such claim against
the Issuing Bank and its correspondents unless such notice is given as
aforesaid.
2.3.6 Role of Issuing Bank; Indemnity. Each Lender and the Borrower agree
that, in paying any drawing under a Letter of Credit, the Issuing Bank shall not
have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. No
Agent-Related Person nor any of the respective correspondents, participants or
28
assignees of the Issuing Bank shall be liable to any Lender for (i) any action
taken or omitted in connection herewith at the request or with the approval of
the Lenders or the Majority Lenders, as applicable; (ii) any action taken or
omitted in the absence of gross negligence or willful misconduct; or (iii) the
due execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Letter of Credit Application. The
Borrower hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit. No Agent-Related
Person, nor any of the respective correspondents, participants or assignees of
the Issuing Bank, shall be liable or responsible for any of the matters
described in clauses (i) through (v) of Section 2.3.5. The Borrower agrees to
hold Issuing Bank and each Lender harmless and indemnified against any liability
or claim in connection with or arising out of the subject matter of this
section, WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM
IS IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT
OR OMISSION OF ANY KIND BY ISSUING BANK OR ANY LENDER, provided only that the
Issuing Bank or such Lender shall not be entitled to indemnification for that
portion, if any, of any liability or claim which is proximately caused by its
own individual gross negligence or willful misconduct as determined in a final
judgment. In furtherance and not in limitation of the foregoing, the Issuing
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the Issuing Bank shall not be responsible for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason. If any Letter of Credit provides that it
is transferable, the Issuing Bank shall have no duty to determine the proper
identity of anyone appearing as transferee of such Letter of Credit, nor shall
the Issuing Bank be charged with responsibility of any nature or character for
the validity or correctness of any transfer or successive transfers, and payment
by the Issuing Bank to any purported transferee or transferees as determined by
the Issuing Bank is hereby authorized and approved, and the Borrower further
agrees to hold the Issuing Bank and each Lender harmless and indemnified against
any liability or claim in connection with or arising out of the foregoing, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY
OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
OF ANY KIND BY THE ISSUING BANK OR ANY LENDER, provided only that the Issuing
Bank or such Lender shall not be entitled to indemnification for that portion,
if any, of any liability or claim which is caused by its own individual gross
negligence or willful misconduct. All of Borrower's Obligations under this
Section 2.3.6 shall survive termination of the Commitments or of this Agreement
and repayment in full of the Obligations.
2.3.7 Applicability of ISP98 and UCP. Unless otherwise expressly agreed by
the Issuing Bank and the Borrower when a Letter of Credit is issued, (i) the
rules of the "International Standby Practices 1998" published by the Institute
of International Banking Law & Practice (or such later version thereof as may be
in effect at the time of issuance) shall apply to each standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International Chamber of Commerce (the "ICC")
at the time of issuance (including the ICC decision published by the Commission
29
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each commercial Letter of Credit.
2.3.8 Letter of Credit Fees. The Borrower shall pay to the Administrative
Agent for the account of each Lender in accordance with its Percentage Share a
Letter of Credit fee for each Letter of Credit equal to the LIBOR Spread then in
effect with respect to Loans after giving effect to the L/C Obligations incurred
with respect to such Letter of Credit times the actual daily maximum amount
available to be drawn under such Letter of Credit. Such fee for each Letter of
Credit shall be due and payable on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after the
issuance of such Letter of Credit, and on the Letter of Credit Availability
Expiration Date. If there is any change in the LIBOR Spread during any quarter,
the actual daily amount of each Letter of Credit shall be computed and
multiplied by the LIBOR Spread with respect to Letters of Credit separately for
each period during such quarter that such LIBOR Spread was in effect.
2.3.9 Letter of Credit Fronting Fee and Documentary and Processing Charges
Payable to Issuing Bank. The Borrower shall pay directly to the Issuing Bank for
its own account a fronting fee in an amount equal to 0.25% per annum on the
daily maximum amount available to be drawn thereunder, due and payable quarterly
in arrears on the last Business Day of each March, June, September and December,
commencing with the first such date to occur after the issuance of such Letter
of Credit, and on the Letter of Credit Availability Expiration Date; provided
that all such fees shall be payable on the date on which the Commitments
terminate and any such fees accruing after the date on which the Commitments
terminate shall be payable on demand. In addition, the Borrower shall pay
directly to the Issuing Bank for its own account the customary issuance,
presentation, amendment and other processing fees, and other standard costs and
charges, of the Issuing Bank relating to letters of credit as from time to time
in effect. Such fees and charges are due and payable on demand and are
nonrefundable. All participation fees and fronting fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
2.3.10 Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.
2.3.11 L/C Collateral.
(a) L/C Obligations in Excess of Borrowing Base or upon Termination of
Commitments. (i) If, after the making of all mandatory prepayments required
under Section 2.4.2, the aggregate amount of all Loans outstanding plus all L/C
Obligations outstanding excluding L/C Obligations secured by cash collateral
pursuant to this Section 2.3.11 will exceed the Borrowing Base, then the
Borrower will immediately pay to the Issuing Bank an amount in cash equal to
such excess, or (ii) should any L/C Obligations remain outstanding on the
Maturity Date, then the Borrower will immediately pay the Issuing Bank an amount
in cash equal to the aggregate amount of such Issuing Bank's L/C Obligations.
The Issuing Bank will hold such amount as security for the remaining L/C
Obligations ("L/C Collateral") until such L/C Obligations become Matured L/C
Obligations, at which time such L/C Collateral may be applied to such Matured
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L/C Obligations. Neither this subsection nor the following subsection shall,
however, limit or impair any rights which the Issuing Bank may have under any
other document or agreement relating to any Letter of Credit or L/C Obligation,
including any Letter of Credit of Application, or any rights which the Issuing
Bank or Lenders may have to otherwise apply any payments by the Borrower and L/C
Collateral under Section 2.3.11.
(b) Acceleration of L/C Obligations. If the Obligations or any part thereof
become immediately due and payable pursuant to Section 8.2 then, unless the
Majority Lenders otherwise specifically elect to the contrary (which election
may thereafter be retracted by the Majority Lenders at any time), all L/C
Obligations shall become immediately due and payable without regard to whether
or not actual drawings or payments on the Letters of Credit have occurred, and
the Borrower shall be obligated to pay to the Issuing Bank immediately an amount
equal to the aggregate L/C Obligations which are then outstanding. All amounts
so paid shall first be applied to Matured L/C Obligations and then held by the
Issuing Bank as L/C Collateral until such L/C Obligations become Matured L/C
Obligations, at which time such L/C Collateral shall be applied to such Matured
L/C Obligations.
(c) Investment of L/C Collateral. Pending application thereof, all L/C
Collateral shall be invested by the Issuing Bank in such interest-bearing
investments as the Issuing Bank may choose in its sole discretion reasonably
exercised. All interest on such investments shall be reinvested or applied to
Matured L/C Obligations. When all Obligations have been satisfied in full,
including all L/C Obligations, all Letters of Credit have expired or been
terminated, and all of the Borrower's reimbursement obligations in connection
therewith have been satisfied in full, the Issuing Bank shall release any
remaining L/C Collateral. The Borrower hereby assigns and grants to the Issuing
Bank a continuing security interest in all L/C Collateral paid by it to the
Issuing Bank, all investments purchased with such L/C Collateral, and all
proceeds thereof to secure its Matured L/C Obligations and its Obligations under
this Agreement, the Notes, and the other Loan Documents, and the Borrower agrees
that such L/C Collateral and investments shall be subject to all of the terms
and conditions of the Mortgage. The Borrower further agrees that the Issuing
Bank shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code as adopted in the State of New York with respect to such
security interest and that an Event of Default under this Agreement shall
constitute a default for purposes of such security interest.
2.3.12 Calculations. A written advice setting forth in reasonable detail
the amounts owing under this section, submitted by the Issuing Bank to the
Borrower or any Lender from time to time, shall be conclusive, absent manifest
error, as to the amounts thereof.
SECTION 2.4 Prepayments.
2.4.1 Voluntary Prepayments. The Borrower may, upon notice to the
Administrative Agent, at any time or from time to time voluntarily prepay Loans
in whole or in part without premium or penalty; provided that (i) such notice
must be received by the Administrative Agent not later than 12:00 p.m., central
time, (A) three Business Days prior to any date of prepayment of LIBO Rate
Loans, and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment
of LIBO Rate Loans shall be in a principal amount of $1,000,000 or a whole
multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate
Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000
in excess thereof. Each such notice shall specify the date and amount of such
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prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of such
Lender's Percentage Share of such prepayment. If such notice is given by the
Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.
Any prepayment of a LIBO Rate Loan shall be accompanied by all accrued interest
thereon, together with any additional amounts required pursuant to Section 3.5.
Each such prepayment shall be applied to the Loans of the Lenders in accordance
with their respective Percentage Shares.
2.4.2 Mandatory Prepayments. The Borrower shall make the following
prepayments of the Loans:
(i) Outstandings Exceed Commitments. If for any reason the Outstanding
Amount of all Loans and L/C Obligations at any time exceeds the Aggregate
Commitments then in effect, the Borrower shall first immediately prepay
Loans and second following repayment of the Loans, Cash Collateralize the
L/C Obligations in an aggregate amount equal to such excess.
(ii) Borrowing Base Deficiency.
(A) If at any time the aggregate unpaid principal balance of the
Loans plus the aggregate amount of L/C Obligations exceeds the
Borrowing Base (a "Borrowing Base Deficiency"), the Borrower shall,
within thirty (30) days after the Administrative Agent sends written
notice of such fact to the Borrower, (1) prepay the principal of the
Loans (and, upon prepayment of all Loans, shall, to the extent
required, provide L/C Collateral as set forth in Section 2.3.11) in an
aggregate amount at least equal to such Borrowing Base Deficiency (in
this section, a "Mandatory Prepayment Amount"), or (2) give notice to
the Administrative Agent electing to prepay such Mandatory Prepayment
Amount in three (3) (or fewer) monthly installments. Each such
installment shall equal or exceed one-third of such Borrowing Base
Deficiency; the first such installment shall be paid within thirty
(30) days of the giving of such notice of the Borrowing Base
Deficiency by the Administrative Agent to the Borrower and the two (or
fewer) subsequent installments shall be due and payable at one month
intervals thereafter until such Borrowing Base Deficiency has been
eliminated.
(B) If (1) at any time during the existence or continuation of a
Borrowing Base Deficiency, the Borrower or any Guarantor makes a
Disposition of assets (other than those described in clauses (a)
through (d) of Section 7.5 hereof), or (2) a Disposition of assets
included in the Borrowing Base results in a reduction of the Borrowing
Base in accordance with Section 7.5(e) such that a Borrowing Base
Deficiency occurs, then, in either case, the Borrower shall, or shall
cause such Guarantor to, use the Net Sale Proceeds from such
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Disposition (whether or not such assets are included in the Borrowing
Base) to prepay the Loans and upon prepayment of all Loans, shall
provide L/C Collateral as set forth in Section 2.3.11, within one (1)
Business Day of receipt of such Net Sale Proceeds in an amount equal
to the lesser of 100% of the Net Sale Proceeds from the sale of such
assets and the full amount of the Borrowing Base Deficiency then
existing or occurring as a result of such disposition. Application of
such Net Sales Proceeds shall be applied to the principal amount of
the Loans until the Loans are paid in full and then shall be held as
L/C Collateral in an amount equal to the aggregate amount of L/C
Obligations pursuant to Section 2.3.11.
SECTION 2.5 Reduction or Termination of Commitments and Maximum Loan
Amount. The Borrower may, upon notice to the Administrative Agent, terminate the
Aggregate Commitments and Maximum Loan Amount, or permanently reduce the
Aggregate Commitments and Maximum Loan Amount to an amount not less than the
then Outstanding Amount of all Loans and L/C Obligations; provided that (i) any
such notice shall be received by the Administrative Agent not later than 12:00
p.m., central time three (3) Business Days prior to the date of termination or
reduction, and (ii) any such partial reduction shall be in an aggregate amount
of $5,000,000 or any whole multiple of $1,000,000 in excess thereof. The
Administrative Agent shall promptly notify the Lenders of any such notice of
reduction or termination of the Aggregate Commitments and Maximum Loan Amount.
Once reduced in accordance with this Section, the Commitments may not be
increased. Any reduction of the Aggregate Commitments shall be applied to the
Commitment of each Lender according to its Percentage Share. All commitment fees
accrued until the effective date of any termination of the Aggregate Commitments
shall be paid on the effective date of such termination.
SECTION 2.6 Repayment of Loans. The Borrower shall repay to the Lenders on
the Maturity Date the aggregate principal amount of Loans outstanding on such
date.
SECTION 2.7 Initial Borrowing Base. On any date during the period from the
Closing Date to the first Evaluation Date, the Borrowing Base shall be an amount
equal to (i) $270,000,000, less (ii) the principal amount of DevX Senior Notes
then outstanding, except in the case of a Loan the proceeds of which will be
used to purchase and cancel or redeem and cancel any of the DevX Senior Notes in
each case pursuant to Section 309 of the DevX Indenture as certified in the
relevant Notice of Advance.
SECTION 2.8 Subsequent Determinations of Borrowing Base.
(a) By each Evaluation Date, the Borrower shall furnish to the
Administrative Agent and each Lender all information, reports and data which the
Administrative Agent has then reasonably requested concerning the Borrower's and
the Guarantors' businesses and properties (including Borrower's and the
Guarantors' Oil and Gas Properties and interests and the reserves and production
relating thereto), together with the Engineering Report described in Section
6.2(g), if an Engineering Report is then due. Within thirty (30) days after
receiving such information, reports and data, or as promptly thereafter as
practicable, the Administrative Agent shall recommend a redetermined Borrowing
Base to the Lenders. Such recommended Borrowing Base shall become effective upon
the receipt by the Administrative Agent of the approval of such recommended
Borrowing Base by Lenders holding not less than 75% of the aggregate amount of
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the Credit Extensions then outstanding (or 75% of the Commitments if no Credit
Extensions are outstanding). If such recommended Borrowing Base is not approved
by Lenders holding not less than 75% of the aggregate amount of the Credit
Extensions then outstanding (or 75% of the Commitments if no Credit Extensions
are then outstanding) within ten (10) days after the Administrative Agent
submits the recommended Borrowing Base to the Lenders, then each Lender shall
submit in writing to the Administrative Agent, on or within ten (10) days after
the Administrative Agent notifies the Lenders that the Lenders have not approved
any such recommended Borrowing Base, such Lender's determination of the
redetermined Borrowing Base; in such case, the redetermined Borrowing Base shall
be the highest amount approved by Lenders holding not less than 75% of the
aggregate amount of the Credit Extensions then outstanding (or 75% of the
Commitments if no Credit Extensions are outstanding). NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, WITHOUT THE PRIOR WRITTEN APPROVAL OF ALL OF THE
LENDERS, SUCH APPROVAL TO BE IN EACH LENDER'S SOLE DISCRETION, THE REDETERMINED
BORROWING BASE SHALL NOT BE INCREASED ABOVE THE AMOUNT OF THE BORROWING BASE IN
EFFECT IMMEDIATELY PRIOR TO SUCH REDETERMINATION. The Administrative Agent shall
by notice to the Borrower and the Lenders designate the amount of the Borrowing
Base (determined by Lenders holding not less than 75% of the aggregate amount of
Credit Extensions then outstanding or 75% of the Commitments if no Credit
Extensions are then outstanding or all of the Lenders, as applicable, in
accordance with the foregoing procedures) available to the Borrower hereunder,
which designation shall take effect immediately on the date such notice is sent
(a "Determination Date") and shall remain in effect until but not including the
next date as of which the Borrowing Base is redetermined. If the Borrower does
not furnish all such information, reports and data by the date specified in the
first sentence of this section, the Administrative Agent may nonetheless
designate the Borrowing Base at any amount which the Lenders determine, and may
redesignate the Borrowing Base from time to time thereafter at any amount which
all Lenders redetermine, until each Lender receives all such information,
reports and data, whereupon Lenders shall designate a new Borrowing Base as
described above. The Lenders shall determine the amount of the Borrowing Base
based upon the loan collateral value which they, in their sole discretion and in
accordance with their respective normal practices and standards for oil and gas
loans as such practices and standards exist at the particular time, assign to
the various Oil and Gas Properties of the Borrower or the Guarantors at the time
in question and based upon such other factors (including without limitation the
assets, liabilities, fixed charges, cash flow, business, properties, prospects,
management and ownership of any of the Borrower or the Guarantors or any
Subsidiary of any of the Borrower or the Guarantors) as they, in their sole
discretion and in accordance with their respective normal practices and
standards for oil and gas loans as such practices and standards exist at the
particular time, deem significant. It is expressly understood that Lenders and
the Administrative Agent have no obligation to agree upon or designate the
Borrowing Base at any particular amount, whether in relation to the Maximum Loan
Amount or otherwise, and that the Lenders' commitments to advance funds
hereunder is determined by reference to the Borrowing Base from time to time in
effect, which Borrowing Base shall be used for calculating commitment fees under
Section 2.10(a) and, to the extent permitted by law and regulatory authorities,
for the purposes of Section 2.15. Additional redeterminations at the request of
the Lenders, the Administrative Agent or the Borrower shall be subject to a
$5,000 engineering fee payable by Borrower to the Administrative Agent for its
own account.
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(b) The Borrower may include additional Oil and Gas Properties of the
Borrower or the Guarantors acquired from time to time as Collateral for the
Obligations, which may then be included in the calculation of the Borrowing
Base, by the Borrower (A) giving written notice to the Administrative Agent of
such properties to be included, (B) subjecting such properties to Liens securing
the Obligations (pursuant to Security Documents satisfactory to the
Administrative Agent), (C) including such properties in an Engineering Report
submitted to the Administrative Agent and (D) delivering to the Administrative
Agent title opinions covering at least 80% of the additional value addressed to
the Administrative Agent for the benefit of the Lenders covering all of such
properties and other legal opinions from counsel acceptable to the
Administrative Agent, in its sole discretion, in form, scope and substance
acceptable to the Administrative Agent opining favorably as to, among such other
matters as may be required by the Administrative Agent, (1) the Borrower's or
the appropriate Guarantor's ownership of such properties and (2) matters of the
type covered by the opinions delivered pursuant to Section 4.1(a)(vi).
(c) In addition to the any scheduled determination or discretionary
determination of the Borrowing Base, the Borrowing Base shall be automatically
reduced from time to time as set forth in Section 7.5(e).
SECTION 2.9 Interest.
(a) Subject to the provisions of subsection (b) below, (i) each LIBO Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Adjusted LIBO Rate for such
Interest Period plus the LIBOR Spread; and (ii) each Base Rate Loan shall bear
interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Base Rate
Spread.
(b) While any Event of Default or Borrowing Base Deficiency exists or after
acceleration, the Borrower shall pay interest on the principal amount of all
outstanding Obligations at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Law.
Accrued and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.
SECTION 2.10 Fees. In addition to certain fees described in Sections 2.3.8
and 2.3.9:
(a) Commitment Fee. The Borrower shall pay to the Administrative Agent for
the account of each Lender in accordance with its Percentage Share, a commitment
fee equal to the Commitment Fee Rate times the actual daily amount by which the
Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Loans and
(ii) the Outstanding Amount of L/C Obligations; provided, however, that from the
Closing Date until the First Evaluation Date, the Borrower shall pay to the
Administrative Agent for the account of each Lender in accordance with its
35
Percentage Share, a commitment fee equal to the Commitment Fee Rate times the
actual daily amount by which $270,000,000 exceeds the sum of (i) the Outstanding
Amount of Loans and (ii) the Outstanding Amount of L/C Obligations. The
commitment fee shall accrue at all times from the Closing Date until the
Maturity Date and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with the
first such date to occur after the Closing Date, and on the Maturity Date. The
commitment fee shall be calculated quarterly in arrears, and if there is any
change in the Commitment Fee Rate with respect to Commitment fees during any
quarter, the actual daily amount shall be computed and multiplied by the
Commitment Fee Rate with respect to Commitment fees separately for each period
during such quarter that such Commitment Fee Rate was in effect. The commitment
fee shall accrue at all times, including at any time during which one or more of
the conditions in Article IV is not met.
(b) Arrangement and Agency Fees. The Borrower shall pay an arrangement fee
to the Arranger for the Arranger's own account, and shall pay an agency fee to
the Administrative Agent for the Administrative Agent's own account, in the
amounts and at the times specified in the letter agreement, dated December 17,
2001 (the "Agent and Arranger Fee Letter"), among the Borrower, the Arranger and
the Administrative Agent. Such fees shall be fully earned when paid and shall be
nonrefundable for any reason whatsoever.
SECTION 2.11 Computation of Interest and Fees. Computation of interest on
Base Rate Loans and Commitment Fees shall be calculated on the basis of a year
of 365 or 366 days, as the case may be, and the actual number of days elapsed.
Computation of all other types of interest and all fees shall be calculated on
the basis of a year of 360 days and the actual number of days elapsed, which
results in a higher yield to the payee thereof than a method based on a year of
365 or 366 days. Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the
day on which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall bear interest for one day.
SECTION 2.12 Notes and Other Evidence of Debt.
(a) The obligation of the Borrower to repay to each Lender the aggregate
amount of all Loans made by such Lender (such Lender's "Loan"), together with
interest accruing in connection therewith, shall be evidenced by a single
promissory note (such Lender's "Note") made by the Borrower in the amount of
such Lender's Commitment payable to the order of such Lender in the form of
Exhibit B with appropriate insertions. Each Lender may record the date, Type (if
applicable), amount and maturity of the applicable Loans and payments with
respect thereto in one or more schedules to its rates or on one or more accounts
or records maintained by such Lender and by the Administrative Agent in the
ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Credit Extensions made by the Lenders to the Borrower and
the interest and payments thereon. Any failure so to record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the Loans and L/C
Obligations.
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(b) In addition to the accounts and records referred to in subsection (a),
each Lender and the Administrative Agent shall maintain in accordance with its
usual practice accounts or records evidencing the purchases and sales by such
Lender of participations in Letters of Credit. In the event of any conflict
between the accounts and records maintained by the Administrative Agent and the
accounts and records of any Lender in respect of such matters, the accounts and
records of the Administrative Agent shall control.
SECTION 2.13 Payments Generally.
(a) All payments to be made by the Borrower shall be made without condition
or deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent's Office in
Dollars and in immediately available funds not later than 12:00 noon, central
time, on the date specified herein. The Administrative Agent will promptly
distribute to each Lender its Percentage Share (or other applicable share as
provided herein) of such payment in like funds as received by wire transfer to
such Lender's Lending Office. All payments received by the Administrative Agent
after 12:00 noon, central time, shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue.
(b) Subject to the definition of "Interest Period," if any payment to be
made by the Borrower shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.
(c) Unless the Borrower or any Lender has notified the Administrative Agent
prior to the date any payment is required to be made by it to the Administrative
Agent hereunder, that the Borrower or such Lender, as the case may be, will not
make such payment, the Administrative Agent may assume that the Borrower or such
Lender, as the case may be, has timely made such payment and may (but shall not
be so required to), in reliance thereon, make available a corresponding amount
to the Person entitled thereto. If and to the extent that such payment was not
in fact made to the Administrative Agent in immediately available funds, then:
(i) if the Borrower failed to make such payment, each Lender shall
forthwith on demand repay to the Administrative Agent the portion of such
assumed payment that was made available to such Lender in immediately
available funds, together with interest thereon (1) in respect of each of
the first two Business Days from and including the date such amount was
made available by the Administrative Agent to such Lender to the date such
amount is repaid to the Administrative Agent in immediately available
funds, at the Federal Funds Rate from time to time in effect, and (2) in
respect of each day after the first two days from and including the date
such amount was made available by the Administrative Agent to such Lender
to the date such amount is repaid to the Administrative Agent in
immediately available funds, at the Base Rate from time to time in effect;
and
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(ii) if any Lender failed to make such payment, such Lender shall
forthwith on demand pay to the Administrative Agent the amount thereof in
immediately available funds, together with interest thereon for the period
from the date such amount was made available by the Administrative Agent to
the Borrower to the date such amount is recovered by the Administrative
Agent (the "Compensation Period") at a rate per annum equal to (1) for the
first two Business Days of any Compensation Period, the Federal Funds Rate
from time to time in effect, and (2) for each other day of any Compensation
Period, the interest rate applicable to the applicable Borrowing. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in the applicable Borrowing. If such
Lender does not pay such amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent may make a demand therefor upon
the Borrower, and the Borrower shall pay such amount to the Administrative
Agent, together with interest thereon for the Compensation Period at a rate
per annum equal to the rate of interest applicable to the applicable
Borrowing. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights which the
Administrative Agent or the Borrower may have against any Lender as a
result of any default by such Lender hereunder.
A notice of the Administrative Agent to any Lender with respect to any
amount owing under this subsection (d) shall be conclusive, absent manifest
error.
(d) If any Lender makes available to the Administrative Agent funds for any
Loan to be made by such Lender as provided in the foregoing provisions of this
Article II, and the conditions to the applicable Credit Extension set forth in
Article IV are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.
(e) The obligations of the Lenders hereunder to make Loans and to fund
participations in Letters of Credit are several and not joint. The failure of
any Lender to make any Loan or to fund any such participation on any date
required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan or purchase its participation.
(f) Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.
SECTION 2.14 Sharing of Payments. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it, or
the participations in L/C Obligations held by it, any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its ratable share (or other share contemplated
hereunder) thereof, such Lender shall immediately (a) notify the Administrative
Agent of such fact, and (b) purchase from the other Lenders such participations
in the Loans made by them and/or such subparticipations in the participations in
L/C Obligations held by them, as the case may be, as shall be necessary to cause
such purchasing Lender to share the excess payment in respect of such Loan or
38
such participations, as the case may be, pro rata with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from the purchasing Lender, such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing Lender the
purchase price paid therefor, together with an amount equal to such paying
Lender's ratable share (according to the proportion of (i) the amount of such
paying Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.9 with respect to
such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. The Administrative Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments. Each Lender that purchases a
participation pursuant to this Section shall from and after such purchase have
the right to give all notices, requests, demands, directions and other
communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased.
SECTION 2.15 Increase in Commitments.
(a) Upon notice to the Administrative Agent (which shall promptly notify
the Lenders), the Borrower may from time to time, request an increase in the
Aggregate Commitments up the Maximum Loan Amount or invite additional Eligible
Assignees to become Lenders pursuant to an agreement in form and substance
satisfactory to the Administrative Agent, the Issuing Bank and their respective
counsel so as to increase all commitments to the Maximum Loan Amount. At the
time of sending such notice, the Borrower (in consultation with the
Administrative Agent and the Issuing Bank) shall specify the time period within
which each Lender or invitee is requested to respond (which shall in no event be
less than ten Business Days from the date of delivery of such notice to the
Lenders). Each Lender shall notify the Administrative Agent within such time
period whether or not it agrees to increase its 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 Commitment. Anything herein contained to
the contrary notwithstanding, no Lender shall have any obligation whatsoever to
increase its Commitment hereunder.
(b) If any Commitments are increased in accordance with this Section, the
Administrative Agent and the Borrower shall determine the effective date of such
increase (the "Increase Effective Date"). The Administrative Agent and the
Borrower shall promptly notify the Lenders of the final allocation of such
increase and the Increase Effective Date. As a condition precedent to such
increase, the Borrower shall deliver to the Administrative Agent a certificate
of each Loan Party dated as of the Increase Effective Date (in sufficient copies
for each Lender) signed by a Responsible Officer of such Loan Party (i)
certifying and attaching the resolutions adopted by such Loan Party approving or
consenting to such increase, and, (ii) in the case of the Borrower, including a
Compliance Certificate demonstrating pro forma compliance with Section 7.13
after giving effect to such increase and (iii) certifying that, before and after
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giving effect to such increase, the representations and warranties contained in
Article V are true and correct on and as of the Increase Effective Date and no
Default or Event of Default exists. The Borrower shall deliver new or amended
Notes reflecting the increased Commitment of the Lenders. The Administrative
Agent shall distribute an amended Schedule 2.1 (which shall be deemed
incorporated into this Agreement), to reflect any changes therein resulting from
such increase. The Borrower shall prepay any Loans outstanding on the Increase
Effective Date (and pay any additional amounts required pursuant to Section 3.5)
to the extent necessary to keep the outstanding Loans ratable with any revised
Percentage Shares arising from any nonratable increase in the Commitments under
this Section.
(c) This Section shall supersede any provisions in Section 10.1 to the
contrary.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
SECTION 3.1 Taxes.
(a) Any and all payments by the Borrower to or for the account of the
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of the
Administrative Agent and each Lender, taxes imposed on or measured by its net
income, and franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the Laws of which the
Administrative Agent or such Lender, as the case may be, is organized or
maintains a lending office (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by any Laws to deduct any Taxes from or in respect of any sum payable
under any Loan Document to the Administrative Agent or any Lender, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), the Administrative Agent and such Lender receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within 30 days after the date of such
payment, the Borrower shall furnish to the Administrative Agent (which shall
forward the same to such Lender) the original or a certified copy of a receipt
evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or future
stamp, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as "Other Taxes").
(c) If the Borrower shall be required to deduct or pay any Taxes or Other
Taxes from or in respect of any sum payable under any Loan Document to the
Administrative Agent or any Lender, the Borrower shall also pay to the
Administrative Agent (for the account of such Lender) or to such Lender, at the
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time interest is paid, such additional amount that such Lender specifies as
necessary to preserve the after-tax yield (after factoring in all taxes,
including taxes imposed on or measured by net income) such Lender would have
received if such Taxes or Other Taxes had not been imposed.
(d) The Borrower agrees to indemnify the Administrative Agent and each
Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by the Administrative Agent and such Lender, (ii) amounts
payable under Section 3.1(c) and (iii) any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, in each case
whether or not such Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. Payment under this subsection
(d) shall be made within 30 days after the date the Lender or the Administrative
Agent makes a demand therefor.
SECTION 3.2 Illegality. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund LIBO
Rate Loans, or materially restricts the authority of such Lender to purchase or
sell, or to take deposits of, Dollars in the applicable offshore Dollar market,
or to determine or charge interest rates based upon the LIBO Rate, then, on
notice thereof by such Lender to the Borrower through the Administrative Agent,
any obligation of such Lender to make or continue LIBO Rate Loans or to convert
Base Rate Loans to LIBO Rate Loans shall be suspended until such Lender notifies
the Administrative Agent and the Borrower that the circumstances giving rise to
such determination no longer exist. Upon receipt of such notice, the Borrower
shall, upon demand from such Lender (with a copy to the Administrative Agent),
prepay or, if applicable, convert all LIBO Rate Loans of such Lender to Base
Rate Loans, either on the last day of the Interest Period thereof, if such
Lender may lawfully continue to maintain such LIBO Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such LIBO Rate
Loans. Upon any such prepayment or conversion, the Borrower shall also pay
interest on the amount so prepaid or converted. Each Lender agrees to designate
a different Lending Office if such designation will avoid the need for such
notice and will not, in the good faith judgment of such Lender, otherwise be
materially disadvantageous to such Lender.
SECTION 3.3 Inability to Determine Rates. If the Administrative Agent
determines in connection with any request for a LIBO Rate Loan or a conversion
to or continuation thereof that (a) Dollar deposits are not being offered to
banks in the applicable offshore Dollar market for the applicable amount and
Interest Period of such LIBO Rate Loan, (b) adequate and reasonable means do not
exist for determining the LIBO Rate for such LIBO Rate Loan, or (c) the Adjusted
LIBO Rate for such LIBO Rate Loan does not adequately and fairly reflect the
cost to the Lenders of funding such LIBO Rate Loan, the Administrative Agent
will promptly notify the Borrower and all Lenders. Thereafter, the obligation of
the Lenders to make or maintain LIBO Rate Loans shall be suspended until the
Administrative Agent revokes such notice. Upon receipt of such notice, the
Borrower may revoke any pending request for a Borrowing, conversion or
continuation of LIBO Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Borrowing of Base Rate Loans in the
amount specified therein.
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SECTION 3.4 Increased Cost and Reduced Return; Capital Adequacy.
(a) If any Lender determines that as a result of the introduction of or any
change in or in the interpretation of any Law, or such Lender's compliance
therewith, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding or maintaining LIBO Rate Loans or (as the case may be)
issuing or participating in Letters of Credit, or a reduction in the amount
received or receivable by such Lender in connection with any of the foregoing
(excluding for purposes of this subsection (a) any such increased costs or
reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section
3.1 shall govern), (ii) changes in the basis of taxation of overall net income
or overall gross income by the United States or any foreign jurisdiction or any
political subdivision of either thereof under the Laws of which such Lender is
organized or has its Lending Office, and (iii) reserve requirements utilized, as
to LIBO Rate Loans, in the determination of the Adjusted LIBO Rate), then from
time to time upon demand of such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amounts as will compensate such Lender for such increased cost or reduction.
(b) If any Lender determines that the introduction of any Law regarding
capital adequacy or any change therein or in the interpretation thereof, or
compliance by such Lender (or its Lending Office) therewith, has the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender's obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
such Lender's desired return on capital), then from time to time upon demand of
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such reduction.
SECTION 3.5 Funding Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise); or
(b) any failure by the Borrower (for a reason other than the failure of
such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by the
Borrower; or
(c) any assignment of a LIBO Rate Loan on a day other than the last day of
the Interest Period therefor as a result of a request by the Borrower pursuant
to Section 3.9;
including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.
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For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.5, each Lender shall be deemed to have funded each LIBO Rate Loan
made by it at the LIBO Rate for such Loan by a matching deposit or other
borrowing in the applicable offshore Dollar interbank market for a comparable
amount and for a comparable period, whether or not such LIBO Rate Loan was in
fact so funded.
SECTION 3.6 Matters Applicable to all Requests for Compensation.
(a) A certificate of the Administrative Agent or any Lender claiming
compensation under this Article III and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Administrative Agent or such
Lender may use any reasonable averaging and attribution methods.
(b) Upon any Lender's making a claim for compensation under Section 3.1 or
3.4, the Borrower may remove or replace such Lender in accordance with Section
3.9; provided that the Borrower shall have the right to replace such Lender only
if they also replace any other Lender who has made or is making a similar claim
for compensation under Section 3.1.
SECTION 3.7 Survival. All of the Borrower's obligations under this Article
III shall survive termination of the Commitments and of this Agreement and
payment in full of all the other Obligations.
SECTION 3.8 Foreign Lenders. Each Lender that is a "foreign corporation,
partnership or trust" within the meaning of the Code (a "Foreign Lender") shall
deliver to the Administrative Agent, prior to receipt of any payment subject to
withholding under the Code (or after accepting an assignment of an interest
herein), two duly signed completed copies of either IRS Form W-8BEN or any
successor thereto (relating to such Person and entitling it to an exemption
from, or reduction of, withholding tax on all payments to be made to such Person
by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor
thereto (relating to all payments to be made to such Person by the Borrower
pursuant to this Agreement) or such other evidence satisfactory to the Borrower
and the Administrative Agent that such Person is entitled to an exemption from,
or reduction of, U.S. withholding tax. Thereafter and from time to time, each
such Person shall (a) promptly submit to the Administrative Agent such
additional duly completed and signed copies of one of such forms (or such
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may then be available under then current United
States laws and regulations to avoid, or such evidence as is satisfactory to the
Borrower and the Administrative Agent of any available exemption from or
reduction of, United States withholding taxes in respect of all payments to be
made to such Person by the Borrower pursuant to this Agreement, (b) promptly
notify the Administrative Agent of any change in circumstances which would
modify or render invalid any claimed exemption or reduction, and (c) take such
steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Lender, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of applicable
Laws that the Borrower make any deduction or withholding for taxes from amounts
payable to such Person. If such Person fails to deliver the above forms or other
documentation, then the Administrative Agent may withhold from any interest
payment to such Person an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction. If any
43
Governmental Authority asserts that the Administrative Agent did not properly
withhold any tax or other amount from payments made in respect of such Person,
such Person shall indemnify the Administrative Agent therefor, including all
penalties and interest, any taxes imposed by any jurisdiction on the amounts
payable to the Administrative Agent under this Section, and costs and expenses
(including Attorney Costs) of the Administrative Agent. The obligation of the
Lenders under this Section shall survive the payment of all Obligations and the
resignation or replacement of the Administrative Agent.
SECTION 3.9 Removal and Replacement of Lenders.
(a) Under any circumstances set forth herein providing that the Borrower
shall have the right to remove or replace a Lender as a party to this Agreement,
the Borrower may, upon notice to such Lender and the Administrative Agent, (i)
remove such Lender by terminating such Lender's Commitment or (ii) replace such
Lender by causing such Lender to assign its Commitment (without payment of any
assignment fee) pursuant to Section 10.7.2(a) to one or more other Lenders or
Eligible Assignees procured by the Borrower; provided, however, that if the
Borrower elects to exercise such right with respect to any Lender pursuant to
Section 3.6(b), it shall be obligated to remove or replace, as the case may be,
all Lenders that have made similar requests for compensation pursuant to Section
3.1 or 3.4. The Borrower shall (x) pay in full all principal, interest, fees and
other amounts owing to such Lender through the date of termination or assignment
(including any amounts payable pursuant to Section 3.5), (y) provide appropriate
assurances and indemnities (which may include letters of credit) to the Issuing
Bank as may reasonably require with respect to any continuing obligation to
purchase participation interests in any L/C Obligations then outstanding, and
(z) release such Lender from its obligations under the Loan Documents. Any
Lender being replaced shall execute and deliver an Lender Assignment with
respect to such Lender's Commitment and outstanding Credit Extensions. The
Administrative Agent shall distribute an amended Schedule 2.1, which shall be
deemed incorporated into this Agreement, to reflect changes in the identities of
the Lenders and adjustments of their respective Commitments and/or Percentage
Shares resulting from any such removal or replacement.
(b) In order to make all the Lenders' interests in any outstanding Credit
Extensions ratable in accordance with any revised Percentage Shares after giving
effect to the removal or replacement of a Lender, the Borrower shall pay or
prepay, if necessary, on the effective date thereof, all outstanding Loans of
all Lenders, together with any amounts due under Section 3.5. The Borrower may
then request Loans from the Lenders in accordance with their revised Percentage
Shares. The Borrower may net any payments required hereunder against any funds
being provided by any Lender or Eligible Assignee replacing a terminating
Lender. The effect for purposes of this Agreement shall be the same as if
separate transfers of funds had been made with respect thereto.
(c) This section shall supersede any provision in Section 10.1 to the
contrary.
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ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
SECTION 4.1 Conditions of Initial Credit Extension. The obligation of each
Lender to make its initial Credit Extension hereunder is subject to satisfaction
of the following conditions precedent:
(a) Unless waived by all the Lenders (or by the Administrative Agent with
respect to immaterial matters or items specified in clause (v) or (vi) below
with respect to which the Borrower has given assurances satisfactory to the
Administrative Agent that such items shall be delivered promptly following the
Closing Date), the Administrative Agent's receipt of the following, each of
which shall be originals or facsimiles (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, each dated the Closing Date (or, in the case of certificates
of governmental officials, a recent date before the Closing Date) and each in
form and substance satisfactory to the Administrative Agent and its legal
counsel:
(i) executed counterparts of this Agreement, the Guaranties, the
Subordination Agreement and the Security Documents, sufficient in number
for distribution to the Administrative Agent, each Lender and the Borrower,
and, in the case of the Security Documents, in form and in sufficient
number of counterparts for the prompt completion of all recording and
filing of the Security Documents as may be necessary or, in the opinion of
the Administrative Agent, desirable to create or continue, as appropriate,
a valid perfected first Lien against the collateral covered by such
Security Documents, and together with stock certificates, membership
interest certificates or such other certificated security as may be part of
the collateral covered by the Security Documents and with stock powers or
other transfer powers or instruments executed in blank for each such
certificate, interest or security;
(ii) Notes executed by the Borrower in favor of each Lender requesting
such a Note, each in a principal amount equal to such Lender's Commitment;
(iii) such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each Loan
Party as the Administrative Agent may require to establish the identities
of and verify the authority and capacity of each Responsible Officer
thereof authorized to act as a Responsible Officer in connection with this
Agreement and the other Loan Documents to which such Loan Party is a party;
(iv) such evidence as the Administrative Agent may reasonably require
to verify that each Loan Party is duly organized or formed, validly
existing, in good standing and qualified to engage in business in each
jurisdiction in which it is required to be qualified to engage in business,
including certified copies of each Loan Party's Organization Documents,
certificates of good standing and/or qualification to engage in business
and tax clearance certificates;
(v) a certificate signed by a Responsible Officer of the Borrower
certifying (A) that the conditions specified in Sections 4.2(a) and (b)
45
have been satisfied, and (B) that there has been no event or circumstance
since the date of the Initial Audited Financial Statements which has or
could be reasonably expected to have a Material Adverse Effect;
(vi) an opinion of counsel to each Loan Party substantially in the
form of Exhibits F-1, F-2, F-3, F-4, F-5, and F-6;
(vii) evidence that the Existing Credit Facility and the DevX Credit
Facility have been or concurrently with the Closing Date are being
terminated and all Liens securing obligations under the Existing Credit
Facility or the DevX Credit Facility have been, or concurrently with the
Closing Date are being, released;
(viii) a certificate of insurance of the Borrower and its Subsidiaries
evidencing that the Borrower and its Subsidiaries are carrying insurance in
accordance with Section 6.7 and that such insurance is in full force and
effect;
(ix) the Initial Engineering Report;
(x) the Initial Audited Financial Statements;
(xi) a certificate from an Responsible Officer of each of Borrower and
Comstock Acquisition Inc., dated as of the Closing Date, certifying that
attached thereto is a true and correct copy of the Offer and the Additional
Offer Documents and certifying that:
(A) On and as of the Closing Date, and except as otherwise
previously disclosed pursuant to the provisions hereof, there does not
exist any judgment, order, injunction or other restraint issued or
filed with respect to the making of Advances or which could reasonably
be expected to impair materially the right or ability of each of
Borrower, Comstock Acquisition Inc. and DevX to effect the Acquisition
substantially in accordance with the terms and conditions of the Offer
and to comply with the requirements of Section 6.17 hereof;
(B) The Offer, at the time of the mailing thereof to the
shareholders of DevX, and any documents, at the time of mailing
thereof, mailed to DevX shareholders in relation to any Merger
Agreement did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein contained, in light of the circumstances under
which made, not misleading;
(C) Each of Borrower, Comstock Holdings, Inc. and Comstock
Acquisition Inc., as the case may be, have received all governmental
and third party approvals necessary in connection with the Acquisition
and the financing contemplated by this Agreement and such approvals
are in full force and effect;
46
(D) Shares of stock issued by DevX which have been tendered
pursuant to the Offer and have not been withdrawn, when aggregated
with shares owned by Borrower or its Subsidiaries, constitute more
than 90% of the outstanding shares of capital stock having ordinary
voting power with respect to the election of the board of directors of
DevX (including all shares issuable upon the exercise of the
exercisable outstanding options or warrants), and all other conditions
to the Acquisition have been satisfied];
(E) There are no government, corporate, contractual or legal
restrictions that would restrict, limit or otherwise impede prompt
consummation of the Acquisition and the transactions contemplated by
the Merger Agreement; and
(F) The per share tender price paid to the DevX stockholders for
the common stock of DevX in connection with the Acquisition did not
exceed $7.32;
(xii) a fully executed copy of the Merger Agreement;
(xiii) acknowledgement copies of proper financing statements (form
UCC-1), filed on or prior to the date of the initial Borrowing, naming the
Borrower as debtor and the Administrative Agent as secured party,
describing all of the Collateral in which the Borrower has granted or
purported to grant an interest, filed in the appropriate jurisdictions;
acknowledgement copies of proper financing statements (form UCC-1), filed
on or prior to the date of the initial Borrowing, naming one or more of the
Guarantors as debtor(s) and the Administrative Agent as secured party,
describing all of the Collateral in which the Guarantor or Guarantors have
granted or purported to grant an interest, filed in the appropriate
jurisdictions; together with copies of search reports in such jurisdictions
as the Administrative Agent may reasonably request, listing all effective
financing statements that name any of the Borrower or the Guarantors as
debtor and any other documents or instruments as may be necessary or
desirable (in the opinion of the Administrative Agent) to perfect the
Administrative Agent's interest in the Collateral;
(xiv) a Form U-1 Purpose Statement duly completed and executed by the
Borrower;
(xv) evidence that the DevX Indenture shall have been amended in
accordance with the terms thereof in such a manner as to (1) permit DevX to
become a Guarantor hereunder and comply with all its obligations under the
Loan Documents and to otherwise permit all the provisions of the Loan
Documents without violating the terms of the DevX Indenture, as so amended,
and (2) remove Sections 801, 802, 1005, 1006, 1008, 1009, 1010, 1011, 1012,
1014, 1017, 1018, and 1020(c) from the DevX Indenture; and
(xvi) such other assurances, certificates, documents, consents or
opinions as the Administrative Agent, the Issuing Bank or the Majority
Lenders reasonably may require.
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(b) Any fees required to be paid on or before the Closing Date pursuant to
any of the Loan Documents shall have been paid.
(c) Unless waived by the Administrative Agent, the Borrower shall have paid
all costs and expenses payable to the Administrative Agent pursuant to Section
10.4 to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of costs and expenses as shall constitute the Administrative
Agent's reasonable estimate of the costs and expenses described in Section 10.4
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude a final settling of accounts between
the Borrower and the Administrative Agent).
SECTION 4.2 Conditions to all Credit Extensions. The obligation of each
Lender to honor any Notice of Advance or Letter of Credit Application (other
than a Notice of Advance requesting only a conversion of Loans to the other
Type, or a continuation of Loans as the same Type) is subject to the following
conditions precedent:
(a) The representations and warranties of the Borrower contained in Article
V, or which are contained in any document furnished at any time under or in
connection herewith, shall be true and correct on and as of the date of such
Credit Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date.
(b) No Default or Event of Default shall exist, or would result from such
proposed Credit Extension.
(c) The Administrative Agent or, if applicable, the Issuing Bank shall have
received a Notice of Advance or Letter of Credit Application in accordance with
the requirements hereof.
(d) The Administrative Agent shall have received, in form and substance
satisfactory to it, such other assurances, certificates, documents or consents
related to the foregoing as the Administrative Agent or the Majority Lenders
reasonably may require.
Each Notice of Advance or Letter of Credit Application (other than a Notice
of Advance requesting only a conversion of Loans to the other Type or a
continuation of Loans as the same Type) submitted by the Borrower shall be
deemed to be a representation and warranty that the conditions specified in
Sections 4.2 have been satisfied on and as of the date of the applicable Credit
Extension.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the
Lenders that:
SECTION 5.1 Existence, Qualification and Power; Compliance with Laws. Each
Loan Party (a) is a corporation, partnership or limited liability company duly
organized or formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
48
and authority and all governmental licenses, authorizations, consents and
approvals to own its assets, carry on its business and to execute, deliver, and
perform its obligations under the Loan Documents to which it is a party, (c) is
duly qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is in
compliance with all Laws, except in each case referred to in clause (c) or this
clause (d), to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect.
SECTION 5.2 Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is a
party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person's Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or (c) violate any Law.
SECTION 5.3 Governmental Authorization; Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person or entity (including, without
limitation, any creditor or stockholder of the Borrower or any Guarantor) is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, any Loan Party of this Agreement or any other Loan
Document.
SECTION 5.4 Binding Effect. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been duly executed and delivered
by each Loan Party that is a party thereto. This Agreement constitutes, and each
other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable against each Loan Party that
is a party thereto in accordance with its terms except as such enforceability
may be limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally and by general
principles of equity.
SECTION 5.5 Financial Statements; No Material Adverse Effect.
(a) The Initial Audited Financial Statements (i) were prepared in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; (ii) fairly present the financial
condition of the Borrower and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; and (iii) show all material indebtedness and other
liabilities, direct or contingent, of the Borrower and its Subsidiaries as of
the date thereof, including liabilities for taxes, material commitments and
Indebtedness in accordance with GAAP consistently applied throughout the period
covered thereby.
(b) Since the date of the Initial Audited Financial Statements, there has
been no event or circumstance that has or could reasonably be expected to have a
Material Adverse Effect.
49
SECTION 5.6 Litigation. Except as specifically disclosed in Schedule 5.6,
there are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against the Borrower or
any of its Subsidiaries or against any of their properties or revenues which (a)
purport to affect or pertain to this Agreement or any other Loan Document, or
any of the transactions contemplated hereby, or (b) if determined adversely,
could reasonably be expected to have a Material Adverse Effect.
SECTION 5.7 No Default. Neither the Borrower nor any Subsidiary is in
default under or with respect to any Contractual Obligation which could be
reasonably expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.
SECTION 5.8 Ownership of Property; Liens. The Borrower and each Subsidiary
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of its
business, except for such defects in title as would not, individually or in the
aggregate, have a Material Adverse Effect. As of the Closing Date, the property
of the Borrower and its Subsidiaries is subject to no Liens, other than Liens
permitted by Section 7.1.
SECTION 5.9 Environmental Matters. The Borrower and its Subsidiaries
conduct in the ordinary course of business a review of the effect of existing
Environmental Laws and claims alleging potential liability or responsibility for
violation of any Environmental Law on their respective businesses, operations
and properties, and as a result thereof the Borrower have reasonably concluded
that, 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 any Loan Party or any Subsidiary nor the
operations conducted thereon violate any Environmental Laws;
(b) without limitation of clause (a) above, no property of any Loan Party
or any Subsidiary nor the operations currently conducted thereon or, to the best
knowledge of the Borrower, by any prior owner or operator of such property or
operation, are in violation of or subject to any existing, pending or, to the
Borrower's knowledge, threatened action, suit, investigation, inquiry or
proceeding by or before any Governmental Authority or to any remedial
obligations under Environmental Laws;
(c) all notices, permits, licenses or similar authorizations, if any,
required pursuant to Environmental Laws to be obtained or filed in connection
with the operation or use of the property of any Loan Party and each Subsidiary
have been duly obtained or filed, and the Loan Party and each Subsidiary are in
compliance with the terms and conditions of all such notices, permits, licenses
and similar authorizations;
(d) all Hazardous Materials, solid waste, and oil and gas exploration and
production wastes, if any, generated at the property of any Loan Party or any
50
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 Borrower, 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, to the Borrower's knowledge, threatened
action, investigation or inquiry by any Governmental Authority in connection
with any Environmental Laws;
(e) the Loan Parties and their Subsidiaries have taken all steps reasonably
necessary to determine and have determined that no Hazardous Materials, 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
Materials on or to any property of the Loan Parties or any Subsidiary except, in
each case, 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
(f) none of the Loan Parties nor any Subsidiary has any known contingent
liability in connection with any release or threatened release of any oil,
Hazardous Materials or solid waste into the environment.
SECTION 5.10 Insurance. The properties of the Borrower and its Subsidiaries
are insured with financially sound and reputable insurance companies that are
not Affiliates of any of the Borrower, in such amounts, with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the
Borrower or its Subsidiaries operate.
SECTION 5.11 Taxes. The Borrower and its Subsidiaries have filed all
Federal, state and other material tax returns and reports required to be filed,
and have paid all Federal, state and other material taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax
assessment against the Borrower or any Subsidiary that would, if made, have a
Material Adverse Effect.
SECTION 5.12 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate of the
Borrower have made all required contributions to each Plan subject to Section
412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.
51
(b) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could be reasonably expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the
Borrower nor any ERISA Affiliate of the Borrower has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) neither the Borrower nor any ERISA Affiliate of the Borrower has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate of the
Borrower has engaged in a transaction that could be subject to Sections 4069 or
4212(c) of ERISA.
SECTION 5.13 Subsidiaries.
(a) The Borrower has no Subsidiaries other than those specifically
disclosed in Part (a) of Schedule 5.13. All Subsidiaries of Borrower are duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of organization and are duly qualified to do business
in each jurisdiction where failure to so qualify would have an Material Adverse
Effect. All outstanding shares of stock of each class of each Subsidiary of
Borrower have been and will be validly issued and are and will be fully paid and
nonassessable and are and will be owned, beneficially and of record, by Borrower
free and clear of any Liens (other than Liens permitted by Section 7.1).
(b) Part (b) of Schedule 5.13 sets forth each of the Subsidiaries of the
Borrower that shall have delivered a Guaranty on the Closing Date. Each such
Guarantor is and will remain a wholly-owned Subsidiary of the Borrower.
(c) The Borrower has no equity investments in any other corporation or
entity other than those specifically disclosed in Part(c) of Schedule 5.13.
SECTION 5.14 Margin Regulations; Investment Company Act; Public Utility
Holding Company Act.
(a) The Borrower is not engaged and will not engage, principally or as one
of its important activities, in the business of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board), or extending
credit for the purpose of purchasing or carrying margin stock.
(b) None of the Borrower, any Person controlling the Borrower, or any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
52
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940.
SECTION 5.15 Disclosure. No statement, information, report, representation,
or warranty made in writing by any Loan Party in any Loan Document or furnished
to the Administrative Agent or any Lender by or on behalf of any Loan Party in
connection with any Loan Document contains any untrue statement of a material
fact or omits any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. There is no fact known to the Borrower which has caused,
or which likely would in the future in the reasonable judgment of the Borrower
cause, a Material Adverse Effect (except for any economic conditions which
affect generally the industry in which the Borrower and its Subsidiaries conduct
business), which has not been set forth in this Agreement or in the other
documents, certificates, statements, reports and other information furnished in
writing to the Lenders by or on behalf of the Borrower or any other Loan Party
in connection with the transactions contemplated hereby.
SECTION 5.16 Intellectual Property; Licenses, Etc. The Borrower and its
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses and
other rights that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person. To the best
knowledge of the Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower or any Subsidiary infringes upon
any rights held by any other Person. No claim or litigation regarding any of the
foregoing is pending or, to the best knowledge of the Borrower, threatened, and
no patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Borrower,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
SECTION 5.17 Direct Benefit. The initial Loans and Letters of Credit
hereunder and all additional Loans and Letters of Credit are for the direct
benefit of the Borrower, or in the case of any initial or additional Letters of
Credit, one or more of the Guarantors, and the initial Loans and Letters of
Credit hereunder are used to refinance and replace indebtedness owning, directly
or indirectly, by the Borrower and certain of the Guarantors to the Lenders
under the Existing Credit Facility. The Borrower and the Guarantors are engaged
as an integrated group in the business of oil and gas exploration and related
fields, and any benefits to the Borrower or any Guarantor is a benefit to all of
them, both directly or indirectly, inasmuch as the successful operation and
condition of the Borrower and the Guarantors is dependent upon the continued
successful performance of the functions of the integrated group as a whole.
SECTION 5.18 Solvency. Each of the following is true for the Borrower, each
Guarantor and the Borrower and the Guarantors on a consolidated basis: (a) the
fair saleable value of its or their property is (i) greater than the total
amount of its liabilities (including contingent liabilities), and (ii) greater
than the amount that would be required to pay its probable aggregate liability
on its then existing debts as they become absolute and matured; (b) its or their
53
property is not unreasonable in relation to its business or any contemplated or
undertaken transaction; and (c) it or they does not intend to incur, or believe
that it will incur, debts beyond its ability to pay such debts as they become
due.
SECTION 5.19 Indenture Debt Documents and Preferred Stock Documents. Before
and after giving effect to all the Credit Extensions contemplated hereunder, all
representations and warranties of the Borrower or any Guarantor contained in any
Indenture Debt Document or Preferred Stock Document are true and correct in all
material respects (except to the extent such representations or warranties
relate or refer to a specified, earlier date). Before and after giving effect to
all the Credit Extensions contemplated hereunder, there is no event of default
or event or condition which could become an event of default with notice or
lapse of time or both, under the Indenture Debt Documents or Preferred Stock
Documents and each of the Indenture Debt Documents and the Preferred Stock
Documents is in full force and effect.
ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, the Borrower shall, and shall (except in the case of
the covenants set forth in Sections 6.1, 6.2, 6.3 and 6.11) cause each of its
Subsidiaries to:
SECTION 6.1 Financial Statements. Deliver to the Administrative Agent and
each Lender, in form and detail satisfactory to the Administrative Agent and the
Majority Lenders:
(a) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Borrower, a consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail, audited and accompanied by a report and opinion of an
independent certified public accountant of nationally recognized standing
reasonably acceptable to the Majority Lenders, which report and opinion shall be
prepared in accordance with GAAP and shall not be subject to any qualifications
or exceptions as to the scope of the audit nor to any qualifications and
exceptions not reasonably acceptable to the Majority Lenders; and
(b) as soon as available, but in any event within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such fiscal quarter, and the related consolidated statements of income and cash
flows for such fiscal quarter and for the portion of the Borrower's fiscal year
then ended, setting forth in each case in comparative form the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail and certified by a
Responsible Officer of the Borrower as fairly presenting the financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes.
54
SECTION 6.2 Certificates; Other Information. Deliver to the Administrative
Agent and each Lender, in form and detail satisfactory to the Administrative
Agent and the Majority Lenders:
(a) concurrently with the delivery of the financial statements referred to
in Section 6.1(a), a certificate of its independent certified public accountants
certifying such financial statements and stating that in making the examination
necessary therefor no knowledge was obtained of any Default or Event of Default
or, if any such Default or Event of Default shall exist, stating the nature and
status of such event;
(b) concurrently with the delivery of the financial statements referred to
in Sections 6.1(a) and (b), a duly completed Compliance Certificate signed by a
Responsible Officer of the Borrower;
(c) promptly after requested by the Administrative Agent or any Lender,
copies of any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the board of
directors) of the Borrower by independent accountants in connection with the
accounts or books of the Borrower or any Subsidiary, or any audit of any of
them;
(d) promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of the Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which the Borrower may file or be
required to file with the Securities and Exchange Commission under Section 13 or
15(d) of the Securities Exchange Act of 1934, and not otherwise required to be
delivered to the Administrative Agent pursuant hereto;
(e) upon the reasonable request of the Majority Lenders or the
Administrative Agent, a schedule of all oil, gas, and other mineral production
attributable to all material Oil and Gas Properties of the Borrower and the
Guarantors, and in any event all such Oil and Gas Properties included in the
Borrowing Base;
(f) promptly, all title or other information received after the Closing
Date by the Borrower or any Guarantor which discloses any material defect in the
title to any material asset included in the Borrowing Base;
(g) (A) as soon as available and in any event within 90 days after each
January 1, commencing with January 1, 2002, an annual reserve report as of each
such January 1 with respect to all Hydrocarbons attributable to the Oil and Gas
Properties of the Borrower and the Guarantors prepared by an independent
engineering firm of recognized standing acceptable to the Majority Lenders in
accordance with accepted industry practices and otherwise acceptable and in form
and substance satisfactory to the Majority Lenders, and including without
limitation all assets included in the Borrowing Base, and (B) within 90 days
after each July 1 thereafter, a reserve report as of such July 1, with respect
to all Hydrocarbons attributable to the Oil and Gas Properties of the Borrower
and the Guarantors prepared by the Borrower in accordance with accepted industry
practices and otherwise acceptable and in form and substance satisfactory to the
Majority Lenders, and including without limitation all assets included in the
Borrowing Base;
55
(h) on or within 30 days after the request of the Administrative Agent or
the Majority Lenders, in connection with a redetermination of the Borrowing Base
permitted under Section 2.8 an updated reserve report with respect to all
Hydrocarbons attributable to the Oil and Gas Properties of the Borrower and the
Guarantors prepared by an independent engineering firm of recognized standing
acceptable to the Majority Lenders in accordance with accepted industry
practices and otherwise acceptable and in form and substance satisfactory to the
Majority Lenders, and including without limitation all assets included in the
Borrowing Base;
(i) promptly, any management letter from the auditors for the Borrower or
any Guarantor and all other information respecting the business, properties or
the condition or operations, financial or otherwise, including, without
limitation, geological and engineering data of the Borrower or an Guarantor and
any title work with respect to any Oil and Gas Properties of the Borrower or any
Guarantor as any Bank may from time to time reasonably request;
(j) at all times after the date ninety (90) days after the Closing Date, if
requested by the Majority Lenders, title opinions and other opinions of counsel,
in each case in form and substance acceptable to the Majority Lenders, with
respect to at least eighty (80%) percent of the value of the assets included in
the Borrowing Base; and
(k) promptly, such additional information regarding the business, financial
or corporate affairs of the Borrower or any Subsidiary as the Administrative
Agent, at the request of any Lender, may from time to time reasonably request.
SECTION 6.3 Notices. Promptly notify the Administrative Agent and each
Lender:
(a) of the occurrence of any Default or Event of Default;
(b) of any matter that has resulted or may reasonably by expected to result
in a Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii)
any dispute, litigation, investigation, proceeding or suspension between the
Borrower or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting any of the Borrower or any Subsidiary, including pursuant to any
applicable Environmental Laws;
(c) of any litigation, investigation or proceeding affecting any Loan Party
in which the amount involved exceeds $5,000,000 or in which injunctive relief or
similar relief is sought, which relief, if granted, could be reasonably expected
to have a Material Adverse Effect;
(d) of the occurrence of any ERISA Event; and
(e) of any material change in accounting policies or financial reporting
practices by the Borrower or any Subsidiary.
Each notice pursuant to this Section shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower or the relevant
56
Subsidiary has taken and proposes to take with respect thereto. Each notice
pursuant to Section 6.3(a) shall describe with particularity any and all
provisions of this Agreement or other Loan Document that have been breached.
SECTION 6.4 Payment of Obligations. Pay and discharge as the same shall
become due and payable, all its obligations and liabilities, including (a) all
tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if
unpaid, would by law become a Lien upon its property; and (c) all Indebtedness,
as and when due and payable, but subject to any subordination provisions
contained in any instrument or agreement evidencing such Indebtedness.
SECTION 6.5 Preservation of Existence, Etc. Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization; take all reasonable action to maintain all
rights, privileges, permits, licenses and franchises necessary or desirable in
the normal conduct of its business, except in a transaction permitted by Section
7.4 or 7.5; and preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
SECTION 6.6 Maintenance of Properties. (a) Maintain, preserve and protect
all of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted;
(b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) use the standard of care typical in the
industry in the operation and maintenance of its facilities.
SECTION 6.7 Maintenance of Insurance. Maintain with financially sound and
reputable insurance companies not Affiliates of the Borrower, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.
SECTION 6.8 Compliance with Laws. Comply in all material respects with the
requirements of all Laws applicable to it or to its business or property, except
in such instances in which (i) such requirement of Law is being contested in
good faith or a bona fide dispute exists with respect thereto; or (ii) the
failure to comply therewith could not be reasonably expected to have a Material
Adverse Effect.
SECTION 6.9 Books and Records. (a) Maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Borrower or its Subsidiaries, as the
case may be; and (b) maintain such books of record and account in material
conformity with all applicable requirements of any Governmental Authority having
regulatory jurisdiction over the Borrower or any Subsidiary, as the case may be.
57
SECTION 6.10 Inspection Rights. Permit representatives and independent
contractors of the Administrative Agent and each Lender to visit and inspect any
of its properties, to examine its corporate, financial and operating records,
and make copies thereof or abstracts therefrom, and to discuss its affairs,
finances and accounts with its directors, officers, and independent public
accountants, all at the expense of the Borrower and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Borrower; provided, however, that when an Event
of Default exists the Administrative Agent or any Lender (or any of their
respective representatives or independent contractors) may do any of the
foregoing at the expense of the Borrower at any time during normal business
hours and without advance notice.
SECTION 6.11 Compliance with ERISA. Do, and cause each of its ERISA
Affiliates to do, each of the following: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other Federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the Code.
SECTION 6.12 Use of Proceeds. Use the proceeds of the Credit Extensions to
fund the Acquisition and for working capital and other general corporate
purposes, in each case, in compliance with, and not in contravention of, Section
7.11, any Law, any Loan Document, or any other Contractual Obligation.
SECTION 6.13 Title Opinions. Not later than February 28, 2002, the Borrower
agrees to deliver, or to cause to be delivered, to the Administrative Agent
favorable title opinions in form and substance satisfactory to the
Administrative Agent addressed to the Lenders or containing an express statement
providing that the Lenders may rely on such title opinions with respect to the
Borrower's and the Guarantor's Oil and Gas Properties constituting at least
eighty percent (80%) of the present value, such present value to be determined
by the Lenders in their sole and absolute discretion and in accordance with
their normal practices and standards for oil and gas loans as it exists at the
particular time, of the Borrower's and the Guarantors' properties and
demonstrating that the Borrower or a Guarantor, as applicable, has good and
defensible title to such properties and interests which is at least equal to the
interest included in the Initial Engineering Report, free and clear of all Liens
(other than those permitted by Section 7.1) and that the Administrative Agent
has a first and prior Lien in and to such properties and interests and covering
such other matters as the Administrative Agent may reasonably request.
SECTION 6.14 COGLA Restructuring. Promptly upon the consummation of the
COGLA Restructuring, the Borrower shall, or shall cause COGH or COGLA to,
satisfy each of the following conditions:
(i) COGH shall execute and deliver to the Administrative Agent on
behalf of the Lenders, a Pledge Agreement, or an amendment or supplement to
an existing Pledge Agreement, if appropriate, pursuant to which all of the
outstanding equity interests in COGLA, after giving effect to the COGLA
Restructuring, shall be pledged to the Administrative Agent on behalf of
the Lenders, together with any certificates representing all equity
interests so pledged, if any, and for each such certificate representing
shares of stock, a stock power executed in blank;
58
(ii) cause such Subsidiary to execute and deliver to the
Administrative Agent on behalf of the Lenders a ratification and acceptance
of the Guaranty and the Subordination Agreement previously delivered by
COGLA;
(iii) cause such Subsidiary to execute and deliver to the
Administrative Agent on behalf of the Lenders and the Issuing Bank, or to
authorize the Administrative Agent to file or record without such
Subsidiary's signature, appropriate financing statements covering the
collateral of such Subsidiary described in the Security Documents
previously delivered by COGLA prior to the COGLA Restructuring;
(iv) deliver or cause to be delivered to the Administrative Agent on
behalf of the Lenders and the Issuing Bank all agreements, documents,
instruments and other writings described in Section 4.1(a)(iii), (iv) and
(vi) with respect to COGLA; and
(v) deliver or cause to be delivered to the Administrative Agent on
behalf of the Lenders and the Issuing Bank an opinion of special Nevada
counsel to COGLA stating that all conditions necessary to the effectiveness
of the COGLA Restructuring have been satisfied and that the articles or
certificates of conversion of COGLA have been properly filed in the
appropriate office in Nevada.
SECTION 6.15 Additional Covenants. If at any time the Borrower shall enter
into or be a party to any instrument or agreement, including all such
instruments or agreements in existence as of the date hereof and all such
instruments or agreements entered into after the date hereof, relating to or
amending any terms or conditions applicable to any of its Indebtedness which
includes covenants, terms, conditions or defaults not substantially provided for
in this Agreement or more favorable to the lender or lenders thereunder than
those provided for in this Agreement, then the Borrower shall promptly so advise
the Administrative Agent and the Lenders. Thereupon, if the Administrative Agent
shall request, upon notice to the Borrower, the Administrative Agent and the
Lenders shall enter into an amendment to this Agreement or an additional
agreement (as the Administrative Agent may request), providing for substantially
the same covenants, terms, conditions and defaults as those provided for in such
instrument or agreement to the extent required and as may be selected by the
Administrative Agent. In addition to the foregoing, any covenants, terms,
conditions or defaults in any existing agreements or other documents evidencing
or relating to any Indebtedness of the Borrower or any Guarantor (including
without limitation the Indenture Debt Documents) not substantially provided for
in this Agreement or more favorable to the holders of such Indebtedness, are
hereby incorporated by reference into this Agreement to the same extent as if
set forth fully herein, and no subsequent amendment, waiver or modification
thereof shall affect any such covenants, terms, conditions or defaults as
incorporated herein.
SECTION 6.16 Security.
(a) The Security. The Obligations will be secured by the Security Documents
listed in the Security Schedule and any additional Security Documents hereafter
delivered by any Loan Party or any Affiliate of any Loan Party.
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(b) Agreement to Deliver Security Documents. The Borrower shall promptly
deliver, and to cause each of the Guarantors to deliver, to further secure the
Obligations, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to the Administrative Agent for the purpose of granting,
confirming, and perfecting first and prior liens or security interests in (i)
prior to the occurrence of a Default (A) at least eighty percent (80%) of the
present value of the Borrower's and the Guarantors' Oil and Gas Properties
constituting proved reserves to which value is given in the determination of the
then current Borrowing Base, (B) after the occurrence of a Default, at least
ninety-five percent (95%) of the present value of the Borrower's and the
Guarantors' Oil and Gas Properties, (ii) all of the equity interests of the
Borrower or any Guarantor in any other Guarantor now owned or hereafter acquired
by the Borrower or any Guarantor, and (iii) all property of the Borrower or any
Guarantor of the type described in the Security Agreement attached hereto as
Exhibit I. The Borrower also agrees to deliver, or to cause to be delivered, to
the extent not already delivered, whenever requested by the Administrative Agent
in its sole and absolute discretion (a) favorable title information (including,
if reasonably requested by the Administrative Agent, title opinions) acceptable
to the Administrative Agent with respect to the Borrower's or any Guarantor's
Oil and Gas Properties constituting at least eighty percent (80%) of the present
value, determined by the Lenders in their sole and absolute discretion and in
accordance with their normal practices and standards for oil and gas loans as it
exists at the particular time, of the Borrower's and the Guarantors' properties
and demonstrating that the Borrower or a Guarantor, as applicable, have good and
defensible title to such properties and interests, free and clear of all Liens
(other than those permitted by Section 7.1) and covering such other matters as
the Administrative Agent may reasonably request and (b) favorable opinions of
counsel satisfactory to the Administrative Agent in its sole discretion opining
that the forms of Mortgage are sufficient to create valid first deed of trust or
mortgage liens in such properties and interests and first priority assignments
of and security interests in the Hydrocarbons attributable to such properties
and interests and proceeds thereof. In addition and not by way of limitation of
the foregoing, in the case of the Borrower or any Guarantor granting a Lien in
favor of the Administrative Agent upon any assets having a present value in
excess of $1,000,000 located in a new jurisdiction, the Borrower or Guarantor
will at its own expense, obtain and furnish to the Administrative Agent all such
opinions of legal counsel as the Administrative Agent may reasonably request in
connection with any such security or instrument.
(c) Perfection and Protection of Security Interests and Liens. In addition
and not by way of limitation of the foregoing, the Borrower will from time to
time deliver, or cause to be delivered, to the Administrative Agent any
financing statements, continuation statements, extension agreements and other
documents, properly completed (and executed and acknowledged when required) by
the Borrower or appropriate Guarantor in form and substance satisfactory to the
Administrative Agent, which the Administrative Agent requests for the purpose of
perfecting, confirming, or protecting any Liens or other rights in the
collateral securing any Obligations. In addition to the foregoing, the Borrower
hereby authorizes, and shall cause each Guarantor to authorize, the
Administrative Agent, on behalf of the Issuing Bank and the Lenders, to file in
the appropriate filing office pursuant to applicable Law such financing
statements, assignments and continuation statements as the Administrative Agent
shall deem necessary or desirable for the purpose of perfecting, confirming, or
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protecting any Liens or other rights in the collateral securing any Obligations
without the signature of the Borrower or any Guarantor.
(d) Additional Subsidiaries. Within five (5) Business Days after the
Borrower or any Subsidiary creates, acquires or otherwise forms a Subsidiary,
the Borrower shall:
(i) execute and deliver, or cause the Person owning all of the
outstanding equity interests in such Subsidiary to execute and deliver, as
applicable, to the Administrative Agent on behalf of the Lenders, a Pledge
Agreement, or an amendment or supplement to an existing Pledge Agreement,
if appropriate, pursuant to which all of the outstanding equity interests
in such Subsidiary shall be pledged to the Administrative Agent on behalf
of the Lenders, together with any certificates representing all equity
interests so pledged, if any, and for each such certificate representing
shares of stock, a stock power executed in blank;
(ii) cause such Subsidiary to execute and deliver to the
Administrative Agent on behalf of the Lenders (i) a Guaranty, (ii) a
ratification and acceptance of the Subordination Agreement, (iii) an
agreement substantially similar to the Security Documents executed and
delivered on the Closing Date and (iv) a Mortgage as to all Oil and Gas
Properties containing any proved Hydrocarbon reserves owned or leased by
such Subsidiary;
(iii) cause such Subsidiary to execute and deliver to the
Administrative Agent on behalf of the Lenders and the Issuing Bank, or to
authorize the Administrative Agent to file or record without such
Subsidiary's signature, appropriate financing statements covering the
collateral of such Subsidiary described in the Security Documents required
to be delivered pursuant to the foregoing clause (ii);
(iv) deliver or cause to be delivered to the Administrative Agent on
behalf of the Lenders and the Issuing Bank all agreements, documents,
instruments and other writings of the type described in Section
4.1(a)(iii), (iv) and (vi) with respect to such Subsidiary and opinions of
counsel acceptable to the Administrative Agent and in form and substance
satisfactory to the Administrative Agent covering the matters covered by
the opinions delivered on the Closing Date with respect to such Subsidiary;
and
(v) deliver or cause to be delivered to the Administrative Agent on
behalf of the Lenders all such information regarding the condition
(financial or otherwise), business and operations of such Subsidiary as the
Administrative Agent, or the Issuing Bank or any Lender through the
Administrative Agent, may reasonably request.
(e) Production Proceeds. Notwithstanding that, by the terms of the various
Security Documents, the Loan Parties are and will be assigning to the
Administrative Agent, the Issuing Bank and the Lenders all of the "Production"
(as defined therein) and the proceeds therefrom accruing to the properties
covered thereby, so long as no Event of Default has occurred, the Loan Parties
may continue to receive from the purchasers of production all such Production
Proceeds, subject, however, to the Liens created under the Security Documents,
which Liens are hereby affirmed and ratified. Upon the occurrence of an Event of
Default, the Administrative Agent, the Issuing Bank and the Lenders may exercise
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all rights and remedies granted under the Security Documents, including the
right to obtain possession of all Production Proceeds then held by any Loan
Party or to receive directly from the purchasers of production all other
Production Proceeds. In no case shall any failure, whether purposed or
inadvertent, by the Administrative Agent, the Issuing Bank or the Lenders to
collect directly any such Production Proceeds constitute in any way a waiver,
remission or release of any of their rights under the Security Documents, nor
shall any release of any Production Proceeds by the Administrative Agent or
Lenders to any Loan Party constitute a waiver, remission, or release of any
other Production Proceeds or of any rights of the Administrative Agent, the
Issuing Bank or the Lenders to collect other Production Proceeds thereafter.
SECTION 6.17 Consummation the Merger. The Borrower agrees to cause its
Subsidiaries to take and complete not later than the close of business on the
Closing Date all actions necessary to effectuate the merger transaction between
Comstock Acquisition Inc. and DevX described in the Merger Agreement, which
actions shall include, but not be limited to, (a) the satisfaction of all of the
conditions set forth in article VIII of the Merger Agreement and (b) the filing
of a certificate of ownership in the appropriate office in the State of
Delaware, which certificate shall provide an effective date for such merger
transaction not later than the Closing Date. The Borrower further agrees to
comply with the provisions of Schedule 6.17 and to cause evidence of the filing
of the certificate effectuating such merger transaction to be delivered to the
Administrative Agent not later than the close of business on the Closing Date
and to provide to the Administrative Agent an opinion of counsel to the
surviving entity substantially in the form of Exhibit F-7. Concurrently with the
consummation of the merger of Comstock Acquisition Inc. with and into DevX,
Comstock Holdings, Inc. shall deliver a Pledge Agreement to the Administrative
Agent, pursuant to which Comstock Holdings, Inc. shall have pledged all of the
shares of common stock of DevX, par value $0.234 per share, then owned by
Comstock Holdings, Inc.
SECTION 6.18 Canceled DevX Notes. The Borrower shall deliver, or cause to
be delivered, within 10 days of the making of Loans pursuant to a Notice of
Advance in which the Borrower shall have certified that all or a portion of the
proceeds of such Loans are to be used for the purpose of purchasing or redeeming
and canceling DevX Senior Notes, an acknowledgment of the Trustee (as defined in
the DevX Indenture) that DevX Senior Notes in an aggregate principal amount
equal to the amount set forth in such Notice of Advance has been canceled (and
not reissued or replaced) in accordance with Section 309 of the DevX Indenture
since the date of such Loans.
ARTICLE VII.
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, the Borrower shall not, and the Borrower shall not
permit any Subsidiary to, directly or indirectly:
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SECTION 7.1 Liens. Create, incur, assume or suffer to exist, any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, other than the following:
(a) Liens existing pursuant to any Loan Document;
(b) Liens existing on the date hereof and listed on Schedule 7.1 and any
renewals or extensions thereof, provided that the property covered thereby is
not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.3(b);
(c) Liens for taxes not yet due or which are being contested in good faith
and by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 30 days or which are being contested in good
faith and by appropriate proceedings, if adequate reserves with respect thereto
are maintained on the books of the applicable Person;
(e) pledges or deposits in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;
(f) deposits to secure the performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person; and
(h) Liens existing pursuant to a Subordinated Mortgage.
SECTION 7.2 Investments. Make any Investments, except:
(a) Investments other than those permitted by subsections (b) through (h)
existing on the date hereof and listed on Schedule 7.2;
(b) Investments held by the Borrower or such Subsidiary in the form of cash
equivalents;
(c) advances to officers, directors and employees of the Borrower or
Subsidiary in an aggregate amount not to exceed $50,000 at any time outstanding,
for travel, entertainment, relocation and analogous ordinary business purposes;
(d) Investments constituting contributions of capital (but not loans or
advances) made by the Borrower or any Guarantor in another Guarantor and
Investments constituting a loans or advances by the Borrower in any Guarantor,
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provided that such Investment constituting a loan or advance shall be evidenced
by a Pledged Note pursuant to a Pledge Agreement;
(e) Guaranty Obligations permitted by Section 7.3;
(f) Investments permitted by Section 7.4;
(g) Investments in common stock of DevX by Comstock Acquisition Inc.
pursuant to the Offer;
(h) Investments by the Borrower or any Guarantor in any other Person;
provided that such Investment shall not violate Section 7.8, and provided,
further, that the Borrower shall, or shall cause such other Person to, comply
with the provisions of Section 6.16(d) in accordance therewith; and provided,
further, that both before and after giving effect to such Investment (on a pro
forma basis acceptable to the Administrative Agent) no Default or Event of
Default shall have occurred and be continuing and all representations and
warranties contained in Article V hereof shall be true and correct in all
material respects as if made both immediately before and immediately after the
time of such Investment.
SECTION 7.3 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Indebtedness outstanding on the date hereof and listed on Schedule 7.3
and any refinancings, refundings, renewals or extensions thereof; provided that
the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing;
(c) Guaranty Obligations of the Borrower or any Subsidiary in respect of
Indebtedness otherwise permitted hereunder of the Borrower or any wholly-owned
Subsidiary provided all such Indebtedness shall be evidenced by Pledged Notes
(as described in the Pledged Agreements) which shall have been pledged the
Administrative Agent in accordance with the Pledge Agreements;
(d) obligations (contingent or otherwise) of the Borrower or any Subsidiary
existing or arising under any Hedging Agreement with any Lender or any Person
with an investment grade debt rating acceptable to the Administrative Agent at
the time such Hedging Agreement is entered into or any other Person acceptable
to the Administrative Agent, provided that (i) such obligations are (or were)
entered into by such Person in the ordinary course of business for the purpose
of directly mitigating risks associated with liabilities, commitments,
investments, assets, or property held or reasonably anticipated by such Person,
or changes in the value of securities issued by such Person and not for purposes
of speculation or taking a "market view;" and (ii) such Hedging Agreement does
not contain any provision exonerating the non-defaulting party from its
obligation to make payments on outstanding transactions to the defaulting party;
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(e) Unsecured Indebtedness in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding;
(f) Indebtedness of DevX outstanding on the Closing Date under the DevX
Indenture and Indebtedness of the Borrower outstanding under the Indenture Debt
Documents;
(g) Indebtedness constituting intercompany loans or advances owing by a
Guarantor to the Borrower evidenced by a Pledged Note; and
(h) Unsecured insurance premium financing in the ordinary course of
business.
SECTION 7.4 Fundamental Changes. Merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of related transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to or in favor of any Person, except
that, so long as no Default or Event of Default exists or would result
therefrom:
(a) any Subsidiary may merge with (i) the Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (ii) any one or more
Subsidiaries, provided that when any wholly-owned Subsidiary is merging with
another Subsidiary, the wholly-owned Subsidiary shall be the continuing or
surviving Person;
(b) any Subsidiary may sell all or substantially all of its assets (upon
voluntary liquidation or otherwise), to the Borrower or to another Subsidiary;
provided that if the seller in such a transaction is a wholly-owned Subsidiary,
then the purchaser must also be a wholly-owned Subsidiary;
(c) the transactions set forth in the Merger Agreement; and
(d) the COGLA Restructuring.
SECTION 7.5 Dispositions. Make any Disposition or enter into any agreement
to make any Disposition, except:
(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory in the ordinary course of business;
(c) Dispositions of property by any Subsidiary to the Borrower or to a
wholly-owned Subsidiary;
(d) Dispositions permitted by Section 7.4; and
(e) if no Default or Event of Default exists either before or after such
Disposition or would result therefrom, other sales of assets in an aggregate
amount not to exceed $25,000,000 in any twelve-month period, provided that, in
connection with any such sales of assets included in the most recently delivered
Engineering Report in excess of $5,000,000 in aggregate amount since the date of
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the most recent redetermination of the Borrowing Base, the Borrowing Base shall
automatically be reduced concurrently with such Disposition in an amount equal
to such excess;
provided, however, that any Disposition pursuant to this Section 7.5 shall be
for fair market value.
SECTION 7.6 Restricted Payments. Declare or make, directly or indirectly,
any Restricted Payment, or incur any obligation (contingent or otherwise) to do
so, except that:
(a) each Subsidiary may make Restricted Payments, directly or indirectly,
to the Borrower or a Guarantor;
(b) Borrower may declare and make dividend payments or other distributions
payable solely in the common stock of Borrower;
(c) the Borrower and each Subsidiary may purchase, redeem or otherwise
acquire shares of its common stock or warrants or options to acquire any such
shares (i) with the proceeds received from the substantially concurrent issue of
new shares of its common stock or (ii) if such purchases, redemptions,
acquisitions or defeasances together with all other Restricted Payments made
hereunder do not exceed $20,000,000 for all such Restricted Payments made since
the Closing Date;
(d) payments in respect of the accrued fixed dividends on the Preferred
Stock at a rate not to exceed 9.0% per annum, provided that both before and
after giving effect to such payment (on a pro forma basis acceptable to the
Agent) no Default or Event of Default shall have occurred and be continuing and
all representations and warranties contained in Article V hereof shall be true
and correct in all material respects as if made at the time of such payment;
(e) other Restricted Payments which, when aggregated with all Optional
Indenture Payments pursuant to Section 7.12, if any, would not exceed
$10,000,000 in aggregate amount since the Closing Date; provided that both
before and after giving effect to such Restricted Payment (on a pro forma basis
acceptable to the Administrative Agent) no Default or Event of Default shall
have occurred and be continuing and all representations and warranties contained
in Article V hereof shall be true and correct in all material respects as if
made at the time of such Restricted Payment;
provided, however, that notwithstanding the foregoing, no Restricted Payment
(other than Restricted Payments pursuant to clause (a) and clause (d)) shall be
made at any time when the Outstanding Amount exceeds 80% of the Aggregate
Commitments; and further provided, however, that the Borrower will not issue any
Disqualified Stock other than the Preferred Stock.
SECTION 7.7 ERISA. At any time engage in a transaction which could be
subject to Section 4069 or 4212(c) of ERISA, or permit any Plan to (a) engage in
any non-exempt "prohibited transaction" (as defined in Section 4975 of the
Code); (b) fail to comply with ERISA or any other applicable Laws; or (c) incur
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any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), which, with respect to each event listed above, could be reasonably
expected to have a Material Adverse Effect.
SECTION 7.8 Change in Nature of Business. Engage in any material line of
business substantially different from those lines of business conducted by the
Borrower and its Subsidiaries on the date hereof.
SECTION 7.9 Transactions with Affiliates. Enter into any transaction of any
kind with any Affiliate of the Borrower (including without limitation, the
purchase from, sale to , or exchange of property with, or the rendering of any
service by or from, any Affiliate), except in the ordinary course of, and
pursuant to the reasonable requirements of, the Borrower's or any Guarantor's
business and upon fair and reasonable terms no less favorable to the Borrower or
such Guarantor than would be obtained in a comparable arms-length transaction
with a Person other than an Affiliate provided such transactions are otherwise
permitted hereunder.
SECTION 7.10 Burdensome Agreements. Enter into any Contractual Obligation
that limits the ability (a) of any Subsidiary to make Restricted Payments to the
Borrower or any Guarantor or to otherwise transfer property to the Borrower or
any Guarantor or (b) of the Borrower or any Subsidiary to create, incur, assume
or suffer to exist Liens on property of such Person, in each case, other than
Contractual Obligations pursuant to the Comstock Existing Indenture to the
extent listed in Schedule 7.10.
SECTION 7.11 Use of Proceeds. Use the proceeds of any Credit Extension,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry margin stock (within the meaning of Regulation
U of the Board) or to extend credit to others for the purpose of purchasing or
carrying margin stock or to refund indebtedness originally incurred for such
purpose, except that the Borrower and its Subsidiaries may use proceeds of the
initial Credit Extension to make a capital contribution to Comstock Holdings,
Inc. which shall be used to consummate the Acquisition, provided that no
proceeds of such Credit Extension shall be used in any manner that contravenes
law, and no proceeds of such Credit Extension shall be used to purchase or carry
margin stock (within the meaning of Regulation U of the Board) in violation of
Regulation U.
SECTION 7.12 Payments and Modification of Indenture Debt; Modification of
DevX Debt Documents.
(a) (i) Make, or permit any Subsidiary to make, any optional payment,
defeasance (whether a covenant defeasance, legal defeasance or other
defeasance), prepayment or redemption of any of its Indenture Debt or enter into
any agreement or arrangement providing for any defeasance of any kind of any of
its Indenture Debt (all of the foregoing defined herein as "Optional Indenture
Payments"), except such Optional Indenture Payments which, when aggregated with
all Restricted Payments made pursuant to Section 7.6(e), if any, would not
exceed $10,000,000 in aggregate amount since the Closing Date, provided that
both before and after giving effect to such Optional Indenture Payment (on a pro
forma basis acceptable to the Administrative Agent) no Default or Event of
Default shall have occurred and be continuing and all representations and
warranties contained in Article V hereof shall be true and correct in all
material respects as if made at the time of such Optional Indenture Payment, or
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(ii) amend or modify, or consent or agree to any amendment or modification of,
any Indenture Debt Document.
(b) Notwithstanding anything contained in Section 7.6 or this Section 7.12
to the contrary, from and after the consummation of the Acquisition, DevX shall
be permitted to redeem DevX Senior Notes in accordance with terms of the DevX
Indenture, provided that both before and after giving effect to such redemption
(on a pro forma basis acceptable to the Administrative Agent) no Default or
Event of Default shall have occurred and be continuing and all representations
and warranties contained in Article V hereof shall be true and correct in all
material respects as if made at the time of such redemption; and provided,
further, any DevX Senior Notes redeemed shall be canceled (and not reissued or
replaced) in accordance with section 309 of the DevX Indenture.
SECTION 7.13 Financial Covenants.
(a) Minimum Tangible Net Worth. Permit or suffer the Consolidated Tangible
Net Worth of Borrower and its Subsidiaries, at any time, to be less than the sum
of (i) $176,500,000 (i.e., 80% of Shareholders Equity as of September 30, 2001),
plus (ii) 50% of Consolidated Net Income for each fiscal year, commencing with
the fiscal year ending December 31, 2001, and to be added as of the last day of
such fiscal quarter and each such fiscal year (provided that if such
Consolidated Net Income is negative in such fiscal quarter or in any fiscal
year, the amount added pursuant to this clause (ii) shall be zero and shall not
reduce the amount added pursuant to this clause (ii) for any other fiscal year),
plus (iii) 75% of the net cash proceeds of any equity offering or other sale of
capital stock of Borrower or any of its Subsidiaries, other than net cash
proceeds in an aggregate amount per fiscal year not to exceed $2,500,000
received by Borrower in connection with the exercising of stock options.
(b) Interest Coverage Ratio. Permit or suffer, as of the last day of any
fiscal quarter of Borrower, the ratio of (i) Consolidated EBITDA, as calculated
for the four fiscal quarters then ending, to (ii) Consolidated Interest Expense,
as calculated for the four fiscal quarters then ending to be less than 2.5 to
1.0.
(c) Current Ratio. Permit or suffer the ratio of (i) sum of Current Assets
plus the unused availability under this Agreement, to (ii) Current Liabilities,
to be less than 1.0 to 1.0 at any time.
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1 Events of Default. Any of the following shall constitute an
Event of Default:
(a) Non-Payment. The Borrower fails to pay within two (2) Business Days
after the same becomes due any amount of principal of any Loan or any L/C
Obligation, or any interest on any Loan or on any L/C Obligation, or any
commitment fee or other fee due hereunder, or any other amount payable hereunder
or under any other Loan Document; or
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(b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.3, 6.5, 6.7, 6.10, 6.12,
6.13, 6.16 or 6.17 or Article VII; or
(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a), (b) or (c) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days after written notice to the Borrowers; or
(d) Representations and Warranties. Any representation or warranty made or
deemed made by the Borrower or any other Loan Party herein, in any other Loan
Document, or in any certificate or document delivered in connection herewith or
therewith proves to have been incorrect in any material respect when made or
deemed made; or
(e) Cross-Default. (i) Any Loan Party (A) fails to make any payment when
due (whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise) in respect of any Indebtedness or Guaranty Obligation having an
aggregate principal amount (including undrawn or available amounts and including
amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $10,000,000, or (B) fails to observe or perform any
other agreement or condition relating to any such Indebtedness or Guaranty
Obligation or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Guaranty Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the actual giving of notice if required, such Indebtedness to be
demanded or to become due or to be repurchased or redeemed (automatically or
otherwise) prior to its stated maturity, or such Guaranty Obligation to become
payable or cash collateral in respect thereof to be demanded; or
(f) Insolvency Proceedings, Etc. Any Loan Party institutes or consents to
the institution of any proceeding under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of such Loan Party and the appointment continues undischarged or unstayed for 30
calendar days; or any proceeding under any Debtor Relief Law relating to any
such Person or to all or any part of its property is instituted without the
consent of such Person and continues undismissed or unstayed for 30 calendar
days, or an order for relief is entered in any such proceeding; or
(g) Inability to Pay Debts; Attachment. (i) Any Loan Party becomes unable
or admits in writing its inability or fails generally to pay its debts as they
become due, or (ii) any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the property of
any such Loan Party and is not released, vacated or fully bonded within 30 days
after its issue or levy; or
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(h) Judgments. There is entered against the Borrower or any Guarantor (i)
one or more final judgments or orders for the payment of money which together
with other such judgments or orders exceeds the aggregate amount of $10,000,000
(to the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage), or (ii) any non-monetary final judgment that
has, or would reasonably be expected to have, a Material Adverse Effect and, in
either case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order, or (B) there is a period of 30 consecutive days during which
a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or
(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Loan Party under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC, or (ii) any Loan Party or any ERISA Affiliate
fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan; or
(j) Event of Default Under Other Loan Document. Any event of default
described in any Security Document or any other Loan Document shall have
occurred and be continuing, or any material provision of any Security Agreement
or any other Loan Document shall at any time for any reason cease to be valid,
binding and enforceable against any Loan Party that is an obligor thereunder; or
(k) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than the agreement of all the
Lenders or satisfaction in full of all the Obligations, ceases to be in full
force and effect, or is declared by a court of competent jurisdiction to be null
and void, invalid or unenforceable in any respect; or any Loan Party denies that
it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any Loan Document; or
(l) Change of Control. There occurs any Change of Control with respect to
any of the Borrower or any Subsidiary or there occurs any "Change in Control,"
"Change of Control" or similar term as defined in the Indenture Debt Documents
or the Preferred Stock Documents; or
(m) Material Adverse Effect. There occurs any event or circumstance that
has a Material Adverse Effect which Material Adverse Effect shall not have been
cured within 30 days following notice from the Administrative Agent.
SECTION 8.2 Remedies Upon Event of Default. If any Event of Default occurs,
the Administrative Agent shall, at the request of, or may, with the consent of,
the Majority Lenders,
(a) declare the commitment of each Lender to make Loans and any obligation
of the Issuing Bank to make L/C Credit Extensions to be terminated, whereupon
such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
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hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower;
(c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and
(d) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law,
including, without limitation, the enforcement of the Administrative Agent's and
the Lenders' rights either by suit in equity, or by action at law, or by other
appropriate proceedings, whether for the specific performance (to the extent
permitted by law) or any covenant or agreement contained in this Agreement or in
any then outstanding Note or any Security Document or in aid of the exercise of
any power granted in this Agreement, any then outstanding Note or any Security
Document;
provided, however, that upon the occurrence of any event specified in subsection
(f) of Section 8.1, the obligation of each Lender to make Loans and any
obligation of the Issuing Bank to make L/C Credit Extensions shall automatically
terminate, the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable, and
the obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Lender.
SECTION 8.3 Distribution of Proceeds. All proceeds of any realization on
the Collateral received by the Administrative Agent pursuant to the Security
Documents or any payments on any of the liabilities secured by the Security
Documents received by the Administrative Agent or any Lender upon and during the
continuance of any Event of Default shall be allocated and distributed as
follows (and with respect to any contingent obligation shall be held as cash
collateral for application as follows):
(a) First, to the payment of all costs and expenses, including without
limitation all attorneys' fees, of the Administrative Agent in connection with
the enforcement of the Security Documents and otherwise administering this
Agreement;
(b) Second, to the payment of all costs, expenses and fees, including
without limitation, commitment fees, letter of credit fees and attorneys' fees,
owing to the Issuing Bank and the Lenders pursuant to the Obligations on a pro
rata basis in accordance with the Obligations consisting of fees, costs and
expenses owing to the Issuing Bank and the Lenders under the Obligations for
application to payment of such liabilities;
(c) Third, to the Issuing Bank and the Lenders on a pro rata basis in
accordance with the Obligations consisting of interest and principal owing to
the Lenders under the Obligations, with any obligations owing to any Lender
pursuant to any Hedging Agreement to which it is a party (whether pursuant to a
termination thereof or otherwise) and with any reimbursement obligations or
other liabilities owing to any Lender with respect to any Letter of Credit or
any application for a Letter of Credit, for application to payment of such
liabilities;
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(d) Fourth, to the payment of any and all other amounts owing to the
Administrative Agent, the Issuing Bank and the Lenders on a pro rata basis in
accordance with the total amount of such Indebtedness owing to each of the
Lenders, for application to payment of such liabilities; and
(e) Fifth, to the Borrower or such other Person as may be legally entitled
thereto.
ARTICLE IX.
ADMINISTRATIVE AGENT
SECTION 9.1 Appointment and Authorization of Administrative Agent.
(a) Each Lender hereby irrevocably (subject to Section 9.9) appoints,
designates and authorizes the Administrative Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere herein or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Administrative Agent have or be deemed
to have any fiduciary relationship with any Lender or participant, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent. Without limiting the
generality of the foregoing sentence, the use of the term "agent" herein and in
the other Loan Documents with reference to the Administrative Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties. Each
Lender hereby agrees to assert no claim against the Administrative Agent on any
agency theory or any other theory of liability for breach of fiduciary duty, all
of which claims are hereby expressly waived by each Lender.
(b) The Issuing Bank shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith until such
time (and except for so long) as the Administrative Agent may agree at the
request of the Majority Lenders to act for the Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have all of the benefits
and immunities (i) provided to the Administrative Agent in this Article IX with
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit issued by it or proposed to be issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Administrative Agent" as used in this
Article IX included the Issuing Bank with respect to such acts or omissions, and
(ii) as additionally provided herein with respect to the Issuing Bank.
SECTION 9.2 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the
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negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.
SECTION 9.3 Liability of Administrative Agent. No Agent-Related Person
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct in connection with its duties expressly set forth herein), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by any Loan Party or any officer
thereof, contained herein or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party or any Affiliate thereof.
SECTION 9.4 Reliance by Administrative Agent.
(a) The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to any Loan Party), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under any
Loan Document unless it shall first receive such advice or concurrence of the
Majority Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Majority
Lenders or all the Lenders, if required hereunder, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and participants. Where this Agreement expressly permits or prohibits an
action unless the Majority Lenders otherwise determine, the Administrative Agent
shall, and in all other instances, the Administrative Agent may, but shall not
be required to, initiate any solicitation for the consent or a vote of the
Lenders.
(b) For purposes of determining compliance with the conditions specified in
Section 4.1, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter either sent by the Administrative Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to a Lender.
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SECTION 9.5 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent for the account of the
Lenders, unless the Administrative Agent shall have received written notice from
a Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default." The
Administrative Agent will notify the Lenders of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be directed by the Majority Lenders in accordance with
Article VIII; provided, however, that unless and until the Administrative Agent
has received any such direction, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Lenders.
SECTION 9.6 Credit Decision; Disclosure of Information by Administrative
Agent. Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereinafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Loan Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrower hereunder. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and the other Loan Parties. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent herein, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Loan Parties or any of
their respective Affiliates which may come into the possession of any
Agent-Related Person.
SECTION 9.7 Indemnification of Administrative Agent. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand each Agent-Related Person (to the extent not reimbursed by or on
behalf of any Loan Party and without limiting the obligation of any Loan Party
to do so), pro rata, and hold harmless each Agent-Related Person from and
against any and all Indemnified Liabilities incurred by it; provided, however,
that no Lender shall be liable for the payment to any Agent-Related Person of
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any portion of such Indemnified Liabilities resulting from such Person's gross
negligence or willful misconduct; provided, however, that no action taken in
accordance with the directions of the Majority Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this Section.
Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Administrative
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Administrative
Agent is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive termination of the Commitments, the
payment of all Obligations hereunder and the resignation or replacement of the
Administrative Agent.
SECTION 9.8 Administrative Agent in its Individual Capacity. TD and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with each of
the Loan Parties and their respective Affiliates as though TD were not the
Administrative Agent or the Issuing Bank hereunder and without notice to or
consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, TD or its Affiliates may receive information regarding any Loan
Party or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Loan Party or such Affiliate) and
acknowledge that the Administrative Agent shall be under no obligation to
provide such information to them. With respect to its Loans, TD shall have the
same rights and powers under this Agreement as any other Lender and may exercise
such rights and powers as though it were not the Administrative Agent or the
Issuing Bank, and the terms "Lender" and "Lenders" include TD in its individual
capacity.
SECTION 9.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent resigns under this Agreement, the Majority Lenders shall
appoint from among the Lenders a successor administrative agent for the Lenders.
If no successor administrative agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders, a successor administrative agent
from among the Lenders. Upon the acceptance of its appointment as successor
administrative agent hereunder, such successor administrative agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term "Administrative Agent" shall mean such successor
administrative agent and the retiring Administrative Agent's appointment, powers
and duties as Administrative Agent shall be terminated. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article IX and Sections 10.4 and 10.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor administrative agent
has accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
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and the Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Majority Lenders appoint a successor
agent as provided for above.
SECTION 9.10 Other Agents; Lead Managers. None of the Lenders identified on
the facing page or signature pages of this Agreement as a "syndication agent,"
"documentation agent," "co-agent" or "lead manager" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. Without limiting the foregoing, none of
the Lenders so identified shall have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied,
and will not rely, on any of the Lenders so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
ARTICLE X.
MISCELLANEOUS
SECTION 10.1 Amendments, Etc. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Majority Lenders and the Borrower and acknowledged and
agreed by each other Loan Party, and acknowledged by the Administrative Agent,
and each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such
amendment, waiver or consent shall, unless in writing and signed by each of the
Lenders directly affected thereby and by the Borrower, and acknowledged and
agreed by each other Loan Party and acknowledged by the Administrative Agent, do
any of the following:
(a) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.2);
(b) postpone any date fixed by this Agreement or any other Loan Document
for any payment or mandatory prepayment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified herein on,
any Loan or L/C Borrowing, or any fees or other amounts payable hereunder or
under any other Loan Document, or change the manner of computation of any
financial covenant used in determining the Base Rate Spread, LIBOR Spread or
Commitment Fee Rate that would result in a reduction of any interest rate on any
Loan;
(d) change the percentage of the Aggregate Commitments or of the aggregate
unpaid principal amount of the Loans and L/C Obligations which is required for
the Lenders or any of them to take any action hereunder;
(e) increase the Borrowing Base, or take any other action which requires
the signing of all the Lenders pursuant to the terms of this Agreement or of any
other Loan Document, or change the Percentage Share or Voting Percentage of any
Lender; or
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(f) amend this Section, or Section 2.14, or any provision herein providing
for consent or other action by all the Lenders; or
(g) permit any termination, amendment, modification, waiver, or release of
any Guaranty or any provision thereof; or
(h) release any collateral under any of the Security Documents, or permit
any termination, amendment, modification, waiver or release of any Security
Document or any provision thereof;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Bank in addition to the Majority Lenders or
all the Lenders, as the case may be, affect the rights or duties of the Issuing
Bank under this Agreement or any Letter of Credit Application relating to any
Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent in
addition to the Majority Lenders or all the Lenders, as the case may be, affect
the rights or duties of the Administrative Agent under this Agreement or any
other Loan Document; and (iii) the Agent and Arranger Fee Letter may be amended,
or rights or privileges thereunder waived, in a writing executed only by the
parties thereto.
SECTION 10.2 Notices and Other Communications; Facsimile Copies.
(a) General. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including by
facsimile transmission) and mailed, faxed or delivered, to the address,
facsimile number or (subject to subsection (c) below) electronic mail address
specified for notices on Schedule 10.2; or, in the case of the Borrower, the
Administrative Agent, or the Issuing Bank, to such other address as shall be
designated by such party in a notice to the other parties, and in the case of
any other party, to such other address as shall be designated by such party in a
notice to the Borrower, the Administrative Agent and the Issuing Bank. All such
notices and other communications shall be deemed to be given or made upon the
earlier to occur of (i) actual receipt by the intended recipient and (ii) (A) if
delivered by hand or by courier, when signed for by the intended recipient; (B)
if delivered by mail, four Business Days after deposit in the mails, postage
prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed
by telephone; and (D) if delivered by electronic mail (which form of delivery is
subject to the provisions of subsection (c) below), when delivered; provided,
however, that notices and other communications to the Administrative Agent and
the Issuing Bank pursuant to Article II shall not be effective until actually
received by such Person. Any notice or other communication permitted to be
given, made or confirmed by telephone hereunder shall be given, made or
confirmed by means of a telephone call to the intended recipient at the number
specified on Schedule 10.2, it being understood and agreed that a voicemail
message shall in no event be effective as a notice, communication or
confirmation hereunder.
(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may
be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same force
and effect as manually-signed originals and shall be binding on all Loan
Parties, the Administrative Agent and the Lenders. The Administrative Agent may
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also require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided, however, that the failure to request
or deliver the same shall not limit the effectiveness of any facsimile document
or signature.
(c) Limited Use of Electronic Mail. Electronic mail and internet and
intranet websites may be used only to distribute routine communications, such as
financial statements and other information, and to distribute Loan Documents for
execution by the parties thereto, and may not be used for any other purpose.
(d) Reliance by Administrative Agent and Lenders. The Administrative Agent
and the Lenders shall be entitled to rely and act upon any notices (including
telephonic Notice of Advances) purportedly given by or on behalf of the Borrower
even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. The Borrower shall indemnify each
Agent-Related Person and each Lender from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower. All telephonic notices to and
other communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.
SECTION 10.3 No Waiver; Cumulative Remedies. No failure by any Lender or
the Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein or therein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
SECTION 10.4 Attorney Costs, Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse the Administrative Agent for all costs and expenses incurred in
connection with the development, preparation, negotiation and execution of this
Agreement and the other Loan Documents and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs, and (b) to pay or reimburse the
Administrative Agent and each Lender for all costs and expenses incurred in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or the other Loan Documents (including
all such costs and expenses incurred during any "workout" or restructuring in
respect of the Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs. The
foregoing costs and expenses shall include all search, filing, recording, title
insurance and appraisal charges and fees and taxes related thereto, and other
out-of-pocket expenses incurred by the Administrative Agent and the cost of
independent public accountants and other outside experts retained by the
Administrative Agent or any Lender. The agreements in this Section shall survive
the termination of the Commitments and repayment of all the other Obligations.
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SECTION 10.5 Indemnification by the Borrower. Whether or not the
transactions contemplated hereby are consummated, the Borrower agrees to
indemnify, defend, save and hold harmless each Agent-Related Person, each Lender
and their respective Affiliates, directors, officers, employees, counsel, agents
and attorneys-in-fact (collectively the "Indemnitees") from and against: (a) any
and all claims, demands, actions or causes of action that are asserted against
any Indemnitee by any Person (other than the Administrative Agent or any Lender)
relating directly or indirectly to a claim, demand, action or cause of action
that such Person asserts or may assert against any Loan Party, any Affiliate of
any Loan Party or any of their respective officers or directors; (b) any and all
claims, demands, actions or causes of action that may at any time (including at
any time following repayment of the Obligations and the resignation or removal
of the Administrative Agent or the replacement of any Lender) be asserted or
imposed against any Indemnitee, arising out of or relating to, the Loan
Documents, any predecessor loan documents, the Commitments, the use or
contemplated use of the proceeds of any Credit Extension, or the relationship of
any Loan Party, the Administrative Agent and the Lenders under this Agreement or
any other Loan Document; (c) any administrative or investigative proceeding by
any Governmental Authority arising out of or related to a claim, demand, action
or cause of action described in subsection (a) or (b) above; and (d) any and all
liabilities (including liabilities under indemnities), losses, costs or expenses
(including Attorney Costs) that any Indemnitee suffers or incurs as a result of
the assertion of any foregoing claim, demand, action, cause of action,
litigation or proceeding, or as a result of the preparation of any defense in
connection with any foregoing claim, demand, action, cause of action, litigation
or proceeding, in all cases, whether or not arising out of the negligence of an
Indemnitee, and whether or not an Indemnitee is a party to such claim, demand,
action, cause of action, litigation or proceeding (all the foregoing,
collectively, the "Indemnified Liabilities"); provided that no Indemnitee shall
be entitled to indemnification for any claim caused by its own gross negligence
or willful misconduct or for any loss asserted against it by another Indemnitee.
The agreements in this Section shall survive the termination of the Commitments
and repayment of all the other Obligations.
SECTION 10.6 Payments Set Aside. To the extent that the Borrower makes a
payment to the Administrative Agent or any Lender, or the Administrative Agent
or any Lender exercises its right of set-off, and such payment or the proceeds
of such set-off or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Lender severally agrees to pay to the Administrative Agent upon demand its
applicable share of any amount so recovered from or repaid by the Administrative
Agent, plus interest thereon from the date of such demand to the date such
payment is made at a rate per annum equal to (i) with respect to the first two
Business Days following such demand, the Federal Funds Rate from time to time in
effect, and (2) with respect to each day thereafter, the Base Rate from time to
time in effect.
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SECTION 10.7 Successors and Assigns; Assignments; Participations.
10.7.1 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or transfer
by the Borrower without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
10.7.2 Assignments.
(a) Any Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (including in all instances for purposes
of this subsection (a), participations in L/C Obligations) at the time owing to
it); provided that (i) except in the case of an assignment of the entire
remaining amount of the assigning Lender's Commitment and the Loans at the time
owing to it or in the case of an assignment to a Lender or an Affiliate of a
Lender, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder, including as noted above, participations in L/C
Obligations) subject to each such assignment, determined as of the date the
Lender Assignment with respect to such assignment is delivered to the
Administrative Agent, shall not be less than $5,000,000 unless each of the
Administrative Agent and, so long as no Default has occurred and is continuing
and so long as in the case of Toronto Dominion (Texas) Inc., such Lender shall
have been reduced to its "target hold" level as described in the Agent and
Arranger Fee Letter, the Borrower otherwise consents (each such consent not to
be unreasonably withheld or delayed), (ii) each partial assignment shall be made
as an assignment of a proportionate part of all the assigning Lender's rights
and obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not prohibit any Lender from
assigning all or a portion of its rights and obligations among separate
Borrowings on a non-pro rata basis, (iii) the parties to each assignment shall
execute and deliver to the Administrative Agent a Lender Assignment, together
with a processing and recordation fee of $3,500. Subject to acceptance and
recording thereof by the Administrative Agent pursuant to subsection (c) of this
Section, from and after the effective date specified in each Lender Assignment,
the Eligible Assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Lender Assignment, have the rights and obligations
of a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Lender Assignment, be released from
its obligations under this Agreement (and, in the case of an Lender Assignment
covering all of the assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 3.7, 10.4 and 10.5). Upon request, the
Borrower (at its expense) shall execute and deliver new or replacement Notes to
the assigning Lender and the assignee Lender. Any assignment or transfer by a
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Lender of rights or obligations under this Agreement that does not comply with
this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.
(b) The Administrative Agent, acting solely for this purpose as an agent of
the Borrower, shall maintain at the Administrative Agent's Office a copy of each
Lender Assignment delivered to it and a register for the recordation of the
names and addresses of the Lenders, and the Commitments of, and principal amount
of the Loans and L/C Obligations owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
10.7.3 Participations.
(a) Any Lender may, without the consent of, or notice to, the Borrower or
the Administrative Agent, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and/or
obligations under this Agreement (including all or a portion of its Commitment
and/or the Loans (including such Lender's participations in L/C Obligations)
owing to it); provided that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other modification
that would (i) postpone any date upon which any payment of money is scheduled to
be paid to such Participant, (ii) reduce the principal, interest, fees or other
amounts payable to such Participant, or (iii) release any Guarantor from the
Guaranty. Subject to subsection (e) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 3.1, 3.4 and 3.5
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 10.9
as though it were a Lender, provided such Participant agrees to be subject to
Section 2.14 as though it were a Lender.
(b) A Participant shall not be entitled to receive any greater payment
under Section 3.1 or 3.4 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower's prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.1 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 3.8 as though it
were a Lender.
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10.7.4 Pledge of Lender's Interest. Any Lender may at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement (including under its Notes, if any) to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or assignee
for such Lender as a party hereto.
10.7.5 Consent to Assignment. If the consent of the Borrower to an
assignment or to an Eligible Assignee is required hereunder (including a consent
to an assignment which does not meet the minimum assignment threshold specified
in clause (i) of the proviso to the first sentence of Section 10.7.2, the
Borrower shall be deemed to have given its consent five Business Days after the
date notice thereof has been delivered by the assigning Lender (through the
Administrative Agent) unless such consent is expressly refused by the Borrower
prior to such fifth Business Day.
10.7.6 Definitions for Section 10.7. As used herein, the following terms
have the following meanings:
"Eligible Assignee" means (a) a Lender; (b) an
Affiliate of a Lender; and (c) any other Person (other
than a natural Person) approved by the Administrative
Agent, the Issuing Bank, and, after Toronto Dominion
(Texas), Inc. shall have assigned a sufficient amount
of its Commitment (as set forth in Schedule 2.1) to one
or more Persons (who shall become Lenders) such that
the Toronto Dominion (Texas), Inc.'s Commitment has
been reduced to an amount not exceeding the "target
hold" level set forth in the Agent and Arranger Fee
Letter, and provided that no Default has occurred and
is continuing, the Borrower (each such approval not to
be unreasonably withheld or delayed).
"Fund" means any Person (other than a natural Person)
that is (or will be) engaged in making, purchasing,
holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of
its business.
10.7.7 Assignment by TD. Notwithstanding anything to the contrary
contained herein, if at any time TD assigns all of its Commitment and
Loans pursuant to subsection (b) above, TD may, upon 30 days' notice
to the Borrower and the Lenders, resign as Issuing Bank. In the event
of any such resignation as Issuing Bank, the Borrower shall be
entitled to appoint from among the Lenders a successor Issuing Bank
hereunder; provided, however, that no failure by the Borrower to
appoint any such successor shall affect the resignation of TD as
Issuing Bank. TD shall retain all the rights and obligations of the
Issuing Bank hereunder with respect to all Letters of Credit
outstanding as of the effective date of its resignation as Issuing
Bank and all L/C Obligations with respect thereto (including the right
to require the Lenders to make Base Rate Loans or fund participations
in Unreimbursed Amounts pursuant to Section 2.3.3).
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SECTION 10.8 Confidentiality. (a) Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential); (b) to the extent requested
by any regulatory authority; (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process; (d) to any other party
to this Agreement; (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder; (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any Eligible Assignee of
or Participant in, or any prospective Eligible Assignee of or Participant in,
any of its rights or obligations under this Agreement or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty's or prospective counterparty's professional advisor)
to any credit derivative transaction relating to obligations of the Borrower;
(g) with the consent of the Borrower; (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrower; or (i) to the
National Association of Insurance Commissioners or any other similar
organization or any nationally recognized rating agency that requires access to
information about a Lender's or its Affiliates' investment portfolio in
connection with ratings issued with respect to such Lender or its Affiliates.
For the purposes of this Section, "Information" means all information received
from the Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Borrower; provided that, in the
case of information received from the Borrower after the date hereof, such
information is clearly identified in writing at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
SECTION 10.9 Set-off. In addition to any rights and remedies of the Lenders
provided by law, upon the occurrence and during the continuance of any Event of
Default, each Lender is authorized at any time and from time to time, without
prior notice to the Borrower or any other Loan Party, any such notice being
waived by the Borrower (on its own behalf and on behalf of each Loan Party) to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender to or for the credit or
the account of the respective Loan Parties against any and all Obligations owing
to such Lender, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Lender shall have made demand under this Agreement
or any other Loan Document and although such Obligations may be contingent or
unmatured. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.
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SECTION 10.10 Interest Rate Limitation. It is the intention of the parties
hereto to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of the Borrower to each Lender and the
Issuing Bank under this Agreement shall be subject to the limitation that
payments of interest shall not be required to the extent that receipt thereof
would be contrary to provisions of law applicable to such Lender or the Issuing
Bank limiting rates of interest which may be charged or collected by such Lender
or the Issuing Bank. Accordingly, if the transactions contemplated hereby would
be usurious under applicable law (including the Federal and state laws of the
United States of America, or of any other jurisdiction whose laws may be
mandatorily applicable) with respect to a Lender or the Issuing Bank then, in
that event, notwithstanding anything to the contrary in this Agreement, it is
agreed as follows: (i) the provisions of this Section 10.10 shall govern and
control; (ii) the aggregate of all consideration which constitutes interest
under applicable law that is contracted for, charged or received under this
Agreement, or under any of the other aforesaid agreements or otherwise in
connection with this Agreement by such Lender or the Issuing Bank shall under no
circumstances exceed the maximum amount of interest allowed by applicable law
(such maximum lawful interest rate, if any, with respect to such Lender or the
Issuing Bank herein called the "Highest Lawful Rate"), and any excess shall be
credited to the Borrower by such Lender or the Issuing Bank (or, if such
consideration shall have been paid in full, such excess promptly refunded to the
Borrower); (iii) all sums paid, or agreed to be paid, to the Lender or the
Issuing Bank for the use, forbearance and detention of the indebtedness of the
Borrower to such Lender or the Issuing Bank hereunder shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest is uniform throughout the full term thereof; and (iv) if
at any time the interest provided pursuant to Article II together with any other
fees payable pursuant to this Agreement and deemed interest under applicable
law, exceeds that amount which would have accrued at the Highest Lawful Rate,
the amount of interest and any such fees to accrue to such Lender or the Issuing
Bank pursuant to this Agreement shall be limited, notwithstanding anything to
the contrary in this Agreement to that amount which would have accrued at the
Highest Lawful Rate, but any subsequent reductions, as applicable, shall not
reduce the interest to accrue to such Lender or the Issuing Bank pursuant to
this Agreement below the Highest Lawful Rate until the total amount of interest
accrued pursuant to this Agreement and such fees deemed to be interest equals
the amount of interest which would have accrued to such Lender or the Issuing
Bank if a varying rate per annum equal to the interest provided pursuant to
Article II had at all times been in effect, plus the amount of fees which would
have been received but for the effect of this Section 10.10. For purposes of
Tex. Fin. Code Ann. Ch. 303, as amended, to the extent, if any, applicable to a
Lender or the Issuing Bank, the Borrower agrees that the Highest Lawful Rate
shall be the "weekly ceiling" as defined in said Article, provided that such
Lender and the Issuing Bank may also rely, to the extent permitted by applicable
laws, on alternative maximum rates of interest under other laws applicable to
such Lender or such Issuer, as the case may be, if greater. Tex. Fin. Code Ann.
Ch. 346 (which regulates certain revolving credit loan accounts and revolving
tri-party accounts) shall not apply to this Agreement or the Notes.
SECTION 10.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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SECTION 10.12 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default or Event of Default at the time of any Credit Extension, and shall
continue in full force and effect as long as any Loan or any other Obligation
shall remain unpaid or unsatisfied or any Letter of Credit shall remain
outstanding.
SECTION 10.13 Severability. Any provision of this Agreement and the other
Loan Documents to which the Borrower is a party that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions thereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
SECTION 10.14 Governing Law.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE (WITHOUT GIVING EFFECT TO THE PRINCIPLES
THEREOF RELATING TO CONFLICT OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW); PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN MANHATTAN OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH
STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
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 ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
SECTION 10.15 Waiver of Right to Trial by Jury. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
85
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
SECTION 10.16 Consents to Renewals, Modifications and Other Actions and
Events. This Agreement and all of the obligations of the Borrower hereunder
shall remain in full force and effect without regard to and shall not be
released, affected or impaired by: (a) any amendment, assignment, transfer,
modification of or addition or supplement to the Lenders Obligations, this
Agreement, any Note or any other Loan Document; (b) any extension, indulgence,
increase in the Lenders Obligations or other action or inaction in respect of
any of the Loan Documents or otherwise with respect to the Lenders Obligations,
or any acceptance of security for, or guaranties of, any of the Lenders
Obligations or Loan Documents, or any surrender, release, exchange, impairment
or alteration of any such security or guaranties including without limitation
the failing to perfect a security interest in any such security or abstaining
from taking advantage or of realizing upon any guaranties or upon any security
interest in any such security; (c) any default by the Borrower under, or any
lack of due execution, invalidity or unenforceability of, or any irregularity or
other defect in, any of the Loan Documents; (d) any waiver by the Lenders or any
other Person of any required performance or otherwise of any condition precedent
or waiver of any requirement imposed by any of the Loan Documents, any
guaranties or otherwise with respect to the Lenders Obligations; (e) any
exercise or non-exercise of any right, remedy, power or privilege in respect of
this Agreement or any of the other Loan Documents; (f) any sale, lease, transfer
or other disposition of the assets of the Borrower or any consolidation or
merger of the Borrower with or into any other Person, corporation, or entity, or
any transfer or other disposition by the Borrower or any other holder of any
shares of capital stock or other ownership interest of the Borrower; (g) any
bankruptcy, insolvency, reorganization or similar proceedings involving or
affecting the Borrower; (h) the release or discharge of the Borrower from the
performance or observance of any agreement, covenant, term or condition under
any of the Obligations or contained in any of the Loan Documents by operation of
law; or (i) any other cause whether similar or dissimilar to the foregoing
which, in the absence of this provision, would release, affect or impair the
Obligations, covenants, agreements and duties of the Borrower hereunder,
including without limitation any act or omission by the Administrative Agent, or
the Lenders or any other Person which increases the scope of the Borrower's
risk; and in each case described in this paragraph whether or not the Borrower
shall have notice or knowledge of any of the foregoing, each of which is
specifically waived by the Borrower. The Borrower warrants to the Administrative
Agent and the Lenders that it has adequate means to obtain from the Guarantors
on a continuing basis information concerning the financial condition and other
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matters with respect to the Guarantors and it is not relying on the
Administrative Agent or the Lenders to provide such information either now or in
the future.
SECTION 10.17 ENTIRE AGREEMENT. This Agreement, together with the other
Loan Documents, comprises the complete and integrated agreement of the parties
on the subject matter hereof and thereof and supersedes all prior agreements,
written or oral, on such subject matter. THIS 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
COMSTOCK RESOURCES, INC.
By: /s/M. JAY ALLISON
------------------------
Name: M. Jay Allison
Title: President
S-1
TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By: /s/NEVA NESBITT
-----------------------
Name: Neva Nesbitt
Title: Vice President
THE TORONTO-DOMINION BANK, as Issuing Bank
By: /s/NEVA NESBITT
------------------------
Name: Neva Nesbitt
Title: Manager of Syndications
and Credit Administrator
TORONTO DOMINION (TEXAS), INC., as Lender
By: /s/NEVA NESBITT
-------------------------
Name: Neva Nesbitt
Title: Vice President
S-2